WASHINGTON – The $12 billion Brightline West high-speed passenger rail project got a boost today in the form of $2.5 billion in private activity bonds, the U.S. Department of Transportation announced.
Brightline West aims to build a 218-mile dedicated passenger railroad between Las Vegas and Rancho Cucamonga, Calif. Trains would operate at speeds of up to 186 mph, linking Sin City and the Los Angeles area in 2 hours and 10 minutes, which is twice as fast as driving. At Rancho Cucamonga passengers would be able to connect to existing Metrolink service.
“Today, the Biden-Harris administration takes the next step to fulfill the promise of high-speed rail in the American West, with $2.5 billion in private activity bond authority to lay tracks, create jobs, and connect American cities,” Transportation Secretary Pete Buttigieg said in a statement.
The funding is the latest for Brightline West. DOT previously approved a private activity bond allocation of $1 billion in 2020. In December, DOT also awarded a $3 billion Bipartisan Infrastructure Law grant to the Nevada Department of Transportation for this project. In June, DOT awarded a $25 million grant to San Bernardino County Transportation Authority that will be used for the construction of the Brightline West stations in Hesperia and Victor Valley, Calif.
“As the first true high-speed rail system in America, Brightline West will serve as the blueprint for connecting cities with fast, eco-friendly passenger rail throughout the country,” Brightline Founder and Chairman Wes Edens said in a statement. “Connecting Las Vegas and Southern California will provide wide-spread public benefits to both states, creating thousands of jobs and jumpstarting a new level of economic competitiveness for the region. We appreciate the confidence placed in us by DOT and are ready to get to work.”
The allocations provide privately financed projects with access to tax-exempt bonds, which reduces their cost of capital and increases private sector involvement in the delivery of transportation projects. The Bipartisan Infrastructure Law signed in November 2021 doubled the available private activity bond authority to $30 billion.
Last week, Brightline West said it was launching field investigation work in Nevada within the proposed rail corridor within Interstate 15 right-of-way. The field work will advance final stages of design in preparation for a groundbreaking. The field work includes geotechnical borings and samplings, utility potholing and land surveying. Work will take place primarily during daytime hours, with some work at night to minimize disruption to traffic.
I imagine everyone in the current administration, including Buttigieg, is cringing at the thought of supporting a private company that is doing what government cannot. Ouch.
Why would you think that when the admin has bent over backwards to finance like $5.8 billion or half the project at this point (between the Infrastructure grant and bonding)?
As Terry noted, this is far from a privately financed project. Heck, I wouldn’t be surprised if the Feds/Buttigieg will be sending some grant/bond funding to get Brightline extended to Tampa and are having back channels conversations with Brightline about taking over the Texas Central project,
So what is it that the “private company” is doing that’s so wonderful, Ruppert? Soaking up billions of public subsidy corporate welfare before it has moved a trowelful of earth.
Private company my glorious {whatever}. How has this “private company” shown that it’s any better than CalHSR?
My guess? CalHSR will be running trains to the moon before Brightline West lays a single crosstie.
Charles, Lets not forget that our Federal Government provided land grants to a large number of railroads and canals starting in 1830 so they could finance their construction right up to 1903.
So what is the difference?
Private activity bonds are issued to attract businesses and labor to a region in order to derive a public benefit, which would qualify the bond for tax-exempt status. These bonds pay taxable interest unless specifically exempted by the federal government. Plus the private entity has to put up 10% or more of equity or collateral to qualify.
From Investopedia:
According to Section 141 of the IRC, a municipal bond will be deemed a private activity bond if more than 10% of the proceeds from the bond issue are used for any private business, and the principal and interest payment on more than 10% of the sale proceeds of the issue is secured by a private business property. Secondly, a municipal bond will be classified as a private activity bond if the amount of proceeds of the issue used to make loans to non-governmental borrowers exceeds 5% of the proceeds or $15 million, whichever is lesser
Charles, the difference is that Brightline is actually running trains. CalHSR is running a political scam for friends of the State of California. Brightline will be regularly running trains before CalHSR moves a single car.
No one should fool themselves any longer about this being a “privately financed” project, but I’ve spent a disproportionate share of my adult life on I-15 and I am very happy to see the field work begin on the Nevada side. It’s starting to feel real!