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10/10/2014



Rail News: Passenger Rail

All Aboard Florida to pursue private funding for Orlando-Miami line


In a change to its financial plan, All Aboard Florida (AAF) is seeking $1.75 billion in private debt financing to pay for its proposed express passenger-rail service between Orlando and Miami, according to media reports.

The financing plan shift marked an "abrupt departure" from the federal loan the company had sought to develop a passenger-rail service that would operate 32 trains per day between Orlando and Miami on Florida East Coast Railway track, The Palm Beach Post reported earlier this week.

AAF has applied for a $1.6 billion Railroad Rehabilitation and Improvement Financing (RRIF) loan from the Federal Railroad Administration, but the company has decided to pursue the alternative route of private activity bonds (PAB) to pay for the West Palm Beach-to-Orlando segment of the project, the newspaper reported.

The Miami-to-West Palm Beach segment will be funded with $405 million in privately offered notes that the company sold in spring, according to the article. Citing the company's prospectus for the private bond sale, the newspaper reported that AAF's parent company Florida East Coast Industries contributed $345 million toward the $2.5 billion project, as well as the land purchased for stations in Miami, Fort Lauderdale and West Palm Beach.

According to AAF's website, the estimated cost of the rail infrastructure and transit-oriented development is $3 billion.

"All Aboard Florida successfully secured private financing for the first phase of the project earlier this year. We have therefore determined to pursue private debt financing for the remaining capital needed," company officials said in a website post. "A PAB allocation would represent an alternative plan to finance the project and would replace or substantially reduce the current [RRIF loan] request. Investors in PABs are private entities, therefore, this financing mechanism poses zero risk to the local, county, state or federal governments."



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