BRADENTON, Fla. – Opponents of Florida’s privately owned passenger train project urged the Trump administration to “exercise extreme caution” in approving a federal loan for the start-up venture.
In a letter to Transportation Secretary Elaine Chao, Indian River and Martin counties and Citizens Against Rail Expansion said their information and studies indicate that a loan to All Aboard Florida would face “a very high risk of default.”
AAF, owned by Florida East Coast Industries, opened discussions in April with the U.S. Department of Transportation about obtaining a Railroad Rehabilitation and Improvement Financing loan to complete its Brightline-branded train project between Miami and Orlando, but no amount was discussed.
However, AAF applied for a $1.6 billion RRIF loan several years ago and subsequently received a $1.75 billion private-activity bond allocation. The bonds were never sold.
“We continue to have serious concerns regarding the integrity of the financials of AAF and believe these concerns should be seriously considered by DOT with respect to AAF’s likely inability to repay a RRIF loan and the risk of default on the loan, which would be borne by the taxpayers,” attorneys for CARE, and Martin and Indian River counties wrote to Chao on Monday.
The 6-page letter raises questions about AAF’s ridership studies and its consultants. The letter also cites an economic analysis commissioned by CARE that concluded AAF would generate annual losses of more than $100 million and would be unable to service its debt burden.
“Martin and Indian River Counties and CARE Florida continue to use misrepresentations, mischaracterizations and fear mongering in their failing attempt to halt the expansion of Brightline,” AAF said in a statement. “Brightline reiterates its commitment to develop a system that meets the highest safety standards while providing a critically needed transportation alternative for Florida’s residents and visitors.”
CARE and the counties have said their concern is about phase 2 of the project from West Palm Beach to Orlando. They contend All Aboard Florida’s high-speed trains will jeopardize public safety, the environment, historic sites and the quality of life as it passes through densely populated areas without stopping.
“We believe AAF is struggling to find a way to finance phase II,” Indian River County Attorney Dylan Reingold said Wednesday. “They have unsuccessfully tried to sell tax-free private activity bonds on at least three different occasions.”
Those failed sales, however, were conducted amid ongoing federal lawsuits filed by Indian River and Martin counties. In May, a federal judge dismissed the suits after AAF withdrew its PAB request for funding phase 2.
The company has received a smaller, $600 million PAB allocation to finance phase 1 but those bonds haven’t been issued. The USDOT has imposed a Jan. 1 deadline by which the bonds must be sold.
“Brightline is considering all funding options,” the company said in June when asked about applying for the RRIF loan. “We continue to explore financing mechanisms that exist for projects that incent private companies to invest in infrastructure used by the public.”
AAF also said that the first phase of service between West Palm Beach and Miami is expected to begin this fall. Work is being completed on train stations with associated commercial and residential development in West Palm Beach, Fort Lauderdale and Miami.
Service on the second phase between West Palm Beach and Orlando could be as far off as 2020, according to a report in the Palm Beach Post, based on an interview with Orlando International Airport Director Phillip Brown.
Brown told the paper that the 2020 timeframe came from updates with train officials.
AAF has a rental agreement at the Orlando airport, which is building an intermodal terminal complex.