Link:TOURISM: DesertXpress on right track? - Business - ReviewJournal.com
TOURISM: DesertXpress on right track?
Critics say terminus in Victorville, route through national park could stymie LV rail proposal
By BENJAMIN SPILLMAN
LAS VEGAS REVIEW-JOURNAL
An artist's rendering shows the 125-mph DesertXpress, which would use electric-powered trains on dedicated tracks between Victorville, Calif., and one of four possible stations in Las Vegas.
Illustration courtesy of DesertXpress
The good news is frequent Las Vegas visitor Larry Carlson may finally get to ditch his car in favor of a high-speed train from Southern California to Nevada.
"I think a lot of people are waiting for it," said Carlson, 40, of Escondido. "I know I'm waiting for it."
The bad news for Carlson, and others like him, is he'd have to ditch his car in Victorville, at least under the leading proposal.
"I don't know how many people would actually want to go into Victorville," said Carlson of the San Bernardino County exurb, where backers of the proposed $4 billion DesertXpress plan to end their line from Las Vegas.
The terminus in Victorville is the first issue detractors claim will doom a train proposal that seeks to accommodate about 5.1 of the estimated 18.25 million annual round trips between Southern California and Las Vegas, with an average fare of $50 each way.
But a line that stops 80 miles short of downtown Los Angeles -- 2 hours and 30 minutes by car in heavy traffic -- is just one obstacle to making DesertXpress a reality.
One proposed track alignment cuts through a national park, a situation that park advocates say could set a dangerous precedent.
Also, the DesertXpress won't reach its full potential without another line between Victorville and Palmdale, a Los Angeles County exurb where California plans to create a major hub for its own high-speed rail system between Los Angeles and San Francisco.
The gap between Palmdale and Victorville is about 50 miles, and even rail supporters are skeptical that it would be built anytime soon.
"I don't think the Victorville connection is anybody's first priority for doing California's high-speed rail," said Richard Little, an infrastructure expert at the University of Southern California.
Despite the obstacles, DesertXpress backers say they have the business and political juice and ridership demand to start construction on the project in 18 months.
That's sooner than backers of a rival route from Las Vegas to Anaheim, Calif., via a magnetic levitation train, can get started on the first phase of their proposal, a short leg from Las Vegas to Primm.
DesertXpress partners include veteran Nevada political consultant Sig Rogich, resort builder Tony Marnell, longtime transportation expert Tom Stone and Gary Tharaldson, a self-made centimillionaire raised on a farm in North Dakota who made a fortune developing modest, midpriced hotels in rural communities. Tharaldson owns land near the Strip that's considered a possible site for the DesertXpress depot in Las Vegas.
The group also recently welcomed support from U.S. Sen. Harry Reid, D-Nev., who ended his long-standing support of the magnetic levitation, or maglev, proposal because, he said, backers had little to show after three decades of work on the project.
"We have a project that goes over 200 miles into Southern California at no cost to the taxpayers," Rogich said.
REASONS FOR CONFIDENCE
Rogich, Marnell and the others say they're confident they can deliver the DesertXpress for three simple reasons: The technology is proven, the demand is present and the funding doesn't require direct government contributions.
"Is it perfect? No. Does it seem like the rest of the world has been doing it for 20 years? Yeah," said Marnell, whose construction company built Bellagio, Treasure Island and The Mirage for developer Steve Wynn. "It is not a stroke of genius. It is a very viable alternative."
Marnell said his business career makes him a natural fit as a DesertXpress partner.
"My part of that has been building rooms," he said of the Las Vegas boom dating back to the 1990s that put so much stress on Interstate 15 in the first place. "But (also) understanding how critical it is to get the customers to Las Vegas so you can put them in the rooms."
The DesertXpress would use electric-powered trains on dedicated tracks between Victorville and one of four possible stations in Las Vegas.
Ridership studies, which were verified by the Federal Railroad Administration, state that by 2013, the projected first year of operation for DesertXpress, the train would haul as many as 2,100 passengers per hour at peak Friday and Sunday times, the equivalent of an entire lane of traffic on Interstate 15, the crowded, hilly, hot, dangerous highway that links Las Vegas to Southern California.
Las Vegas regular Mike Esfahani, 26, of Irvine, Calif., contrasted a potential train to flying from Southern California.
"If it was about half the price I would actually drive to Victorville and hop the train the rest of the way, if parking was ample and safe," said Esfahani, a freelance musician.
He added, "It would have to cost the same as gas, if not a little more."
DesertXpress partners boast of a one-way fare of $50. But a closer look at the project's environmental impact statement, or EIS, shows they intend to have tiered pricing, with costlier fares at peak travel times.
DesertXpress spokeswoman Lee Haney said the $50 figure represents an average fare and the company hasn't set prices for frequent riders, first class versus economy accommodations and peak-time fares.
Trains would depart every 20 minutes and make the trip to Las Vegas in 84 minutes, rolling along at a speed of about 130 miles per hour.
Unlike conventional passenger rail, DesertXpress wouldn't need to yield to freight trains. Its dedicated tracks for both eastbound and westbound trains would be independent of existing rail lines.
Passengers would essentially start their Las Vegas vacation in Victorville, where they would park their cars and have the option to check bags, reserve a hotel room and, presumably, receive cocktail service in the depot.
"The resort experience starts and you don't have anything to worry about," Stone said.
SIMPLE PLAN FOR FUNDING
If Stone and the other Desert Xpress partners are worried about anything, such as how to find $4 billion to invest in a train to one of the cities hurting most in the current recession, they aren't showing it.
Their funding plan is simple.
They plan to recruit $1.5 billion in private equity investment and borrow the rest through the Railroad Rehabilitation and Improvement Financing Program, which operates through the Federal Railroad Administration.
The program has the capacity to make loans and loan guarantees for up to $35 billion, according to the railroad administration's Web site.
So far it has only committed about $7 billion nationally, presumably leaving capacity to make another $28 billion in loans.
Rob Kulat, an administration spokesman, said the loans are made at the U.S. Treasury rate, which is now about 4.4 percent for 30-year notes.
That's much less than the backers could expect to find on the debt markets, where bonds for a new, unproven transportation project would likely get poor ratings and drive up the cost of financing.
Chad Lewis, an analyst for Fitch Ratings, said about the only transportation bonds with AA or better ratings are those for proven turnpike routes or projects that are backed by dedicated tax revenue, as opposed to fares from riders.
"It is just a pure pledge of tax receipts," said Lewis of some highly rated transportation- related bonds.
DesertXpress backers insist they won't seek help from taxpayers. The backers have already invested nearly $30 million of their own money, and say more is on the way.
"We've had significant interest from potential private equity investors," Haney said. "Once you are familiar with the corridor, most people understand the demand is absolutely there."
OBSTACLES TO SURMOUNT
But the corridor has its own obstacles.
It cuts through the Mojave National Preserve, a unit of the national park service. The 1.6 million-acre park is considered a zone of solitude for people and an oasis for wildlife wedged between the chaos and pollution of Southern California and Southern Nevada. It is also home to endangered species, primarily the desert tortoise.
"That is an area that is very dense with desert tortoise," said Lynn Davis, a Las Vegas-based representative of the National Parks Conservation Association, a private, nonprofit group that advocates on behalf of national parks. "Aside from that (the train) would mandate a new right-of-way."
Although the conservation association supports DesertXpress and the proposed maglev train in concept, Davis said it opposes allowing a new transportation right-of-way in a national park.
"We don't want to look like a spoiler in this," she said. "We just want to advocate for routes that skirt where the actual preserve is."
Stone acknowledged that the right-of-way issue could be problematic.
The DesertXpress backers say they want to work with park advocates, but they haven't committed to a route that would avoid the preserve.
"That does have to get resolved, and it will," Stone said.
Another unresolved issue is competition with the maglev proposal.
SUPPORT FOR MAGLEV
Although Reid withdrew his support for the maglev project in favor of DesertXpress, maglev backers continue to back their project.
They want to build a train that would use magnets to levitate the cars in an overhead track and propel them at speeds as high as 300 miles per hour.
Their proposed route is from Las Vegas to Anaheim, a much more central location than Victorville.
"You want to go all the way to the ocean? Or do you want a train that is going to stop halfway?" said Neil Cummings, president of American Magline Group, the private component of the public-private partnership behind the maglev.
But maglev has its own problems, beginning with a price of about $12 billion. It is also just beginning its environmental study process, which puts it behind DesertXpress' time line.
And the first phase, which would cost about $1.8 billion, would only go from Las Vegas to Primm, home to three casinos, a roller coaster, an outlet mall and little else.
The maglev group is also dependent on raising money in the debt markets, which have little appetite for unproven transportation proposals.
Still, the greatest obstacle for both proposals may be the one Don Duhamel, 67, of Rowland Heights, Calif., pointed out.
Duhamel, who visits Las Vegas as often as 12 times per year, said he's not yet ready to ditch his car and he doesn't think others are, either.
"I don't see an advantage in it myself. If the train doesn't stop right where you want to be you have to take a cab there," he said. "I don't think it will ever happen."
Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or 702-477-3861
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