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September 17, 2014

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DesertXpress rail project going after tax dollars, after all

High-speed rail company after nearly $5 billion loan

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Photo courtesy DesertXpress Enterprises LLC

The fully electric DesertXpress trains are expected to take passengers between Victorville, Calif., and Las Vegas in 84 minutes.

Ever since plans to build a high-speed train from Las Vegas to Victorville, Calif., were unveiled, developers have been adamant about one point — they wouldn’t ask taxpayers to fund it.

But DesertXpress Enterprises has no qualms about borrowing from taxpayers — and borrowing big — for a project that skeptics say has little chance of gaining the ridership needed to pay for it.

The company has applied for a $4.9 billion loan through a federal program to construct what is billed as a $6 billion project. Since the plan was presented nearly two years ago, the cost estimate has ballooned from $4 billion.

The Federal Railroad Administration will hire an independent analyst to determine if ridership estimates, $50 one-way fares and other related revenue will be enough to repay the loan and prevent taxpayers from getting stuck with the bill.

The company, which is waiting for environmental clearances before it can begin preliminary design and engineering on the 185-mile route, requested the loan through the federal Railroad Rehabilitation & Improvement Financing program.

Under the program, funding may be used to develop or establish new railroad facilities, and direct loans can finance up to 100 percent of a railroad project with repayment periods of up to 35 years and interest rates the same as what the government is charged.

If approved, the loan would be more than four times the amount the program has lent to 28 railroad projects since 2002.

Since then, it has loaned $1.02 billion with the largest loan, $233 million, going to the Dakota, Minnesota & Eastern Railroad in 2003.

According to the Federal Railroad Administration, it plans to solicit bids to independently assess the loan application by March 1. Nine companies have expressed interest in bidding on the analysis.

The review will include an evaluation of the economic soundness of the project and the creditworthiness of the applicant. The evaluation also will include projections on ridership, an assessment of the company’s ability to pay off the loan; project risks; and a cost-benefit analysis.

The administration typically approves loans within three months.

Representatives of privately held DesertXpress Enterprises have said they would not seek direct federal funding for their project, which envisions an 85-minute trip along the Interstate 15 corridor.

A spokeswoman acknowledged the loan application, noting it’s consistent with plans not to use tax dollars, but to borrow money from federal sources.

Although DesertXpress officials were optimistic in 2010 that ground would be broken this year, delays in environmental clearances have pushed engineering the project back. Construction is expected to take three to four years.

The environmental process is expected to spell out the best route options for the track, including a recommended location for a station in Las Vegas. Four sites are options: a site near Russell Road, two near Flamingo Road and one in downtown Las Vegas.

Plans call for conventional steel-wheel trains to operate at 150 mph on two dedicated tracks. Critics think the train wouldn’t get the ridership it needs to support itself with Victorville as the southern terminus.

Developers chose Victorville because most passenger traffic in cars pass through the high-desert community en route to Las Vegas on I-15.

After critics ripped the Victorville end point, the company announced plans to build an extension west to Palmdale, where a station for the California high-speed rail project is planned.

The project also has been criticized because Sen. Harry Reid, D-Nev., a longtime supporter of a magnetic levitation system between Las Vegas and Los Angeles, withdrew his support and began backing DesertXpress in 2009. Reid said he was frustrated by the lack of progress on the maglev project, but critics said the switch was because DesertXpress investor Sig Rogich formed a campaign support group for Reid’s re-election months before the change in support.

DesertXpress officials have said a maglev is too expensive, but boosters of the technology say long-term costs are about the same because of the higher maintenance expense for traditional rail compared with the frictionless maglev, which is propelled on a magnetic field.

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  1. There are two parallel rail lines running through Cajon Pass. Heavy trains go up and down the pass all the time - so what is the problem in continuing to LA?

    How about regular, dependable rail service with $50 tickets from LA Basin to LV? The ridership would double for sure and the cost of the train and system would be a lot less than "high speed rail". Eliminating the continuous traffic jams and slow ups would be well worth the ticket.

    Mag Lev is absolutely NOT NEEDED between LV and Victorville and be too unsafe in this era of saboteurs.

  2. And a third rail line to the west...

  3. "The Federal Railroad Administration will hire an independent analyst to determine if ridership estimates, $50 one-way fares and other related revenue will be enough to repay the loan and prevent taxpayers from getting stuck with the bill."

    They better charge a lot more because no one is going to ride the Hooterville Express.

  4. They want $5 Billion dollars to build this and we can't come up with half that to balance our state budget?

    No! Hell NO!

  5. Since when is a loan from the government not public money?

  6. 84 Minutes to Victorville, then how many minutes to Palmdale, then a wait for the CA train to LA plus how many minutes to LA. Add the train cost to Palmdale then add the train cost to LA. A MAGLEV train from Vegas to Anaheim at 90 minutes makes sense. The slow Desert Express will not be able to compete with the Airlines in cost or speed.
    The Desert Express will be a Ghost Train and should be named after Harry Reid for destroying the MAGLEV system.

  7. NOBODY WANTS THIS TRAIN !! This is a waste of tax money. The monorail on Paradise Rd went bankrupt and left the state with debt to clean up.

    If someone wants to build it, do it with out tax money or government guarantees.

  8. Jon & Frank: here's your chance to put YOUR money where your mouths are. Buy bonds in the venture and then you can laugh all the way to the bank with your super profits. Me, I question why the feds, who are so broke they have to go on bended knee to China for funds, are in the business of "loaning" money to RRs or anyone else. That's what we have banks for. If it's such a "winning" idea, I'm sure Wells Fargo, BofA or Chase, to name a few, will be fighting each other to cough up the $5 billion (less, of course, the investments made by guys like Jon & Frank).

  9. 1. The 160 miles between Victorville and Las Vegas is usually the fastest part of the trip. What takes the time is getting out of the LA Basin, Orange County, and San Diego and through Cajon Pass. Getting to and through Cajon Pass can take 3 to 5 hours. So would someone please explain how this proposal to run a sort of high speed train between Victorville and Las Vegas for $50 is going to attract passengers? (A) If you figure 2 people per car, getting 20 MPG, gas would have to go to $10/gallon for the cost of the train ticket to equal the cost of going by car. (At 30 MPG, and 2 people per car, the gas price would have to be $20/gallon to equal the proposed $50 ticket price.) (B) It would seem that fuel cell or just straight natural gas buses between Las Vegas and LA/OC/SD would run for less per complete round trip than the just the cost of the train one way between Victorville and Las Vegas. (Right now, just straight diesel buses can be profitably run between Las Vegas and Los Angeles with a round trip fare of $50. If gasoline goes to $5/gallon, the freeways are going to be a lot less crowded, and at $10 and $20/gallon, what traffic there is will be flowing smoothly even at rush hour.) So, why would a train trip part way make sense?

    2. The Cajon Pass is a bottleneck. Good luck getting rail slots fore passenger trains When the ports of Los Angeles/Long Beach are running near capacity because freight has priority for the railroads. If you are going to run a rail line between Las Vegas and LA/OC/San Diego, you need to find another route. The San Gorgonio Pass might be a viable route for Maglev -- and it also holds the prospect of selling seats between Las Vegas and Palm Springs.

  10. "The Federal Railroad Administration will hire an independent analyst to determine if ridership estimates, $50 one-way fares and other related revenue will be enough to repay the loan and prevent taxpayers from getting stuck with the bill."

    independent analyst ? lol

    No one is going to ride the Hooterville Express.

  11. High speed passenger rail is another pie in the sky hole for our money supported by idiot liberals and the very few who stand to benefit.

    Nevadans already pay for the AMTRACK fiasco that supports only DC, Philadelphia, NY and Maryland (a suburb of DC).

    Other than the politicians like Biden and lobbyists in that North East corridor, who benefits from the billions wasted on AMTRACK? A small number of Californians who travel between southern and northern CA.

    While taxpayers in all 50 states pay for it, only a tiny minority ride it. Why should Hawaiians, Alaskans, Nebraskans, Floridians or Nevadans subsidized the travel of those who probably don't need it anyway? Floridans' governor was already smart enough to turn down the money. This company doesn't care if the project ever makes a profit as it will be subsidized by the bottomless pockets of the taxpayers.

    A scam, a trojan horse and more dishonesty from those who live to spend and tax.

  12. Last Tuesday, I drove from Los Angeles to Las Vegas on I-15. It took two hours to reach Victorville in moderate traffic. The rest of the trip took another 2 1/2 hours. Who in their right mind would drive to Victorville to ride on Reid and Rogich's stupid train? Reid is trying to pad his campaign manager's pockets.

    Steve Miller, Former Clark County Regional Transportation Commissioner

  13. Just plain stupid,I don't think I need to add anything here, there should be enough readers here with the brains to see it would never work..!

  14. This is stupidest idea ever.

  15. Mag-lev needed. Tax casinos, gold mines and Republicans to pay for it.

  16. There is an awfully important thing to consider, aside from all of the logistics and technological problems of DesertXpress.

    It is that our government is hell-bent upon spending ever-increasing amounts of money ever more wastefully for the purpose of bankrupting the beleaguered tax payers, so that they can become impoverished wards of the government.

    This state of affairs is known as socialism, the most, cruel oppressive form of rule known to Man.

    Examples of socialism are the mass famines, mass incarcerations and genocides of Mao Zedong's Communist China, the Soviet Union, Pol Pot's Communist Cambodia, Robert Mugabe's Zimbabwe, Kim's North Korea and endless other nations already under the cruel yoke of Communism.

    After our citizens will riot violently because of the confiscation of their savings and properties by an ever-voracious government, the dark sea of socialism will surely descend upon us all.

    Government funding of Desert Xpress is just one minor nail in the coffin of the United States.

  17. Mag-lev not needed. But build it anyway.

    Tax unions, anti-business Democrats and Liberals to pay for it.

  18. MAGLEV trains will NEVER go UP the Cajon Pass and I don't want someone piling rocks on the train path for a derailment at 240 mph: No one would survive.

    MAGLEV is a coffin on wheels.

  19. I ditto the bus comment. When to many buses are running back and forth then plan a train to take their place. If a train can not run from LAX to LAS why bother. It would be cheaper to put people to work digging a ditch, then pay them to fill it back in. Create jobs, this is what it is all about..

  20. You can always take the parasite(social services) moneys to payback the loan when the system goes TU. It would only be fair.

  21. Do what the guy in the other article in today's paper is doing: start a charter airline and try to make money selling seats to people.

    Get this boondoggle railroad off the taxpayers' backs.

  22. Please do not let this, or any other rail system, pass for loan approval. This MUST be privately funded or it simply will NOT work.

    Isn't it about time we learned our lesson?

  23. Several years ago, I was agreeable to the concept of a high speed train from the Los Angeles area to
    Las Vegas. It seemed like a good mass transit system
    and could utilize solar generated electricity to propel it. But when the plan was unveiled that the train would run only from Victorville to LV, I was dumbfounded. Who is going to drive all the way to Victorville then park their car in a fee parking lot, then pay $100 round trip to go by train to Vegas and have to rent a car there. (Yeah, I know there is a great public bus service to get people around in Las Vegas--but not when one has to wait in 115 degree heat or when the wind is blowing hard enough to sweep you off the sidewalk.)

    Gasoline will probably get to $7/gal over the next five to 10 years, so biodiesel buses would probably be the most efficient way to move people rapidly. The highways are already in place. No need to build more railways through Cajon Pass.