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Private Investment in High-Speed Rail: Back to the Future. Amer ican Association of State Highway Transportation Officials Standing Committee on Rail Transportation  2010 National Meeting September 20, 2010. Karen J. Hedlund Chief Counsel Federal Railroad Administration.

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private investment in high speed rail back to the future

Private Investment in High-Speed Rail: Back to the Future

American Association of State Highway Transportation Officials Standing Committee on Rail Transportation

 2010 National Meeting

September 20, 2010

Karen J. Hedlund

Chief Counsel

Federal Railroad Administration

tools to implement ppps
Tools to implement PPPs
  • Federal infrastructure bank
  • Federal and state grants and loans
  • Contribution of ROW
  • Sale of equity
  • Municipal tax bonds
  • Foreign investment
  • Buy America
the founding fathers of ppps
The founding fathers of PPPs

Leland Stanford, one-term California governor and titular head of the Central Pacific, late 1860s. (California State Library: 8527)

Collis P. Huntington, the hardware storekeeper-turned-empire builder for the Central Pacific, late 1860s.

(The Huntington Library: HEH 61/1/2/13)

recent us ppp precedent
Recent US PPP Precedent
  • Mostly highways and tollroads
    • CA – SR 91, San Diego Expressway, Doyle Drive
    • TX – I -35, 161, 635
    • VA – Greenway and Pocahontas
    • FL – Miami Port Tunnel and I-595
  • PPPs not “privatization”
    • Chicago Skyway
    • Indiana Tollroad
    • Northwest Parkway
can highway model be adopted to rail
Can highway model be adopted to rail?
  • Ridership and revenue hard to predict
    • New market
    • Competition from air and highways
    • Network connectivity issues
  • Potential for long-term operating losses

Vs. “Ramp up” period for new toll roads

  • Technology risk
additional issues
Additional issues
  • Role of freight and other ROW owners
  • Includes systems, equipment and operations
  • Major operator role re specifications
  • Multi-jurisdictional funding and governance
  • Liability
  • Safety – federal design standards and regulations
transit ppps unproven
Transit PPPs - unproven
  • Hudson-Bergen DBOM
  • Las Vegas Monorail
  • Denver Eagle P3 – in procurement
  • LA Metro Extension – in planning
  • Oakland Airport Connector – in re-procurement
california high speed rail project
California High-Speed Rail Project
  • PPP investment - $10 – 25 billion (25% total)
  • Base revenue guarantee
  • Vendor financing – equipment leases
  • DB for construction risk transfer
  • Possibly DBOM (design-build-operate-maintain
ca hsr request for expressions of interest
CA – HSR: Request for Expressions of Interest
  • Critical factors
    • Risk transfer
    • Public funding commitments
    • Public policy mandate
    • Clear P3 authority
    • No ROW, environmental risk
  • Ridership risk
    • Unique nature of project
    • Lack of comparable models
    • Could assume more after projections proven up
florida deals show the way
Florida deals show the way?

“Availability payment” financings

  • Port of Miami Tunnel
  • Fort Lauderdale I-595 managed lanes
availability payments apply to rail
Availability payments – apply to rail
  • Public owner sets and retains fares
  • Some progress payments during construction and annual payments for term of agreement
  • Annual payments based on performance
    • Number of trains
    • Headways, OTB
    • Quality – cleanliness, customer service
    • Safety
  • Public obligor must be credit-worthy
first to leave the station
First to leave the station -

Tampa – Orlando High Speed Rail

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