Rich Campbell: All Aboard Florida continues to use system to its advantage

Posted on November 18, 2016

All Aboard Florida is like a shape-shifting creature in a science-fiction movie: Just when the authorities seem to have the beast cornered, it morphs into another form and escapes.

The rail company, which plans to run 16 daily, round-trip passenger trains between Miami and Orlando, appears to have orchestrated a Houdini-like escape from a failed financial strategy.

This latest development is both a good news/bad news scenario for Treasure Coast residents opposed to the project. However, rail opponents have one overarching factor in their favor: It doesn't matter what type of bond-issuance plan All Aboard Florida uses, the rail company still needs to sell the bonds.

And that has proved to be an exceedingly difficult task.

All Aboard Florida has been locked in a legal fight with Indian River and Martin counties over its authority to issue $1.75 billion in tax-exempt bonds to help fund the project. Those bonds were initially approved by the U.S. Department of Transportation, then rubber stamped by the Florida Development Finance Corp., the state agency that issued the bonds.

Seventeen months ago, U.S. District Judge Christopher Cooper ruled the counties lacked standing to challenge the issuance of the bonds. But Cooper also allowed the counties to proceed with discovery and review thousands of pages of documents that might bolster their case.

Armed with new information, the plaintiffs successfully persuaded Cooper to change his position on "standing" — a ruling the judge issued in August. Cooper also painted a bleak picture of All Aboard Florida's ability to complete the project without government-backed bonds

Officials in Indian River and Martin counties felt so strongly about their legal position, they filed a summary motion to dismiss the case.

But now, on the eve of what may well be a major legal victory for rail opponents, All Aboard Florida is pursuing a different tack.

The shape-shifter has morphed. Again.

"In order to try and avoid that final judgment, All Aboard Florida is blowing up its finance plan," said Steve Ryan, the attorney who represents Martin County and Citizens Against Rail Expansion-Florida, in the fight against the rail project.

Ryan joined Martin County Administrator Taryn Kryzda, Martin County Attorney Michael Durham and other county staff for a meeting Wednesday with the Editorial Board of Treasure Coast Newspapers.

The rail company's new strategy: Abandon its request for the $1.75 billion of tax-exempt bonds and instead seek separate allocations of $600 million for Phase I (Miami to West Palm Beach) and $1.15 billion for Phase II (West Palm Beach to Orlando).

Also on Wednesday, All Aboard Florida officials met with the U.S. Department of Transportation's credit council, presumably to discuss the company's new bond request.

No word yet on the council's decision.

"The council will tell us when it's ready (to tell us)," Ryan said.

Treasure Coast officials and taxpayers should have been afforded the opportunity to voice their objections to All Aboard Florida's new bond request. However, it appears this decision has been (or will be) made behind closed doors — without input from the public.

Troubling? Yes.

Surprising? No.

The system has been rigged against rail opponents from the beginning of this project.

The new finance strategy may improve All Aboard Florida's ability to sell the bonds. But this remains a high hill to climb.

"We know that when All Aboard Florida got the bonds in 2015, they failed four times to sell them," Ryan said. "They've been able to sell the bonds, but the dogs are not eating the dog food. That is, the bond-buying community has looked at the project, but didn't want to make that investment."

Indian River and Martin counties have waged a spirited battle against All Aboard Florida. However, on the eve of what may be a major legal victory for the counties, their effort could be rendered moot by the rail company's new finance strategy.

The good news for rail opponents: At some point, no matter how many concessions All Aboard Florida receives from the federal government, it still needs to sell the bonds.

Good luck with that.

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