Las Vegas train lands $300 million California PAB authorization
California Treasurer Fiona Ma announced Wednesday that a state board has approved $300 million in private activity bonds for a high-speed rail line to link Las Vegas with Victorville, California.
The debt was approved by the California Debt Limit Allocation Committee, which administers the state’s tax-exempt, private activity bond program.
“This will transform transportation in Southern California and Las Vegas for generations by providing a fast and efficient connection that gets people out of their cars, reduces traffic congestion, and decreases air pollution,” said Ma, who chairs the CDLAC board.
She also called the project a “regional kick starter that will usher in a new era of economic development in San Bernardino County by creating jobs, housing, retail, and commercial activity.”
The PABs were awarded to DesertXpress Enterprises LLC. That company, which promoted the Vegas-Victorville plan under the XpressWest name, was acquired in September 2018 by Brighhtline, the private developer of a Florida passenger train system that later rebranded to Virgin Trains USA following a deal with Richard Branson's Virgin Group.
PABs issued for Virgin Trains USA's Florida projects are being challenged in court.
The approval is contingent upon XpressWest submitting an economic development plan to the committee that will outline the company’s goals in the areas of housing, jobs, traffic congestion, and workforce development.
The issuance comes out of California’s allocation for tax-exempt private activity bonds, which is calculated using an IRS formula. This year the total amount the state may allocate is $4.15 billion. The 1986 Federal Tax Reform Act imposed a limit on how much private activity bonds can be issued in a state each year.
XpressWest estimates the total cost of building the project will be $4.8 billion, with $3.2 billion spent in California.
According to the CDLAC staff report, the California PABs would be issued through the California Infrastructure and Economic Development Bank. Morgan Stanley would be underwriters, and Orrick, Herrington & Sutcliffe the bond counsel.
XpressWest plans to eventually operate 32 trains daily between Victorville and Las Vegas that will cover the 180-mile distance in about 90 minutes. The trains, which would carry up to 600 passengers, will reach speeds in excess of 150 miles per hour.
The company plans to build a station on 80 acres in Victorville and acquire 225 acres for housing and retail/commercial development near the station in North Victorville.
Victorville is a High Desert city of 122,000 across a mountain pass from the population centers of Southern California. It is 40 miles from San Bernardino and 85 miles from Los Angeles.
The privately developed XpressWest project has been in the works for more than a decade with the first project application to federal officials in 2005.
“Today the Victor Valley Chamber of Commerce board voted unanimously to support the high speed train and urge approval of the use of $300 million in bond funds by CDLAC due to the tremendous positive impact to the local economy of the High Desert,” said Mark Creffield, president and CEO of the Victor Valley Chamber of Commerce.