Evaluating Innovative Financing Mechanisms for the California High-Speed Rail Project

Funding a large-scale infrastructure project using entirely from public funds often leads to unforeseen challenges. This is because public funds are often politically invested, are temporal, tax-dependent and sensitive to economic health of the funding public agency. As a result, shortage or uncertainty in funds often limit timely completion of large-scale infrastructure projects. California high-speed rail (HSR) is one such example – which has recently faced uncertainty in its funding from its federal partner – the Federal Railroad Administration (FRA). This was evident in May of 2019 when the FRA cancelled its entire funding meant for the completion of California HSR program.  The primary reason cited was the slow progress of the project, and in response to California’s Governor announcing to complete only a short segment section of the HSR line linking Merced and Bakersfield in the State’s Central Valley. A lot has already gone into funding the HSR program, almost ten years of effort, and an unfinished project could lead to job losses that have been sustained by the HSR program. 

Thus, innovative funding mechanisms which, in practice, have often proved to be effective for large-scale infrastructure projects is needed for California’s HSR completion.  There is limited literature on mechanisms to leverage funds from evaluating all aspects of economic benefits accrued from HSR construction/completion. Alternative sources of financing, such as value capture, is the need of the time for California’s HSR program, and this should be achieved through some sustainable and innovative means.

Therefore, there are two main objectives that this research aims to fulfill, which are as follows:

  1. evaluating an efficient funding mechanism based on benefits from real estate value increase and business expansions from HSR line’s completion at researched strategic locations, and
  2. identifying key HSR stations along developed segments that can be revamped with the above mechanism.

The findings from this proposed research would assist decision makers in determining benefits that have not yet been thought of being harnessed if completion of HSR segments are carried out at strategic locations.

Principal Investigator: 

Shailesh Chandra

PI Contact Information: 

shailesh.chandra@csulb.edu
California State University, Long Beach

Project Number: 

2047