Bullet Train Developer Locks In Up To $300M Investment From Japanese Backers
In the latest saga to introduce a high-speed, public transportation network in Texas, the developers of one proposal have secured backing from an overseas investor — which is causing a stir among other high-speed rail players.
Last week, Texas Central Partners, the private company behind constructing the first bullet train line in the U.S. from Dallas to Houston, tapped Japan Overseas Infrastructure Investment Corp. for Transport & Urban Development, or JOIN, and the Japan Bank for International Cooperation for a loan of up to $300M, according to CoStar.
Both institutions are backed by the Japanese government, a trend increasing in Houston. Earlier this year, Japan ranked second in foreign investment in the Bayou City. JOIN had invested $40M in equity into Texas Central in 2015. The technology behind the bullet train is Japanese, and the country is invested in sharing it internationally.
"The Japanese government emphasizes that railway transport is an important sector in which to promote the export of Japanese infrastructure technology," JOIN said in a statement.
Texas Central estimates its project will cost about $16B.
In May, the company selected Bechtel as the project manager for Texas' bullet train. The company has also announced the Northwest Mall as a terminal location in Houston, and completed an environmental study.
Bisnow last reported that the project could start in 2019; Texas Central could not be reached for an update on the timeline of the project.
The Maryland-based arm of the French national railway company, SNCF America, which has its own transportation plans for the state, argued the project needs local funding and support, and called Texas Central out for turning to international capital.
"Two Japanese-government agencies are supporting an attempt to corner the market with technology that lacks interoperability and creates a monopoly on the future of Texas high-speed rail," SNCF America spokesperson Scott Dunaway said in a statement Tuesday.
"This project is right for Japanese companies subsidized by Japanese taxpayers and wrong for Texas. Nowhere in the world have high-speed rail projects become reality without government participation."
Last spring, SNCF lobbied Texas state legislators to consider a plan that would bring a higher-speed rail — different than bullet train technology, according to SNCF's statement. Its project, in total 480 miles of mixed-use track, calls to connect Austin, Dallas and San Antonio with another track from Temple to Houston passing through College Station.
The third high-speed project — this one by Virgin Hyperloop One — proposes to builds the first hyperloop network along The Texas Triangle. The first proposed track connects the Dallas, Arlington and Fort Worth areas and the second route links Fort Worth, Austin and San Antonio. In July, the plans removed the Houston stop.
The Hyperloop is a high-tech system that would shuttle passengers through a low-pressure tube at very high speeds with minimal aerodynamic resistance.
Texas Central officials continue to say its project is not in competition with the others. Last year, Texas Central, in reference to the Hyperloop, said the two different modes of transportation are complementary and similar to airlines in providing options. It released a direct response to SNCF's comments about its international investment.
"SNCF doesn't understand how free-market capitalism works in Texas because they are a government-owned monopoly in France," Texas Central said in a prepared statement. "Its state-owned approach and overextended unprofitable network demands immediate restructuring. SNCF and its industrial partners don't want competition in the United States nor do they offer to invest in bringing high-speed service here."