Quote:
Originally Posted by electricron
Seeking government backed loans doesn't mean there will be public financing, any more than my GI Bill, FHA backed mortgages involved any public financing. I guarantee that the government never had to pay a penny on my mortgage, that I paid it all myself.
What that government backed mortgage provided me was access to a home mortgage without any down payment and at a lower interest rate. The same should hold true with government backed bonds for transportation projects. The government is not acting as a co-signer to the leases or bonds.
Whether Texas Central operates the trains themselves, or hires another transportation operator to do so is immaterial. North Carolina has hired Amtrak to run its Carolinia subsidized train, and Hertzog to operate its Piedmont subsidized trains. So there are plenty of operators to choose from.
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These financial instruments can be direct loans, federal guarantees, or extensions of credit (the way in which the federal government subsidizes home ownership employs these options and more).
In any case, the federal government is acting in the capacity of guarantor under such instruments as RRIF/TIFIA. Such a loan would very clearly be federal funding (even if we won't call it that), because the federal government is either 1) using it's superior credit to borrow from financial markets on behalf of TXC, 2) staking its credit to guarantee the repayment of the loan on behalf of TXC, or 3) extending credit, directly to TXC.
Pretending otherwise, as TXC has coyly done, is like saying your home mortgage isn't technically financed with the bank's money but that of its customer's (both can be true, but it's conceptually the former). This refrain of "we won't need public funding" is specious, at best, and may end up leaving them with egg on their faces if the public perception - incorrectly or not - comes to be that they have.
The main point I'm driving home about the operations is that their potential profits all depend on what terms they get for the financing: public funding doesn't need to be recouped but financing does. This changes some of the realities surrounding their revenue/profits, whether they choose to seek a franchisee or not.
CAHSRA will only face political pressure to appear to recoup their capital costs (they won't), but TXC will either definitely do so (very difficultly) unless it gets written off - via government [tax] subsidies/credits as part of the terms of potential federal/BoJ loans.
I may be wrong, but the latter action is one of the reasons JR et. al. have managed to be profitable: a lot of their capital costs were taken off of their books, at some point in the past (though on this, I'm not very knowledgeable on specifics).