TransportationPotential Funding for Texas Central High Speed Rail in New Federal Infrastructure Bill

An infrastructure bill recently passed in the House could provide financial benefits and funding to Texas Central, a high-speed rail project.
July 10, 2020
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When the U.S. House of Representatives passed a large infrastructure bill, tagged the “Moving Forward Act” (H.R. 2) on July 1, it included a few provisions that could provide financial benefits and assistance to the planned high-speed rail project, Texas Central Railway.

Texas Central aims to build a high-speed rail between Dallas and Houston with one stop in the Brazos Valley.  

H.R. 2 provides $19 billion over five years in Passenger Rail Improvement, Modernization, and Expansion (PRIME) Grants.  

The House Transportation Committee report confirmed that high-speed rail projects would be eligible for PRIME grant funds. The program offers federal cost-sharing of 90 percent. The bill did not make clear who would administer the PRIME Grant program, but the Federal Railroad Administration has handled other grant programs like the High Speed Intercity Passenger Rail Program.

Rep. Colin Allred (D-TX-32) lauded the grant program funding. “Private entities like Texas Central, which is trying to build a high-speed rail line between Dallas and Houston, would also be eligible for financing through the Railroad Rehabilitation and Improvement Financing program,” he said in a press release.

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The bill now moves to the Senate, but Senate Majority Leader Mitch McConnell has said it “is not going anywhere in the Senate.” The bill contains many provisions funding other projects besides transportation infrastructure, including funding for broadband internet, low-income housing, health care, the postal service, and “green” energy.

Texas Central was originally said to be privately funded as seen in the Texas Department of Transportation 2016 Texas Rail Plan Update. “TCR [Texas Central Railway] proposes an entirely privately funded high-speed passenger rail service between Dallas and Houston with no state or federal funds for the EIS [environmental impact statement] study, the development, construction, or operation of the service.”

The Texas Central website says, “The Railroad will not seek grants from the US Government or the State of Texas, nor any operational subsidy once operation begins. The project will be financed with a blend of debt and equity.” 

Since then, a spokesperson for Texas Central said in June that they have made clear for the last two years that they would explore all types of funding available, including federal programs.  

In a letter to Texas State Senator Robert Nichols (R-Jacksonville) in April, Texas Central CEO Drayton McLane said that the cost of the project has grown to nearly $30 billion and that he hoped to receive “monies from President Trump’s infrastructure stimulus.”

Another possible benefit to Texas Central in the “Moving Forward Act” was an amendment to H.R. 2 proposed by Rep. Eddie Bernice Johnson (D-TX-30), a vocal supporter of high-speed rail. It would change current law to alter the Credit Risk Premium (CRP) by creating a new payment schedule.  

According to the Federal Railroad Administration, the CRP is intended as a protection in case of default and is “assessed as a percentage of the total loan amount and varies by the loan terms and overall risk of each unique transaction.” 

This amendment allows Railroad Rehabilitation and Improvement Financing (RRIF) applicants to pay half the premium upfront, and the other half in installments over the 10 years after getting a loan. 

Johnson believes the CPR premium payment requirement has been an impediment to RRIF assistance for projects like Texas Central.  

“I am encouraged that my amendment to provide a workable option for Texas Central to meet the CRP was included in the bill,” Johnson said to The Texan in a statement.  

Rep. Kevin Brady (R-TX-8) spoke against the amendment on the floor of the House. He believes that Texas Central’s “financial situation [is] so poor, they will not be able to pay the risk premium upfront – the altered CRP payment schedule would allow them access to government loans without putting down a full premium payment to protect taxpayers. If the project fails, then taxpayers could be left holding the bag for TCR,” a spokesperson for his office said.

Texas Central did not respond to request for comment before the time of publication.

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Kim Roberts

Kim Roberts

Kim Roberts is a reporter for the Texan in the DFW metroplex area where she has lived for over twenty years. She has a Juris Doctor from Baylor University Law School and a Bachelor's in government from Angelo State University. In her free time, Kim home schools her daughter and coaches high school extemporaneous speaking and apologetics. She has been happily married to her husband for 23 years, has three wonderful children, and two dogs.