ALL ABOARD FLORIDA WANTS AN EXTENSION FOR THE SALE OF $1.75 BILLION IN TAX-EXEMPT BONDS

Publish Date: 
Friday, May 29, 2015 - 3:00am

Lisa Broadt - TCPalm

All Aboard Florida will seek an extension from the U.S. Department of Transportation for the sale of $1.75 billion in tax-exempt bonds to finance its project, the company said in federal court here Friday morning.

But before All Aboard Florida moves forward, it must clear another hurdle: The Federal Railroad Administration must issue its final environmental impact statement, which lays out potential problems created by the project and how those problems would be mitigated. The federal agency has not said when it would release the document.

 All Aboard Florida has been facing a July 1 deadline to sell the private-activity bonds to help pay for the $3 billion high-speed passenger rail system. But with time running out, and still no sign-off from the Florida agency that would issue the bonds, the delay is needed, attorney Eugene Stearns, representing All Aboard Florida, told Judge Christopher Cooper during the 3½-hour hearing: “No one in All Aboard Florida wanted to extend the deadline an hour, but ... we keep being told, ‘Next week, next week,’ on the (environmental impact statement). Time is money, and this project is a huge amount of money.”

MORE: All Aboard Florida reveals ridership, fare projections

Friday’s court session was set to hear arguments by Martin and Indian River counties, which claim in separate lawsuits that All Aboard Florida is not entitled to the tax-exempt bonds. The lawsuits originally were filed against the U.S. Department of Transportation, which gave approval to the bonds. The counties are attempting to block issuance of the bonds, arguing they were approved under a federal program intended for highway projects, not railroads.

Cooper is expected to rule by June 19 on the counties’ request.

Stearns said the Florida Development Finance Corp. would hold a hearing between June 10 and 13 to consider final approval of the bonds for All Aboard Florida.

Stephen Ryan, Martin County’s attorney, pointedly questioned that announcement coming from All Aboard Florida.

“I don’t understand,” Ryan said. “They order FDFC around. There’s no real deadline.”

Indian River County Commissioner Tim Zorc, who attended the hearing, questioned why All Aboard presented this new information in the last five minutes of the court session.

“If they had brought it up at the beginning of the hearing it would have changed everything,” Zorc said. “It was crucial information.”

All Aboard Florida officials who attended the hearing declined to comment. The company issued a statement, but declined to address the issues argued in court: “All Aboard Florida appreciates Judge Cooper’s thoughtful questions and the opportunity to present our case,” the statement said. “We look forward to his decision.”

The Department of Transportation has scheduled a meeting June 19 to consider extending bond-sale deadlines for All Aboard Florida and other applicants. If an extension is granted, it would be at least six months, said DOT attorney Luther Hajek. Stearns said All Aboard Florida wants to move ahead as quickly as possible.

About 35 people, including about a dozen attorneys, attended Friday’s hearing.

Cooper methodically questioned attorneys on both sides throughout the hearing, but pushed Indian River and Martin counties in particular to better define their arguments.

How, exactly, would the rail project cause immediate and irreparable harm — the standard needed for a preliminary injunction — Cooper asked the plaintiffs.

The judge pressed the attorneys to more clearly explain the relevance of familiar Treasure Coast concerns, such as public safety and more frequent bridge closures, to bond financing and to defend their use of information from more than 2-year-old All Aboard Florida financial documents.

DOT and All Aboard Florida also faced tough questions from Cooper, who repeatedly requested more specific and detailed explanations of All Aboard Florida’s financing plan.

How crucial is tax-exempt funding to the project as a whole, and what would be the financing breakdown between phases I and II, Cooper asked, instructing the defendants to quantify their answers.

“Where is it on the record that (parent company Fortress Investment Group) will spend its billions of dollars on the project if the project is denied tax-exempt bonds?” Cooper asked Stearns in a line of inquiries about All Aboard’s alternative funding plan.

Cooper’s questions about Florida Development Finance Corp. procedure on several occasions seemed to stump both sides.

Despite fielding many of the judge’s more difficult questions, Ryan and Indian River County attorney Dylan Reingold praised Cooper’s approach as fair.

“He’s been asking really good questions of both sides,” Reingold said during a mid-hearing break.

“We appreciate him hearing us with curiosity,” Ryan said. “He didn’t have to spend over three hours on this.”

Cooper seemed to appreciate the Treasure Coast’s strong arguments about the use of highway-designated funds for the railroad project, Ryan added.

He was “very interested” in that argument., to which All Aboard Florida “didn’t really have a good response,” Ryan said.