FINANCING SNAGS COMPLICATE ALL ABOARD FLORIDA'S PLANS

Publish Date: 
Tuesday, February 24, 2015 - 5:00am

All Aboard Florida faces complications and possible delays with its plan to finance a high-speed passenger railroad with $1.75 billion of tax-exempt bonds. Florida Development Finance Corp. — the quasi-governmental agency that agreed to issue All Aboard Florida’s bonds — is temporarily disabled.

Its board members never were appointed by Gov. Rick Scott, as required by law, and “nothing can be done until board appointments are made,” said spokesman Sean Helton. “(The Florida Development Finance Corp.) is not able to legally issue bonds at the moment,” Helton said Friday.

Securing $1.75 billion for the $2.25 billion project seemed to be a crucial step for All Aboard Florida. The company was counting on borrowing that money to pay for locomotives, train cars, land acquisition, construction and equipment along the 235-mile corridor from Miami to Orlando.

It plans to use the money in every county along its route except in Indian River, St. Lucie and Martin, where the estimated $387 million of construction would be paid by parent company Florida East Coast Industries, company officials said.

All Aboard would spend $720 million of the bond money in Orange and Brevard counties, $634 million in Palm Beach, Broward and Miami-Dade counties and $395 million on non-location-specific expenses, such as train cars.

Some construction — including stations in Fort Lauderdale and West Palm Beach — already is underway.

All Aboard Florida also is facing a July 1 deadline from the U.S. Department of Transportation for the bonds to be sold.

Lynn Martenstein, All Aboard Florida vice president of corporate communications, on Friday declined to say how paralysis at the Florida Development Finance Corp. would affect the project.

All Aboard Florida plans 32 trains a day along the Florida East Coast Railway corridor. It plans to begin service from Miami to West Palm Beach by the end of next year and through the Treasure Coast to Orlando International Airport in early 2017.

Borrowing through private-activity bonds is All Aboard Florida’s second choice for financing. In March 2013, the company applied for a $1.6 billion federal loan through the Federal Railroad Administration, a request that became a rallying point for opponents who criticized the private company for seeking public money.

The company switched direction in August and applied for the bond financing.

Successfully selling $1.75 billion in bonds could “replace or substantially reduce” the federal loan, Martenstein said.

The loan application remains on the table, according to Michael Cole, Federal Railroad Administration spokesman.

The federal Department of Transportation has barred all Aboard Florida from using any bond money until 45 days after the final All Aboard Florida environmental impact study is released. Federal officials have not set a date for that release.

When the Florida Development Finance Corp. could be up and running again also is unclear.

Scott has no immediate plan to make the needed appointments, and even once board members are appointed and confirmed by the Florida Senate, the development corporation must hold public hearings before it can issue the bonds, according to Helton.

Typically, five members sit on the board, but only three are needed for a quorum, he said.