All Aboard Florida receives 1-year extension to sell $1.75 billion of tax-free bonds
Posted on January 7, 2016
By Lisa Broadt
All Aboard Florida has another year to sell $1.75 billion of tax-exempt bonds, the railroad confirmed Thursday.
The extension — to Jan. 1, 2017 — is the second for All Aboard Florida, the company behind Brightline, the Miami-to-Orlando rail service that is to begin operations in 2017.
The U.S. Department of Transportation — the government agency that oversees private activity bonds — previously extended the $3 billion railroad’s original July 1 deadline by six months.
A “tough bond market” and investors who “lack the appetite” for a large issuance of unrated, or high-risk, bonds, are among the challenges All Aboard Florida could face in the coming year, according to local experts.
All Aboard Florida on Thursday said it will use the time to work out its financial plan.
“The extension provides us with necessary flexibility to pursue the most appropriate structure for the long-term financing of our business,” said Melissa Shuffield, All Aboard Florida spokeswoman. “We are under construction at each of our stations and remain committed to beginning Brightline service in 2017.”
When All Aboard Florida received approval in August to sell the bonds, the company said it could complete the transaction “within days.” But in mid-November it delayed a planned auction of its high-risk bonds, and in December confirmed it was seeking a deadline extension.
The company has not announced a new bond sales date.
All Aboard Florida over the last two years has come under fire from Martin and Indian River counties and Treasure Coast activists, who say the bonds were improperly authorized and have taken legal action to stop the project.
Brent Hanlon, treasurer of All Aboard Florida opposition group CARE FL, on Thursday hailed the delay as proof the project is doomed.
“AAF has twice had to ask for an extension from the U.S. DOT. The financial press indicates AAF is having a very difficult time selling tax-exempt and taxpayer-subsidized bonds to the investment community,” Hanlon said in an email. “This need for yet another extension reflects the project’s perceived weakness where it counts most, in the investment community. And U.S. DOT remains AAF’s benefactor.”
Meanwhile, All Aboard Florida’s request for a $1.6 billion Federal Railroad Administration loan remains on hold.
The loan, All Aboard Florida’s original financing plan, was relegated to second-line funding in August 2014 when the company applied for the bonds.
Construction of the passenger railroad already has begun between Miami and West Palm Beach, and service there is to begin in early 2017, with full service beginning in late 2017.