STOP THE MONEY, STOP THE TRAIN

Publish Date: 
Friday, May 8, 2015 - 2:00pm

TCPalm

Stopping All Aboard Florida could hang on stopping its financing, according to Indian River and Martin County attorneys. PROTEST IN PERSON ON MAY 28TH - MORE INFO HERE: http://bit.ly/1KrfpyI

But there apparently is just one month — at most — left to stop issuance of the $1.75 billion in bonds that All Aboard Florida needs to build its $3 billion Miami-to-Orlando passenger rail service.

The Florida Development Finance Corp. — the quasi-governmental agency that would issue the bonds — at a May 28 board meeting in Orlando is to decide whether to authorize tax-exempt bonds for the private company. In August, the agency issued preliminary financing approval.

Should it grant final authorization, bond sales could begin immediately, though no sales would be closed before June 8, according to All Aboard Florida.

“June 8 would be the date that the issuance would be irretrievable,” said U.S. District Court Judge Christopher Cooper during an April 28 conference call regarding scheduling the legal proceedings.

The counties’ best shot at stopping bond issuance may be on May 29, when the Washington, D.C., court hears their request for a preliminary injunction to temporarily block sale of the bonds.

The U.S. Department of Transportation’s December decision to authorize sale of the bonds was “clearly unlawful” and sets up a strong case for a preliminary injunction, according to Martin County attorney Stephen Ryan.

“These are pure matters of law that we’re confident the judge can evaluate before bonds are sold,” Ryan said Wednesday.

If the court denies the injunction, Indian River and Martin counties could appeal and seek a stay in a higher court an option also open to All Aboard Florida and DOT should the court rule against them.

The counties also could pursue other legal avenues, such as their allegations that DOT violated the National Environmental Policy Act.

There’s still work ahead for All Aboard Florida and the Florida Development Finance Corp., even if the bonds are approved.

There are “many other subsequent steps that need to happen before the bonds are actually sold” including issuing the bonds, marketing the bonds, selling the bonds and closing on the bonds, and this work must be complete before a July 1 deadline mandated by DOT, All Aboard Florida attorney Cynthia Taub said during the April 28 conference call.

“There’s no certainty ... as to how the market would work because that isn’t really developed yet,” Eugene Stearns, another All Aboard Florida attorney, said.

All Aboard Florida has been in discussions with “top-tier financial institutions” to act as its lead underwriter, according to its Sept. 24 bond finance application to the state agency, but details have not been made public.

The railroad needs the money to purchase equipment and fund infrastructure improvements necessary to run 32 trains a day between Miami and Orlando.

Bond proceeds would be spent all along the 235-mile Florida East Coast Railway corridor, except on the Treasure Coast, where many residents have voiced opposition to the project. Using the funds only in counties where there has “been clear and consistent support” for the project allowed the company to say, in its bond application, that it was “not aware of any reason why any local government would not want (FDFC) to issue bonds.”

If All Aboard Florida is successful in borrowing the $1.75 billion, a portion would be used to repay investors who last summer bought $405 million in bonds, at 12 percent interest, for initial funding for the project.

All Aboard Florida already has begun construction between Miami and West Palm Beach, but none of that $405 million has been used, the company has said.

All Aboard declined to comment.

A $1.6 billion federal loan through the Federal Railroad Administration was All Aboard Florida’s first financing choice.

But when the loan became a rallying point for opponents who criticized the private company for seeking public money, All Aboard Florida switched direction.

The loan is still on the table, but could be replaced or substantially reduced if private activity bonds are approved and sold, according to Lynn Martenstein, All Aboard Florida spokeswoman.