The Texas Supreme Court ruled June 24 that the company behind the Dallas-Houston high-speed rail project could, in fact, use eminent domain to obtain the land it needed for the rail line. Residents of the rural area in the train’s route fought for years to keep Texas Central from taking over some of their land.
It’s a big win for the company, but it also comes at a turbulent time: Two weeks before the decision, Texas Central CEO Carlos Aguilar left the company and its board disbanded. . James Leggateonline news editor for Engineering News-Record, spoke with Texas Standard about the future of the project.
This transcript has been slightly edited for clarity:
Texas Standard: Tell us about the importance of this eminent domain agreement for the project itself. I thought that was one of the big obstacles to its viability.
James Leggate: Yes, that was one of the main issues blocking the way. This essentially means that Texas Central can now acquire the rest of the land it needs for this railroad project.
But is it too late? What happened to Texas Central?
So it’s been a busy month for Texas Central. At the beginning of June, its CEO, Carlos Aguilar, announced that he was leaving the company. He didn’t give many details, but he said he hadn’t been able to align the company’s stakeholders on a common vision of the way forward.
Around the same time this was happening, I learned that the company’s board of directors had also disbanded. So it’s a big turnover at the top.
Who is the head of the railway company? Is that clear?
Yes. At least in the meantime, it’s run by a man named Michael Bui. He is the senior managing director of a company called FTI Consulting. FTI is somewhat of an international company that takes care of any type of challenge that a business might face. You know, if you’re under investigation, if you need to respond to a cybersecurity incident, they step in and can help you.
Michael specializes in particular in the financing and restructuring of companies. He has helped other businesses through processes like bankruptcy or sale. So that sounds bad.
Where does the money for this project come from? This is not a publicly funded project.
It’s true. They promised it would be entirely privately funded. Exactly how much money they have is not entirely clear. There was a filing with the Securities and Exchange Commission early in the company’s time that showed it had raised $75 million from investors. And then a few years later, they got a loan of up to $300 million from a Japanese bank. Other than that, it looks like they may have attracted other investors since that first round, but their finances are really opaque.
It appears that the Texas Central Railroad is still, at least on paper, a going concern. But are there questions about how much longer?
Yeah. One of the big things that the landowner side of this state Supreme Court case tried to show or at least raise questions about was the financial viability of the business. The cost of this project, or at least the estimated cost, has kind of increased significantly over the years, from almost $10 billion to $20 billion, and now maybe even $30 billion. , which would obviously be quite far from what we know at least they have been able to increase so far.
So the company itself says it keeps moving forward. One of their attorneys recently filed a court filing indicating that they continue to move forward, seeking more investors, in hopes of building. I don’t know exactly what timeline.
But if the Texas Supreme Court had ruled the other way, saying Texas Central couldn’t use eminent domain, is it possible that the company just wrapped it up?
The project would apparently be dead in the water then. They would struggle to succeed in acquiring all the land they need and a very weak bargaining position to do so. And if they are looking for more investors, I can imagine the Supreme Court ruling would be a big step in their favor.
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