WASHINGTON — Supporters of the Florida high-speed rail project are scrambling to come up with options to preserve it after Gov. Rick Scott rejected $2.4 billion of federal funding last week.

The project, an 84-mile rail line between Orlando and Tampa, is considered the furthest along in the development stage among high-speed rail projects nationally. More than $26 million in federal funds have been spent on the project already and it enjoys bipartisan support from Florida's congressional delegation.

The project was thrown into turmoil last week when Scott rejected the $2.4 billion in federal funds, which were expected to cover about 90% of the total cost. Scott said he feared cost overruns and overly optimistic ridership estimates would mean state taxpayers could end up subsidizing the railway.

If Florida eventually accepts Washington's money, it could send out requests for qualifications — the initial step in finding contractors who can bid on the construction work. Construction could begin later this year, sources said.

On Tuesday, the project's supporters in Florida and the nation's capital, were considering three proposals to salvage it. Still, sources acknowledged it will be difficult to orchestrate a plan to continue the project without the Republican governor's support.

"Everyone who believes in the project will do everything in their power to be creative to get to a deal," said Michael Bedke, a partner at DLA Piper in Tampa who is the firm's co-chair for the rail sector.

"However, I'm not overly optimistic. The deal cannot be done if the governor is not willing to move his position at all," because the state owns the right of way land — the land where the rail line would be built.

One alternative floated last Friday by U.S. House Transportation Committee chairman John Mica, R-Fla., would initiate construction on the core, 21-mile stretch of the railway from Orlando International Airport to the convention center and Disney World.

The plan is a trimmed-down version of the original proposal for an 84-mile rail line and could cost between $700 million to $1 billion, estimated Andy Kunz, the president and chief executive officer of the U.S. High Speed Rail Association in Washington.

"This would be a national high-speed rail demonstration project," Kunz said. If this section of the project — bolstered by Disney World tourism traffic — is scored a success, then work can proceed with the rest of the project, he said.

But at just 21 miles, the project would hardly qualify as high-speed rail, sources said. That distance "calls for an extension of the Disney Monorail," not a high-speed rail line, Bedke said.

A Transportation Committee spokesperson said Mica's plan has received interest among parties involved with the project, but no one has officially supported it yet.

A second option under consideration would be for local governments to form an authority independent of the Florida Department of Transportation to take the federal funds and take control of the rail line. The local governments would be responsible for the design, build, financing, and maintenance needs of the rail line. The proposal could include private partners that would eliminate any concerns that Florida taxpayers would become responsible for the rail line.

Finally, Kunz said that if the state does not accept the federal funds, then there is a last-resort proposal where the U.S. Department of Transportation could take full responsibility for the 21-mile project and oversee its design, build, financing and maintenance needs.

"It makes total sense" for the project, the nation's example for high-speed rail, to be administered by the U.S. DOT, Kunz said. However, he said he cannot think of an example where the federal government has taken over a local project similar in such circumstances.

A federal takeover would be a nuclear option that opens up issues of states rights versus federalism, Bedke said. The scenario would be "an absolute showdown of epic proportions," because the Florida DOT owns most of the right of way land needed for the project, he said.

A spokesperson with the U.S. DOT said the department is continuing to work with state officials to get the project moving.

Even if a plan to move forward with the project can be worked out, Scott's stance may have scared off international businesses that have been eyeing the Florida project as a way to break into the American market for high-speed rail projects. Bedke said the high-speed rail business community had expected the project to proceed.

If it cannot be salvaged, other states have said they are willing to take the lead in high-speed rail — and the federal funds that come with it. Officials in Maryland, New York, and Rhode Island said they would welcome the $2.4 billion dedicated to Florida's project.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.