The Texas Supreme Court ruled on June 24 that the company behind the proposed bullet train between Dallas and Houston could, in fact, use eminent domain to obtain the land it needed for the rail line. Residents in the rural area in the path of the train fought for years to keep Texas Centralfrom seizing part of their land.
It’s a big win for the company, but it also comes at a turbulent time: Two weeks before the ruling, Texas Central CEO Carlos Aguilar left the company, and its board of directors dissolved itself. James Leggate, online news editor for the Engineering News-Record, spoke to the Texas Standard about the future of the project.
This transcript has been edited lightly for clarity:
Texas Standard: Tell us about the significance of this eminent domain deal for the project itself. I thought this was one of the big obstacles for its viability.
James Leggate: Yes, this was one of the main problems that was a hurdle blocking the path. Essentially what this means is that Texas Central can now go ahead with acquiring the rest of the land that it needs for this planned railroad.
But is it too much too late? What has happened to Texas Central?
So it’s been a busy month for Texas Central. In early June, its CEO, Carlos Aguilar, had announced that he had left the company. He didn’t give a lot of detail, but he said that he had been unable to align the company’s stakeholders on a common vision for a path forward.
Around the same time as that was happening, I learned that the company’s board of directors had also disbanded. So it is a big turnover at the top.
Who’s at the helm of the train company? Is it clear?
Yes. At least in the meantime, it’s being managed by a man named Michael Bui. He is a senior managing director at a company called FTI Consulting. FTI is sort of an international firm dealing with just any sort of challenge here a company might be going through. You know, if you’re under investigation, if you need to respond to a cybersecurity incident, they step in and can help you out.
Michael in particular specializes in corporate finance and restructuring. He’s helped other companies go through process like bankruptcy or sale. So it does sound bad.
Where is the money coming from for this project? This is not a publicly funded project.
That’s right. They’ve been promising that it was going to be fully privately funded. Exactly how much money they have isn’t totally clear. There was a Securities and Exchange Commission filing sort of early on in the company’s days that showed they’d raised $75 million from investors. And then a few years later, they got a loan for up to $300 million from a Japanese bank. Outside of that, it does look like they’ve maybe attracted some other investors since that first round, but their finances are really opaque.
It sounds like the Texas Central railroad is still, at least on paper, a going concern. But are there questions about for how much longer?
Yeah. One of the big things that the landowners’ side in this state Supreme Court case had been trying to show or at least raise questions about was the company’s financial viability. The cost of this project, or at least the estimated cost has kind of grown significantly over the years, from closer to $10 billion to $20 billion, and now maybe even $30 billion, which obviously would be quite a stretch from what we at least know they’ve been able to raise so far.
So the company itself says that they are still moving ahead. There was a recent court filing that one of their lawyers submitted that said that they are still moving ahead, looking for more investors, hoping to build. Not sure exactly what timeline.
But if the Texas Supreme Court had ruled the other way, saying that Texas Central could not use eminent domain, is it possible the company might just have packed it up altogether?
The project would seemingly be dead in the water then. They’d have a tough fight managing to acquire all the land they need and very weak bargaining position to do it. And if they are looking for more investors, I can imagine that the Supreme Court ruling would be a big step in their favor.
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