by Adolfo Pesquera
Texas Central Partners LLC, a private enterprise trying to bring bullet train service between Houston and Dallas, appears to have secured the financing needed to proceed to design and construction.
On Sept. 10, the Japan Overseas Infrastructure Investment Corporation for Transport & Urban Devleopment (JOIN) announced that it had reached agreement on Sept. 7 with Texas Central Rail Holdings LLC to provide financing “for the purpose of development of the Texas High-Speed Railway Project.”
The $300 million Notes Purchase Agreement is to be funded jointly by JOIN and Japan Bank for International Cooporation (JBIC) through an equity investment to a JOIN special purpose vehicle.
JOIN and JBIC are backed by the Japanese government. Texas Central will use Japan’s high-speed railway technology based on the Tokaido Shinkansen system owned and operated by Central Japan Railway Company.
“JOIN, through its equity investment and financial support in overseas infrastructure projects, will continue to support Japanese companies to enter into or expand their presence in the overseas infrastructure market, and, amongst others, Japanese operators and manufactures (sic) to expand their business opportunities outside of Japan,” the JOIN communique concluded.
Following this announcement, Texas Central released its own statement Sept. 13 acknowledging the securitization agreement. Texas Central claimed it would use the funds to proceed to “permitting, design and engineering, as well as other early works needed to launch construction during 2019.”
The Texas Central High-Speed Railroad preferred alignment. Courtesy: Texas Central Partners LLC.
To date, Texas Central has received most of its financial backing from private equity Texas-based investors. A Dallas Morning News report described the loan as getting Texas Central “to the point at which all of the capital required to construct is fully committed.”
The interest-bearing loan, combined with other financing, provides enough funding for all activities required for the project to reach financial close, the Texas Central press release stated.
The 240-mile rail project has an estimated cost of $12 billion to $15 billion. Construction cannot begin until Texas Central receives final environmental clearance, at which point it will take about five years to build.
The Federal Railroad Administration, the lead federal agency, anticipates issuance of its Environmental Impact Statement by Jan. 31. The Texas Commission on Environmental Quality has not set a deadline for itself, but is likely to make its decision on a permit for water quality certification sometime in the first half of 2019.
From Aug. 27 to Sept. 6, TCEQ held three public meetings for public comment on the requested certification.
Texas Central’s preferred design-build contractors are Fluor Corp. and Lane Construction. They are collaborating with Central Japan Railway Company (JRC).
Under an agreement between Texas Central and Cheshire, Connecticut-based Lane that was announced August 2017, Lane said its role is to “refine and update the project’s construction planning and sequencing, scheduling and cost estimates, and other design and engineering activities,” and they would be the preferred design-builder once the development phase and financial close are complete.
A Central Japan Railway Company bullet train riding an elevated rail in Japan. Photo courtesy of Texas Central Partners LLC.