Can the private sector save America's high-speed rail projects? Experts are generally skeptical.

In the absence of federal funding support, the California High-Speed Rail Authority has turned its attention toprivate investment. Last week, the authority signed ajoint development agreementwith a consortium of high-speed rail, infrastructure, and investment companies to attract outside investors.

The consortium will "seek viable strategies" over the next six months to raise construction funding for work beyond the current 119-mile initial segment from Merced to Bakersfield. The $25 million agreement has an initial term of 30 months.

"These are very positive developments aimed at building partnerships and evaluating accelerated delivery, private investment, and public-private partnership opportunities for high-speed rail expansion," an authority spokesperson said in an email.

As things stand, the project has few other financing channels. The Federal Railroad Administration, under the direction of Transportation Secretary Sean Duffy,terminated approximately $4 billion in unspent federal funds previously awarded to the authority. The authority'sonly guaranteed source of fundingis a commitment from the state of California to provide $1 billion annually to the project from 2026 through 2045 through the state's cap-and-invest program. That program allows greenhouse gas emitters to buy and sell allowances at auction based on their needs, with a portion of the proceeds going to the state's Greenhouse Gas Reduction Fund.

According to the authority's2026 business plan, completing the full San Francisco-to-Los Angeles project would cost $126 billion. Currently available, authorized, or projected future funding through 2045 stands at $39.3 billion, including $20 billion from the cap-and-invest program, leaving a funding gap of $87 billion. Transportation experts who spoke with Smart Cities Dive believe it is nearly impossible for the private sector to provide funding on that scale to close the gap.

"If the California project could get private sector investment, they would have gotten it by now," Baruch Feigenbaum, senior managing director of transportation policy at the Reason Foundation, told Smart Cities Dive.

In a column published on the Reason Foundation website, Feigenbaum said the authority's partnership with the consortium is"a standard engineering contract paid for by taxpayers". Smart Cities Dive sought comment from the authority on this claim but did not receive a response by press time.

Private financing reality "catching up with ambition"

Two other passenger rail projects that once promised to succeed with a private model may offer a cautionary tale for potential investors.

The Brightline West project, backed by Fortress Investment Group, aims to build a 200 mph high-speed rail line connecting Las Vegas and Southern California. Its estimated cost has ballooned from $12 billion to $21.5 billion, and its completion date has slipped from 2028 to 2029. A Brightline West spokesperson said in an email that things are "fairly quiet right now" and confirmed the completion date and cost projections.

According to local media reports, work on its Las Vegas station was underway as of January. Beyond that, most construction activity is concentrated onsite surveys, which Brightline West describes on its website as including "geotechnical drilling and sampling, utility potholing, and land surveying."

According to Bloomberg, the project had promised to raise $400 million by March 31, 2026, but failed to deliver.

"Private sector plans don't actually work, and I expect Brightline West to turn to seeking more federal funding," Alon Levy, a fellow at New York University's Marron Institute focusing on transportation and land use, said in an email.

Brightline Florida, also backed by Fortress (though not considered a high-speed rail line), faces default if it cannot repay or restructure its debt by July 1.

"Brightline deserves credit, but the challenges they face are not surprising," Florencia Cirigliano, co-founder and board member of RedCoach, a luxury intercity bus company operating in Florida, Texas, and Oklahoma, said in an email. "I think what we're seeing now is reality catching up with ambition."

Despite financial hurdles, both high-speed rail projects are moving forward. Brightline West selected Siemens Mobility in 2024 to produce its high-speed trainsets, which will be manufactured at a new plant in Horseheads, New York.

The California High-Speed Rail Authority has completed track installation at a railhead facility in Kern County, California, which will serve as a staging and distribution center for high-speed track and systems installation. The authority has also approvedtrack installation, overhead catenary systems, train control systems, and communications infrastructure for its 119-mile Central Valley segment. Additionally, the authority has issued a request for qualifications seeking contractors for a project toextend the Central Valley line to Madera, California, with a price tag of $2.4 billion.

The question remains whether these multi-billion-dollar projects can move beyond the fundraising stage and into an era of trains running on tracks. "For most private sector development projects, financing arrangements are designed to limit downside risk and allow ample upside," Levy said. But if the railways cannot turn a profit, he said, it is unlikely the government will bail out investors.

"I never thought the numbers could really work," Feigenbaum said. "If I were a private investor, high-speed rail really isn't the best place to put money."