Congressional Members Blast AAF/Brightline During Hearing on PABs

Posted on April 20, 2018

Thursday, April 19, 2018

 Contact: Alia Faraj-Johnson or Kristen McDonald

Congressional Members Blast AAF/Brightline During Hearing on PABs

~Congressmen Mast and Posey play important role on behalf of Floridians~

Washington, D.C. – Members of the House Oversight and Government Reform Subcommittee on Government Operations today grilled the U.S. Department of Transportation’s Deputy Assistant Secretary for Transportation Policy Grover Burthey and Patrick Goddard, President and COO of All Aboard Florida, regarding the use of Private Activity Bonds (PABs) for the All Aboard Florida project. The hearing, chaired by Congressman Mark Meadows (R-North Carolina), was attended by Congressman Brian Mast (R-Palm City) and Congressman Bill Posey (R-Rockledge).

Testimony was also heard from Dylan Reingold, Indian River County Attorney, Bob Crandall, CARE FL Steering Committee Member and former Chairman and CEO of American Airlines and Dan Wouters, Division Chief Martin County Fire Rescue. The Treasure Coast witnesses addressed a number of concerns, including the legality of the PAB allocation to All Aboard Florida, the unfunded mandate the project places on local communities and serious public safety concerns.

In his opening statement, AAF’s Goddard sought to dismiss the legitimate concerns of Martin County, Indian River County and CARE FL by referring to them as “a minority of narrow-minded residents of two counties on our corridor.” He also referred to them as a “small group of obstructionists.” Chairman Meadows quickly took issue with Goddard’s tone and description of the project’s opponents, advising him to keep personalities out of the conversation since it would not help his case.

The review of the PABs was made at the request of Congressman Brian Mast in a letter to Chairman Meadows.  In requesting the hearing, Congressman Mast stated, “Brightline is continuing their deceptive business practices, seeking public financing for this expansion by claiming that their passenger rail train is actually a ‘highway’ because they fail to qualify for public financing under the statutory definition of high-speed rail.”

During the two-hour hearing the Chairman and members asked a number of questions about how AAF qualified to receive PABs under the federal statute governing the program. AAF recently received two PAB allocations, $600,0000 for Phase I and $1.15 billion for Phase II.

In an exchange with DOT’s Burthey, Chairman Meadows challenged the agency’s interpretation that AAF qualifies as a highway for the purpose of receiving PABs. He noted it was not the intent of Congress for the statute to be applied so broadly and added that maybe it was time to change the law.

CARE FL Steering Committee Member and former Chairman and CEO of American Airlines Bob Crandall stated that, “In recent years, there have been several attempts by which the Obama Administration or individual members of congress have proposed to amend the statute to include passenger rail projects that do not meet the current high-speed definition. None of those proposals were ever enacted, but the fact that they were proposed is a clear admission that the authority does not exist.”

The use of taxpayer subsidies also became a topic of discussion during today’s hearing. Despite years of public comments by AAF, which has repeatedly stated that it is a privately funded rail project, today under oath, and after being pressed by Congressman Mast, AAF’s Goddard admitted, “There has been public funding granted to the corridor.”

Chairman Meadows questioned AAF’s Goddard and the company’s decision to pursue PABs rather than private funding. Chairman Meadows proclaimed that, “There is a benefit to your company that comes at the expense of the American taxpayer, is there not?” Goddard admitted that there is a deferral of taxes to investors, and added that the reason they were interested in a “financial instrument such as PABs is, it’s a cheaper cost of money, it’s a less expensive cost of money.”

The hearing also focused on the financial burden AAF is imposing on counties that will have to pay for the costs of maintaining the necessary safety improvements in perpetuity.

In his testimony, Indian River County Attorney Reingold stated that, “An initial calculation performed by Indian River County estimates that these long-term maintenance costs will be $8.2 million through 2030 for our community alone – a significant sum for our small county.”

Chairman Meadows then questioned why AAF expects the counties in which there is no stop to bear the burden of safety costs. He asked, “If you are going to do railroad crossings and you are going to ask them to maintain something that they don’t get a benefit from, do you not see a problem with that?”

Goddard responded by saying, “I can see how… potentially…”

Chief Dan Wouters, Division Chief Martin County Fire Rescue focused his testimony on public safety. He highlighted that Martin County has 27 at-grade road crossings, and that Indian River County has 31 at-grade crossings within the corridor.

He went on to express concerns that the significant increase in the number and speed of passenger and freight trains will impact public safety because it will increase delays for fire rescue calls. In addition, Chief Wouters also highlighted the fatality and injury track record along the rail corridor and stated, “If 32 high-speed passenger trains and 20 faster freight trains are added to these tracks, statistically these fatality and injury figures will increase.”

Also attending the congressional hearing were Senator Debbie Mayfield (R-Melbourne), Rep. Erin Grall (R-Vero Beach), Rep. MaryLynn Magar (R-Tequesta) and Brent Hanlon, Chairman of CARE FL.

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