Just as we thought the "On Again - Off Again" High-Speed Train between Las Vegas and Southern California was finally set to go, another delay. Construction on the high-speed train between Las Vegas and Southern California that was to begin this year has been delayed indefinitely because of financing issues.
Brightline West has announced it was delaying a $2.4 billion bond offering that would have funded the initial work on the planned $8 billion project.
Brightline tied the delay to market conditions brought on by the COVID-19 pandemic and this being an election year. Nevertheless, Brightline insisted there’s still investor interest in the project and it will continue to move forward.
“Brightline West received a significant amount of investor interest, despite the challenging market,” a Brightline representative said. “We ultimately had a deal, but it would have been restrictive.”
There is no timetable for the bonds to be marketed again, but Brightline said it will continue to monitor timing and market volatility before returning to the market with the bond offering.
Terry Reynolds, director of Nevada’s Department of Business, said the state is aware of the bond delay and it’s probably a good thing for potential investors in the project. “Issues this large where you have unsecured bonds out on the private market (are) very tough right now,” Reynolds said. “We do housing bonds, and they seem to be doing fine and other bonds. But this one, because of its size and because of the instability in the market with investors, it’s probably to their benefit to wait.”
Reynolds said if Brightline plans to delay the bond offering past a Dec. 31 deadline, he would recommend that Nevada reallocate the funds for affordable housing.
“Nevada has affordable housing needs, and I think the answer for us is easy, to reallocate it to housing,” Reynolds said. “We know there is some demand and they would be used. We front-loaded $200 million into housing in 2019, so this would put a substantial amount in. We should be good for another year and a half or so, with putting $200 million into our affordable housing.
California Treasurer Fiona Ma also cited current market conditions and said she is hopeful the project will go ahead at a later date.
“Unfortunately there is not a lot of liquidity in the market and a lot of economic uncertainty at this moment,” Ma said in an email. “The project is postponed until market liquidity improves.”
As with Nevada, California will also look to reallocate its funds tied to the project to affordable housing projects.
“We will first apply the $600 million to the housing deficit (since we overallocated the bonds in a previous round to award more finance/shovel-ready projects during this COVID-19 time) and then the remainder will go towards non housing projects,” Ma said.
“We will first apply the $600 million to the housing deficit (since we overallocated the bonds in a previous round to award more finance/shovel-ready projects during this COVID-19 time) and then the remainder will go towards non housing projects,” Ma said.
Expect projects of this nature to continue to go by the wayside as State Economies continue to suffer as a result of the Federal Government's failure to react to COVID-19. COVID-19 and the Economy are tied together at the hip.....
