California bullet train preps private partner, OKs business plan

The California High-Speed Rail Authority expects to finalize its predevelopment agreement with a private partner by mid-June, after which the Plenary-backed consortium will spend the next six months analyzing the beleaguered project for monetization opportunities.

"Today really is the turning point for high-speed rail, not just in the state of California but in the United States," said CHSRA CEO Ian Choudri Monday at a board meeting that saw the approval of a new board chair, a controversial business plan and a $3.5 billion rack-and-systems construction contract. "We are entering into this new phase for this monumental project."

The authority tapped the Plenary consortium in mid-May but is still hammering out a few "contractual issues," said Choudri, who in May had said he hoped to iron out the differences before the June 1 meeting.

The six-month pre-development agreement is the first step toward a larger public-private partnership to help deliver the struggling bullet train, which has been stung by the Trump administration's withdrawal of federal funds among other political and financial headwinds.

The authority said it received one Statement of Qualifications in response to its Request for Qualifications, floated in December. Momentum Alliance Partners includes Plenary Americas US Holdings Inc., CDPQ Infra Inc., Keolis Rail Services America, LLC, SV California HSR, Inc., Jacobs Project Management Co. / Jacobs Solutions Inc. (J), Sener Engineering and Systems, Ltd, and the Steer Group Ltd.

It's a "world-class team" with decades of experience, Choudri told the board.

Assuming the contract is finalized, the group will spend the next six months assessing the full project and proposing at least one project that will support monetization, according to Choudri's presentation.

The second phase would outline how the private partner proposes to collaborate with the authority, including its level of investment. Phase 3 would be the development of key technical commercial and financial plans as well as transaction agreements, he said.

"This is a big day for California high speed rail," he said, saying the authority's previous attempts to bring in private partners had failed. "We did try in 2015, 2019 and 2022 ? now this is it," he said. "We said that we're going to get this done. We are here now. We have the private sector engaged and we have track builders, track and electrification builders on board."

The P3 will be backed by a securitization of future cap-and-invest revenue from the Greenhouse Gas Reduction Fund that allocates $1 billion through 2045.

The authority is currently exploring bonding or other financing legislation that would allow the state to securitize the $1 billion cash flow up front, according to its 2026 business plan, which the board approved Monday.

The business plan faces opposition from local officials, some of whom spoke at Monday's meeting, as it would give the authority the power to set up "Enhanced Infrastructure Financing Districts" to capture a piece of future local taxes generated around stations.

Local officials have threatened to sue over the plan.

The updated plan included a re-estimated $231.1 billion price tag for a buildout based on the original design for the 500-mile route. That price would drop to $126.2 billion based on several cost-saving measures, including changing to a single-track system from a double-track system in the Central Valley.

New board member Jason Elliot raised the question of the substantial funding gap between the cap-and-trade dollars and the full project price tag.

"By my own math, $86.8 billion dollars short of where we need to go and that's going to require partnership by every definition," Elliot said. "If we all commit to partnership, we will solve that gap. If we are fighting with each other we won't."

Gov. Gavin Newsom last month appointed his longtime aide Stephen Kawa as CHSRA board chair, and the board approved the appointment Monday. He replaced longtime board member and chair Tom Richards.

"I have worked for the governor since the 1990s," Kawa said Monday. "We have worked on many important issues and programs together. I know how important high speed rail is to him and his belief that this project will result in many benefits and a brighter future for California. I share that belief."

Newsom in May also appointed Joshua Hurlbert as the authority's chief technology officer. Hurlbert had previous been director of information technology at Brightline West Trains since 2023.