L.A. to L.V. — Again?
The last time we reported on the endeavor to find a railroad way to transport partiers from Southern California to Las Vegas , the X-Train was negotiating with Union Pacific for the right to operate on its main line be- tween the two glittering entertainment strongholds. The X-Train would operate at conventional speeds, but it was assumed that the celebratory on-board amenities would compensate for its lack of speed. Now comes word that the X-Train’s com- petitor, the Xpress West (formerly Desert Xpress), after originally offering a regular few-frills service from Victorville, Calif. — 90 miles from L.A. — to Vegas now has decided to offer 150-m.p.h. high speed schedules on newly laid track, and also with on-board bar/food/entertainment. The competitive dis- advantage for the Xpress West is that pas- sengers would have to make a 90- to 100- mile drive (from the San Fernando Valley) just to reach the train. (The X-Train promis- es a connection to commuter rail in Southern California.) L.A. County Supervisor Mike Antonovich envisions a connection at Vic- torville to a high-speed train for another 50 miles to Palmdale that would be operated by the area’s Metrolink. But as of now, that is very much in the talking stages. Both prospective services have promised a luxurious train ride, with multiple conve- niences including show reservations, on- board check-in (the equivalent of handing the passengers the keys to their hotel rooms), and more
Inevitable?
Whoever wins the election is going to make hard, unpopular choices. Forget the current campaign rhetoric. The music will have to be faced. The person who is sworn in as Presi- dent on January 20, 2013, will not want to go down in history as the president whose image (fairly or unfairly) is that of (fairly or not) the 21st century’s depression president. National security, health issues, and enti- tlement reform will likely precede passenger trains as a matter of urgency. Mitt Romney says he would eliminate Amtrak subsides and Barack Obama likely will face hard- choice prioritizing.
Amtrak’s bold expansion plans for Wash- ington Union Station (discussed in our last column) may be scrapped if the economy continues to go south. In 1931, the Empire State Building was completed in the very depths of the great Depression. Different time? Different issues? Different culture? Heavier reliance on private investment?
Speaking of Which
Recently, Amtrak issued a plan for the fu- ture of the Northeast Corridor. Within the document is a paragraph that reads as fol- lows:
“Private Sector Support — The B&F [Business and Financial] Plan acknowl- edged that Amtrak will require significant external resources to deliver the program and that involvement of the private sector is vital. Early introduction of the private sec- tor is most likely through the use of ‘design build’ arrangements where some of the de- livery risk is transferred. After these early phases, opportunities for arrangements [for some private sector risk] are likely to grow. Monetization methods have been used in many international infrastructure projects, including rail, to fund large-scale projects.
This type of funding is difficult to arrange at affordable rates until sufficient confidence has been obtained that a revenue stream is secure. Therefore a significant amount of such funding is not likely to be made until the first HSR segment is completed by 2030.”
That of course, is a cautious long-term time span, but the issue is about to hit us in the face early next year. Some potential funding sources have been sharing their views with International Business News. These have included the Carlyle Group (a serious icon when it comes to infrastructure investment) and some foreign entities (in- cluding France, India, and Chinese sover- eign funds) indicated a high level of enthusi- asm for pouring money “into America’s dilapidated tracks.” China Investment Corp. has talked with California politicians about investing in the California High- Speed Rail plan for Los Angeles-San Fran- cisco by 2033.
Closer to home
This column sought out the view of Frank Wilner, rail economist and author of two books on Amtrak. Here is his take: “With federal and state funds becoming more and more scarce because of federal and state budget shortfalls, the private sector of- fers Amtrak another avenue of financial support. There are many areas outside the actual operations of trains — real estate de- velopment, station management, and even training, for example — where Amtrak might leverage public/private investment and benefit from private sector expertise. “Even private sector firms find them- selves in need of outside expertise, through, for example, contracting out and consulting services. No organization has within its ranks world-class expertise in all areas of executing a business plan. Successful enter- prises — whether public or private — recog- nize their in-house limitations and reach out for expert assistance where and when it is most beneficial to meeting customer expectations and revenue enhancements at least cost “Amtrak, which is perpetually short of in- vestment and refurbishment capital, is equally squeezed in its ability to hire, on a full-time basis, expert staff beyond its core responsibilities of operating passenger trains. Partnering with private sector firms is an eminently wise decision.”
Freight Some of our
readers, including a good
friend, have challenged the wording of a TV ad we quoted last month in which the freight rail industry claimed no reliance on taxpayers’ money. So we asked the freight industry (the Association of American Rail- roads) for comment. The response was that “no federal stimulus dollars have gone to freight railroads. TIGER and HSR grant re- cipients are state DOTs and Amtrak that use the funding for public projects that ad- vance rail or ease congestion. These grants fund the public portion of a project. Public projects that involve freight rail from the first three TIGER grant rounds total rough- ly $700 million.”
The industry adds, “Of the $10 billion in HSR stimulus funds, about 3.4 billion con- cern projects on freight rail rights of way. But ultimately, these projects are for the benefit of passenger rail, and not freight. Even so, compare these amounts with the
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