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3/28/2008



Rail News: Rail Industry Trends

PPPs needed to help fund California high-speed rail system, advisors say


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Yesterday, financial advisors for the California High Speed Rail Authority (CHSRA) held a “Request for Expressions of Interest for Private Participation” session — in other words, they met with private investor and authority board members to outline a funding strategy for the proposed 800-mile statewide high-speed rail system.

Advisors from the Infrastructure Management Group and Lehman Brothers discussed the public-private partnership (PPP) approach that will be used to fund the system with the more than 70 private contractors, equipment vendors, operators and financiers who attended the meeting.

Retained by CHSRA in January 2007, the advisors have determined that funding the multi-billion-dollar system will require an upfront state funding commitment, as well as a significant investment of political capital to obtain other necessary funds. PPPs could help bring vendor finance, private equity, design-build approaches and operational skills to the project, advisors said.

CHSRA expects to place a $9.95 billion bond measure on the November 2008 ballot to help fund the system. If approved, construction could begin by 2011 — but state funds will not be made available until CHSRA obtains matching funds from additional sources. The authority expects the federal government to fund between 25 percent and 33 percent of project costs.


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