Infrastructure finance experts and high-speed rail advocates are largely united in the belief that public-private partnerships are the way to finance ambitious bullet train plans, but uncertain federal policy and public hesitancy continue to hamper efforts to find the right model.
The U.S. High Speed Rail Association’s two-day summit in Washington on Monday brought together executives from Amtrak, the nation’s state-supported rail service provider, as well as infrastructure finance scholars and mass transit interest groups. The theme that emerged was that high-speed rail development is crucial for reducing congestion and improving the U.S. economy, but funding is currently highly problematic.
Richard Arena, president of the Association for Public Transportation said that while traditional funding such as municipal bonds and federal grants work very effectively for infrastructure, there is no single strategy that easily allows the development and construction of multi-billion dollar “megastructure” projects.
“We don’t really have a way to fund that,” Arena told summit attendees.
Arena said the situation is further complicated by a lack of federal commitment and reliability to infrastructure investment. The elimination of earmarks, a traditional source of drumming up votes for legislation, has complicated the prospect of federal support. Arena suggested using tax-increment financing, where established tax zones around new infrastructure would provide revenue to back debt, but conceded even this is not a silver bullet.
“Our number one job this year? We have to get a funding source. That’s what we have to do,” he said.
Richard Geddes, a Cornell scholar suggested that privately-issued debt could be extended the same tax-exempt benefits as munis, in some cases.
“Policies should strive to encourage private investment,” he said.
A project highlighted during a panel was the proposed renovation of Washington’s Union Station, an ambitious $7 billion initiative to expand capacity for high-speed rail and develop lucrative retail opportunities at the station.
David Tuchman, vice president for development at Akridge, said the project is a forward-thinking development that could create up to $15 billion of economic impact by 2030.
But when questioned about the details of the funding plan, Stephen Gardner, Amtrak’s vice president for northeast corridor infrastructure and investment development, said that still has to be hashed out.
“It’s clearly going to be a partnership,” he said. “Of the users, of the federal government, of the district, of the private sector.”
Whatever the model, the experts said high-speed rail cannot realistically advance in the U.S. without strong private-sector support.
“Investors having skin in the game is one of the best things that could happen to high-speed rail,” Geddes said.
