Investors might wait to back rail project until trains are running

Private investors may not be willing to invest in the California bullet train project until after it begins operating, the California High-Speed Rail Authority said in a letter to key legislators, an acknowledgment that again raises serious questions about how the state is going to fund the $43-billion construction over the next decade.

The letter gives a preview of the authority’s upcoming business plan, a critical document that is supposed to address longstanding concerns that it lacks a credible plan to build and operate the system. Even supporters of the Southern California-to-San Francisco system have said the previous business plans were unrealistic in their estimates of construction costs and ridership numbers, among much else.

The business plan is expected to be filed Nov. 1 and along with a related funding plan must be approved by the Legislature before the state can issue any of the $9 billion voters approved for the project in a 2008 bond measure. The legislature has a 60-day window to approve the plans and then begin the process of committing the state to bonds that would take several decades to pay off.

The authority wants to begin building an initial segment of the rail system from south of Chowchilla to north of Bakersfield, taking the train through the Central Valley agriculture belt. That segment would cost about $6 billion, exactly what the authority would have in hand from past federal grants and matching bond funds.