Congressmen blast Brightline financing strategy in D.C. hearing, question safety record

Congressmen on Thursday blasted Brightline for possibly circumventing federal law to obtain $1.75 billion of tax-free financing. Moreover, they suggested in a Capitol Hill hearing, financing for the Miami-to-Orlando passenger railroad could be in jeopardy.

Brightline President Patrick Goddard, meanwhile, defended the railroad’s use of private-activity bonds. Railroad opponents who continue to question the financing, he testified, are “narrow-minded,” selfish and determined to stand in the way of progress.

The hearing of the House Oversight Subcommittee on Government Operations was held at the urging of Rep. Brian Mast, R-Palm City, a vocal opponent of the railroad.

The bond financing is critical for Brightline's Phase 2, which would extend the railroad from West Palm Beach through the Treasure and Space coasts and on to Orlando International Airport.

More: Brightline fatalities in Boynton Beach polarize, worry local communities

The subcommittee, during the two-hour hearing, criticized Brightline for trying to get financing under a statute intended for certain highway projects and for high-speed passenger rail, or trains traveling faster than 150 mph. Brightline will travel up to 110 mph.

Rep. Mark Meadows, R-N.C., also disputed Goddard's claim that taxpayers would not subsidize the private-activity bonds, one of two financing mechanisms Brightline has considered for the project.

"If that’s the case, and the taxpayer has no exposure … why don’t you get private funding for this," Meadows asked.

“We certainly could,” Goddard responded.

More: Martin, Indian River counties file new lawsuit in attempt to block Brightline expansion

“Why don’t you?” Meadows shot back, adding that “most of this hearing would go away if you did that. So why don’t you go ahead and get private funding?"

Because private-activity bonds are less expensive, Goddard replied.

“Were interested in PABs because it’s cheaper money,” he said.

“So there is a benefit to your company that comes at the expense of the American taxpayer, is there not?” Meadows said, with visible frustration, a little later in the heated exchange, during which he continued to press Goddard to acknowledge that private-activity bonds provided the company a subsidy.

More: Brightline's $600 million of bonds approved by Florida Development Finance Corp.

Brightline’s effect on local-government finances also needs to be examined more closely, members of the subcommittee said.

Of particular concern was Brightline’s requirement that local governments pay for ongoing maintenance of track crossings. Indian River County Attorney Dylan Reingold told the committee that by 2030 this mandate would cost local taxpayers $8.2 million.

The committee pressed Goddard for more information and asked him to return with additional details within 30 days.

“You’re asking them to maintain something they don’t get a benefit from,” Meadows explained to Goddard. “Can you see why they might take issue with that?”

Goddard hesitated before responding: “I can see so, potentially."

The Brightline president also was peppered with questions about the safety of its trains, which have struck and killed six people, most recently on April 9 in Delray Beach.

More: Report: Pedestrians hit, killed by Brightline trains had drugs in their systems

More: Brightline train strikes, kills man Sunday in Delray Beach

Goddard said safety is Brightline’s top priority, and denounced opponents who have criticized Brightline’s safety record.

“They choose to ignore information to support their anti-progress narrative,” Goddard said.

Brightline is not at fault for the fatalities; rather, the responsibility falls on the six people killed, all of whom either committed suicide or were under the influence of drugs, Goddard said.

More: Do Brightline, other high-speed trains attract more people who want to commit suicide?

More: Brightline: Rep. Brian Mast addresses train safety in hearing on positive train control

Brightline announced in late December that the U.S. DOT had approved the allocation of $1.15 billion of tax-free bonds for Phase 2.

The Florida Development Finance Corp., the state agency that would issue the bonds, needed the federal approval to proceed.

Brightline already had received approval for a first round of bonds — $600 million for Phase 1, between Miami and West Palm Beach — in October.

It was the second time the state agency issued bonds to Brightline.

In 2015, the finance corporation issued Brightline $1.75 billion of private-activity bonds, but the company failed to sell them, and in 2016 canceled that request.

Instead, Brightline said, it would seek the tax-exempt financing in two phases. It immediately requested the $600 million for Phase 1 and said it later would separately request $1.15 billion for Phase 2.

Brightline began limited West Palm Beach-to-Fort Lauderdale service Jan. 13. Service to Miami is to begin within weeks, according to Brightline

Phase 2 — the extension of full service through Martin, St. Lucie, Indian River and Brevard counties and on to Orlando — still is at least two years away, officials have said.