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September 18, 2014

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Maglev or DesertXpress? One could be your new ride

DesertXpress’ competing proposal for speedy train muddies waters for long-desired, more costly maglev line

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Dreamers have long envisioned a fast train to whisk riders between Las Vegas and Southern California.

But probably no one expected that, with $8 billion in federal money available for the smartest proposals across the country, two starkly different proposals for fast trains between Las Vegas and Southern California would compete for the business.

And neither proposal is perfect.

One offers a stunning view of the future: A publicly-funded maglev train, smoothly propelled at speeds up to 300 mph by magnetic levitation, a technology untried in this country because it is so expensive to build. The price tag is $12 billion.

The other, the upstart DesertXpress, would use traditional steel wheels on steel tracks, driven at speeds up to 150 mph with electric or diesel-electric power. Its oddity is its southern terminus — the high-desert outpost of Victorville, more than an hour’s drive above the Southern California basin. The $4 billion project was pitched as a privately funded venture but its backers say now they may seek government loans.

Both of the proposed lines would transport passengers between Las Vegas and Southern California in the time it takes to watch a movie, for about $50 — with one going at half the speed and covering two-thirds the distance of the other.

The choices raise pivotal questions as the nation weighs its appetite for risk and considers whether such a system should be in public versus private hands.

As President Barack Obama offers this bold investment in train travel — the most dramatic since the transcontinental rail line was laid a century ago — is it time to take a grand leap with a futuristic technology? Or is the public averse these days to financial risk?

This week, the federal Transportation Department will unveil guidelines for those seeking to apply for a portion of the $8 billion passed by Congress as part of the economic recovery package. Decisions will be made this year.

The maglev project desperately needs public dollars and has appealed to Obama’s transportation secretary, Ray LaHood, for $1.8 billion to develop the first segment — from Las Vegas to the state line at Primm — and to continue planning the rest.

DesertXpress Enterprises LLC has shunned federal aid, promising to be privately financed and turn a profit, a feat no other modern rail line has been able to accomplish in this country. But it is in the market for federal loans.

If the maglev project gets a federal boost of stimulus dollars, it could make it difficult for DesertXpress backers to raise private equity. If DesertXpress can leverage its newfound support from Senate Majority Leader Harry Reid, it could knock maglev out of the picture.

Maglev’s boosters say that even if DesertXpress is constructed, it will still pursue its own project. But skeptics doubt there is sufficient appetite, financial or otherwise, for the Federal Railroad Administration to permit both trains.

Sen. Reid’s turnabout

Reid, knowing that one-third of Las Vegas visitors come from Southern California, has been in frequent contact with the Obama administration about the importance of a high-speed rail between the two regions.

He tilted the game board last week.

Reid had long championed the maglev project and had helped steer more than $50 million toward its development.

After three decades of talk by maglev boosters but little to show for it, Reid turned his back on it in favor of the swift enterprise of DesertXpress.

“He’s been waiting on a high-speed train from L.A. to Las Vegas for 30 years,” said Reid’s spokesman, Jon Summers. “He wants to see something done.”

The senator’s change of heart surprised maglev developers, with some suggesting that Reid switched sides because DesertXpress could be tangible when he runs for office in 2010.

DesertXpress is backed by power broker Sig Rogich, a former official in the first Bush administration who is co-chairman of the group Republicans for Reid.

Yet Reid’s move could have been foreseen by anyone who has watched and waited for the visionary maglev train to be more than designs on paper.

Rogich has backed Reid since 2004.

“I would suspect the senator’s decision is based on practicality,” said former Democratic Gov. Bob Miller, who recently wrote a commentary in the Las Vegas Sun with former Republican Gov. Kenny Guinn in support of the maglev project.

“Certainly anything that has taken as long a period of time as this has taken creates frustration,” Miller said.

For his part, Miller is ambivalent. “I can’t pick between one or the other,” he said. “Whatever can help, more power to it.”

Maglev’s proponents vow to soldier on, undeterred by the loss of their powerful patron, and relying on supporters in the White House. They say two lines can coexist across the desert.

“We’re going to do it,” said Neil Cummings, president of the American Magline Group, the consortium of engineering and construction companies that would build the maglev project.

Because this country has never had a strategy for rail planning in the modern age, unlike its master plan for interstate highways, the nation now faces the prospect of designing a rail system from bottom up, rather than from the top down.

The General Accountability Office said as much in a report this year: “No federal vision or national plan for determining the role of high-speed rail in the U.S. transportation system exists.”

Robert Puentes, a senior fellow at the Brookings Institution’s Metropolitan Policy Program, said the result has been what he calls the peanut butter method of allocating transportation dollars. The government just spreads it around.

“It’s done in an ad hoc way,” Puentes said. “The criticism is the federal government has been absent and adrift for too long.”

Train projects are popular among the engineering, construction and rail firms that would profit from their construction. The maglev project is among dozens of rail projects from across the country that could be vying for the $8 billion in federal recovery money for high-speed rail.

Most employ traditional technologies, but one in Pittsburgh and another that would link Baltimore and Washington, D.C., involve 10-year-old maglev proposals.

Maglev’s 20-year history

This maglev project is the brainchild of the California-Nevada Super Speed Train Commission, a highfalutin name for a nonprofit entity formed in 1988 with the sole purpose of developing a fast train between Las Vegas and Southern California.

The commission, made up of private citizens and public officials, entertained several technologies before choosing magnetic levitation in 1991 and choosing American Magline Group as its developer in 1993.

The maglev train proposes to zoom passengers between Vegas and the Disneyland area, enabling tourists in either city to experience the other, just 80 minutes away, without need of automobile. The northbound maglev would stop in Ontario to connect with the airport, and would stop southbound stop at Ivanpah, to connect with an airport planned for there.

With California separately building a north-south high-speed train line between San Francisco and Orange County, the maglev team envisions passengers being able to connect to the California train at its stop in Anaheim station to continue to Los Angeles’ Union Station.

(Groundbreaking for the California network could happen in the next few years. It is funded by an $11 billion bond issue approved by California voters last year, and is considered a front-runner in being awarded federal stimulus money.)

Bruce Aguilera, chairman of the California-Nevada Super Speed Train Commission and an executive at Bellagio, said his organization offered a prime selling point when the group met with LaHood in April: They promised to have the first 40-mile segment to Primm running “in time for President Obama, the secretary and Sen. Reid to show the American people before the next election what this money could be used for.”

Maglev critics deride the technology as wishful futurism, but transportation experts say it is maglev’s price tag, not science, that has left it undeveloped in this country.

“It’s not to say maglev couldn’t be successful or the technology isn’t feasible, it probably is,” said Martin Wachs, one of the nation’s leading transportation experts, who taught for 25 years at UCLA and is now director of the Rand Corp.’s Transportation, Space and Technology Program.

“It’s a question of rationality,” he said. “Those who have to actually plunk the dollars down on the table see the increased benefits of maglev as not worth the risk.”

The world’s only operating commercial maglev line links Shanghai and Pudong International Airport — a 19-mile-long run completed in 7 1/2 minutes.

That system, now in its ninth upgrade, is what American Magline wants to build between Anaheim and Las Vegas.

At one point, reminds Miller, the former governor, maglev was the only game in town.

Not only Reid, but much of Nevada’s political class has at times supported the maglev train.

And then DesertXpress plans emerged, relatively suddenly, to pose a competitive challenge.

That has left lawmakers to rework their support. Democratic Rep. Dina Titus, a former commission member as an appointee of three governors, thinks maglev is the “technology of the future,” but is now giving some thought to DesertXpress, her spokesman said.

Democratic Rep. Shelley Berkley is among those who support “whichever one is successful.”

Over the years, the commission has raised $10 million for maglev — more than $7 million in federal allocations championed mainly by Reid and more than $2 million in state and local funding.

Internal Revenue Service filings from recent years show that most of the commission’s annual expenditures go to the American Magline Group, the consortium of private companies that is developing the project.

Rail lines are an expensive undertaking. Before a single track is laid, millions are spent drafting the inches-thick environmental review required by the federal government.

After two decades, the commission’s maglev project is suddenly losing the paper war.

In just a few short years, the DesertXpress backers have spent $25 million producing an environmental report.

DesertXpress is the nation’s only privately financed train proposal before the Transportation Department’s Federal Railroad Administration.

If their plan is approved this year, DesertXpress backers say, they can raise private funding and break ground in 2010. Earlier groundbreakings have been postponed.

Although Reid secured another $45 million last year for maglev, the money has not been spent because the commission had been unable to raise the required matching funds until American Magline Group contributed the $11 million two months ago.

Cummings, the Los Angeles attorney who is president of American Magline Group, said, “We’ve admittedly been stalled, delayed, because of a shortage of funding.”

DesertXpress’ 7-year history

Plans for DesertXpress were launched in 2002. Its backers have been slowly but methodically spending money to plan the rail line between Las Vegas and Victorville.

The company is run by two alumni of the Metro Gold Line, the light rail train between Pasadena and downtown L.A., who saw the potential of a line between the two states.

But for all the attention it is getting for trying to create a private, profitable passenger rail line, DesertXpress is also raising eyebrows for a different reason: Why Victorville?

The answer: Unlike maglev, which can handle steep grades, the steel-wheel train can’t accommodate the Cajon Pass, which funnels entry into the Southern California basin, and blasting a tunnel to flatten the route is too costly.

Backers think that for the promise of a fast, on-time train across the desert, passengers will get themselves at least to Victorville, where the Vegas experience could begin. At the station, passengers would check into their hotels, turn over their luggage and board a train car with food, drink and entertainment (but no gambling).

“It’s not so much why Victorville,” Vice President Andrew Mack said. “Victorville is what makes the project work.”

Skeptics abound. The high-desert city is 85 miles northeast of Los Angeles — more than an hour’s drive in the best of traffic. Why not just fly?

The Government Accountability Office acknowledged concern, that with the terminus outside of Los Angeles, “whether travelers will use the (DesertXpress) line at the level being forecast.”

But its backers cite marketing studies showing a sufficient number of passengers will brave urban traffic to get at least as far as the high-desert community, where they’ll transfer to the train rather than drive the rest of the way across the Mojave.

And for those coming from Nevada to California, would it be worth it to rent a car in Victorville for the drive into the basin?

But just for back-up, the company is planning the next phase.

Like the maglev, DesertXpress would connect with California’s north-south line by adding a spur to the California train’s stop in Palmdale, another high-desert outpost, about 50 miles west of Victorville.

Passengers could then continue south to Los Angeles, where the California train has a planned stop at Union Station and another in Anaheim, in Orange County.

Realities of the recession

Wachs, who taught engineering at UCLA and was chairman of the Department of Urban Planning before moving to Rand, said a privately-run train company is a model unlike almost any working today.

“In the entire world there are maybe one or two passenger rail projects that are actually profitable without public financing,” he said.

But recently, stung by recessionary realities of the credit markets, the company has indicated it could be interested in low-interest government loans to supplement its private backing.

The company is counting on raising 30 percent in private equity and 70 percent debt to finance the project. Though the company counts casino construction magnate Tony Marnell among its backers, Strip casinos have largely declined to get into the transportation business.

“Would we love to see greater access between Las Vegas and Southern California? Absolutely,” said Alan Feldman, spokesman for MGM Mirage. “Are any of us able to participate in that financially? The answer is probably not.”

DesertXpress officials said interest from potential global investors remains strong, but with the tightened credit market, government loans could be helpful. The Federal Railroad Administration can provide loans for 100 percent financing for 35 years.

“In view of the credit crunch, that might be attractive,” DesertXpress President Tom Stone said.

Reid has been pressing the White House to name the Nevada-California line as a priority corridor, a designation that, depending on how the route is drawn, could help his now-preferred line, DesertXpress, get access to government grants in the stimulus project.

If that happens, Reid is likely to be targeted, as he has in the past, by critics deriding a big-money train project as pork for the Sin City Express.

Politics are likely to continue playing a sizable role in deciding which Nevada line, if any, gets built.

Wachs, at Rand, shrugged off the political infighting or the lack of a master-planned vision.

“It’s up to a political system to sort all those out and make a decision,” Wachs said.

“Invariably we end up with systems that look to no one to be ideal,” Wachs said. Only in the lock-step world of Mussolini did the trains run on time.

In a democracy, he said, “it’s always kind of a messy, multifaceted process.”

Sun reporter Brian Eckhouse contributed to this story.

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