BRADENTON, Fla. - Few people lived along Florida's largely pristine east coast when pioneer Henry Flagler bankrolled the first hotels and passenger rail service to serve them, opening the region to wealthy northern visitors in the late 1800s.
Today, more than 7 million residents live in the coastal counties where a revival of passenger service is envisioned along 195 miles of existing railroad right of way by All Aboard Florida, a venture of Fortress Investment Group-owned Florida East Coast Industries.
Eventually, the service will run inland using 40 miles of new track to Orlando, where tourists flock and another 1.2 million residents live.
Billed as "the first privately owned and operated passenger rail system" in Florida since Flagler's days, the public took little notice when the $3 billion project was first announced in March 2012.
While Flagler likely would be proud to see the revival and extension of his trailblazing railroad, time has changed his right of way.
Now packed with businesses and year-round residents, the coastal route of the new passenger rail service, using a right of way that has served Florida East Coast freight trains since the 19th century, is home to growing opposition.
A least two citizens groups have formed to oppose the passenger train project, and they have garnered support from a number of politicians - some seeking an inquiry by the General Accounting Office.
AAF said it hopes to start service in 2016 along 70 miles between West Palm Beach and Miami, with the second leg of service beginning in 2017 completing the link between south Florida and Orlando with 32 round trips daily.
Last week, All Aboard announced that Siemens would build the service's 125 mile-per-hour locomotives and passenger coaches at Siemens' rail manufacturing hub in Sacramento, Calif., with components from Siemens plants across the U.S.
The company will pay for the project with corporate debt and equity, its website says.
Florida East Coast's long-time real-estate holdings near its planned stations in Miami and other cities are another key to its business plan.
In April, Florida East Coast sold $405 million in junk-rated corporate notes with a 12% coupon to finance a portion of the passenger rail project. The deal reportedly included attractive covenants such as a lien on land and rights to the track, according to Reuters.
All Aboard has also applied for a $1.6 billion low-interest loan from the Federal Railroad Administration's Railroad Rehabilitation and Improvement Financing Loan program that would be the largest of its kind.
Similar to the Federal Highway Administration's popular Transportation Infrastructure Finance and Innovation Act loan program, RRIF loans are based on attractive Treasury rates and can mature up to 35 years.
Private companies and public entities can apply for RRIF loans.
The FRA would not provide any details about AAF's request other than to say that an application has been submitted. However, RRIF loan applicants are expected to comply with the FRA's policy requiring purchased goods to be produced in the U.S.
If the RRIF loan is granted, some or all of the notes sold earlier this year reportedly could be taken out with loan proceeds, according to Reuters.
All Aboard Florida has released few specifics about its finance plan and loan application, citing trade secrets in court documents. AAF was asked to comment for this story.
The planned service, which still requires approval under the National Environmental Policy Act, has received support from some governments and chambers of commerce where train stations are planned in Miami, Fort Lauderdale, West Palm Beach, and Orlando.
The project is also supported by the National Association of Railroad Passengers, which believes All Aboard Florida has good chances "of being very successful," according to a NARP spokesman, citing the existing rail infrastructure All Aboard will use. "It has low start-up costs," he said.
All Aboard's website says an investment grade ridership study has been produced, but the project's feasibility has been questioned by a growing cadre of opponents.
Many opponents are residents who will be impacted by closures and maintenance costs at train crossings, and who argue that the project is not completely privately funded.
"We feel this project is not just deleterious to Florida, but to all taxpayers," said K.C. Traylor, founder of Florida NOT All Aboard. She claims the RRIF loan could require a public bailout if All Aboard defaults.
"We believe this is not a feasible project because it will operate in the same market as Tri-Rail and Amtrak, both of which lose tens of millions of dollars a year and now we are adding a third system," Traylor said. "As a taxpayer this does not seem feasible to me."
Tri-Rail is a regional commuter rail service that runs between Miami, Fort Lauderdale, and West Palm Beach. Amtrak offers a pair of trains daily that meander inland for six or seven hours between Miami and Orlando on their way to the northeast.
Traylor, a stay-at home mom with a background in sales and marketing, lives in Stuart in Martin County, one of four counties along the coastal passenger route where no train stations are planned, though communities and waterways will be impacted by trains traveling through and increased costs to upgrade railroad crossings maintained by local governments, said Traylor.
"The maintenance costs - that's taxpayer money," she said, noting that Martin County maintains 18 train crossings at an average cost of about $60,000 each. "We're going to have to figure out how to come up with the additional tax money to maintain those intersections."
Traylor, who began Florida NOT All Aboard after reading about the project's impacts in local papers seven months ago, said she has obtained the signatures of 28,000 people on petitions objecting to the use of "taxpayer money for this private venture."
In addition to railroad crossing costs and delays, the petition cites the age of some railroad bridges, noise pollution, increased traffic congestion, safety concerns, and decreased property values of homes in close proximity to train routes. The petition also alleges there will be an increase in freight trains.
Traylor said her goal is to stop the new passenger service, or force a change in its coastal route farther to the west where the population is less dense.
"It's not that we hate trains, it's just that this is so deleterious to our communities," she said. "It bisects the middle of downtowns."
Growing opposition to All Aboard Florida has not gone unnoticed by politicians.
Two U.S. Representatives From Florida, Patrick Murphy and Bill Posey, have asked for a General Accounting Office review of AAF's viability.
"I have consistently opposed taxpayer subsidies for rail initiatives," Posey said in an Aug. 14 letter to the GAO. "I am therefore concerned about the potential exposure to taxpayers of all such projects including, but not limited to, the AAF application."
Murphy and Rep. Lois Frankel, said they met earlier this year with USDOT Secretary Anthony Foxx asking for a thorough review of the project, and requesting that DOT address specific concerns before approving the RRIF loan request.
"While AAF may boost tourism and business in Florida's biggest cities, it also may delay emergency vehicles, create traffic jams, raise noise pollution, and block waterways along hundreds of miles of tracks," Murphy and Frankel wrote in a letter to Foxx. "In addition, AAF may force Florida towns and cities on already-tight budgets to foot the bill for quiet crossings and future maintenance."
Frankel and Murphy also requested that AAF be required to work with local governments, and AAF officials have attended meetings to work out train crossing maintenance agreements. Some have not been approved yet.
Traylor said a frustrating aspect about All Aboard Florida is difficulty she has had getting details concerning the project and the federal loan that is being sought.
"This being a private company, they are able to keep a lot under wraps," she said. "I feel like we should have more information as taxpayers when they are asking for $1.6 billion from us."
