House lawmakers split over using more PABs for rail line in Florida

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WASHINGTON – House lawmakers are taking opposite sides in the debate over whether more tax-exempt private activity bonds can legally be authorized by the U.S. Department of Transportation for All Aboard Florida’s Brightline project.

On one side are four Florida lawmakers, all Republicans, who signed a letter sent to U.S. Transportation Secretary Elaine Chao asking her to suspend authorization of the PABs for financing the second stage of the 235-mile passenger rail line.

On the other side, a bipartisan group of seven Florida lawmakers and a former congressman sent two letters to Chao supporting the use of PABs for the project.

One of the two letters was sent by former Congressman John Mica, a Republican from Florida, who chaired the House Transportation and Infrastructure Committee from 2011-2012. He attested that the use of PABs for the project is “absolutely correct.”

Mica said he was involved in drafting the legislation that created a category of PABs for surface transportation and it was “our intent that a surface transportation project would include rail.”

“Brightline is the most viable private project of this type to come along in decades in the U.S.,” Mica wrote. “Already operating in its first, most populous segment, it represents a huge private investment with an absolute minimum [of] government outlays.”

The Florida Development Finance Corp. issued $600 million of PABs in December for phase one of the project. The bonds had a yield of 5.62% and were rated BB-minus by Fitch Ratings. That money is being used to finance portions of phase one development, the 66.5 miles between Miami and West Palm Beach.

USDOT has authorized the issuance of another $1.15 billion in PABs to help finance the 168-mile second phase of the Brightline project between West Palm Beach and Orlando.

All Aboard Florida faces a May 31 deadline to issue those PABs and last week asked USDOT for an extension, which the department said it is considering.

A federal lawsuit seeking to block the issuance of the PABs in the second phase of the project was filed in February by Martin County, Indian River County, Citizens Against Rail Expansion (CARE), and Indian River County Emergency Services.

Rep. Brian Mast, R-Fla., whose district is part of the Brightline passenger rail route, persuaded Rep. Mark Meadows, R-N.C., to chair a hearing on the legality of the PABs in April in his capacity as chairman of the House Oversight and Government Reform Subcommittee on Government Operations.

Meadows, Mast and two other Florida Republican lawmakers sent a letter to Chao on May 16 asking her to “suspend” the approval of the PABs until after the subcommittee completes its ongoing inquiry. Brent Hanlon, CARE chairman, issued a statement Tuesday thanking Meadows and the other lawmakers for their letter.

“For four years, CARE ... has questioned AAF’s claim that it is a privately funded project when its financing is so completely reliant on federal and state subsidies,” Hanlon stated. “The members of Congress have urged [USDOT] to suspend the bond authorization until all the issues raised are addressed — that makes real sense for our community and the taxpayers.”

Meanwhile, House Transportation and Infrastructure Committee Chairman Bill Shuster, R-Pa., and Rep. Paul Gosar, R-Ariz., joined the seven Florida House members who support the project in the second letter that describes Brightline “as a project of national and regional significance.”

“We disagree with those who suggest that a rail system, whether freight or passenger, is not a 'surface transportation project,’” their May 21 letter to Chao said.

Brightline pointed out in an April 30 letter to Chao that similar approval was given in 2010 for $398 million of PABs to finance passenger rail service between Denver International Airport and Denver’s Union Station.

In addition, USDOT gave approval in 2014 to the use of $1.3 trillion of PABs for Maryland’s Purple Line service in the suburbs of Washington, D.C.

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