ADVERTISEMENT

High-Speed Train to Las Vegas Wins California Bond Approval

High-Speed Train to Las Vegas Wins California Bond Approval

(Bloomberg) -- California has approved $600 million of tax-exempt financing for a proposed high-speed train to Las Vegas, clearing a path for Virgin Trains USA to sell bonds for the private rail project.

A state committee Tuesday voted 3-0 to grant the rail project 15% of the state’s annual private activity bond allotment. Supporters of the train have said its construction and completion, slated for 2023, will result in more jobs, housing development and environmental benefits for the state.

The Fortress Investment Group-backed Virgin Trains project will be able to leverage the allocation into as much as $3.2 billion in unrated tax-exempt bonds. Affordable housing advocates have suggested that the money would be better spent solving the state’s housing and homelessness crisis more directly.

The train will originate 90 miles (145 kilometers) northeast of Los Angeles, in the Mojave Desert, and terminate in Las Vegas.

Virgin Trains will have until October 1 to complete the bond sale or it will lose access to the $600 million in financing. Representatives for the company said that they will move forward as soon as they receive all requisite approvals.

Its approval comes amid the coronavirus pandemic, adding another layer of uncertainty into the time line for the project. California Governor Gavin Newsom has already stated that state agencies shouldn’t expect new funding in next year’s budget.

Nevada has not yet taken steps on its end to approve the project as it deals with the virus fallout.

This marks the second high-speed rail project for Virgin Trains. It has a Florida line running between Miami and West Palm Beach, with plans to further expand service. The Florida operations and services have been suspended due to the virus.

©2020 Bloomberg L.P.