Do 60 or so international investors know something special about the business revenue potential of California’s proposed high-speed rail system that would carry riders between the Bay Area and Southern California in two and a half hours? Apparently so, according to the state’s High-Speed Rail Authority.
Authority board members and their finance team, coordinated by Wall Street’s Lehman Brothers, met last week with about 80 investors representing railway systems, construction firms and financiers worldwide. The serious interest from private finance sources was called “very encouraging” by Assemblymember Fiona Ma, D-San Francisco, and “amazingly good” by rail authority Executive Director Mehdi Morshed.
At this point in the long-postponed development of the $42 billion train system, approximately $10 billion in private investments must be obtained before the 700-mile high-speed network is built.Gov. Arnold Schwarzenegger has indicated he would likely veto any such legislation not including public-private partnership.
A recent poll said 58 percent of Californians support the scheduled November measure authorizing the state to issue a $9.95 billion bond for the first phase of the high-speed railway. This funding would trigger a matching $9 billion federal grant. So with private investment included, more than half of the project’s cost would be covered.
The other half would have to come from other funding, possibly including a new sales tax. By law, state money cannot be spent for these projects unless matching funds from elsewhere are contributed.
The promise is that silent, clean, electric-powered trains would travel up to 220 mph and cost $55 for a one-way, two-and-a-half-hour trip between San Francisco and Los Angeles. Bullet trains would link all of the state’s major population centers — Sacramento, the Bay Area, Central Valley, Los Angeles, Southern California’s Inland Empire, Orange County and San Diego.
High-speed rail transit is also expected to be a major environmental improvement over gas-guzzling and polluting airliners or automobiles. The rail authority estimated that its trains would lower statewide oil consumption by 1.1 billion gallons per year and reduce annual CO2 emissions by 12.4 billion pounds.
But all those potential high-finance backers must be particularly interested in bankrolling high-speed rail because they find the authority’s projections of 100 million annual passengers and $2.6 billion to $3.9 billion yearly revenues by 2030 to be reasonable and believable. After all, bullet-train travel is highly successful in Japan and Europe.
The Examiner is not quick to recommend additional bond debt for California, especially during budgetary hard times such as now. We will have to see how the high-speed railway funding package adds up in November. However, with the nonstop growth of California’s population and ever-worsening gridlock on the state’s roads and airports, it does seem as if bullet trains could be an important factor in easing our transportation bottlenecks.