Private sector gets a seat on the California bullet train

June 26, 2015

To its critics, California’s high-speed rail project has exemplified an outsize government project draining taxpayer money with little concern for the cost efficiencies that are a hard fact of life in the private sector.

But something happened this week that could not only undercut that view, but also set the project on a course for substantial private investment and a (partly) market-based business model.

The California High-Speed Rail Authority, taking a step industry peers have been expecting for years, on Monday sent out a “request for expressions of interest” to U.S. and international companies it hopes will respond by Sept. 14 with suggestions on how to build the system quicker, cheaper and with less risk to taxpayers.

If that sounds like a big departure, it is and it isn’t. The rail authority has long talked about soliciting such input. The idea is to follow up by signing contracts that shift various responsibilities — design, construction, finance and maintenance — to private-sector partners.

To this point, industry’s role in the $68.5 billion project has mostly been limited to bidding on and receiving contracts to design and build segments in the Central Valley. Although this approach gives the agency maximum control, it does nothing to bring in the private dollars the project badly needs, and it does little to tap the expertise of companies that have actually built bullet train systems around the world.

Probably the biggest question involving the private sector is how to finance the project, which faces a shortfall of tens of billions of dollars. To date, work on the bullet train has been paid for by state bond sales and federal dollars, neither of which is considered a strong source going forward.

 

To read the full story by John Cox in The Bakersfield Californian, click here.

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