THE R.V.:
With lack of funding, will DesertXpress ever lay its tracks?
There’s still one more major approval necessary to get the high-speed rail moving: DesertXpress needs money—lots of it.
Facebook
Fark
Digg
Reddit
StumbleMonday
25 July 2011
3 a.m.
Richard N. Velotta
VEGAS INC Coverage
It’s clear from the volume of email in my inbox and messages left on voicemail that people are genuinely concerned about whether DesertXpress, the high-speed rail proposal that would link Las Vegas with Victorville, CA, has a snowball’s chance in the Mojave Desert of success.
Earlier this month, the US Department of Transportation gave the word that DesertXpress Enterprises, the private company that’s planning the 185-mile, $6 billion project, has cleared all the environmental hurdles necessary to begin work. Although the release of the agency’s so-called “record of decision” is a major step toward drafting detailed plans that will lead to construction, there’s still one more major approval necessary to get things rolling: DesertXpress needs money—lots of it.
With the record of decision in hand, the company next goes to the federal government to borrow money, through the Railroad Rehabilitation & Improvement Financing program, which provides direct federal loans and loan guarantees to finance development of railroad infrastructure. If the feds OK the loan, it would be the biggest one ever approved for that program. Since 1998, when the program was initiated, just more than $1 billion in loans have been approved on 28 rail projects. DesertXpress is seeking $4.9 billion.
The Federal Railroad Administration will review the economic soundness of the project and the creditworthiness of the applicant. The evaluation will include the financial viability of the project, including the capitalization plan; financial projections of the borrower; the business plan, which includes projections on ridership, financial modeling and an assessment of the future ability of the company to pay off the loan; project risks and, finally, a cost-benefit analysis.
What are the chances the loan is approved? It’s hard to gauge with someone as powerful as Senate Majority Leader Harry Reid in the picture.
One would have to think that any serious review of ridership would include the million-dollar question every critic asks: Victorville?
I’ve perused DesertXpress’ 73-page ridership review, which includes a rider and financial study prepared by New York transportation engineer URS in 2005, a follow-up report prepared in 2008 by Cambridge Systematics Inc., of Cambridge, MA, and an audit and review for a prospective investor by London-based Steer Davies Gleave.
The report is filled with documentation on how the high-speed rail line could capture market share from automobile traffic running on heavily traveled Interstate 15 and from travelers who fly to Las Vegas from several Southern California airports. The final estimate was that about 22 percent of those coming to Las Vegas would consider taking the train if it were available. Part of the data was based on surveys of potential riders. But the reports are unclear as to what was asked in those surveys.
The Cambridge report had some very telling comments about the initial URS study.
“While it is likely that the introduction of new high-quality service such as that envisioned by DesertXpress will induce a small number of intercity trips between Southern California and Las Vegas, we’re not convinced the day trip analysis conducted by URS is the best means to estimate this induced demand.”
“Based on our analysis of the survey data, a total of 115 Las Vegas traveler respondents were asked: ‘If there were a high-speed train from California to Las Vegas, would you consider a one-day trip on this train?’ Respondents to this question could not be provided with any additional information about the high-speed rail system, including any basic information about the routing, cost or amenities, because the surveys were being personally administered.”
In other words, many of those asked about their willingness to ride a train to Las Vegas weren’t told they’d have to ride it from Victorville.
Much of the data gathered in the ridership studies was collected before the recession took its toll on the economy. Some of the reports referenced how passengers arriving in Las Vegas could get to their hotels if the Las Vegas Monorail is extended. I’m fairly certain that isn’t going to happen anytime soon.
Still, it wouldn’t surprise me if the Federal Railroad Administration approved the DesertXpress loan. There are some forces in Washington that seem to be greater than a runaway train.
Share
Discussion 3 comments
Comments are moderated by VegasInc editors. Our goal is not to limit the discussion, but rather to elevate it. Comments should be relevant and contain no abusive language. Comments that are off-topic, vulgar, profane or include personal attacks will be removed. Full comments policy.
Additionally, we now display comments from trusted commenters by default. Those wishing to become a trusted commenter need to verify their identity or sign in with Facebook Connect to tie their Facebook account to their VEGAS INC account. For more on this change, read our story about how it works and why we did it.
Only trusted comments are displayed on this page. Untrusted comments have expired from this story.
Post a comment
Commenting requires registration.
If you have a LasVegasSun.com account, you are already registered.
Most Popular
- Viewed
- Discussed
- E-mailed
- Can old Sahara site become a symbol of Las Vegas’ rebound?
- With Ron Paul’s infiltrators, clout of state GOP party further erodes
- Coolican: Courageous first move could bring success to north portion of the Strip
- 9-year-old hit on Summerlin Parkway on-ramp
- School District to lay off 1,015 teachers, literacy specialists
With the marketing ability the casinos have, a high speed rail to L.A. even Victorville can be very effective. I can see packed trains going to & from Las Vegas. Promotions, great amenities and I'm sure Las Vegas promo people will make sure there's plenty of buses ferrying people to Victorville from many parts of L.A. Lotsa people will take the drive from eastside of L.A., Riverside area, etc to Victorville to catch a "party train". No problem with Casino buses picking up party goers at train station. Imagine the crowds willing to take the train back to Victorville after an exhausting party weekend here in town! Instead of that drive back, instead a relaxing stressfree ride back.
So why would Sen Reid try to make a project get funded if the FRA did not think it was viable? He would not waste any tax payer money, right? He is trying to cut the budget and all, right?
I think a high speed bus would be a great first step in the project to gauge the level of economic viability. Let a bus travel at 100 MPH from Victorville to Las Vegas on I-15, see how it goes..I think a slow train from LA would beat a fast train from Victorville ridership wise.
If it is built (not very likely), it will never turn a profit. (See Las Vegas Monorail). Like the proposed Los Angeles to San Francisco High speed rail, they seem to be using extremely inflated ridership numbers. And yes, they need to ask: Victorville? I just do not think there will be sufficient numbers of people willing to pay the necessary cost for a ticket (unless subsidized by casinos like the 24hr. turnaround busses). Cost overruns are very likely to double the cost, or more, before the first rider hits the rails. My Chevrolet will get me to Las Vegas in 4 1/2 hours on 9 gallons of gas, and I have a car when I get there. A drive to Victorville is at least 2 hours.
I like the idea if a high speed train, but I do not see it as very practical.
DesertXpress the Yucca Mountain replacement money pit?
I do the Drive a couple of times a week. Nobody has ever asked me what I think of a train that only goes as far as Victorville. (Try doing surveys of motorists in Lenwood!) Problems: 1) Economy of scale for more than one traveler: I don't have to pay individual train fares for each passenger in my car. 2) Means of transportation from Victorville to LA or Anaheim: Are there going to be reasonably priced rent-a-cars in Victorville? Don't think so. I would rather have a thru train to L.A. or Anaheim even if it takes 8 hours to get there. It's time to revisit the viability of conventional (Amtrak) train service from LA-Vegas in the internet age. 8 hours on a train with internet = productive time. 3 hours on a train to Victorville plus carrying my bags to the next (unknown) form of transportation to L.A. = down time.