California has spent nearly two decades relying on taxpayers to finance its high-speed rail project. Now it’s looking to private investors. Whether any step up remains an open question. The search for private money was always part of the plan. When Californians approved a bond measure to fund the project in 2008, they pictured a system to rival the best in the world. Sleek trains would whisk riders between San Francisco and Los Angeles in just 2 hours and 40 minutes. Using renewable energy would cut emissions by up to 3 million metric tons annually. Voters were willing to put up $10 billion to make this dream a reality. Everyone knew that wouldn’t be enough. The bond was never meant to cover the entire cost. State officials envisioned the federal government and private sector contributing equally toward the projected $33 billion budget. But Washington’s support ebbed and flowed with each president. After years of legal battles with the Trump administration, the state said ‘the federal government is not a reliable, constructive, or trustworthy partner’ in advancing the project. Private capital, meanwhile, has largely remained on the sidelines. That may soon change. The California High-Speed Rail Authority recently announced a $25 million agreement with a consortium of companies that will explore ways to advance the project. Over the next six months, it will develop funding strategies to expand the project beyond the state’s Central Valley, potentially into San Francisco and Los Angeles. ‘This agreement reflects growing market confidence in that strategy and the long-term potential of California high-speed rail as a transformative investment in California’s future,’ Ian Choudri, the agency’s CEO, said in a news release. Choudri said the agency has spent the past year taking steps to ‘reposition’ the project around ‘a more commercially focused and delivery-oriented strategy.’ Most of the construction is focused in the Central Valley, where the first phase will connect the cities of Merced and Bakersfield. The rail authority chose to start there because it offered the quickest and cheapest path to getting trains running. It is also an opportunity to bring a state-of-the-art transportation system to a region long overlooked by the state. Crews have completed dozens of bridges and viaducts and laid roughly 60 miles of guideway. Their efforts will soon shift to laying track. Linking San Francisco and Los Angeles is expected to cost $126 billion, with service slated to begin in 2040. Even the first phase alone will likely require tens of billions of dollars. Last year, the state committed $1 billion annually to finance the project through 2045. Read Next Billions spent, miles to go: The story of California’s failure to build high-speed rail Benton Graham Genevieve Giuliano, a professor emeritus of public policy at the University of Southern California, said the rail authority’s announcement doesn’t mean an influx of private capital is imminent. It is simply an agreement to explore how that might happen. ‘Until I see something that says, ‘Company X is going to put up $10 billion under the following conditions,’ I don’t see that as we’re getting private money in here,’ she said. She also doesn’t see the private sector taking on any risk until it has a guaranteed revenue stream and is confident the project will be profitable. Others see opportunities for private investment, but not necessarily in financing the railway. ‘I do not believe there will be any at-risk private investment in expanding the system,’ said Lou Thompson, who chaired the High-Speed Rail Peer Review Group from 2012 until 2024. Instead, he sees investors finding opportunities in merchandising, such as T-shirts, caps, and model trains, and residential and business development around stations. The rail authority sees that potential, too. It could allow cable companies to install fiber optic lines alongside tracks, for example, or produce surplus energy for utilities. The agency expects to have an agreement in place with power companies later this year to consider opportunities. Whether those opportunities lead to significant investments remains uncertain. But establishing a business consortium to find out shows California is willing to get creative, said transportation expert Joe Schwieterman. ‘They’re not settling for a go-slow approach that pushes key decisions off to the next generation,’ said Schwieterman, who leads the Sustainable Urban Development Project at DePaul University. He conceded that ‘there’s still gigantic financial hurdles ahead,’ not the least of which is that the funding needed to finish the project ‘has yet to be identified.’ Andy Kunz sees reason for optimism. He sees private capital helping the rail system reach the more profitable cities of San Francisco and Los Angeles. ‘Having private sector groups show up just gives us more confidence that it’ll be done more quickly,’ said Kunz, head of the U.S. High-Speed Rail Association. That’s important, given the meager federal support the project has. ‘Because our public sector is not really leading the charge, this is really exciting,’ he said. ‘We now have a private sector group stepping in to help get these first couple of projects going.’ Choudri has been pursuing that exact strategy since taking the helm at the California High-Speed Rail Authority in 2024. He told Grist the timing is right, given the state’s promise of annual funding and the project now owns all of the land needed to complete the first 119 miles. ‘We need to turn this project into a business,’ he said. ‘We need to build this corridor having rail as primary service, but then use it for other economic development and growth in order for us to be self-sustainable.’ This story was originally published by Grist with the headline Next stop for California’s high-speed rail: Finding private investors on Jul 28, 2026.