The Palm Beach Post – Federal lawsuit calls All Aboard Florida funding “plainly unlawful”

Posted on April 2, 2015

Indian River County filed a federal lawsuit Tuesday challenging the approval of $1.75 billion in tax exempt bonds for All Aboard Florida, calling the award “plainly unlawful.”


The 44-page complaint naming the U.S. Under Secretary of Transportation as a defendant is the first seen from opponents of the express passenger rail project, which plans to run 32 trains per day on the Florida East Coast Railway tracks.


All Aboard Florida was provisionally granted the $1.75 billion in private activity bonds by the U.S. Department of Transportation in December. The funding still requires approval from the Florida Development Finance Corp., which would act as the conduit issuer of the bonds.


The bonds are called a “linchpin” for completing the Miami to Orlando project in a letter from All Aboard Florida President and Chief Development Officer Michael Reininger that accompanied the federal bond application.


But Tuesday’s lawsuit, which was filed in U.S. District Court for the District of Columbia, said the department of transportation’s approval violated federal environmental laws that require a final environmental impact statement to be completed first.


A draft environmental impact statement was released in September.


“Accordingly, the project approval should be declared not in accordance with law, arbitrary, capricious, and an abuse of discretion, and should be vacated and annulled as being in violation of the National Environmental Policy Act,” the lawsuit states.


The U.S. Department of Transportation said it does not comment on active litigation. Under its provisional approval, the bonds must be issued by July 1 and none of the bond proceeds can be spent until 45 days after a final environmental impact statement is released.


Private activity bonds are marketed to investors at no risk to taxpayers. The notes have a low interest rate, but are attractive to investors because they don’t pay taxes on the interest earned.All Aboard Florida hopes to use the bonds to supplement or replace a Federal Railroad Administration loan that is still pending approval. The Coral Gables-based company also wants to use the bond proceeds to pay off $405 million in high-risk bonds it sold last year to begin construction on the line between Miami and West Palm Beach.


Treasure Coast residents are concerned All Aboard Florida will increase noise, traffic and safety hazards as trains travel up to 110 mph through their communities and historic downtowns.


The federal complaint says the plan will harm conservation areas such as the Vero Man archaeological dig, which is excavating human remains dated to 14,000 years ago, the Old Town Sebastian Historic District and Florida scrub-jay habitat. Decreased property values will also result from the increase in trains, the suit claims.


“At the same time, the purported benefits of the project will not accrue to the county, which is not slated for any train stops,” the complaint notes.


The legal action was expected following a unanimous March 17 vote by Indian River County commissioners to pursue a lawsuit in an effort to stop the project.


“Indian River County’s federal lawsuit is an important step in this process,” said Bill Ward, chairman of the All Aboard Florida opposition group Citizens Against Rail Expansion, CARE. “Their legal theory is to be lauded because it is designed to address a very critical issue — protecting the community’s right to be heard.”


CARE, which includes communities in northern Palm Beach County and the Treasure Coast, is weighing its own legal options, Ward said.


“Momentum is shifting and we will continue to do what we can to keep the All Aboard Florida project from taking over our communities,” Ward said.


Indian River and Martin counties approved a combined $4.1 million in February to fight All Aboard Florida.


In March, Martin County commissioners hired the same Washington, D.C.-based law firm that represents Citizens Against Rail Expansion.


Martin County Attorney Michael D. Durham said Wednesday that his office is still evaluating its legal options.

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