All Aboard, federal officials move to end lawsuit over rail bonds

The U.S. Department of Transportation has withdrawn its 2014 approval granting All Aboard Florida’s Brightline permission to sell up to $1.75 billion in tax-exempt bonds to pay for the rail project, a move federal officials now argue makes a lawsuit filed by opponents of the train service moot.

In court documents filed Monday, the U.S. Department of Transportation said it withdrew its original approval this month, and instead granted All Aboard provisional permission to move forward with a smaller bond sale.

The original sale would have paid for the second phase of Brightline’s project, connecting West Palm Beach to Orlando. The new sale will be limited to the rail venture’s first phase between Miami and West Palm Beach.

Martin and Indian River counties filed suit last year over the original bond sale, arguing that federal officials violated the National Environmental Policy Act when they approved the tax-exempt bonds before an environmental study of the rail project’s second phase was complete.

The U.S. Department of Transportation on Monday asked a federal judge to dismiss the case, saying the financing shift has resolved the dispute since the second phase of the project will no longer be included in the bond sale.

Court documents show All Aboard filed an application with the U.S. Department of Transportation in September requesting permission to move forward with the smaller, $600 million bond sale.

All Aboard’s president Michael Reininger pointed to improving economic conditions, adding that a smaller “targeted” sale would be easier to market.

“Since December 2015, we have been monitoring the status of the markets and evaluating potential options for an offering of (tax-exempt bonds),” Reininger wrote in Sept. 30 letter to federal transportation officials. “We are pleased to report that market conditions relative to bond financing began to improve earlier this year and have continued to improve, to the point that we now believe we can conclude an initial offering of (tax-exempt bonds) on favorable terms in the near future.”

In the letter, Reininger said the company planned to consider a second, $1.15 billion bond sale to help pay for rail work between West Palm Beach and Orlando.

“Within the next several weeks, we will separately discuss a new request for an allocation of up to $1.15 billion in (private activity bond) authority for Phase II,” Reininger wrote to federal transportation officials.

In a statement released Tuesday, a citizens group opposing the project said the financing shift was “visible proof” that efforts to block the rail project are working.

“They have no obvious way to fund Phase 2,” Citizens Against Rail Expansion in Florida said. “…They aim to repackage their offer, but pouring bad wine into new bottles doesn’t make it taste any better. It remains to be seen whether the investor community will back even this more limited financing activity. ”

Construction on the first phase of Brightline’s service, which includes three stations and track work between Miami and West Palm Beach, is 70 percent complete, company officials have said.

Brightline’s first train is expected to arrive in South Florida by the end of the year.