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Governors' Letter to Rick Scott

Governors' Letter to Rick Scott

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Published by Heidi De Vries
Letter from mayors of Lakeland, Miami, Orlando and Tampa have written a letter to Gov. Rick Scott asking him to reconsider accepting federal money for high-speed rail.
Letter from mayors of Lakeland, Miami, Orlando and Tampa have written a letter to Gov. Rick Scott asking him to reconsider accepting federal money for high-speed rail.

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Categories:Types, Letters
Published by: Heidi De Vries on Mar 03, 2011
Copyright:Attribution Non-commercial

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03/03/2011

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March3,2011TheHonorableRickScottOfficeofGovernorRickScottStateofFlorida.TheCapitol400S.MonroeSt.Tallahassee,
FL
32399-0001DearGovernorScott:Wevaluethedialoguewehavehadonhighspeedrailoverthelasttwoweeks.Thepurposeofthisjointletter
is
toclearlyrestateandfurtheramplifyhoweachoftheconcernsyouhaveraisedhavebeenresolvedbythestructurewehaveproposedtoeliminatefinancialrisktotheStateofFloridaanditstaxpayers.Initiallyyouexpressedconcernsregardingpotentialstateresponsibilityfor:Constructioncostoverruns;Shortfallsinoperatingrevenueduetolowridership;andPotentialrepaymentofgrantfundsifthehighspeedrailProjectdiscontinuesoperationafteroperationscommence.Weappreciatedtheopportunitytomeetandprovideyouwithinformationandsatisfactoryassurancesoneachoftheseitems,Atourrecentmeetingyouarticulatedthreeadditionalconcerns:AssurancesthattheProjectwillbestructuredinamannertoeliminaterisktotheStateofFlorida;ThescopeofcontinuedinvolvementbytheFloridaDepartmentofTransportation("FDOT");andThetestforfinancialassurancethatasuccessfulprivatesectorvendorcanmeetallobligationsforconstructionandoperationofthehighspeedrailProject.Thisletter,whileaddressingeachoftheseissues,doesnotchangetheconceptpreviouslypresented.
It
doesprovideadditionaldetailandclarificationoftheproposaL
1.
EliminationofrisktotheStateofFlorida
A.Thenon-recourseentitywillprotecttheStateofFloridaanditstaxpayers
ThekeytoprotectingtheStateofFloridafromriskisthecreationofa"non-recourse"entitytobethesub-recipientofthefederalgrantfundsandconstructtheFloridahighspeedrailsystem.Non-recourseentitiesareacommonbusinesstoolusedtoproperlyallocateriskinlargeconstructionprojects.Bycreatinganon-recourseentitythatisfinanciallyindependentfromthe
 
LettertoGovernorScottMarch3,2011Page2of6StateofFloridaandthecitiescreatingit,thestateanditstaxpayerswillbeprotectedfromfinancialrisk.TheauthorityexistsunderstatelawfortheCitiesofLakeland,Miami,OrlandoandTampa(the"Cities"),tocreatethisnon-recourseentitythroughaninterlocalagreementbetweentheCities.Section163.01,FloridaStatutes,allowscitiesandcountiestoformvariousindependentregionalgovernmententitiesthroughinterlocalagreements.Theyarewell-acceptedbythefinancialmarkets,theyregularlyissuebonds,andthefinancialindependenceoftheseinterlocalentitieshasbeenvalidatedbytheFloridaSupremeCourt.Asyourequested,weprovidedyouwithadetailedopinionletterfromarespectedFloridalawfirmconfirmingtheindependent,non-recoursenatureoftheseinterlocalentitiesandhowonecouldbeusedtoprotecttheStatefromliabilityforconstructioncostoverruns,shortfallsinoperatingrevenueduetolowridership,andpotentialrepaymentofgrantfundsifthehighspeedrailProjectdiscontinuesoperationafteroperationscommence.Proofofthismodelforfinancing,constructingandoperatinglargeinfrastructuresystemscanbefoundinthemultitudeofinterlocalentitiesinFloridaandthebillionsofdollarsininfrastructuretheyhavedeveloped.CitiesandcountiesthroughoutFloridahaveusedindependentinterlocalentitiestomeetadiversearrayofinfrastructureneeds,includingportfacilities,waterandwastewatersystems,transportationandtransitsystems,andsolidwastefacilities.Oneregionalinterlocalentityhasover
$1,5
billioninassets,andastatewideinterlocalentityhasalmost$2.5billion
in
assets.Thenewnon-recourseinterlocalentitytobecreatedbytheCities(the"InteriocalEntity")willrequiretheprivatecompanyselectedtodesign,finance,construct,operate,andmaintaintheTampatoOrlandolegofthehighspeedrailsystemandtoacceptfullfinancialliabilityforanycostoverruns,withoutrecoursetotheStateofFloridaortheCities.Theindependentandnon-recoursestatusoftheInterlocalEntitywillfullyprotecttheStateofFlorida(andtheCities)fromanyconstructioncostoverruns,anyoperatingshortfalls,andpotentialrepaymentofgrantfundsifthehighspeedrailProjectdiscontinuesoperationafteroperationscommence.WeenvisionthattheInterlocalEntitycouldbethevehicleforconstructionofastatewidehighspeedrailsystemthatwill,intime,connecttoaninterstatehighspeedrailsystem.TampatoOrlandoisonlythefirstleg.TheOrlandotoMiamicorridorwillbethecriticalsecondlegofthestatewidesystem.UseoftheInterlocalEntitytodevelopthefirstlegoftheFloridahighspeedrailsystemwillnotrestricttheabilitytoconstructandoperatehighspeedrailstatewide.WefullyexpectthattheOrlandotoMiamicorridorwillbedevelopedinthefutureandwehopethatweandyoucanworktogethertosecurefundsthroughfutureappropriationsfromtheU.S.DepartmentofTransportation("USDOT")fortheOrlandotoMiamicorridor.
B.USDOThasunambiguouslywaived
its
standardrepaymentobligation
USDOThasexplicitlyandunambiguouslywaivedthestandardconditioninFederalRailroadAdministrationcooperativeagreementsthatrequirestheStatetorepayapro-rataportionofthegrantfundsintheeventhighspeedrailserviceisdiscontinued.Thisstandard
 
LettertoGovernorScottMarch3,2011Page3of6conditionwasincludedintheinitialdraftofthecooperativeagreementfortheStateofFlorida,butinaletterdatedFebruary28,2011,USDOTcommittedtowaivethisconditionfortheStateandtheCities
in
anyfuturecooperativeagreementsfortheTampatoOrlandohighspeedrailline.II.Thescopeofcontinuedinvolvement
by
FDOTAsstructured,thisprojectwillrequirenofinancialsupportfromtheStateofFlorida.Tobecompletedeffectivelyandefficiently,however,theProjectwillneedcontinuedsupportbyFDOT.FDOT'sdedicationofthenecessarytechnicalresourceswillbeindispensableforcompletionoftheProject.UndertheproposaladvancedbytheCities,theStateofFloridawouldbefullyreimbursedforthedirectcostsofsuchsupport,consistentwithfederalgrantlaw.Tobeclear,highspeedrailcannotsucceed
in
Floridawithout
full
andunfetteredcooperationbyFDOTofthenatureandscopethatiscustomarilyprovidedbyFDOTforlargetransportationprojects.Accordingly,tosupportasuccessfulFloridahighspeedrailsystemFDOTwillneedtoparticipatefullyintheProject.AdescriptionoftheworkthatweexpectfromFDOT'sparticipationwouldencompass:1.PDOTwillneedtoenterintosubgrantanddelegationagreement(s)withtheInterlocalEntity.Thisagreement(s)allowpassthroughofthefederalfunds,delegateauthorityforconstructionandoperationofthehighspeedrailsystem,andassignallrightsandpropertynecessarytoallowingress,egressandconstructionintherights-of-wayasmaybeneeded
in
ordertofullycompleteandoperatetheProjectinthemannercontemplated.Throughthisagreement(s)theStateofFloridawillberelievedof
any
contractualfinancialobligationforanyconstructioncostoverrunsoranyoperatingshortfalls.Moreover,USDOTcontinuesitsassurancethatFloridawillnotbeobligatedtorepaygrantfundsintheeventtheProjectdiscontinuesoperationafteroperationscommence.
2.
FDOTwillneedtoperformitsnormalprojectadministrativetasksinaccordancewithitsgrantagreementwithUSDOT.FDOT
will
havestaffingobligationsinthesamemannerasatypicalFDOTproject,regardingtheimplementationplanning,design,location,procurement,construction,maintenanceandoperationoftheProjectandattendantProjectDocuments.AllFDOTworkproductwillbetransmittedtotheInterlocalEntity.FDOTwillneedtoprovidetechnicalassistanceandsupport,andwillassigntotheInterlocalEntityallitemsandrightsasnecessaryforcarryingoutthecompletionoftheProjectincludingbutnotlimitedto:designdocuments,research,contracts,permitsobtainedandapplicationssubmitted.

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