State Treasurer Bill Lockyer is warning that investors' concerns that the proposed high-speed rail project will "never work economically" could hurt progress on plans to build the bullet train connecting Los Angeles to San Francisco.
Lockyer said questions from Wall Street investors have made him "reticent to try to go to market to issue bonds to finance the state's share."
Voters approved $9.95 billion in bonds in 2008 to fund the project. The state has also been awarded $2.25 billion in federal funding, but Lockyer said securing the additional private funding to construct the project could prove difficult until questions about its viability are answered.
Here's what Lockyer told the editorial board of the San Diego Union-Tribune:
"There are segments of the line that you could run sensibly, principally L.A. to San Diego," the treasurer said. "I hear from the world of Wall Street investment bankers about what they think makes sense. And almost universally, they're convinced that no one can finance the routes from L.A. to the Bay Area, that it just will never work economically, certainly in the foreseeable future."
Rail authority officials "need to do a lot more work to make sure investors can be reassured of the financial viability of the project," Lockyer said. "There are dozens if not hundreds of infrastructure investment funds on the planet. (The California Public Employees' Retirement System), as an example, recently bought a significant piece of a London airport. There are a lot of infrastructure funds like that that are public and private, probably trillions of dollars looking for good deals. So there's financing potentially available if it's a good deal. I'm just not yet convinced the investors are going to think that's a smart investment to make."
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PHOTO CREDIT: State Treasurer Bill Lockyer testifies before a legislative committee on May 22, 2009. Hector Amezcua / Sacramento Bee file photo