California legislators are not backing down from the commitment to create a high-speed rail system to connect the Bay Area and the Los Angeles basin.
On Saturday, the California Legislature will convene to approve new energy and climate agreements, including one that will extend the state’s cap-and-trade emissions program through 2045.
As part of that agreement, which was negotiated between state legislators and Gov. Gavin Newsom, the California High-Speed Rail will receive something it’s never had before: steady funding.
Every year through the cap-and-trade program, the California High-Speed Rail Authority will be awarded $1 billion for the construction and realization of the state’s most ambitious infrastructure project in history. It’s the largest guaranteed cash infusion in its history, and helps solve an ongoing problem about funding volatility.
The California High-Speed Rail project was kick-started in 2008 with the passage of California Proposition 1A, which allocated about $9 billion for the initial planning and early construction.
Aside from that, funding has been sparse. Only one-quarter of cap-and-trade auction funds were previously set aside for the project; another source of funding has come in the form of grants from the federal government, which can’t always be considered consistently reliable, especially as the Trump Administration has vowed not to award future grant money toward it.
The lack of clear, defined funding has hamstrung the project in many ways, officials from the Authority say.
But now, with $1 billion specifically allocated for the project every year, a new world of opportunities has been opened to get the oft-criticized transit project built.
“This funding agreement resolves all identified funding gaps for the Early Operating Segment in the Central Valley and opens the door for meaningful public-private engagement with the program,” Authority CEO Ian Choudri said in a release.
With steady funding, the Authority can work to attract private sector investment and partner with global financial lenders to acquire more cash up-front, knowing that there’s an avenue to repay any investment. This, officials said, is how major projects like this are financed across the world.
The ability to create public-private partnerships, or P3s, has been among the primary focuses of Choudri since coming aboard as the Authority’s main decision-maker.
“As we move forward, I am greatly encouraged by commitments to continue productive discussions with the Administration and the Legislature to put in place statutory and regulatory enhancements that accelerate construction and give greater certainty on time and schedule for segment delivery,” Choudri said.
The initial operating segment of the California High-Speed Rail will connect Merced to Bakersfield along the nation’s first electric railroad with trains capable of reaching 220 mph—hopefully by 2032.
The new agreement and reliable funding closes any funding shortfalls for the Central Valley segment, and could also clear the way for the California High-Speed Rail Authority to expand construction.
Choudri and the current regime at the Authority would like to have the system built out further north and south so riders can connect with other transit agencies, including Metrolink in Palmdale or Bakersfield, and Caltrain in Gilroy. The Authority has already invested heavily in the Caltrain system by helping electrify the line for future high-speed train use. A potential connection with Brightline West, California’s other high-speed rail system, could happen in the High Desert.
Theoretically, the system would be able to connect the Bay Area and Los Angeles with the help of regional passenger rail transfers. That would allow for revenue generation while work continued to finish the actual high-speed system in its entirety.
The Authority says that could happen by 2039.
Choudri says work must continue to secure long-term funding beyond the cap-and-trade commitment in order to “bring high-speed rail to California’s population centers, where ridership and revenue growth will in turn support future expansions.”
Other potential revenue sources include advertising opportunities, real estate development on land owned by the Authority, and the ability for companies to tap into the system’s vast fiber network.
But for now, the focus remains on the Central Valley.
Construction and design are currently underway along 171 miles from Merced to Bakersfield, with about 70 miles of guideway complete and dozens of structures built from the ground up.
A construction yard should be completed in the coming weeks, allowing for materials to be more easily delivered to construction crews. The very first tracks will be laid sometime next year, officials said.
So far, about 80% of the project’s total funding has come from the state. The Authority hopes that consistent state funding, alongside P3s and potential federal grant support, could help the project clear its biggest obstacle: money.
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