DALLAS — The $8 billion in federal stimulus funds earmarked for high-speed rail development in the United States is the first installment of a program that could reshape the nation’s transportation options as significantly as has the interstate highway system.
Mike Marler, freight rail practice leader with Jacobs North American Infrastructure, on Thursday told participants at The Bond Buyer’s 10th annual Transportation Finance/P3 Conference in Dallas that the high-speed rail program will promote economic expansion, reduce oil dependency, and foster more livable communities.
“High-speed rail is the state of the art in Europe, Asia, and around the world,” Marler said. “This $8 billion effort is the modern-day version of President Eisenhower’s interstate highway program.”
The $8 billion in stimulus funding is the down payment on a high-speed rail system that could eventually span the country, according to Marler.
“This money will provide the initial financing, but funding will be added in the coming years,” he said. “The federal 2010 budget proposes $1 billion a year of additional funding each year for the next five years.”
A number of states are seeking funding for work on several high-speed rail corridors, but Barney Allison, a partner with Nossaman LLP’s infrastructure practices group, said California is the only state with a dedicated rail funding source to match the federal funds.
California voters in November 2008 approved $9 billion of general obligation bond capacity for high-speed rail projects, Allison said. Another financing source could be the transportation districts in more than 20 California counties that now have voter approval to levy sales taxes for transportation projects.
Financing with bonds the 400-mile system California has proposed is not feasible, Allison said. Conventional bond debt financing will more likely provide 50% of the total cost. It is unlikely that more than $300 million of debt financing can be obtained for any single segment of the project, he said.
The state has identified a 400-mile rail route between San Francisco and Anaheim that would cost $33.6 billion to complete, Allison said. The financing plan calls for $12 billion to $16 billion of federal funds, $9 billion from the state, $2 billion to $3 billion from local governments, and $6.5 billion to $7.5 billion from the state’s private partner in the development.
“This is the only true ground-up high-speed rail project being proposed in this initial round,” Allison said. “The others rely on existing rails and rights-of-way, but the California one would be completely new.”
A request for partnership proposals brought 30 responses from private entities, Allison said, including construction firms, rail operators, and investment bankers. The state hopes to select qualified bidders by fall 2010.
Irene Walsh, managing director of Deloitte Corporate Finance, said state governments have a wide variety of public-private partnership structures that could be viable.
“The question is not, will we have public-private partnerships, but what type of public-private partnerships will we have,” she said.
In many parts of the world, Walsh said, rail systems that were operated by monolithic state agencies are now run by public-private partnerships with separate entities handling the infrastructure and operations. In contrast, she said, the U.S. rail system is moving from diverse private ownership and a mixed operating environment.