AAF/Brightline November 2015 Update

[spuwho]

AAF/Brightline continues to move along in south Florida between WPB and Miami Central. 

But the route from Orlando to WPB is probably going to see some delays.

Per the Orlando Sun Sentinel:

http://www.sun-sentinel.com/news/fl-updates-mayocol-b112415-20151123-column.html

All Aboard Florida bonds: When the proposed Miami-to-Orlando rail service received state approval in August to issue $1.75 billion in tax-free bonds, I wondered who'd buy them, considering they were deemed "high risk" by the underwriter and would go to market unrated (junk bonds, in financial parlance). Nobody for now, it turns out.

The bond offering has been pulled after failing to attract enough investors, and it's unclear if and when All Aboard Florida will try again. It's also unclear what will change to make the bonds more palatable next go-round. Work continues on tracks in South Florida and new downtown stations in Fort Lauderdale, West Palm Beach and Miami, and the first leg is supposed to launch in early 2017. The second leg, from West Palm Beach to the Orlando airport, faces uncertainty, lawsuits and strong opposition from communities along the Treasure Coast.

Earlier this month, All Aboard Florida executives unveiled sketches of colorful new trains and dubbed the service "Brightline." Wary investors seem to be calling it "Bad bet."

Per the TC Palm:

http://www.tcpalm.com/news/shaping-our-future/all-aboard-florida/all-aboard-florida-faces-a-wary-bond-market-investors-who-just-arent-interested-experts-say-24b10b3c-352364281.html

All Aboard Florida is facing wary investors who lack the appetite, and the cash, to buy more than $1 billion in bonds, according to Rainford Knight, Florida Atlantic University finance professor.

"The All Aboard Florida deal would be the largest private-activity bond deal of its type," said Knight, who also is chief operating officer of Alexander Alternative Capital, a Miami hedge fund. "The demand is not there for a deal this size in the tax-exempt market."

All Aboard Florida ideally would sell its bonds when investor confidence is high, the monetary policy of the Federal Reserve is accommodating and interest rates are low — which, at the moment, is not the case, explained Ajay Samant, University of North Florida finance and accounting professor.

The market is unlikely to change in the next few weeks, months or year, according to Knight and Samant.

"With the overhang of the Fed raising rates, the default of Puerto Rico on its debt ... coupled with the general fear factor as a result of the terror events in Paris, it seems unlikely that a shift in market sentiment will occur," Knight said.

Moreover, All Aboard Florida's bonds may be perceived as an unusually risky investment, even in the field of bonds, according to Knight.

"There is no guarantee that the cash flow generated by the railroad will be enough to make the debt-service payments on these bonds," Knight said.

All Aboard Florida officials declined to comment for this article.

Earlier this year, a consultant for the Florida Development Finance Corp., the quasi-governmental board that issues the tax-exempt bonds, reached a similar conclusion.

All Aboard Florida "currently has no revenues or cash flows and has never constructed or managed a passenger railroad," the consultant said in financial documents released in early August. "There can be no guarantee that the company will achieve profitability."

However AAF is making headway with the marine community as a Coast Guard bridge test confirmed an announced plan.

The marine industry and the proposed All Aboard Florida passenger train are making peace over the New River bridge in downtown Fort Lauderdale.

A test by the Coast Guard has proved successful in trimming the time the railroad bridge needs to be closed, allowing both boats and trains to share the river — at least for now, leaders said.

Later, the marine industry would like to see an elevated bridge built over the river for the passenger trains to use instead, said Phil Purcell, executive director of the Marine Industries Association of South Florida.

"Guess what? I think we've worked it out," Purcell told a surprised audience at a boat show event attended by All Aboard Florida's president Michael Reininger.

"The test has gone incredibly well," Reininger added in an interview. "The test worked."

At issue is a 1970s bridge over the New River that is kept open for boats and closes when freight trains pass — up to 14 times per day. All Aboard Florida plans to use the tracks when it starts high-speed passenger service next year, requiring the bridge be closed 16 extra times per day.

New River railroad drawbridge
A water taxi passes the Florida East Coast Railway New River drawbridge. (Taimy Alvarez / Sun Sentinel)
The marine industry has balked that the extra closings could choke access to the river and the canals, marinas and boatyards.

When the bridge is closed at high tide, it sits just 4 feet above the water, making it hard even for a kayak to pass underneath.

Since spring, the Coast Guard has been testing a plan that places a person, or "tende,r" at the bridge. Communication with the tender has cut the time needed to open and close the bridge.

What's more, the Coast Guard has set a standard that the bridge be closed for no more than 60 minutes in any two-hour period, a schedule that further allays concerns for boaters, Purcell said.

While the bridge still is controlled from Jacksonville, the tender now can communicate with operators to slow down for a boat passing through or to quickly open the bridge after a train passes, leaders said.

All Aboard also plans to develop a Web application and a mobile app offering train schedules and other information, among other tools to help boats and trains share the river, Reininger added.

Purcell said the peace shows the importance of groups "sitting down and talking" to work out their differences for the good of the community. He's been pushing collaboration with business and outreach to nonprofits and schools to underscore the contribution of the marine industry in South Florida.

Meanwhile the fighters continue:

Meanwhile, local efforts to fight the project continue.

Opponents met Friday at The Lyric Theatre in downtown Stuart for a meeting and fundraiser led by Stephen Ryan, attorney for Martin County and the citizen group CARE FL, and Robert Crandall, a former president and CEO of American Airlines and vocal All Aboard Florida opponent. Both emphasized the rail expansion fight is ongoing and winnable.

"I represented the Mayo Clinic in a case that was almost identical to this. We lost every legal encounter in the Mayo case but ultimately the project collapsed," Ryan told the packed theater about a 2007 case in which he helped the Rochester Coalition — a group made up of the Mayo Clinic and local governments — successfully fight a plan to run 34 coal trains a day through the middle of Rochester, Minnesota, where the world renowned hospital is based.

"I'm not suggesting we lose every battle here," Ryan continued, "but all we need to do is win one of the major encounters."

The company says its stations will be complete by mid- to late-2017, and full train service between Miami and Orlando will begin by the end of 2017