(Bloomberg) – California has reallocated $ 200 million in tax-exempt bonds for private activities, previously reserved for the Fortress Investment Group’s Las Vegas tourist train, to be used instead by affordable housing projects.
In January, the state’s Debt Limit Allocation Committee put that portion of California’s limited funding resources aside in anticipation of the company’s Brightline Holdings later in the year. Instead, the company announced in June that it would target an undisclosed amount of debt next year. The three-person board of the committee unanimously decided on Wednesday to convert the bonds into residential real estate.
This is the second time California expected the train to use the bonds just to provide the resource for housing, with housing company demands far exceeding supply. Last year California gave Fortress the opportunity to sell $ 600 million in bonds for public interest ventures that are capped annually by the federal government in each state.
But Fortress was unable to attract enough investors to an unrated bond deal that would have funded the construction of a 172-mile stretch between Las Vegas and the desert city of Apple Valley, 90 miles from downtown Los Angeles. After the company closed the deal in October, California matched the price of Fortress with the need for affordable housing.
In the latest iteration of the project, the line would move closer to Los Angeles by extending it to Rancho Cucamonga, which is along an existing commuter train called the Metrolink. In July, Brightline announced it had purchased a Las Vegas location for its station.
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