Loan Details for All Aboard Florida Put Taxpayers at Risk

Publish Date: 
Friday, October 3, 2014 - 2:45pm

Letter by: Richard V. Neill, Fort Pierce TC Palm

CSX Transportation is one of only five Class One railroads in the United States. CSX currently furnishes passenger rail service between Miami and Orlando via Amtrak. If high-speed rail is such a great opportunity, I wonder why CSX has not jumped at the chance to provide that service.

In fact, no railroad company is planning to provide the high-speed rail service. The current proposal is by a Wall Street hedge fund, Fortress Investment Group. Fortress bought the FEC in 2007 and has set up All Aboard Florida as a subsidiary.

At a recent meeting with the St. Lucie County Commission, the All Aboard Florida representative acknowledged that the money being borrowed by All Aboard Florida would be used to build a second and third set of tracks that would be used by the FEC in its freight operations.

That's only half of the story. The first, second and third set of tracks and the roadbed will be owned by the FEC and will not be subject to the lien of the mortgage given by All Aboard Florida to secure its debt.

If All Aboard Florida should fail, then the FEC has the improved roadbed and the second and third set of tracks free and clear of any lien.

That strikes me like a bank lending someone the money to build and furnish a home and taking back a mortgage on only the furniture.

If the FEC is not willing to guarantee the loan to All Aboard Florida and secure it by a mortgage on the real estate and all improvements, then the loan should not be made.