Next stop for California’s high-speed rail: Finding private investors
Grist · LC · trust 48/100
California has spent nearly two decades relying on taxpayers to finance its high-speed rail project. Now it’s looking to private investors.
Whether any step up remains an open question.
The search for private money was always part of the plan. When Californians approved a bond measure to fund the project in 2008, they pictured a system to rival the best in the world. Sleek trains would whisk riders between San Francisco and Los Angeles in just 2 hours and 40 minutes. Using renewable energy would cut emissions by up to 3 million metric tons annually. Voters were willing to put up $10 billion to make this dream a reality.
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The bond was never meant to cover the entire cost. State officials envisioned the federal government and private sector contributing equally toward the projected $45 billion budget. But Washington’s support ebbed and flowed with each president. After years of legal battles with the Trump administration, the state said “ the federal government is not a reliable, constructive, or trustworthy partner ” in advancing the project. Private capital, meanwhile, has largely remained on the sidelines.
That may soon change. The California High-Speed Rail Authority recently announced a $25 million agreement with a consortium of companies that will explore ways to advance the project. Over the next six months, it will develop funding strategies to expand the project beyond the state’s Central Valley, potentially into San Francisco and Los Angeles.
“This agreement reflects growing market confidence in that strategy and the long-term potential of California high-speed rail as a transformative investment in California’s future,” Ian Choudri, the agency’s CEO, said in a news release . Choudri said the agency has spent the past year taking steps to “reposition” the project around “a more commercially focused and delivery-oriented strategy.”
Most of the construction is focused in the Central Valley, where the first phase will connect the cities of Merced and Bakersfield. The rail authority chose to start there because it offered the quickest and cheapest path to getting trains running. It is also an opportunity to bring a state-of-the-art transportation system to a region long overlooked by the state. Crews have completed dozens of bridges and viaducts and laid almost 90 miles of guideway. Their efforts will soon shift to laying track.
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Linking San Francisco and Los Angeles is expected to cost $126 billion, with service slated to begin in 2040. Even the first phase alone will likely require tens of billions of dollars. Last year, the state committed $1 billion annually to finance the project through 2045.
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