Bond approval puts Las Vegas high-speed link one step closer to construction

Virgin Trains USA made serious progress towards beginning construction of its Las Vegas high-speed line recently when it won approval from California’s Infrastructure and Economic Development Bank to issue a record-breaking amount of tax-exempt bonds.

Virgin has moved quickly since September of 2018, when it acquired the rights to Xpress West, including its right-of-way, station sites, and environmental clearance. Virgin plans electric trains traveling on a new, high-speed line at more than 150 mph that will make the 170-mile trip from Las Vegas to Victorville, CA in about 90 minutes. A future link from Victorville to Palmdale would give trains a path to downtown Los Angeles—and a connection to the rest of California’s extensive planned rail network.

The deal authorizes Virgin to issue $3.25 billion in tax-exempt private activity bonds, which allow a private developer like Virgin access to the same low-cost financing available to governments for infrastructure projects with public benefit.

The bonds authorized by California cover the majority of the $4.2 billion Virgin needs to begin construction. It expects the rest to be covered by bonds that will be authorized by Nevada soon.

This represents a major vote of confidence in Virgin’s high-speed rail project by the State of California. It’s the largest bond issue in the history of California’s Infrastructure Bank, topping the previous record set by a 2003 issue for the seismic retrofit of the San Francisco-to-Oakland Bay Bridge.

The public sector enthusiasm for the project will likely be mirrored by private investors when the bonds are put up for sale: Virgin easily sold $1.75 billion in bonds earlier this year to finance the extension of its successful new Brightline service in Florida. Demand for those bonds was so high that the deal was expanded by $250 million at the last minute.

Virgin plans to sell these bonds in early 2020 and break ground soon after, with service beginning as early as 2023.

Success of Virgin’s Las Vegas service would bolster support for completing California’s planned high-speed project. When Californians experience the game-changing reality of high-speed rail on a weekend trip to Vegas, they’ll understand what fast trains could do for trips around the rest of the state.

Photo by Ryan Hafey on Unsplash