Dallas-Houston bullet train developer faces a leadership exodus as land acquisition slows

ByWilliam Melhado, The Texas Tribune
Tuesday, August 30, 2022
Texas bullet train project still lacks necessary permits
It's been nearly a decade. So what's the hold up on the Texas bullet train project?

Ten years ago, a company calling itself Texas Central High-Speed Railway announced plans for a trailblazing bullet train that would whisk passengers between Dallas and Houston in 90 minutes. Company leaders exuded confidence that the trains would be running up to 205 miles per hour by 2020.

The potential for an American high-speed rail line captured the imagination of Texans and national train enthusiasts alike. At one point during an event celebrating the unbuilt high-speed rail line, then-Vice President Joe Biden told a Dallas crowd, "You're going to lead this country into an entirely new era of transportation."

But a decade on, there are still no new tracks between Dallas and Houston.

The video above is from a previous report.

Through multiple business entities who often use some version of the Texas Central moniker, developers of the project spent years raising hundreds of millions of dollars for construction, fighting conservative lawmakers' attempts to dampen their plans and buying land needed to lay the tracks. Perhaps the biggest battle, though, came from legal challenges to the company's claims that state law allows it to forcibly purchase property when owners aren't willing to voluntarily sell.

In June, the Texas Supreme Court settled the matter and handed the company what could be a watershed victory, ruling that Texas Central can use eminent domain for its high-profile project. By the time the court ruled, though, Texas Central's board had reportedly disbanded and its CEO and president had resigned. The project's original timeline had already gone off the rails (at one point the construction was slated to begin in 2017). And land acquisition seems to have all but stopped in the last two years, according to land records reviewed by The Texas Tribune.

SEE ALSO: Texas high-speed rail CEO Carlos Aguilar announces departure after 6 years

A spokesperson for the company, who is employed by a consulting firm that handles Texas Central's media requests, says the project is still in the works.

"Texas Central is continuing to seek further investment, and is moving forward with the development of this high-speed train," Tom Becker, a senior managing director with FTI Consulting, said in a statement. "We appreciate the continued support of our investors, lenders, and other key stakeholders, as we continue to advance this important project."

But the company and Becker have declined to answer specific questions about the leadership exodus, apparent slump in land acquisition, funding prospects and status of permits Texas Central would need to move forward. A federal transportation agency says it hasn't had contact with the company in two years. The portion of Texas Central's website that once listed executive leaders is now blank - as is the list of current job openings.

Texas Central's map showing the likely route of a high-speed rail line between Dallas and Houston.
Graphic by Emily Albracht for The Texas Tribune

Texas Central's relative silence on the recent developments has left supporters of the project, who would like to see two of the state's largest economic engines more easily connected, in limbo. Opponents, who have long railed against the idea of a private company using eminent domain to seize Texans' land, are cautiously hoping Texas Central won't rebound.

Even if the company resurges, there remain major obstacles ahead to acquire land and finance an increasingly expensive project described as "shovel ready" as recently as 2020. The stakes of the high-speed rail project extend beyond the company and Texas. The 240 miles of relatively flat land between Dallas and Houston has long been heralded as the ideal location for what Texas Central and its supporters say could be the first leg of a national high-speed rail system that transforms the country.

There are few infrastructure projects in the country that can compare in size to the Texas rail line. A California high-speed rail project between Los Angeles and San Francisco also faces significant political, financial and legal hurdles. But Michael Bennon, the program manager at Stanford University's Global Infrastructure Policy Research Initiative, hangs a lot of hope on the Texas project given the relatively short distance, estimated frequency of travel and the landscape between the two cities.

"If you can't do high-speed rail in that corridor, it's hard to imagine it working anywhere else," Bennon said.

A decade in the making

The announcement of the Dallas-Houston bullet train came more than two decades after another, failed high-speed rail project in Texas that collapsed after $70 million in investments in the early 1990's.

The most recent attempt at high-speed rail drew widespread attention and support. Texas Central has long billed the project - modeled after the Japanese Shinkansen bullet train - as an accessible, safe alternative to car travel in Texas. Among the selling points: an estimated $36 billion in economic benefits, an environmentally friendly solution to plane travel and a revolutionary step forward for large-scale infrastructure in America. The hype cast the train as a game changer for Texas and America.

"There's no doubt once people ride this train, they will want trains like this to go other places," Holly Reed, Texas Central's former managing director of external affairs, said in 2018.

In addition to Biden's 2015 endorsement, plans for high-speed rail in Texas saw formal support from former President Donald Trump, several state leaders and close to 100 businesses and organizations. The company's board and advisors featured a plethora of prominent names, like billionaire and former Houston Astros owner Drayton McLane and Ron Kirk, the former Dallas mayor and former Texas secretary of state.

But Republican state officials, who have long controlled the Legislature and state government, were caught between the collision of two things they and their voters support - minimal restraints on the private industry and protecting Texas landowners' property rights.

RELATED: High speed rail may cause landowners to give up their property

In the summer of 2016, Texas Central began its efforts in earnest to acquire land along the route of the line, contacting property owners and submitting documentation to retain the option to purchase acres in the 10 counties the rail line would cross.

Along the way, Texans' free-market enthusiasm often clashed with private property advocates who criticized the efforts of the company to push the railroad through rural land to benefit two already bustling urban behemoths.

Donovan Maretick, a Navy veteran who lives in Harris County, has fought the company's efforts to survey and purchase his land. He moved to a more rural area of the state to seek some quiet for his family - and he doesn't intend to give that up so a private entity can build an intercity bullet train.

"I rose to the occasion to fight for the country, and I'll be damned if I'm not gonna rise to the occasion to fight for my little piece of country. And that's what we've had to do as individual landowners for the last six years," Maretick told the Tribune.

Throughout multiple legislative sessions, some Republican lawmakers sought to limit how the project could be developed or financed. Others tried to kill it outright. But Texas Central's project repeatedly emerged largely unscathed.

State Sen. Royce West, D-Dallas, has maintained his support for the development endeavor, though he's well aware of how rural and urban interests are often at odds on the matter.

"The time has come for us as Texans to recognize that we need another mode of transportation to get people around the state," West said in an interview with the Tribune. "Just like anything else, you have to build this for the future."

In October 2020, with another legislative session on the horizon, Republican Gov. Greg Abbott threw his "full support" behind the project in a letter to Yoshihide Suga, then the prime minister of Japan. By then, the Japan Bank of International Cooperation had loaned the venture $300 million.

"Public support and momentum are on our side, and this project can be completed swiftly," Abbott wrote.

The governor also claimed Texas Central had "all the necessary permits to begin construction" - something the Tribune found was not, and still isn't, true. Lawmakers representing Texans who own land in the project's path expressed disappointment at the letter. Abbott's office later said the "information it was provided was incomplete" and it would review the matter, but did not respond to multiple follow-up questions from the Tribune at the time.

And the governor still isn't talking. This month, Abbott's office did not return multiple requests for comment about the matter.

After Abbott's 2020 letter to the Japanese prime minister, Carlos Aguilar, Texas Central's CEO at the time, also declined to answer specific questions, but said the company was "focused on finalizing financing and getting ready for execution."

A portion of Austin Street near South Side Music Hall in Dallas is part of a proposed bullet train station that would contain a bus drop-off area and parking zones.
Ben Torres for The Texas Tribune
Traffic on Interstate 30 passes near an area of land that's been planned to be used for pedestrian bridges leading to the bullet train terminus.
Ben Torres for The Texas Tribune

RELATED: Texas Supreme Court begins rehearing petition against construction of high-speed rail

A plan derailed

In June, the Texas Supreme Court ruled that Texas Central Railroad & Infrastructure and Integrated Texas Logistics, a partner in the rail project, have eminent domain power because they are "interurban electric railway companies." The decision, based on the Texas Transportation Code, enables the high-speed railway project to move forward with surveying and forcibly buying private property.

Trey Duhon, president of Texans Against High-Speed Rail, said the decision surprised him and set a dangerous precedent.

"You're not supposed to be able to exercise this authority or power without some checks and balances," he told the Tribune. "This opinion really opens the door and allows anyone who wants to build an electric railway anywhere in the state of Texas the ability to do so."

But having the ability to use eminent domain doesn't mean the process will be easy - or cheap. And one expert in eminent domain law said the company may still face a major legal hurdle in exercising its eminent domain authority.

Luke Ellis, an Austin lawyer who teaches eminent domain law at the University of Texas School of Law, told the Tribune that project opponents could still mount legal challenges that hinge on what's called a "public use" clause. That provision of law requires that an entity using eminent domain can only do so when creating something for "public use." Ellis said there remains an outstanding question whether the train qualifies as "public use." The Texas Supreme Court didn't rule on that question, leaving it open to future legal challenges.

What's more, eminent domain isn't a fast and clean operation. If a landowner doesn't want to sell, Texas Central would likely have to sue and kick off what's called a separate condemnation process - complete with arguments and hearings - for each landowner who won't voluntarily give up their land and doesn't agree that the money Texas Central offers is adequate compensation.

These two legal obstacles could stall Texas Central's momentum if construction gets underway, Ellis said, but only up to a certain point. Entities with eminent domain authority can take possession of private property once a designated commission determines the land's value and that amount is paid into an account. While both parties can appeal the decision and take it to a jury, entities like Texas Central have an advantage.

SEE ALSO: 6 rural Texas counties file lawsuit against Houston-Dallas high speed train

"There's a legal mechanism that allows them to begin construction of the project even before the eminent domain lawsuit has fully resolved," Ellis said.

Texas Central has long said it would use eminent domain only as a last resort and it would prefer to amicably buy the land needed for the project. How many parcels it needs has long been a mystery. While Texas Central has released a map of the line's route, it has remained mum for years on how many purchases it would take to amass the land needed for the project.

The company has negotiated with landowners to reserve the option to purchase land along the route. In some instances, the railroad developer acquired those parcels of land. Yet in others, the purchase options expired or the company agreed to release those contracts, allowing landowners to sell to another buyer.

According to a Tribune review of public land records, the company ramped up land acquisition efforts in 2016. But since 2020, there's been a steep decline in options filed and deeds amassed on behalf of Texas Central.

In several counties in the past two years, Texas Central has resold property it had purchased to other buyers. Texas Department of Transportation officials confirmed the state agency purchased a handful of acres from the railroad company in Madison County for $75,000. Public documents filed between May 2021 and April 2022 showed that the railroad company sold off more than 170 acres in Navarro County.

The Tribune reached out to McLane, the board of directors' former chair; several former advisors, including Kirk; and the company's listed partners. They either did not respond or they directed inquiries to Katie Barnes, the director of right of way at Texas Central, who declined to answer questions.

Continued resistance

Meanwhile, the cost of the project will likely continue to grow. Initially estimated to cost $12 billion, McLane expected the project to cost $30 billion by 2020.

In 2019, Texas Central announced it had raised $450 million in capital commitments for the project, which included the $300 million loan from the Japan Bank of International Cooperation. In written testimony to Congress in 2021, Aguilar, the CEO at the time, said the company had made $700 million in private investments into the project.

Just before the Supreme Court ruling this year, Aguilar explained his resignation via a LinkedIn post after Spanish news outlet La Información reported that the board had disbanded and he was leaving.

Aguilar said he "could not align our current stakeholders on a common vision for a path forward," but spoke highly of the plans - and Texas Central employees.

"Most of the 'graduates' of our effort will continue to contribute to our economy through their roles at other companies," he wrote.

During Aguilar's tenure, the project cleared two key regulatory hurdles. The Federal Railroad Administration approved the bullet train between the two Texas cities and released an environmental impact statement for the project in 2020. While those were stepping stones needed to keep the project on track, they didn't completely clear the way for the company to begin building.

Railroad tracks near a proposed bullet train terminus on the outskirts of downtown Dallas on Thursday, Aug. 25, 2022.
Ben Torres for The Texas Tribune

The Surface Transportation Board, a federal agency that primarily regulates freight trains, ruled in 2016 that it did not have jurisdiction over Texas Central's plan to build a rail line between Dallas and Houston because it would not be part of an interstate rail network.

Texas Central appealed, and STB said in July 2020 the company could submit another application for consideration. But the agency hasn't heard back from the would-be railroad builders, a STB spokesperson told the Tribune.

Many proponents of the project still stand behind it, even if there are few, if any, details about its future.

"The Texas Association of Businesses fights for policies that help employers make the largest impact on their communities. High speed rail would not only expedite business operations but would connect job creators to talent in other areas. With an estimated economic impact of $36 billion, TAB maintains its support of this project," Rebecca Grande, TAB policy manager, said in a statement.

Texas Central's critics and opponents are cautious about declaring the project dead, even if it appears the company has lost necessary momentum to bring its ambitions to life.

Maretick, the Harris County landowner, says Texas Century might have won the battle in the Texas Supreme Court, but he won't give up the war for his property. He hopes the burden of future legal battles will hinder the project to such a degree that the power of eminent domain will be but a "pyrrhic victory" for Texas Central.

"A victory that they won, but it came at too high of a cost," he said.

Disclosure: Texas Association of Business and Texas Central have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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