High-Speed Rail’s Ian Choudri Confirms Plans For Private Investment to Bridge $10.2 Billion Funding Gap

California High-Speed Rail has roughly 11 months to plug a funding gap of between $10.2 billion to $14.2 billion. Back in March, the California Legislative Analyst’s Office told lawmakers that CHSR needs $7 billion in funding by June 2026 or else the first Bakersfield to Merced leg of the system could be delayed further into the 2030’s, with costs rising as a result as well. Even worse for the High-Speed Rail – the state is now out of bond money.

The amount shot up in May, and ever since then, High-Speed Rail and state authorities have been scrambling to fix it. In April, the leading solution to bridge the gap became private funding, with California High-Speed Rail Authority CEO Ian Choudri saying that the state may have to take out federal loans or issue new bonds if no private funding is secured. However, that amount was only for the original $7 billion gap. Nevertheless, Choudri and others ran with it despite a new round of criticism from gubernatorial candidates, most of whom are either against the system or said that cuts were necessary. CHSR has also dealt with federal reports showing no viable way forward for the system and the looming mid-July deadline for the state to respond to the federal cut in rail grants, including that $4 billion that is the difference between having a $10.2 billion gap and a $14.2 billion gap.

Earlier this month at the American Public Transportation Association Conference in San Francisco, Choudri confirmed that the current plan was increased state funding mixed with private equity to invest in the project. In addition, he confirmed that there was no chance that the state would simply stop the project at this point.

“We’re not stopping,” Choudri said. “This is now at a place that we are not changing our path. We are talking with the administration and California legislature to step up more. Funding through whatever the program they would like to look at, so that we can finance against it and keep building.

“We are looking at state-level commitments so that we can bring private equity partners in. Investors need to see consistent funds in order for them to put money into the project. If we secure enough private investment, the system could get built faster. It will accelerate the construction. The end result we are looking for get to the population centers faster.

“It is still worth the investment, even if the cost is high. Maintain the commitment and let us do the delivery like we did with the interstate highway grid. It was the commitment of the government saying we are not backing away. We have to do it. It is important.”

High-Speed Rail, Higher Risk

However, private funding wasn’t the only plan offered up, even if California says this is the only way forward. Dan Richard, the former Chairman of the U.S. High-Speed Rail Association, and former Chairman of California’s High Speed Rail Association, said that the Japanese model of auctioning operational rights for each segment following initial customer and ridership benchmarks could be a way forward to help the state recoup some costs.

“There’s always been a desire to have the private sector involved at the right time, when the risk is understood,” said Richard.

But that plan relies on getting an initial customer base first. While it worked for the Shinkansen bullet train in Japan, a route filled with high-population centers, California could prove to have a harder time showing high ridership between certain areas. If the Bakersfield to Merced section is potentially put up for sale, it would need a certain amount of ridership to be sold off, let alone be profitable. And while there would likely be initial high ridership in the first few weeks as people would want to check it out, it would likely swiftly decrease as the number of riders using it for actual necessary transportation would not be very high

If anything, the conference showed that there are not many option for CHSR going forward, with increased state funding being the talked about option and the cancellation of the project being the elephant in the room that no one wanted to discuss.

And of course, all of this is only over the short term gap that needs to be filled by the end of fiscal year 2026. The current total cost is much, much more. Originally estimated to cost $33 billion in 2008 with a San Francisco to Los Angeles line to open by 2028, the California high speed rail system has since ballooned to $128 billion, then $135 billion+, with an estimated partial completion somewhere in the late 2030’s. And last year, CHRSA actually confirmed that the system still needed $100 billion to link up San Francisco and Los Angeles. The true cost may also be much higher than anticipated, with some estimates during the Governorship of Jerry Brown putting that figure at around $350 billion.

2025 and 2026 are proving to be the most critical two years in the history of California High-Speed Rail, with a looming funding gap, the federal government trying to pull all funds they are currently giving to it, and rapidly declining public support for the project. Currently, public support has eroded to barely over half of all Californians still supporting it. And who knows where that figure could stand at the end of the year.

The federal decision to cut a additional $4 billion from the state for high-speed rail funds is expected soon.