The Florida Development Finance Corp. board asked few questions Wednesday before unanimously approving a bond resolution and agreeing to be the conduit issuer for All Aboard Florida’s $1.75 billion sale of private activity bonds.
The decision was made after a three-and-a-half-hour public hearing during which supporters of the privately owned Brightline-branded passenger train project urged the panel to approve the tax-exempt PAB deal. People from the Orlando area and business owners said the trains will help provide relief from gridlock they face on some of Florida’s roads.
Others spoke against it, including state and federal elected officials who advised the board to postpone action because of questions at the federal level into the U.S. Department of Transportation’s “theory and methodology” for approving the federal PAB allocation to the company, as well as an ongoing high-speed rail study at the state level.
Attorneys for Indian River, Martin County and Citizens Against Rail Expansion in Florida also urged the FDFC board members to delay their decision in part because of their pending federal lawsuit challenging the approval of the PABs and the environmental studies that led to federal approval of the project.
“We appreciate the FDFC board’s continued support in the private activity bond process and the members’ recognition of the significant economic impacts Brightline will have on the state,” Brightline President Patrick Goddard said in a statement after the meeting. “This is another important step forward for our Phase 2 extension to Orlando, and we look forward to executing this transformative vision of privately funded intercity passenger rail.”
J.W. Howard, an executive director with underwriter Morgan Stanley & Co., said the deal will be marketed between now and the end of the year, and sold when market conditions are appropriate.
Howard said like the $600 million of bonds AAF sold late last year, some of terms of this year’s deal are expected to be the same though the final structure will be determined after talks with potential investors, who are expected to include participants in the 2017 deal.
The 2017 bonds included an optional call that allowed them to be refunded in order to provide a consolidated collateral package for the debt to be sold later this year to qualified institutional investors.
Some $921.7 million of PAB proceeds will be used to build portions of the 169 miles between West Palm Beach and Orlando. Some $630 million, which includes a 5% early call premium, will refund last year’s bonds, which were sold to finance work on the 66.5-mile first phase between Miami and West Palm Beach.
During Wednesday’s hearing some speakers said the tax-exempt status of the PABs could be in question as a result of the ongoing federal review and litigation. An AAF representative said investors will take the risk if the bonds are determined to be taxable.
CARE FL Chairman Brent Hanlon said the FDFC’s vote was expected and predictable, a reference to the board’s bond approval last year after a long public hearing.
“The board once again acted as a rubber stamp for the All Aboard Florida/Brightline project, placing no conditions on the bond approval, despite repeated urging from both elected officials and representatives from affected counties to carefully consider numerous economic, safety and legal issues related to these bonds,” Hanlon said.
“As the state’s authorized conduit issuer of these bonds, the FDFC has an obligation to take a balanced look at all of the facts, not just treat AAF as its favored client,” he added.
Brightline officials said all material permits are in hand for work to begin later this year on the West Palm Beach to Orlando segment, which is expected to be in operation in 2021. The company also has
