By Jennifer Sorentrue - Palm Beach Post
All Aboard Florida’s request for a nearly $1.6 billion publicly subsidized federal loan is drawing concern from two U.S. congressmen who are calling for the nonpartisan Government Accountability Office to investigate whether the company’s planned express passenger rail service between Miami and Orlando is financially viable.
In separate letters to U.S. Comptroller General Gene Dodaro on Thursday, U.S. Reps. Patrick Murphy (D-Jupiter) and Bill Posey (R-Rockledge) said an independent review of the project is needed before federal officials decide whether to give the company the loan.
“Before the (Federal Railroad Administration) risks public money on this project, it is imperative that AAF’s relevant financial viability be thoroughly reviewed,” Murphy wrote in the letter. “…A comprehensive evaluation of AAF’s viability is necessary to ensure that our tax dollars are not used as an irresponsible handout to a company that could not be profitable on its own. Murphy has opposed All Aboard Florida’s plan to resurrect passenger travel on the Florida East Coast Railway tracks.
The company plans to run 32 passenger trains a day between Miami and Orlando on the FEC tracks, with stops in Fort Lauderdale and West Palm Beach. The Miami-to-West Palm Beach service is expected to open in late 2016 with the Orlando leg beginning in 2017.
All Aboard Florida has asked the Federal Railroad Administration for a nearly $1.6 billion loan to help pay for its plan. On Monday, All Aboard declined to comment on the letters.
The Federal Railroad Administration has not responded to a Palm Beach Post public records request made May 7 for information about All Aboard Florida’s Railroad Rehabilitation and Improvement Financing (RRIF) loan application.
In general, though, the RRIF program authorizes the Federal Railroad Administration to provide direct loans and loan guarantees up to $35 billion to finance development of railroad infrastructure. Up to $7 billion is reserved for projects benefiting freight railroads.
The money may be used to acquire and improve rail equipment or facilities, refinance outstanding debt taken on to rehabilitate rail lines, and develop new intermodal railroad facilities — all things All Aboard Florida plans to do.
If the company’s $1.6 billion request is granted, it will be the largest RRIF loan ever awarded.
In his letter, Posey said he is concerned taxpayers could be on the hook if All Aboard Florida’s rail service fails. He asked the federal Government Accountability Office to review the project’s cost to taxpayers, the risk of default and the interest rate that would be assessed to the loan.
“We have a duty to protect taxpayers, and this evaluation will help us uphold that duty,” wrote Posey, whose district includes all of Brevard and Indian River Counties, and a portion of east Orange County.
The GAO is expected to review congressmen’s request in the coming weeks to determine whether it will investigate the loan request, and if so, when it will start its work. The GAO is an independent, nonpartisan agency that works for Congress and is responsible for investigating how the federal government spends tax dollars.
All Aboard Florida has said the total cost for its unprecedented project is $2.5 billion. In June, the company sold $405 million in high-risk bonds to help pay for the project.
The bond prospectus notes that parent company Florida East Coast Industries has contributed $345 million in cash to the plan. It has also contributed to the land purchased for the stations in Miami, Fort Lauderdale and West Palm Beach, which is valued at approximately $730 million, according to the prospectus.