After hearing dozens of speakers for and against the approval of $2.7 billion in private activity bonds for Brightline, the Florida Development Finance Corp. postponed making a decision about the matter.
The FDFC, which scheduled the meeting from 2:30 p.m. to 4:30 p.m. on Wednesday despite intense interest in the privately owned passenger train project, determined it could not vote on the bond resolution after the advertised ending time of the meeting.
A second meeting will be scheduled to hear nearly 30 remaining speakers on the PABs requested by Brightline, which will rebrand as Virgin Trains USA this year.
During the two-hour meeting Wednesday most speakers opposed approval of the bonds, while some of them urged the board to allow the financing so that Brightline can offer another way for travelers to move across Florida.
Orange County Mayor Jerry Demings said central Florida and Orlando — home of major theme parks including Walt Disney World and Universal Studios — is also home to 1.4 million residents and 440,000 workers who depend on various modes of transportation.
“What I can tell you is that we’re a growing community,” Demings said. “Because of that tremendous growth we need alternative forms of transportation.”
Demings said the county will work across jurisdictional lines to ensure that growth occurs in responsible ways, and that includes the support of passenger rail in his region and across the state.
Peter Seed, a retired public finance attorney from Vero Beach in Indian River County, said that the FDFC had failed to conduct due diligence on the proposed bond issuance.
Seed said he believes it is likely that Indian River County will prevail in an appeal the county has filed in a federal lawsuit challenging the private active bond allocation by the U.S. Department of Transportation. The county lost the case in December when Federal Judge Christopher Cooper granted motions for summary judgment sought by the USDOT and Brightline.
That ruling was based in part on a determination that Brightline qualified for the PABs under Title 23 of the Federal Highway Administration as a surface transportation project. Seed said his analysis of that determination has “no merit.”
Michelle Martinez, a district director for U.S. Rep. Darren Soto, D-Fla., said that Soto remains “bullish” on Brightline. She urged the FDFC to assist the project sponsors with the financing to help make it successful. She also said that in approving the PABs there will be no risk to taxpayers.
A number of speakers told the board that since Brightline’s operations began last year between Miami and West Palm Beach, 15 people have died in accidents or suicide-by-train. Some deaths occurred at crossings and others at unprotected areas along the route.
Dirk Van Doren, a resident of Hobe Sound and a junk bond analyst, said Brightline’s financials are a “huge negative.” He said the train company’s debt to EBITDA — earnings before interest, taxes, depreciation and amortization — is 5 times, an amount that pushes some companies into bankruptcy.
The company is currently operating trains on a relatively short West Palm Beach-Miami segment, which offers little insight one way or the other into passenger demand for its planned long-distance Miami-Orlando route.
Rochelle Lessner, a resident of Hollywood, said there are public safety issues that need to be addressed. Lessner showed a 19-second home video of what she said was an 80-mile-per-hour Brightline train zooming through three at-grade crossings. In the video of the train track, which is a small roadway away from Lessner’s 9th-story condominium, the arm that prevents vehicles from crossing when a train goes by remained in the upright position.
The question about whether the FDFC board could legally vote on the bonds resolution was also raised. The board currently consists of three members because two positions are vacant.
Indian River County Commissioner Peter O’Bryan pointed out that the agenda showed that the terms of two of the three members at the meeting had expired in May 2018. He questioned if a quorum existed to vote.
The FDFC’s board of directors are appointed by the governor and confirmed by the Senate. Board members whose terms expire can continue to serve until reappointed or a new appointment is made, a Senate spokesperson told The Bond Buyer Thursday.
Indian River County Attorney Dylan Reingold told the board that as of Wednesday morning Brightline still hadn’t received a new allocation for $950 million of PABs, which are part of the $2.7 billion bond issue. He also questioned the train’s ridership projections and project costs.
Joe Stanton, the FDFC’s bond counsel, said only two hours were set aside for Wednesday’s the meeting “due two limitations” of board members’ schedules. He advised the board that the meeting time couldn’t be extended to hear all public speakers and vote on the bond resolution because the meeting was advertised to end at 4:30 p.m.
