Treasure Coast residents opposed to the All Aboard Florida/Brightline passenger rail project have had a nagging suspicion from the beginning.
They have suspected, understandably, that state and federal agencies with some degree of oversight have been predisposed to approve the Miami-to-Orlando project.
Rail opponents have questioned the seeming lack of scrutiny on the part of state and federal officials. For example, the U.S. Department of Transportation granted initial approval for All Aboard Florida's request for $1.75 billion in private-activity bonds in December 2014, nine months before the Federal Railroad Administration released its final environmental impact statement on the project.
How can a federal agency approve a financing request of this magnitude without first evaluating all relevant documents, especially something as critical as the final environmental impact statement?
This procedural omission was the first major clue to Treasure Coast residents that their concerns were being subverted.
It gets worse.
Last May, U.S. Rep. Bill Posey, R-Rockledge, wrote a letter to the U.S. Department of Transportation, inquiring about the agency's due diligence with respect to All Aboard Florida's financing request.
This wasn't the first time Posey, an advocate for greater transparency with respect to rail issues, has challenged the federal financing process. In January 2015, Posey offered key amendments to the Passenger Rail Reform and Investment Act of 2015. One amendment would have capped at $600 million the amount of Railroad Rehabilitation & Improvement Financing loans authorized by the U.S. Department of Transportation to a single railroad in a five-year period. Another amendment would have required the federal government to obtain a resolution of support from each county government through which a rail project would operate before providing a direct loan or loan guarantee.
Not surprisingly, Posey's amendments failed.
Returning to May of last year: Posey inquired if the U.S. Department of Transportation had used ridership data provided by the Louis Berger Group to determine eligibility for the private-activity bond allocation, and whether the same data would be used as the basis for approving a future $1.65 billion Railroad Rehabilitation & Improvement Financing loan. At the time, both requests still were on the table.
The Louis Berger Group had been retained by All Aboard Florida to produce a ridership and revenue study on the rail project. Posey's query was pertinent because, as the congressman noted in his letter, the Louis Berger Group has a "history of public corruption." Posey cited several examples of the firm's illegal and unethical behavior in his missive to the agency.
The Nov. 1 response to Posey from Blair Anderson, undersecretary for the U.S. Department of Transportation, illustrates the agency's seeming disregard for fiscal accountability.
"The U.S. Department of Transportation does not evaluate ridership, revenue or creditworthiness in determining the eligibility of projects for private-activity bond allocations, and therefore did not consider the study in connection with its (private-activity bond) allocation to the (All Aboard Florida) project," Anderson wrote.
You read the statement correctly.
Ridership, revenue or creditworthiness were not considered by the agency in determining All Aboard Florida's eligibility for tax-free bonds.
Anderson did note that, "With respect to Railroad Rehabilitation & Improvement Financing applications, the department conducts its own due diligence, including an independent assessment of risks and mitigants, on all pledged revenue sources prior to executing any loan."
Posey's reaction to Anderson's first statement was predictable. You probably reacted the same way.
"This statement — to me — is shocking," Posey wrote in a Nov. 14 follow-up letter to the agency. "Most concerning to me is that the federal government will lose $600 million in tax revenue if the (private-activity bonds) are issued for the All Aboard Florida project ... yet (the Department of Transportation) performed no analysis of ridership or revenue generation related to this decision."
The picture that emerges is one of a federal agency playing fast and loose with taxpayers' money for the purpose of facilitating the creation of a passenger rail project.
We should add that this $3.1 billion passenger rail project faces serious financial challenges.
All Aboard Florida attempted four times to sell the $1.75 billion in private-activity bonds with no success. The harsh reality of the marketplace prompted the rail company to pursue a different strategy. In November, the U.S. Department of Transportation, at All Aboard Florida's request, rescinded its approval of $1.75 billion of tax-free bonds and instead approved $600 million for the Miami-to-West Palm Beach segment (Phase I). In a bond application filed with the federal agency in late October, the company said it likely would request approval to sell $1.15 billion in bonds for Phase II (West Palm Beach to Orlando International Airport).
One might think the federal government — in this case, the U.S. Department of Transportation — would protect the interests of taxpayers by scrutinizing ridership and revenue projections, as well as the creditworthiness, of companies such as All Aboard Florida/Brightline when determining eligibility for tax-free bonds.
All of which fuels the suspicion that we're being railroaded.