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XPressWest’s 200-mph line from Las Vegas to SoCal is on track to break ground soon

July 30, 2020

Last week, Nevada approved $200 million in private-activity bonds for XpressWest’s proposed high-speed line from Las Vegas to Southern California. That follows California’s approval of $600 million in private-activity bonds for the project in April.

Private-activity bonds (PABs) are often used to finance large infrastructure projects undertaken by private companies in the public interest.

Virgin Trains USA, which is building the XpressWest line and also operates Florida-based Brightline passenger trains, can translate the bond awards from Nevada and California into $3.2 billion in financing. That’s because it can now sell tax-exempt bonds to private investors based on the awards—up to 4 times their amount. The project will also receive $1 billion in PABs from the U.S. Dept. of Transportation, bringing its total financing to $4.2 billion. The balance of the roughly $4.8 billion project would be covered by private equity.

Investor Wes Edens—who leads the Fortress Investment Group, the company behind the Florida and Nevada lines—has put roughly $100 million of his own money in the projects. Edens has called the lack of passenger-rail options in the U.S. both a “travesty” and “a gigantic opportunity.” He told Forbes recently that “great fortunes are generally made by solving the most obvious problems.”

Construction on the line is scheduled to start later this year. It is projected to open in 2023. According to XpessWest, the project will create 30,000 construction jobs and 1,000 permanent jobs, and it will remove the 3 million cars from the roads annually.

The project has been in the works since the early 2010s.  When Fortress acquired the project in 2018, under the umbrella of Brightline, Edens announced that the company was “changing transportation in our country by connecting heavily trafficked corridors that are too long to drive and too short to fly.”

Fortress has been an aggressive booster of the public-private financing model, which it also used to get the Brightline project built. In response to Nevada’s approval of the private-activity bonds, a spokesperson for XpressWest said that “large construction projects are a critical piece of rebuilding our economy, and private activity bonds are a perfect mechanism to incentivize the private sector to deliver public benefits.”

Current plans for the Xpress West line call for it to run from Las Vegas to Victorville, CA, about 80 miles outside of Los Angeles. But talks are underway to extend the line to Rancho Cucamonga, in suburban LA, where it would connect with the city’s commuter rail service, Metrolink.

The line’s fully electric, zero emissions, 200-mph trains will cover the distance between Las Vegas and Victorville in about 1.5 hours, or half the time of a car trip. There are currently about 50 million one-way trips between Las Vegas and LA each year, and 85 percent are by car. XpressWest believes it can capture 20 percent of the market, or 10 million one-way riders each year.

Brightline trains, which currently run from Miami to West Palm Beach, will begin running from Orlando’s airport to downtown Miami in 2022. The trip will take 3 hours—or 1 hour less than by car. The company projects about 6.6 riders in the first year.

Read More:

Los Angeles to Las Vegas High-Speed Train Wins $200 Million Nevada Bond Allocation

Inside A Wall Street Tycoon’s Plan To Get Americans Off the Highway—And On His Trains

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