All aboard the high-speed train to Las Vegas

"This is not a train engine. It’s an economic engine for the whole state of California and the nation," says Palmdale Mayor Steve Hofbauer.

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by Fiona Ma

An endeavor by Virgin Trains USA that would bring an all-electric, high-speed train between California and Nevada is moving down the track.

For the better part of 18 months, the California Treasurer’s office, in coordination with Governor Newsom and state agencies, has worked to encourage significant private investment in our state’s transportation network. On Tuesday, the California Debt Limit Allocation Committee board approved a tax exempt bond allocation that will allow the $5 billion Virgin Trains project to move forward, connecting Southern California and Las Vegas by rail.

Our efforts are not alone on this project. Last month the United States Department of Transportation approved its own allocation of tax-exempt bonds for Virgin Trains and the state of Nevada is weighing a similar proposal. We’ve also worked with local officials and heard from mayors, state legislators, union leaders and members of the business community who support this project.

The 170-mile line from Apple Valley in the high desert to Las Vegas would be along Interstate 15. The project will be paid for almost entirely with private funding. Virgin Trains USA plans to eventually operate all-electric trains from Victorville to Las Vegas in about 90 minutes. 

The trains would reach speeds in excess of 150 miles per hour. The project will benefit from the Metrolink system that connects Victorville with the Los Angeles area. Construction is estimated to start later this year and trains running by 2023.

According to an economic development plan submitted by Virgin Trains USA to the California Debt Limit Allocation Committee (CDLAC), which I chair, the project will result in a $2.3 billion boost to the economy, operations will contribute $377 million over a 10-year period, and it will generate $317 million in state, local, and federal taxes. Further, it will all take place in the High Desert, San Bernardino County area, where high quality jobs are scarce and many commute to Los Angeles for work.

The Victor Valley region of San Bernardino County was hit hard by the Great Recession and was slower than other areas of the state to recover, which is why the Virgin Trains USA project is getting deep support from Apple Valley, Victorville, Adelanto, and Hesperia officials.

“This is not a train engine. It’s an economic engine for the whole state of California and the nation,” says Palmdale Mayor Steve Hofbauer.

“This is a great infrastructure project,” says Robbie Hunter, President of the State Building and Construction Trades Council, which represents about 450,000 construction workers. “It’s good for the state, good for workers and good for the environment.”

Apple Valley Town Council member Art Bishop says: “This is the largest project the high desert has ever seen and may ever see.”
The Virgin Trains USA economic development plan calls for the company to build 1,250 potential workforce housing units (between 25 and 30 dwelling units per acre) on 400 acres it controls in the valley.  Meanwhile, the new jobs created will benefit the local economy and include 100 high-skilled vehicle maintenance facility jobs with an average annual salary of $70,000.  In addition to constructing a maintenance facility in the region for the train system, Virgin plans to purchase rolling stock from Siemens Mobility, Inc. in Sacramento, a leading manufacturer of locomotives and passenger coaches.

The company also plans to build a station on 80 acres in Victorville and acquire 225 acres for housing and retail/commercial development near the station in North Victorville.

Private equity, tax-exempt bonds issued on behalf of private businesses help make funding for certain private-sector projects feasible. Unlike municipal bonds, the payment of principal and interest on private activity bonds is the responsibility of the private business receiving the proceeds – not the state or local community. Thus, private activity bonds are a low-risk way for government to finance projects that provide public benefits and contribute to the economic vitality of California.

The all-electric train will save energy and reduce pollution. The project will significantly cut pollution by removing 100,000 metric tons of carbon emissions annually, and reduce traffic congestion by removing 2.8 million cars and 400 million vehicle miles travelled annually. This is an important consideration for California, which aims to slash climate changing greenhouse gas emissions another 40 percent by 2030.

This project is a triple win: transportation, economic development and housing – and an exciting public/private partnership that gives us the best value for our private equity, tax-exempt bonds.  It creates desperately needed housing and jobs in the Apple Valley/Victorville region, while getting people out of their cars.

Fiona Ma serves as California State Treasurer.