Texas Looks to State for High-Speed Rail Funding Multibillion-Dollar Project Could Fail If Financing Falls Through

Article excerpt

AFTER seeing Congress pull the plug on the Superconducting Super Collider, Texas could soon lose another multibillion-dollar project: a proposed 200-mile-an-hour railroad. Only this time, the decision rests with Texans themselves.

Three years ago, Texas awarded a franchise for a high-speed rail system connecting the Houston-Dallas-San Antonio triangle. The franchisee, now called Texas TGV Corporation, promised that the private sector would pay all the costs. But in December, Texas TGV executives announced that they would not be able to meet a year-end deadline to raise $170 million. "We've more or less told {state regulators} there needs to be a restructuring, a relooking at how this project ought to be done," says David Rece, president of Texas TGV in San Antonio. "We're waiting for them to evaluate what their next step is."

Marc Burns, executive director of the Texas High Speed Rail Authority, says attorneys are determining the authority's options. The 11-member board is expected to meet late next month to decide what to do.

At stake is a $6 billion rail system - $8 billion if the cost of financing is counted. Backers say it is an essential component of the intermodal transporation network that will be needed by 2015, when three times as many people as today will be traveling within the three-city triangle. High-speed rail also has potential environmental advantages, requiring less land than a highway and powered by electricity.

The Intermodal Surface Transportation Efficency Act of 1991 set aside money for high-speed rail corridors. Many have been designated: Boston-Washington, New York-Albany-Buffalo, Washington-Richmond-Charlotte, and Miami-Orlando-Tampa on the East Coast; Detroit-Chicago-St. Louis and Milwaukee-Chicago-St. Louis in the Midwest, and San Diego-Los Angeles-Oakland and Portland-Seattle-Vancouver on the West Coast.

"When you lay those black marks out on the map, you see the beginnings of a national intercity high-speed rail system," says Gil Carmichael, who was federal railroad commissioner under President Bush. "And the Texas piece is the premier part of the whole thing."

Mr. Carmichael is now a vice president of Morrison Knudsen Corporation, the Idaho-based construction giant and Texas TGV's largest shareholder. Morrison Knudsen had intended to underwrite the $170 million financing that Texas TGV set out to raise in United States and European financial markets. When it changed its mind, the financing collapsed. "We would have exposed our shareholders to the full potential of having to shut that thing down," Carmichael says. …


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