The company proposing to build a high-speed passenger rail line from Las Vegas to Southern California has applied to the Nevada Department of Business & Industry for the right to sell tax-exempt bonds to help fund the project.
Terry Reynolds, deputy director of the department, said this week that an application from Virgin Trains USA to sell $200 million worth of private activity bonds is under consideration. The rail line, expected to cost more than $4 billion, would run from Las Vegas to Victorville, Calif., a distance of about 190 miles, according to officials from Virgin Trains, which was formerly known as Brightline.
The state’s involvement in the issuing of the bonds would be only as a pass-through as it wouldn’t be obligated to step in if revenues from the project are not sufficient to cover bond payments in the future, Reynolds said.
The bonds — likely to be in the 20- to 25-year range, Reynolds said — represent a more attractive financing option for private projects than would typically be found with more traditional financing avenues.
If the request is approved, the company could leverage as much as $1.2 billion for the project, formerly known as Xpress West. A decision could be made in November at a scheduled state Board of Finance meeting.
A similar request for $600 million in activity bonds has been submitted to California officials, said Bill Ainsworth of the California State Treasurer’s Office. If approved by the California Debt Limit Allocation Committee in September, Virgin Trains would be able to issue up to $2.4 billion in debt for the dual-state project.
British billionaire Richard Branson last year entered into a marketing agreement to change the Brightline name for branding purposes. Virgin Trains announced last fall a deal to acquire Xpress West and closed on the transaction earlier this year.
“Through private investment, we will create thousands of new jobs, spark additional development and remove millions of cars off the road,” said Ben Porritt, a spokesman for Brightline, in a statement.
Virgin Trains officials say a trip from Las Vegas to Victorville on the proposed train would likely take about 75 minutes. By comparison, the drive between the two cities on I-15 would take about three hours.
Construction, officials say, could begin in 2020 and be finished in about three years. Eventually, the rail line would be expected to expand to Los Angeles, according to published reports. The idea of train service between Los Angeles and Las Vegas is nothing new, having surfaced in several different forms since Amtrak shut down its Desert Wind service in 1997.
Months ago, a group from Nevada traveled to Florida to see a Virgin Trains passenger rail line that stretches from Miami to West Palm Beach.
Included in that group were Tina Quigley, CEO of the Regional Transportation Commission of Southern Nevada, and Steve Hill, CEO of the Las Vegas Convention and Visitors Authority.
“I’m optimistic that this is a project that’s going to go,” Quigley said. “There’s a lot of energy and a lot dedication there.”
In a statement, LVCVA spokeswoman Lori Nelson-Kraft said the authority “encourages the exploration of innovative and viable transportation options and solutions” to help Las Vegas visitors.
California Treasurer Fiona Ma recently traveled to Florida to get a look at the Virgin Trains operation.
“I was very impressed with Virgin’s transformation of the existing ho-hum passenger rail experience to one that is now cool and hip,” Ma said in a statement. “We got on at West Palm Beach station, rode 30 minutes to Fort Lauderdale, then another 30 minutes to Miami. The ride was quick, stress-free and pleasant.”
Company officials have said Virgin Trains hopes to secure more projects around the country that would connect population centers within several hundred miles of each other, possibly including lines in Texas and between St. Louis and Chicago.
Its service in Florida, however, has also come under fire. In June, Miami Herald columnist Carl Hiaasen blasted Virgin Trains’ plan to connect Orlando and Miami, citing low ridership numbers for the company’s existing service.
Virgin Trains is owned by Fortress Investment Group, which was co-founded by Wesley Edens, part-owner of the NBA’s Milwaukee Bucks.