The O’Jays — who enjoined people all over the world to start a love train — have nothing on Southern Nevadans who voiced their support Thursday for a passenger rail project with a sexy name and a decidedly unsexy destination.
“For the first time I think we have a real deal to talk about here,” former gaming executive Don Snyder testified at a public hearing on a request by Virgin Trains USA to receive $100 million in federally-tax exempt private activity bonding authority from the State of Nevada.
Virgin Trains USA, which is backed by Fortress Investment Group, intends to request an additional $100 million next year from Nevada and a total of $600 million from California, which has already approved half of that amount.
Federal law allows Virgin Trains USA to parlay the $800 million in bonding authority it seeks from California and Nevada into four times that amount — $3.2 billion in bond debt to help finance the $4.5 billion dollar project.
A company spokesman says Virgin Trains USA is seeking another $1 billion in private activity bonds from the U.S. Department of Transportation, which provided the PABs for its Florida project.
“We intend to finance the project through a mix of equity and debt,” Ben Porritt, Senior Vice President of Corporate Affairs for Virgin Trains USA, told the Current. Porritt did not identify alternative financing in the event Virgin’s federal application is unsuccessful.
The hearing was dominated by testimony from Snyder, chairman of the Regional Transportation Commission’s Transportation Resource Advisory Committee (TRAC), four other TRAC members, labor officials and Anthony Marnell, former chairman of XpressWest, the previous iteration of the train project, which sold to Brightline, now Virgin Trains USA.
Snyder noted decades of “near misses” in the quest to connect Las Vegas and Los Angeles via rail. The proposed project gets close but falls short of that goal, with terminals in Southern Nevada and Victorville, a remote town in California’s high desert.
“It never happened before because no one could put the financing together,” said former AFL-CIO of Nevada executive director Danny Thompson. “This isn’t like you’re giving something away. This project makes so much sense, both for the economy and the public good. It’s good for the environment.”
A 2019 Congressional Research report on improving inter-city rail service notes “passenger rail lines rarely generate an operating profit.”
With the exception of Snyder, who noted he recently stayed near a Virgin Trains USA station in downtown Miami “in an area that had been a hardcore slum before the train,” those who testified were unfamiliar with the company’s Florida venture, which has been plagued by expansion delays and ridership falling short by fifty percent of company projections. Initial plans called for the Miami to Orlando leg to be completed in 2018 in one phase. The extension from West Palm Beach to Orlando is now slated for a 2022 completion.
Thompson and his fellow TRAC members admitted they had not seen ridership projections for the local project, noting the demand can be seen in backed-up southbound traffic on Interstate 15.
Conspicuously absent from the hearing was outgoing RTC Chief Executive Officer Tina Quigley, who confirms she will begin working for Virgin Trains USA in November as its Senior Vice President of Business Strategy. Quigley says she has no cooling-off period, meaning she is not prohibited from representing her new employer’s interests before the agency she currently oversees.
Nevada, based on its population, received $318 million in tax-exempt bonding capacity from the federal government in 2019. Half is allocated to local governments and half to the Director of the Department of Business and Industry, who has not granted any bonding authority this calendar year, Terry Reynolds of Business and Industry testified.
“We have approved this calendar year almost over $100 million worth of housing projects in both Southern Nevada and Northern Nevada,” Reynolds said in response to the Current’s reporting that the train project would cut into available bonding capacity for developers of low-income housing, a commodity sorely needed at both ends of the state. “These are affordable low-income housing projects for seniors or for workforce development. So a major amount of this money has gone into housing.”
The Clark County Commission is slated to vote next month on a resolution supporting the project.
Commissioner Lawrence Weekly supports the project in concept but says anything that cuts into the government effort to identify and generate low-income housing opportunities would be a concern.
“We gave direction to staff to go out and find affordable housing,” he said. “That would be a major concern.”
Porritt pointed to Virgin’s practice in Florida of investing in the area surrounding its stations, where the company has developed workforce housing.
“We invest where we do business,” he said, including providing free train fare to commuters in the area.
A recent report detailed by the Miami Herald last week indicates the company’s fares are too high and predicts low ridership for its expanded Florida route.