For months, the California High-Speed Rail Authority (CHSRA) has been flirting with ways to incorporate private investment into the struggling megaproject. The Authority held an industry forum in January on the topic, and in May it announced that it was preparing a Request for Expression of Interest (RFEI) to begin formally consulting with potential private investors regarding potential public-private partnerships (P3s).
Recent news from Washington will likely require the Authority to speed things up a bit. In early June, the Trump Administration announced that it would be withdrawing approximately $4 billion in federal grants that have been awarded to California High-Speed Rail. Drew Feeley, acting administrator for the Federal Railroad Administration (FRA), sent CHSRA a letter and compliance review report, which concluded that the Authority was unlikely to deliver the initial segment of the project by 2033, as agreed in the federal grant agreements. CHSRA has 30 days to respond to the report.
Can private financing fill the federal gap? That seems preposterous now that the project appears to be on the brink of collapse. Aside from the present difficulties, however, it wasn’t out of the question that portions of the high-speed rail project could potentially be delivered as public-private partnerships. The CHSRA wouldn’t even need to collect expressions of interest later this year – it could simply review the responses it received in 2008, which was the last time the Authority collected expressions of interest from private investors. Times have certainly changed since then.
Today, the same opportunities for private investment may be too little, too late, and the federal funding withdrawal will sow doubt over the viability of even the Bakersfield-to-Merced initial operating segment of the system. The Authority was already facing a funding shortage, even for that initial segment, and that was before the announcement from the Trump Administration. The opportunity for this project to structure sound partnerships and attract private capital may have literally passed 17 years ago.
