A private corporation planning a 235-mile passenger rail system from Miami to Orlando has been given the green light by a state financing authority to fund the project through the sale of tax-exempt bonds.
All Aboard Florida sought and won approval Wednesday from the board of the Florida Development Finance Corporation (FDFC) to sell $1.75 billion in municipal bonds to finance its $2.5 billion project. The FDFC voted in favor of the application around 9 p.m. following an all-day hearing, and will act as a conduit bond issuer despite opposition from some local governments in the Treasure Coast and some acknowledgment that the unrated bonds carry heightened risk to the buyers.
All Aboard Florida has until Jan. 1 to issue the bonds, and still must clear some additional hurdles with the state. The company is also fighting a federal lawsuit by Martin and Indian River counties seeking to stop the bond issue. But, after the Federal Railway Administration published a final environmental study Tuesday, the FDFC vote was perhaps the last major bureaucratic step toward financing a project that has been touted by local, state and federal politicians as a major step forward for Florida’s mass transit.
As planned, the intercity rail project would run 32 trains each day to and from downtown Miami and a station at Orlando International Airport by mid-2017, attracting what the company estimates will be 5.4 million riders annually by 2020. Each train, currently being manufactured by Siemens, would be about 900 feet in length and run at speeds faster than 100 miles per hour. All Aboard Florida projects yearly revenues of $300 million from ticket sales, which executives say will be comparable in price to driving a car.
Proponents say the trains will take as many as 3 million cars off the road.
With the FDFC tasked with assisting for-profit companies and driving economic activity, All Aboard president Michael Reininger told board members that the project is creating thousands of jobs through the railway alone, and generating transit-oriented development at and around its stations in Miami, Fort Lauderdale and West Palm Beach. All Aboard Florida plans to invest about $700 million in equity into the project.
“No state or county entity will have any financial exposure as a result” of the bond issue, Reininger said.
In South Florida, where All Aboard Florida parent company Florida East Coast Industries is based, the project has enjoyed a positive reputation and the support of local governments, which are contributing more than $40 million to help add a Tri-Rail connection to a downtown Miami rail hub.
But in the Treasure Coast, where trains will run but not stop, concerns that All Aboard’s trains will block traffic and inundate neighborhoods with noise and potential hazardous material from increased freight traffic have generated significant opposition. Some critics felt the state is rubber-stamping the project. State Rep. Gayle Harrell, R-Stuart, urged the FDFC board to vote down the bonding request, noting that the company’s own documents acknowledge that there are a number of risks involved in issuing the municipal bonds, which would likely be unrated.
“There are 25 pages that state very specifically these are high-risk bonds,” she said. “Think carefully before you put the name of Florida, the good housekeeping seal of approval, on tax-exempt bonds that will fail.”
Harrell was just one of a slew of local, state and federal politicians to weigh in, and many spoke in favor of All Aboard Florida. Miami Congressman Carlos Curbelo appeared in a video presentation on behalf of the project, and U.S. Rep Alan Grayson called it “imperative.”