Start of high-speed rail construction likely delayed 2 years

Virgin Trains USA was ready to break ground on a $4 billion high-speed rail project between Las Vegas and Southern California as early as next year, but those plans were docked after it failed to secure tax abatements this legislative session.

Bob O’Malley, Virgin Trains’ vice president of government affairs, said Thursday that after being in Carson City for over a month, the abatements the company was seeking didn’t come to fruition.

Not getting those abatements will likely push the start of planned construction back at least two years, he added.

“If we had been able to do something this session, we were ready to start construction in 2020,” O’Malley said.

Without the abatements, he said, “we’ll have to go back and reevaluate the timeline. Abatements are a critical component of the financing package so without it I don’t think so.”

Representatives for Virgin Trains, formerly known as Brightline, plan to attend the 2021 legislative session to again seek the tax exemptions, O’Malley said.

Virgin Trains was seeking partial abatement of sales and property taxes. The company still would pay the portion of those taxes tied to schools, similar to what it received in Florida for its Orlando to Miami high-speed line, O’Malley said.

“Like Nevada, high-speed rail was an unfulfilled dream in Florida for decades,” he said. “Florida leaders encouraged private investment in high-speed rail, and as a result the state is now reaping the benefits of billions of dollars in privately funded infrastructure, thousands of good-paying jobs, improved mobility for its residents, and positive environmental impacts.”

O’Malley reiterated that Virgin Trains was not seeking tax credits or state grants for the planned 185-mile dual-track project, which would run along the Interstate 15 corridor, as it would be financed entirely by private investment.

“There’s no public funding,” he said. “We’re taking the responsibility to build this infrastructure off the public, still providing that public service. Again, $4 billion is a big lift and just like in Florida, having policies in place that encourage that investment are critical to making to happen.”

O’Malley said the project would spur $1.98 billion in economic impact, create over 1,000 construction jobs, transport 5.5 million visitors to Las Vegas annually, remove 4.5 million cars from I-15 annually and create $14 million in environmental benefits per year.

Those proposed benefits and the private funding should make the project worthy of tax exemptions, according to lobbyist Danny Thompson, who represents various labor unions and other groups.

“It would create prevailing wage jobs, good paying jobs with livable wages,” Thompson said. “The environmentalists have always been advocates for mass transportation and this is truly mass transportation at its best.”

Thompson said environmental groups “all support it, the progressive groups all support it, the unions all support and I don’t understand why this is not a priority to get done.”

Other companies have been given incentive packages in the past, like Tesla and Faraday Future, with the latter exiting the state without completing its project.

Faraday was awarded a $215.9 million incentive package that included $177.9 million in sales, property and business tax abatements for its planned $1 billion electric automobile factory that was to be built 15 miles northeast of Las Vegas.

O’Malley said Virgin’s talks with legislators didn’t progress far enough to get into the possible amount of the tax abatement, but he said Virgin Trains’ project would differ from Faraday’s.

“Even though I compared us to other companies, we’re different because we’re more permanent in our infrastructure in the investment that we are building,” he said.

Thompson said he was baffled why the abatements weren’t awarded this time around.

“It makes no sense not to do this,” he said. “In that (I-15) corridor all you can put in that corridor is a train. It’s not going to be built without the abatements. If you compare that to Monday … the reported 17-mile backup on I-15, you can truly say this is in the public’s interest.”

Contact Mick Akers at makers@reviewjournal.com or 702-387-2920. Follow @mickakers on Twitter.