Possible loan from China bank keeps high-speed rail plan alive
By ADRIENNE PACKER
LAS VEGAS REVIEW-JOURNAL
Feb. 02, 2010
Backers of a proposed magnetic levitation train that would ferry passengers between the Los Angeles area and Las Vegas announced Monday that a $7 billion loan from China hinges on the U.S. government's support for the project.
The announcement comes on the heels of maglev officials learning they were deemed ineligible for any of the $8 billion doled out Thursday for high-speed rail systems across the country.
Although maglev officials strongly disagree with the government's decision, spokesman Mark Fierro said that at this point, the government's hard cash is not as crucial as its support.
The Export-Import Bank of China is willing to lend the money with the knowledge that if the California-Nevada Super Speed Train Commission is unable to pay it back, federal officials will.
"This funding from the bank in China was never contingent on this round of federal funding," said Fierro, adding that the agreement was sealed in November. "They're willing to put up $7 billion, and that is a game changer. This is absolutely enormous."
The Chinese bank is familiar with the high-speed train technology and its potential, Fierro said. It is estimated that the train would carry 43 million passengers by 2025.
Fierro said the government backing is "good common sense," noting that the high-speed rail line is equivalent to an eight-lane freeway with traffic moving constantly at 60 mph, or to 55 fully loaded 747s landing in Las Vegas every day. Fierro said the project would also create about 90,000 jobs.
"We want people to know there is help on the way; the jobs are an enormous part of this," he said. "The future of Las Vegas looks completely different. This makes Las Vegas a suburb of Los Angeles."
Fierro said the project would take about five years to build and would be started at each end to trigger ridership and raise revenues.
Members of the speed train commission still plan on protesting the denial of federal monies, saying they followed all the rules and were never informed they did not meet the funding criteria.
In a Jan. 29 letter to the Federal Railroad Administration (FRA), Bruce Aguilera, chairman of the maglev project, asked for the opportunity to further discuss the federal government's reasons for denying Nevada a piece of the high-speed train funding doled out last week.
Aguilera requested a meeting "as a means of possibly curing these concerns in the event that some part of the $8 billion is reallocated or made available in the future, and make certain that this project is 'in the pipeline' of projects for future funding."
In explaining the reasons Nevada did not receive a grant, U.S. Secretary of Transportation Ray LaHood said the commission is not a state agency and added that he never received an application for the funding.
"Nevada did not submit any paperwork, any proposal for any high-speed rail money," LaHood told Senate Majority Leader Harry Reid in a one-on-one meeting.
Aguilera rebutted that in his memo, saying that after the maglev commission submitted its application, a Federal Railroad Administration attorney sent a letter outlining his concerns about whether the commission was a state agency. A month later, in September, Aguilera and Gov. Jim Gibbons responded that the application was submitted on behalf of the state by the commission, which they asserted is a state agency, and the Nevada Department of Transportation.
"Neither Governor Gibbons nor myself received any response from the FRA to these letters of clarification," Aguilera wrote to Joseph Szabo, administrator for the railroad agency. "If there were a continuing question relating to eligibility we would think that the courtesy of a response from the FRA would have been extended."
Aguilera also noted that for a decade, the administration has recognized the commission as a state agency eligible for federal grants.
Kent Dagnall said Monday that the maglev organizers were stunned to learn they did not meet the criteria for the funding.
"The first they heard they missed a deadline or weren't eligible was when they announced it," Dagnall said.
The denial of funds has sparked suspicions that Reid, who withdrew his support from maglev citing the lagging progress, might have interfered with the grant process.
Reid now supports the rival DesertXpress, an electricity propelled high-speed train that would initially run between Las Vegas and Victorville, Calif., and eventually connect to a rail system in Palmdale, Calif. The train tops out at 150 miles an hour, transporting passengers to Victorville in an estimated 84 minutes.
The maglev reaches speeds of up to 300 mph and would deliver passengers to Anaheim, Calif., in 86 minutes. The maglev commission requested $83 million in grants from the federal government.
During his discussion with LaHood, Reid reiterated that Nevada never submitted an application for high-speed rail money and noted the "good news for Nevada" is the $2 billion in funding that California received for its rail system, including a high-speed link from San Francisco and Sacramento to Los Angeles and San Diego. Once California's system is built, Reid said, only 50 additional miles of rail will be needed to connect California's web of rails to the DesertXpress project.
LaHood agreed.
"Nevada certainly can be a partner in this with DesertXpress and what California will do," he said. "There obviously is a connection as a part of a regional high-speed rail opportunities for the citizens not only of Nevada but of California."
But maglev officials said the lost funding could have devastating effects on Las Vegas in the struggle to lure conventions, especially because Florida secured $1.3 million for a high-speed train linking Orlando to Tampa and Miami.
"In a huge setback to the Las Vegas business community, the funding that was announced for Florida ... places Las Vegas in an enormous competitive disadvantage," according to a statement released by Dagnall. "Orlando is among Las Vegas' strongest competition for convention business."
Maglev officials are still banking on $45 million Reid set aside for the high-speed project in 2005, Dagnall said, and have secured private money to match that. Reid has said that since the maglev project is going so slowly, he plans to reallocate the money. Dagnall, like other maglev proponents, claims Reid's grant was written into law and cannot be changed without a congressional vote.
"We're very much in this fight and we're going to continue; the only thing standing in our way is the train to nowhere," Fierro said, referencing the DesertXpress proposal.