Virgin Trains applying for bonds
Firm seeking $600M to finance Vegas-to-california line
Virgin Trains is looking to get the long-talkedabout high-speed train project between Las Vegas and Southern California on track by applying for tax-exempt bonds from the two states where it will run.
Under the name of its parent company, Florida East Coast Industries, Virgin Trains USA is seeking authorization from California authorities to sell $600 million in tax-exempt private activity bonds, according to the California State Treasurer’s Office.
The company also is seeking approval from Nevada to sell $200 million in bonds, according to Terry Reynolds, deputy director of the Nevada Department of Business and Industry.
That authorization would make Virgin Trains eligible for federal grant funding
in what would amount to a 4-to-1 match, Reynolds said. Virgin could leverage the $800 million in bonds into $3.2 billion toward the project, he said.
The rest of the estimated $4 billion project would be funded by debt and equity, according to Ben Porrit, senior vice president of corporate affairs for Virgin Trains, though he would not elaborate.
The involvement of California and Nevada is required for Virgin Trains’ bonds to receive tax-exempt status, but the states wouldn’t be on the hook for any of the bond payments.
If the bonds come through and the project gets the necessary right-ofway approvals from the U.S. Department of Transportation, the Nevada Department of Transportation and Caltrans, construction could get underway as early as the beginning of 2020, and trains could be running in 2023, Reynolds said.
‘Win-win’ project
The hope is that the prospect of improving transportation between Las Vegas and Southern California and the possible economic benefit from the system will be enough to get the bonds approved.
“This project would be a win-win for Nevada and California,” said California Treasurer Fiona Ma. “It would allow people to move rapidly between Southern California and Las Vegas.”
Virgin Trains is using a similar plan to finance an expansion of its Florida rail line that will run between Orlando and Miami, selling $1.75 billion in unrated municipal bonds and using equity to fund the remainder of the $4 billion project. Construction on that project began in June.
“Similar to Florida, private activity bonds will be a component of our financing strategy, which will offer tremendous economic and environmental benefits,” Porrit said. “Through private investment we will create thousands of new jobs, spark additional development and remove millions of cars off the road.”
Bob O’malley, Virgin Trains’ vice president of government affairs, said in May the California-nevada project would generate $1.98 billion in economic impact, create over 1,000 construction jobs, transport 5.5 million visitors to Las Vegas annually, remove 4.5 million cars from Interstate 15 each year and generate
$14 million in environmental benefits per year.
Brightline acquired Xpresswest in September 2018 and formed a partnership with businessman Richard Branson and his Virgin Trains line late last year.
The company’s plan includes a 185-mile dual track that would run along the I-15 corridor between Victorville, California, and Las Vegas.
The designated Las Vegas stop, dubbed Harmon Station, would be located in an area near the Rio, Reynolds said. Las Vegas officials are hoping to further connect Virgin Rail passengers to the city by looking at the feasibility of adding a rail connection to and from the proposed station to downtown Las Vegas.
Contact Mick Akers at makers@ reviewjournal.com or 702-387-2920. Follow @mickakers on Twitter.