Virgin Trains Poised to Win California to Vegas Train Tax Credit
Virgin Trains Poised to Win California to Vegas Train Tax Credit
(Bloomberg) -- Virgin Trains USA is poised to win $10 million in tax credits from California’s economic development agency for its proposed passenger rail to Las Vegas from a southern California desert city.
The company, backed by Fortress Investment Group private equity funds, has said the project will generate construction jobs and full-time and part-time posts, as well as boost housing production and reduce pollution by getting cars off the road. A state committee on April 23 will consider granting the tax credit under the program known as California Competes and the award would result in a net increase of 320 workers in the state, according to an agenda posted on the economic development office’s website.
California’s potential support for the venture comes as the state battles the coronvirus pandemic and related economic fallout that threatens to cause widespread tax revenue declines. Governor Gavin Newsom has warned state agencies that they shouldn’t expect funding for new programs in next year’s budget.
Meanwhile, as localities across the country ordered residents to stay home, tourism-related businesses have shuttered or paused operations, such as the Virgin Trains’s rail line in Florida, which last month suspended service.
Friday’s announcement from the agency known as GO-Biz comes before the Tuesday meeting of a different California committee to approve the company’s request for about 15% of the state’s annual share of private activity bonds intended for publicly desirable projects. The rail venture would leverage its allotment to sell up to $3.2 billion in tax-free debt through a California agency.
The tax-exempt financing plans total $4.2 billion for the $4.8 billion project. Virgin Trains would be on the hook for debt payments, not the government agencies selling the bonds on its behalf.
The train, originating in Apple Valley, 90 miles (145 kilometers) northeast of Los Angeles by the Mojave Desert, is slated to open in 2023.
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