Can the private sector save high-speed rail projects in the U.S.? Experts are doubtful.
The California High-Speed Rail Authority has turned its attention to private investment in the absence of federal funding. It entered a co-development agreement last week with a consortium of high-speed rail, infrastructure and investment firms in hopes of attracting outside investors.
The group will spend the next six months “identifying viable strategies” to fund construction beyond the current 119-mile Merced to Bakersfield, California, initial phase. The $25 million agreement comes with an initial term of 30 months.
“These are all very positive developments aimed at a partnership to evaluate accelerated delivery, private investment, and public partnership opportunities for high-speed rail expansion,” an authority spokesman said in an email.
The project has few other funding opportunities as things stand. The Federal Railroad Administration, under the direction of Transportation Secretary Sean Duffy, terminated some $4 billion in unspent federal funding previously awarded to the authority. The authority’s only guaranteed funding source is a California state commitment to provide $1 billion annually toward the project through 2045 from the state’s cap-and-invest program, which enables greenhouse gas emitters to buy and sell allowances at auctions based on their needs, with some of the proceeds going to the state’s Greenhouse Gas Reduction Fund.
The authority needs $126 billion to complete the full San Francisco to Los Angeles project, according to its 2026 business plan. It has $39.3 billion currently available, authorized or in projected future funding through 2045, including $20 billion from the cap-and-invest program, leaving an $87 billion gap. Transportation experts Smart Cities Dive spoke with see little opportunity for private investment of the magnitude needed to close that gap.
“If they could have gotten private sector investment [for the California project], they would have gotten it already,” Reason Foundation senior managing director of transportation policy Baruch Feigenbaum told Smart Cities Dive.
Feigenbaum, in a column posted on the Reason Foundation website, said the authority’s partnership with the consortium “is a standard engineering contract paid for by taxpayers.” Smart Cities Dive asked the authority to respond to this statement, but did not receive a reply before publication.
Private funding realities “catching up with ambition”
The outcomes to date of two other passenger rail projects that promised success as private ventures may serve as a warning to potential investors.
Brightline West, the proposed 200-mph Las Vegas to Southern California line, backed by Fortress Investment Group, has seen its projected cost balloon from $12 billion to $21.5 billion and pushed its completion date from 2028 to 2029. A Brightline West spokesperson said in an email, “It’s pretty calm right now,” and confirmed the completion date and cost projection.
Work on its Las Vegas station was underway as of January, according to local news outlets. Beyond that, most construction activity has been for field investigation, which Brightline West describes on its website as including “geotechnical borings and samplings, utility potholing, and land surveying.”
The project had promised to raise $400 million by March 31, 2026, but failed to do so, according to Bloomberg.
“Private-sector plans aren't really workable, and I expect Brightline West to pivot to expecting even more federal funds,” New York University Marron Institute fellow in the transportation and land use program Alon Levy said in an email.
Brightline Florida, not considered a high-speed rail line but also backed by Fortress, faces default if it isn’t able to make payments or restructure its debt obligations due July 1.
“Brightline deserves credit for trying, but the challenges they’re facing aren’t surprising,” RedCoach co-founder and board member Florencia Cirigliano said in an email. RedCoach is a luxury intercity bus company in Florida, Texas and Oklahoma. “I think what we’re seeing now is reality catching up with ambition.”
Despite the financial hurdles, the two high-speed rail projects are forging ahead. Brightline West in 2024 chose Siemens Mobility to produce its high-speed train sets, which will be manufactured in a new facility in Horseheads, New York.
The California High-Speed Rail Authority completed track installation at a railhead facility in Kern County, California, that will serve as the staging and distribution hub for high-speed track and systems installation. It also gave the go-ahead to install the track, overhead electrical contact system, train control and communications infrastructure along its 119-mile Central Valley segment. Additionally, the authority opened a request for qualifications from contractors to extend the Central Valley line to Madera, California, a $2.4 billion project.
The question remains whether these multibillion-dollar projects can get beyond the money-raising phase to a time when trains are rolling along the railroad. “For most private-sector developments, the financing arrangement is designed to limit the downside and allow for a full upside,” Levy said. But if the railroad doesn’t become profitable, governments are unlikely to bail out investors, he said.
“I didn't think the numbers ever really penciled out,” Feigenbaum said. “If I'm a private investor, [high-speed rail] is just not the best place to put my money.”
