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Study: High-speed rail could pack $36B punch for Texas

🕐 4 min read

High-speed rail could deliver more than $36 billion in economic benefits for the state of Texas, according to a newly released study.

The study, conducted independently by Insight Research Corp. of Allen, evaluated the impact of a privately developed high-speed rail system linking Texas’ biggest metropolitan areas and its economic benefits over 25 years.

The rail system, under development by Texas Central Partners, is expected to benefit local and statewide economies through direct spending, increased employment and taxes paid by the private project, the study found.

“Texas Central’s high-speed rail project will have a substantial and long-lasting positive impact on the state’s economy,” said Tim Keith, CEO of Texas Central Partners, commenting in a news release.

“It not only will help alleviate growing congestion on crowded roadways but also give the state additional tax revenue for its purposes and projects,” Keith said.

As part of the Oct. 15 announcement, Texas Central Partners said it may pay almost $2.5 billion in tax revenue to the state, counties, local municipalities and school districts between now and 2040 as a result of the multibillion-dollar infrastructure investment, depending on assessed values and tax rates in each taxing jurisdiction.

Texas Central Partners also said it plans to invest more than $1 billion in Grimes County, site of a Brazos Valley Station that could attract retail and large-lot residential development. Retail, residential and office developments also are expected around the Dallas station serving North Texas and the Houston station.

Texas Central Partners, backed by a group of Texas-based investors, said it will not accept federal grants for construction or public subsidies for operation. Plans call for trains making the trip between Dallas-Fort Worth and Houston in less than 90 minutes, with a single stop at its Brazos Valley station to be in Grimes County somewhere between Bryan-College Station and Huntsville.

The company plans to begin operations in 2021.

The estimated $36 billion in economic impact includes the initial $10 billion that Texas Central Partners plans to spend on the project’s design and construction.

Newly released findings of the study said Texas Central Partners’ investment in more than 240-miles of track, three stations and multiple maintenance facilities along the route “will have ripple effects across the entire state economy,” including employment, tax revenue and and additional private development.

Employment-wise, the project could create an average of 10,000 jobs per year over the four years for construction, totaling more than 40,000 highly skilled jobs with competitive salaries.

When rail operations begin, Texas Central Partners estimates that it will employ about 1,000 permanent employees along the entire route, including operations and maintenance. The annual payroll is estimated at $80 million. An additional 4,000 indirect jobs are expected to be created, thanks to anticipated spending of Texas Central Partners and its employees.

As for tax revenue, businesses are expected to benefit indirectly as the project brings more people into local restaurants, hotels and retail shops.

Passenger transportation systems such as highways and transit often pay no taxes because they are government owned and operated. Since most of Texas Central Partners’ assets, including tracks, maintenance facilities and stations, are taxable, the firm could pay nearly $2.5 billion in taxes to the state, counties, school districts, hospital districts and other taxing entities along the corridor between now and 2040.

The sum would come from property taxes and state and local sales taxes. Every county affected by the project – both rural and urban – could receive long-term tax revenue benefits from the project, according to Texas Central Partners.

Meanwhile, private development – including transit-oriented development around the stations spurred by the project – is expected to generate nearly $1.9 billion in tax revenues for the state, counties, cities and school districts between now and 2040.

That’s based on taxes paid by new office and housing developments, retail stores, restaurants and other businesses drawn by the high-speed rail system, according to Texas Central Partners.

The North Texas and Houston stations are expected to attract large new high- rise office buildings, significant retail space and thousands of residential units, Texas Central Partners said.

Numbers in the economic study commissioned by Texas Central Partners do not include future stations along the corridor or their adjacent development.

The economic report is the latest in a string of key announcements by Texas Central Partners. In July, the company said it had raised $75 million from Texas-based investors, including Fort Worth investor John Kleinheinz, Dallas developer Jack Matthews and former Houston Astros owner Drayton McLane Jr. of Temple.

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