Luck May Be Changing for California High Speed Rail

No, the debilitating lawsuits haven't been resolved, so the HSR Authority still can't tap the $10 billion in voter-approved bonds, but the new state budget based on cap-and-trade revenue for HSR is sparking inquiries from private investors.

2 minute read

July 24, 2014, 9:00 AM PDT

By Irvin Dawid

FLV California train

California High Speed Rail Authority / Wikimedia Commons

Jessica Calefati of Inside Bay Area News writes that along with demolition beginning "in Fresno to clear the way for the first stretch of track, a budget agreement brokered by Gov. Jerry Brown that guarantees the San Francisco-to-Los Angeles rail line its first funding stream -- one that leading economists say could reach about three quarters of a billion dollars annually -- has emerged as a 'game changer,' high-speed rail [HSR] experts say."

As a direct result of that agreement, "private investors across the country and abroad are expressing new interest in bankrolling part of the $68 billion project," Calefati writes. The High Speed Rail Authority is expecting private interests to provide significant funding. See HSRA pie chart [PDF].

The new funding gives us confidence that as political leanings and priorities change, it won't be easy for the government to back out of its end of the deal," said Stephen Polechronis, senior vice president of Los Angeles-based AECOM, one of the world's largest engineering and construction firms. "We feel we have a partner now. [Note: AECOM agreed last week to purchase URS Corp., the engineering and construction-management company, for about $4 billion.]

However, the lawsuits have not gone unnoticed by potential investors. "AECOM and others are still troubled by the number of lawsuits filed against the authority -- 13 so far -- but Polechronis said it's common for large infrastructure projects to face litigation."

Another sign of interest came from "Vinci Concessions, a French company that is considered a world leader in developing highly technical high-speed rail projects; one of the nine companies that eagerly wrote to California about the bullet train last month."

"Developing the first high-speed rail corridor in the United States is an extremely exciting proposition," said Sidney Florey, Vinci Concessions' director of North American business development, whose company is now building a bullet train between Tours and Bordeaux in France. "If California makes the right offer, anybody in this industry would be interested."

Correspondent's addendum: We noted last month that the budget funds provided by cap and trade revenues would, in addition to funding high speed rail, provide a major source of funds to affordable housing, smart growth planning, public transit et al. provided they reduce carbon emissions. And yes, the cap and trade program is itself being litigated.]

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