California HSR Bonds

[Daniel]

With the feds giving CA HSR roughly $4 billion, when/will CA release that $10 billion in 1A bond financing? How does that work exactly?

 

[GlobalistPotato]

MAGIC!!! Actually, I don't know how...

 

[George Harris]

There are mechanisms. I do not know what they will be for these. You could probably do some on-line searching and find out. In general, state bond issues are backed by the "full faith and credit" of the state. For California that may not be worth a lot at this time. There are other forms, such as revenue bonds which are to be paid off by income from whatever they are building. I do not think this is the form of the Calif. bonds.

 

[afigg]

With the feds giving CA HSR roughly $4 billion, when/will CA release that $10 billion in 1A bond financing? How does that work exactly?

First, CA has put up about $2.8 billion of the state bond amount so far for state matching funds. The rest of the authorized bond funds will be in reserve until CA needs it to provide state matching for future federal grant applications or additional funding for the project.

However, until CHSRA needs the money for starting construction, land acquisition, or what have you, there is no need to issue the bond amounts that have been committed. They also may want to spend some of the federal grant money first before they start using the bond funding. Depends on the details of the agreement with the FRA on how and when the state matching has to be spent. There is also the issue of market timing. The state will issue the bonds when they need to or when they decide the market is good to do so.