Brightline Says Freight Rail Suit Won’t Thwart Florida Project

(Bloomberg) -- A lawsuit by a freight railroad against Brightline, the private train operator, won’t derail a planned commuter rail project in South Florida, Brightline’s chief executive officer said in a Friday call with investors. 

Florida East Coast Railway, which operates in the same corridor as Brightline, sued the passenger railroad in July, alleging the company and three counties were negotiating in secret and that existing infrastructure can’t support more passenger traffic. 

The 85-mile (137-kilometer) “Coastal Link” commuter rail would run through Miami-Dade, Broward and Palm Beach counties on the shared corridor. Brightline, which has the exclusive rights to operate passenger trains in the corridor, would get lease payments from the counties, which would be used to refinance $985 million of debt carrying a 15% yield. 

Brightline is negotiating access and development agreements with the counties and expects to enter a deal with Miami-Dade in the coming months, followed by Broward, Brightline CEO Patrick Goddard said. 

“We believe these claims are without merit and that these agreements provide Brightline with a clear right to facilitate commuter service and to increase passenger train frequency,” Goddard said on the call. “Even in the unlikely event that FECR prevails, we believe that there are alternate paths to deliver substantially the same commuter projects under the operative agreements.” 

Brightline has filed a motion to dismiss the suit and compel arbitration, according to an update from the company. A hearing is set for Nov. 13. 

Federal, state and local governments are sharing the cost of the Coastal Link. 

The first, $930 million phase of the project in Miami-Dade County would create a rapid transit route from Miami Central Station in downtown Miami to West Aventura Station, about 15 miles north. The phase would add five stations in Wynwood, Design District, Little Haiti, North Miami Beach and Florida International University’s North Campus.

Financing for the Miami-Dade phase hit a snag in June when Florida shifted $200 million in funds to other infrastructure projects. Goddard said he expects lawmakers to address funding for the project in the next legislative session, which begins in January.

“The status of the local and federal funding for the projects remains unchanged,” he said.

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