Brightline pushes to issue more tax-exempt bonds

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A Brightline test train passes the new West Palm Beach station.
JACKSONVILLE, Fla. – Attempting to strike while the iron is hot, Brightline this week has asked the Florida Development Finance Corp. to hold an emergency meeting Dec. 18, in Jacksonville to consider issuing another $1.15 billion for is second phase, the segment north of West Palm Beach to Orlando.

When the Florida Development Finance Corp. announced that it was issuing $600 million in All Aboard Florida tax-exempt private activity bonds, the Wall Street Journal reported that the issue attracted $2 billion of interest by investors eager to get in on the ground floor.

That financing was to help pay back higher interest, short-term loans used for constructing the soon-to-open West Palm Beach to Miami “Phase 1” segment.

Although proven demand may have had something to do with Florida’s authorized tax exempt bond issuer granting the request during the week before a major holiday, the main reason is that the attractiveness of private activity bond financing may change as a result of tax reform legislation currently being debated in Washington, D.C. The Wall Street Journal noted that the looming deadline helped drive unprecedented demand for the tax-exempt bonds.

Late Thursday, The Bond Buyer trade publication pointed out that there is faction in the House that believes corporations have abused use of private activity bonds, but Treasury Secretary Steven Mnuchin, “had proposed expanding the use of [private activity bonds] so they could be used along with public-private partnerships to finance infrastructure projects.”

The Palm Beach Post reports that Brightline is moving forward with the request to “preserve the optionality of utilizing this financing tool for the project.”

Attorneys for Martin and Indian River counties and the Citizens Against Rail Expansion group want the meeting delayed and its venue changed from Jacksonville to a location along the proposed route. In a letter to the Florida Development Finance Corp. published in part by the Post, the lawyers argue that they will not have enough time to analyze the 91-page packet that explains how Brightline will use the money and question why it is being held in Jacksonville instead of in Orlando, where the offices of the issuing body are located.

The counties north of West Palm Beach had spent $5.1 million of taxpayer funds through mid-2016 to fight Brightline, and legal expenditures have likely increased substantially since then.

The railroad has been running test trains between its already-completed Fort Lauderdale and West Palm Beach stations; it still expects to launch revenue service between those cities before the end of the year and begin serving its downtown Miami Central intermodal facility sometime in early 2018.

NEWSWIRETrains News Wire

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