Carlos Aguilar is CEO of Texas Central, a company raising money to build a bullet train. This “innovative new high-speed passenger train line … will connect the fourth and fifth largest economies in the country, North Texas and Greater Houston, in less than 90 minutes, with one stop in the Brazos Valley,” the website advertises.
To build that train, Texas Central must raise tens of billions of dollars. It currently puts the cost at “around $20 billion,” a ballpark price that encompasses “the construction of the lines, tracks, viaducts, berms, maintenance facilities, power substations, and three passenger stations,” though that’s likely lowballing it.
Aguilar said on Y’all-itics, a podcast that calls itself “the home of cold beer and hot takes on Texas politics,” that fundraising for the train probably hinges on the passage of the infrastructure funding bill in Congress.
“We’re looking at what happens with the infrastructure package. That’s obviously paramount to whatever it is that we do here. We do have a base case that includes funding from the U.S. government. And that is because of the length of debt service that these funds provide. That is a yardstick by which the other funds that would come into the project would be following. That’s how it works in international finance. You have to close everything together at the same time so that everything works together,” the Texas Central CEO said.
ABC affiliate WFAA reported that Texas Central would be seeking about $12 billion from the federal government in the form of Railroad Rehabilitation and Improvement Financing loans, matched up with an additional $12 billion in private financing from Japanese and European banks, $4 billion over the company’s current advertised cost.
This funding scenario left Marc Scribner, policy analyst for the Reason Foundation, with a question.
“It’s unclear what Mr. Aguilar means when he says the infrastructure bill needs to pass to receive RRIF loans. RRIF loans already exist, and the infrastructure bill does not increase lending capacity. The vast majority of the $35 billion in RRIF loan authority is currently available to eligible projects,” Scribner told the Washington Examiner.
Scribner’s colleague Baruch Feigenbaum said he thinks “Texas Central sees this as a chance to get publicity for their train.” But he added that “the infrastructure bill makes some minor changes that make it easier for Texas Central to get a RRIF loan.” He said he worries that “the RRIF program is so undersubscribed that [the Federal Railroad Administration] will give Texas Central a massive loan that the company cannot possibly pay back.”
In that default scenario, it could be U.S. taxpayers who end up taking the loss.
If the infrastructure bill passes and Texas Central secures government funding, the bullet train will have been about 15 years coming by the time construction is finished. However, the company claims it will generate “17,000 jobs during construction and more than 1,500 direct permanent jobs when the train is fully operational.”
“All the major items that we need to support the execution phase are in place. We’ve gone through the regulatory approvals. That has gone through its course in D.C. Those things have been approved. We’ve had cases brought at the Texas Supreme Court regarding our status as a railroad in Texas and, with it, eminent domain. That’s been resolved in our favor, still. We respect all legal processes, so we don’t preempt any final decision, but things are going very well,” Aguilar said on the podcast.
One of the selling points of the bullet train had been that it would be “privately funded.” News that it hinges on federal funding led one of the Y’all-itics hosts to ask, “Did something change somewhere along the route? Because since this was announced many years ago, it was touted as this private option. It was going to use private money. It didn’t need any money from the state. It didn’t need any money from the federal government.”
Aguilar replied, “No. I think there’s a misunderstanding as to what ‘private’ means. Private means that it’s been developed privately. We have not spent any federal or state funds developing this project at all. We have got over $700 million of funding, and none of that has been from either the state of Texas or the federal government. And that has allowed us to put a package together that is ready for execution.”
That is, once the federal government opens its wallet.
