By Kristina Webb TC Palm
All Aboard Florida announced in early October it is seeking a new form of financing and possibly scrapping its plans for a controversial $1.6 billion government loan.
The company hopes to receive approval from the federal government and raise $1.75 billion through Private Activity Bonds to pay for work on the high-speed passenger rail project. Money from the bonds would not be used for work on the Treasure Coast.
On Oct. 21, commissioners in Brevard and Miami-Dade counties gave the OK for issuance of the bonds, paving the way for the bonds’ federal approval.
So what are Private Activity Bonds?
What they do:
Provide low-cost financing to public-benefit infrastructure projects with private involvement. This includes ports, water and sewer projects and highway and freight transfer projects.
Aim to increase private sector investment in U.S. transportation infrastructure.
Significantly lower the cost of capital.
Requirement: There must be some public benefit from the project.
Amount for which All Aboard Florida applied: $1.75 billion
Total amount approved for all Private Activity Bonds: $15 billion limit set by law
Who approves the bonds: The U.S. Department of Transportation, pending the passing of a resolution by state or local lawmakers authorizing the issuance -- in this case, by the Florida Development Finance Corp. -- of a specific issue of obligations.
Who would sell the All Aboard Florida bonds: Florida Development Finance Corp.
Who can purchase the bonds: Institutional buyers
Would this be the largest approved allocation of Private Activity Bonds?: Yes. The next highest would be a project pending approval: the Purple Line project in Maryland, which has applied for an allocation of $1.3 billion in Private Activity Bonds.