I want to take a moment today to answer a question I get asked often: “How is the Texas high-speed train really any different than other high-speed rail projects we hear about? Aren’t they all the same?” I can appreciate the question, as most people, especially in Texas, are not following the day to day developments of passenger train projects across the country.
The simple answer is: The Texas Bullet Train is being developed with the discipline of a private development based on market principles and using the safest, most advanced technology in the world.
All major infrastructure projects are large and complex and high-speed trains are no different – it’s impossible to get a complete picture from media reports. One thing is certain, all are vastly different from one another. The Texas Bullet Train is the right project (North Texas to Houston), the right way (privately developed, safest technology) at the right time (exponential growth and demand for safe, reliable travel alternatives).
Let me elaborate on these points.
The Right Way
Taking a private approach to financing changes everything. It brings a fiscal discipline to all decisions and careful scrutiny of economic models and timelines. Private projects have to demonstrate that there is a viable market before a project is built. Public highway and transit projects, for example, are under few such constraints, as they are often built to meet multiple public policy objectives and are not necessarily expected to make money. Through its initial capital raise of $75 million, all from Texas-based investors, Texas Central demonstrates strong private sector support to make this project a reality. This project will cost less to build than a comparable public-sponsored project because options that are not viable will not be pursued. Already, this project’s financial and technical experts are developing the Texas Bullet Train to maximize ridership and capital efficiency. At the same time, decisions are made not based on a short term, low cost bid basis, but on what is best for the riders’ experience and the life cycle over the long haul. Why is this important? Because the discipline we employ results in zero risk to the people of Texas.
The Right Project
This project was selected based on criteria for success. There were 97 city pairs evaluated before developers identified the North Texas and Houston city pair as the most feasible in the country. The market-led approach not only identified the destinations for the project, it has also informed every decision made to date, and will continue to do so through construction and operation. Market economics drive where and when stations will be built and even how often trains will run. In public projects, those critical economic decisions are inherently subject to outside consideration and influence factors that are not always focused on ridership.
The Texas high-speed train is following a strong plan of finance. A unique feature of this plan is the project’s cash reserves, to be raised and set aside to provide a “financial backstop” in case ridership levels do not immediately meet expectations. In a public project, the state or federal government would take that risk and back the project – with your tax dollars. Not here. In the event that a public project does not attract the planned number of riders, you, the taxpayer, are stuck with the bill. As a private project, investors take the risk. And the private market takes care of any failures just like an underutilized office building or bankrupt utility company – private investors swoop in to purchase the asset for pennies on the dollar.
The Texas high-speed train must prove its worth every day to the investors who launched this effort, investors who built their reputation and legacy backing huge transformational projects – and making them successful and profitable. Their history of strategic and savvy business decisions has positioned them to invest in large projects with enormous potential – like the Texas Bullet Train.
The Shinkansen system is the safest and most reliable railroad technology in world – Texas deserves nothing but the best. With a 50-year flawless safety record, this state-of-the-art technology is unlike any other train system being planned in the United States today.
Safety is at the heart of every decision in this system. No other freight or passenger trains will travel on the same tracks. It is also “grade separated,” which means it will cross over or under all public roads and has no intersections with people or vehicles. There will be no cars waiting on trains to pass and no risk of trains interacting with cars. Therefore, there are no crossing arms, no whistles and the train doesn’t even have a horn – a very quiet experience.
In closing, I would remind you, that the biggest difference between the Texas project and others is that it will take no state or federal grants to build or subsidies for operations. Other projects have applied for the federal government’s $10-billion allocation in the American Recovery and Reinvestment Act of 2009 which was designed to “jump start” high-speed rail projects in the US. This project did not, and will not seek any of that money. Instead, Texas high-speed train employs a private financing approach that will pump more than $10-billion into the Texas economy. This private investment will launch true high-speed train travel in Texas and do so in a way that is consistent with our values.
I encourage you to reach out to us with your questions. We’re committed to sharing the facts with you. And – if there’s a question on your mind – I’m sure our leaders and investors have asked the same question.