DesertXpress To Land Multi-Billion Federal Loan?
The other California high speed rail project, DesertXpress, may be on the verge of landing a multi-billion dollar federal loan to begin construction. That’s according to this in-depth AP article on the project from the weekend:
Privately held DesertXpress is on the verge of landing a $4.9 billion loan from the Obama administration to build the 150 mph train, which could be a lifeline for a region devastated by the housing crash or a crap shoot for taxpayers weary of Washington spending….
The company is still arranging as much as $1.6 billion needed to cover its share of the construction bill for the roughly 200-mile line. Investments could hinge on the loan approval, which requires the company to convince the FRA that taxpayers won’t get stiffed. In a worst-case scenario, the train would become government property if the company fails.
The low-interest loan would be about three times the combined amount the FRA loaned 32 other projects through the Railroad Rehabilitation & Improvement Financing program since its inception in 2002.
I have heard numerous discussions that similar funding through the same program could be available to the SF-LA high speed rail project as well. Still, it’s interesting to see that DesertXpress could actually get this loan, which would be essential to getting their project off the ground. A significant federal loan could also open the way to more private investment as well.
The prospect of federal loans for DesertXpress is also drawing out critics of the project:
“When somebody comes and tells me I will build a system that pays for itself, I’m suspicious,” said Hasan Ikhrata, executive director of the Southern California Association of Governments, which questioned ridership potential in a report last year. “There is no high-speed rail system in the world that operates without subsidies.”
Ikhrata is wrong – HSR routes in Taiwan, Russia, Spain, France, Japan and many other places operate without subsidies. Even the Amtrak Acela generates an operating surplus. However, their construction costs are usually subsidized, but there’s nothing wrong with that.
More importantly, Ikhrata’s organization, SCAG, were longtime backers of the proposed maglev from Anaheim to Vegas, a project that would have had an astronomical capital cost. So I do not exactly see him as a neutral party.
The article also dwells on the common criticism of the DesertXpress project – namely, the terminus in Victorville:
On a dusty, rock-strewn expanse at the edge of the Mojave Desert, a company linked to Senate Majority Leader Harry Reid wants to build a bullet train that would rocket tourists from the middle of nowhere to the gambling palaces of Las Vegas….
The vast park-and-ride project hinges on the untested idea that car-loving Californians will drive about 100 miles from the Los Angeles area, pull off busy Interstate 15 and board a train for the final leg to the famous Strip.
Planners imagine that millions of travelers a year will one day flock to a station outside down-on-its-luck Victorville, a small city where shuttered storefronts pock the historic downtown.
This makes Victorville sound like a dying one-horse town, which is simply absurd. In reality, the Victor Valley is an exurb of over 250,000 people and just over the Cajon Pass from the millions of people living in the Inland Empire. It’s had some tough times in the wake of the housing market crash, but it’s hardly “nowhere” as the article claims.
Worse, the article never once mentions the oft-discussed possibility of cheaply extending the DesertXpress line westward through the flat, empty Antelope Valley to Palmdale, where it could be connected to the main SF-LA high speed rail line. That would allow people living in Southern California’s main population centers to easily take a train all the way to Vegas.
A Victorville terminus is itself useful. Weekend traffic backs up on Interstate 15 between Victorville and Vegas to the point that it can take 9 to 10 hours to complete a drive that should normally take only four. A train can speed right by that backup, which would be extremely compelling for travelers from Southern California. Driving and parking in Victorville and then beginning the party on the train would likely attract a lot of riders.
Would “a lot” be enough to pay the operating costs and the federal loans? That’s the big question. But as gas prices continue to soar, even a train that terminates in Victorville will be an attractive proposition for many. And it would help encourage plans to close the gap to Palmdale and the main HSR route in California.
I’ve always thought DesertXpress is a good idea. It looks as if we’re going to get a chance to find out for ourselves whether that’s the case. It’s a chance we ought to be willing to take.