For All Aboard Florida, Florida Development Finance Corp. violates regulations
Posted on July 2, 2015
The Florida Development Finance Corp. violated its own rules in an apparent rush to help All Aboard Florida obtain $1.75 billion in tax-exempt bonds, according to records obtained by Treasure Coast Newspapers.
The finance corporation, a quasi-governmental state agency, in August gave preliminary approval for the bonds although All Aboard Florida hadn’t submitted its application, according to finance corporation records.
All Aboard Florida finally submitted its bond application and fees Sept. 24, more than a month after staff said it planned to issue the bonds and just a day before a U.S. Department of Transportation council met in Washington, D.C., for a briefing on the company’s bond request.
Officials of both the Florida Development Finance Corp. and All Aboard Florida declined to comment.
All Aboard Florida needed approval from the Department of Transportation, which it received in December, before it could proceed with the bond process.
Moreover, the finance corporation’s specified deadlines may hold continued challenges for All Aboard Florida.
Before the railroad proceeds with bond sales it needs the go-ahead from the Florida Division of Bond Finance, according to finance corporation’s records. But the division has not specified when it would make its determination, according to Ben Watkins, director.
That state division plays a small role when it comes to issuing the tax-exempt bonds All Aboard Florida wants to sell, Watkins said.
For All Aboard Florida, the Division of Bond Finance must review and approve the proceedings of an April 20 public hearing, held by the finance corporation to ensure federal tax requirements were met.
The division hasn’t yet reviewed the April 20 meeting transcript, according to Watkins.
The finance corporation has canceled May 28 and June 10 bond-validation hearings and has not scheduled a new time to meet and rule on the private-activity bonds.
All Aboard Florida has said it would use the tax-exempt financing for construction along most of its $3 billion Miami-to-Orlando passenger-rail service, but not on the Treasure Coast.
By late 2017, All Aboard Florida plans to have completed all construction and begin running 16 daily round trips through the Treasure Coast.
The company stands to receive the second-largest private-activity bond award ever, behind only the $2 billion approved for the Interstate 4 project in Orlando, according to the Department of Transportation.
Questions about adherence to regulations — particularly the setup of its board — have plagued the finance Corp. for over six months and continue to be a point of contention for local governments which oppose the passenger-rail project.
The agency was functioning with an invalid board — and had been since 2008 — in August, when it issued preliminary approval to All Aboard Florida’s bond issue, according to federal tax records.
Enterprise Florida in February confirmed that members of the finance corporation had not been confirmed by the governor as required.
State law requires that the governor nominate and the Senate confirm board members; nominees must come to the governor from Enterprise Florida.
The Corp. should have five board members — though it can operate with three — with specific professional qualifications, all serving four-year terms, according to the state.
The governor in March appointed three new members, allowing the finance corporation to resume operations, though his nominations only included one name — Kevin Hale — from the list provided by Enterprise Florida.
Hale did not meet the professional qualifications criteria required by state statute.
On June 20, the governor appointed a fourth member.
Ryan Tennyson, a banker, meets the required professional qualifications and brings the corporation into compliance on that matter.
Still, only half the board was on a list suggested by Florida’s economic-development agency, Enterprise Florida.
Issues including the board makeup, members’ failure to file financial-disclosure statements and apparent conflicts of interest have been the subject of strongly-worded public letters from government officials on the Treasure Coast and could form the basis for at least three Treasure Coast lawsuits.
Disputing the legality of the finance Corp. is one of several strategies Treasure Coast governments have put in play in their legal battle to stop the rail project they say would endanger the environment, public safety and the local quality of life.