Scott Powers
U.S. Sen. Marco Rubio on Tuesday joined his congressional colleagues U.S. Republican Reps. Brian Mast and Bill Posey in questioning whether All Aboard Florida should have received $1.75 billion in federally authorized, tax-exempt private activity bonds to build its private, higher-speed railroad from South Florida to Orlando.
Mast, of Palm City, and Posey, of Rockledge, led a congressional challenge of the appropriateness of the bonds during a hearing last Thursday of the U.S. House Subcommittee on Government Operations.
In a letter Tuesday to U.S. Transportation Secretary Elaine Chao, Rubio raised the same question Mast and Posey posed, plus a couple more.
“AAF’s project has raised questions regarding whether federal financing was appropriately used. I urge the Department of Transportation to provide clarity,” Rubio wrote.
At issue is the interpretation used by the U.S. Department of Transportation to determine whether the privately owned and operated Brightline railroad being planned from West Palm Beach to Orlando would qualify under federal laws that restrict private activity bonds’ usage.
The federal tax-exemption on bonds is explicitly available in the law to either passenger trains that can go at least 150 mph, or to surface transportation projects that have previously received federal transportation funding.
The Brightline train, as envisioned, could go as fast as 110 mph between West Palm and Cocoa, and could top out at about 120 between Cocoa and Orlando. The current trek from West Palm to Fort Lauderdale has a maximum speed of 79 mph. The next leg, to Miami, opening later this year, also has a maximum speed of 79 mph.
At the hearing last week, a U.S. DoT official maintained that Brightline qualified for $1.75 billion of tax-exempt bonds as a surface transportation project that had previously received funding, up to $9 million for upgraded road crossings. Posey, Mast and other members of Congress at that hearing criticized that interpretation, saying they understood “surface transportation” to be defined as roads and highways, not railroads. They also argued that the road crossings that had received the federal funding were not owned by Brightline and thus shouldn’t have been considered a part of the Brightline project.
Brightline President Patrick Goddard testified that his company followed all the U.S. DoT rules, and that the approval of private activity bonds has been successfully defended in court, more than once.
Though Rubio appeared unconvinced in his letter Tuesday.
“It is not clear that Brightline’s proposal should have qualified for these funds,” he wrote.
He wanted to know three things:
– “Is DOT’s interpretation that any surface transportation project that utilizes Title 23 funds, no matter the dollar amount, would qualify for funding through private activity bonds?”
– Is there precedent for other rail projects that did not meet the 150 mph threshold receiving funding?
– Has DOT previously denied rail projects based on the 150 mph threshold not being met?
