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Dispute Over Florida Passenger Rail Project Gets Airing in Congress

A Brightline train approaches a railroad crossing, Thursday, Jan. 18, 2018, in Fort Lauderdale, Fla.

A Brightline train approaches a railroad crossing, Thursday, Jan. 18, 2018, in Fort Lauderdale, Fla. AP Photo/Wilfredo Lee

 

Connecting state and local government leaders

The rail controversy has lawmakers raising questions about guidelines for tax-exempt private activity bonds.

A privately-run passenger rail project in Florida drew scrutiny on Capitol Hill on Thursday, with lawmakers pressing a U.S. Department of Transportation official and a railroad executive on the project's use of tax-exempt bonds and other issues.

Reps. Brian Mast and Bill Posey, Florida Republicans who represent districts in the path of a proposed extension of the rail line, delivered much of the grilling during a hearing of a House Oversight and Government Reform subcommittee. Mast requested the hearing.

"I've heard a lot of talk about overwhelming support for the project, man, I sure as hell haven't seen that," said Posey. He added that many of his constituents were nervous about the railway. "Especially those residents whose homes back right up to train tracks."

Patrick Goddard, president and chief operating officer of Brightline Trains, and Grover Burthey, deputy assistant secretary for policy at DOT, received some of the most pointed questions. 

The Brightline project, situated on Florida's east coast, is currently tangled in a lawsuit in federal court—the latest in a series of legal battles over it.

Service on the line began between Fort Lauderdale and West Palm Beach earlier this year and it is expected to extend soon further south to Miami. The current dispute over the project centers on a planned expansion north, which would link West Palm Beach and Orlando.

Two counties, an emergency services district and a citizen group filed the lawsuit in February against the U.S. Department of Transportation and the Federal Railroad Administration. Among other things, the suit calls into question the federal government's allowance of roughly $1.1 billion of tax-exempt private activity bonds for the project.

Public officials and residents in communities along the pending rail corridor highlight safety risks and costs they say their local governments will have to bear due to the train line. These issues are raised in the lawsuit as well, along with environmental concerns.

Much of the discussion before the House subcommittee mirrored the court fight.

The counties behind the lawsuit include Martin County and Indian River County, and they're joined by Indian River's emergency services district and the group Citizens Against Rail Expansion in Florida.

Representatives from the counties and the advocacy group testified at Thursday's hearing.

"It almost feels like I'm back in my old boardroom in Fairfax County," Rep. Gerry Connolly, a Virginia Democrat and the subcommittee's ranking member, said referring to his past position as a county board of supervisors chairman.

"This hearing appears to focus on a local dispute," he said.

But Connolly also acknowledged the role of Congress in overseeing projects that benefit from federal funding or financing mechanisms.

Subcommittee Chairman Mark Meadows, a North Carolina Republican, took part in the tough question, zeroing in on issues surrounding the private activity bonds for the project. "At this particular point, I have a real concern that the intent of Congress is being overridden with the private activity bond measure here," he said.

Private activity bonds, or PABs as they're commonly called, provide a way for state and local governments to issue bonds that receive favorable tax treatment on behalf of private entities and nonprofits. But the overall amount of the bonds issued is limited by certain caps.

Federal law allows for PABs to be issued for 15 categories of projects. One is high-speed intercity rail, where trains travel over 150 mph. Brightline trains aren't expected to travel this fast.

Meadows, Mast and Posey voiced skepticism over DOT allowing for the issuance of bonds for Brightline under a category that covers "qualified highway or surface freight transfer" facilities. This is an issue at the heart of the lawsuit over the project also.

Burthey, the DOT official, explained during his testimony that the agency believes the project does qualify for bonds under that category because, part of the definition for it, says it covers "any surface transportation project" that receives so-called "Title 23" funding, under Section 130 of the U.S Code.

But, in the case of Brightline, the Title 23 dollars were spent by the Florida Department of Transportation to upgrade highway train track crossings along the rail corridor, rather than the railroad itself.

"If Congress had intended to provide private activity bonds for a passenger train traveling 80 to 110 miles per hour, as Brightline does," said Mast, "they would have just said so."

Meadows at one point asked Goddard why Brightline didn't seek private financing.

"We certainly could," Goddard replied.

"Well, why don't you," the congressman shot back. "It takes a problem off of my desk."

"I'd love to alleviate you of this burden," Goddard said. "However, the reason why we are interested in a financial instrument such as PABs is it's a cheaper cost of money."

In terms of safety, Brightline rail service has been involved in at least six deaths as of April 8, according to local news reports. But Goddard said Thursday that every person killed on the rail line had been using drugs, decided to commit suicide, or bypassed safety equipment.

Another concern that came up during the hearing is that local governments would be required to pay for maintenance of upgraded rail crossing infrastructure along the line indefinitely.

Dylan Reingold, county attorney for Indian River County, estimated those costs would total $8.2 million through 2030.

"Local governments like ours have absolutely no control over the cost of the maintenance," he said.

"One, we are concerned about safety," Reingold added, "and, two, we do not want the bills for these safety maintenance costs to come from the pockets of our constituents."

Bill Lucia is a Senior Reporter for Government Executive's Route Fifty and is based in Washington, D.C.

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