California panel OKs bond issue for Virgin Trains' Las Vegas service

The California Debt Limit Allocation Committee's board last week approved the issuance of $300 million in tax-exempt, private equity bonds as part of Virgin Trains USA's proposal to build a high-speed passenger-rail line from Las Vegas to Southern California.

The board's vote followed a committee staff recommendation that the company, which is backed by Fortress Investment Group's private equity funds, receive half of its bond request now, contingent on it submitting an economic development plan, Bloomberg reported last week.

That plan must outline the company's goals in the area of housing, jobs, traffic congestion and workforce development, according to a press release issued by California State Treasurer Fiona Ma's office.

Virgin Trains' proposed project "will transform" transportation in Southern California and Las Vegas by providing a fast connection that reduces traffic congestion and air pollution, Ma said.

"But it will do far more," she added. "It's a regional kick starter that will usher in a new era of economic development in San Bernardino County by creating jobs, housing, retail and commercial activity."

Once built, Virgin Trains expects to eventually operate 32 trains from Victorville, California, to Las Vegas that would cover the 180-mile distance in about 90 minutes. The trains, which would carry up to 600 riders, would reach speeds of more than 150 mph.

The company also plans to build a station on 80 acres in Victorville, and acquire 225 acres for housing, retail and commercial development near the station. Company officials estimate the rail line will inject $46.9 million into San Bernardino County's economy each year.

This summer, Virgin Trains made a request to the Debt Limit Allocation Committee to issue $600 million in activity bonds. In November, the company will ask Nevada state officials to issue up to $800 million for the railroad, plus part of the federal allocation, so the company's tax-exempt allocation plans total $4.2 billion, Bloomberg reported.

Virgin Trains would be obligated to repay the debt payments, not the government agencies that would sell the bonds on the company's behalf.

Virgin Trains estimates the entire project will cost $4.8 billion, with $3.2 billion of it spent in California. The project will benefit form the Metrolink system that connects Victorville with the Los Angeles area, according to officials with the state treasurer's office.