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Virgin Trains project gets approval for $3.25B in bonds

Updated October 24, 2019 - 1:53 pm

The proposed high speed train between Las Vegas and Southern California continues its track toward becoming a reality as the Golden State has approved a $3.25 billion bond request to go toward the $4.8 billion project.

The board of directors of the California Infrastructure and Economic Development Bank (IBank) on Wednesday approved a bond request on behalf of Virgin Trains USA that will go toward constructing 135 miles of rail lines in California as well as a passenger and maintenance facility in the Victor Valley region.

The entire project would run 170 miles, including 35 miles in Southern Nevada, with a train station slated to be located on Las Vegas Boulevard between Warm Springs and Blue Diamond roads.

“Our project continues to gain momentum and public support, and yesterday’s approval was a big step forward,” said Ben Porritt, Virgin Trains spokesman. “Developing rail between Southern California and Las Vegas will go beyond transportation and will lead to an upshot of jobs and housing for Las Vegas and the Victor Valley region. The environmental benefits are equally impressive and offer a real solution to getting 4.5 million cars off the road each year.”

IBank, created by the California Legislature in 1994 to finance public infrastructure and private development that promotes job creation and a strong economy, is the state’s only general purpose financing authority.

The bond approval is the largest in the bank’s history, with the previous largest being $1.65 billion approved in 2003 for toll bridge seismic retrofit work on the Bay Bridge between Oakland and San Francisco.

“Moving toward clean, green electrified high speed rail is the future,” said Lenny Mendonca, director of the Governor’s Office of Business and Economic Development and IBank board chair. “Yesterday’s vote is evidence of our state’s commitment to making this happen in California.”

The $3.25 billion bond request IBank approved is comprised of $850 million through the U. S. Department of Transportation and $2.4 billion in tax exempt, private activity bonds. Virgin is seeking $600 million in bonding authority from California through its debt limit allocation; Internal Revenue Service guidelines would allow Virgin to market up to four times that amount, or $2.4 billion, in tax exempt, private activity bonds.

Last month, a committee led by California Treasurer Fiona Ma approved the first $300 million in tax exempt, private activity bonds, with another $300 million to be considered next year.

Virgin also is seeking $950 million in total private activity bonds from Nevada. It’s seeking $200 million in bonds from the state’s debt limit allocation — which would allow Virgin to market $800 million in bonds — and $150 million through the USDOT’s bond program.

In total, Virgin Trains would have $4.2 billion tied to the project if all bond measures are approved by the two states. The project would be paid for by a combination of debt and equity.

Similar to California, the debt allocation bonds in Nevada would be requested in $100 million amounts each of the next two years.

The Nevada Department of Business and Industry will consider the first half of the bond request at its Nov. 11 meeting.

Neither Nevada or California will be on the hook for any of the money tied to the bonds.

If all bond requests are finalized, Virgin would break ground on the project next year with a 2023 start to operations. The Las Vegas to Victorville line would be the initial portion of Virgin’s plan to link downtown Los Angeles to Southern Nevada.

Contact Mick Akers at makers@reviewjournal.com or 702-387-2920. Follow @mickakers on Twitter.

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