Xpress West

[Bus Nut]

Of the two viable options out there, this one is by far the more costly and the more risky. The X Train will provide affordable service from Fullerton to Las Vagas whereas XpressWest will not connect to anything without an additional $1.5 billion extension.

Affordable... but slow. Amtrak's affordable but slow Western service bleeds cash so all I have to say is: good luck with that.

. So, why should we loan Xpress West $5 billion dollars to build a brand new line that won't be completed for at least 3 or 4 years at the earliest and stops over 100 miles short of LA? Besides, because X Train has lower start up costs their chance of success are much higher, where the multi-billion dollar HSR is a huge gamble on a route that has always been lackluster at best.
I suspect that one reason Paul Ryan objects to this, as does Fred Frailey, is that there is no reason for the government to give a $5 billion loan to a company to provide an inferior service that a 100% privately funded company is already planning to provide for a lot less. This deal smells like a government subsidy to Las Vagas Casino operators. Will this really provide a $5 billion improvement in the everyday lives of the people of LA and LV?

It's a loan. Loans make an income. Why shouldn't the government loan money for economic development? The government's balance sheet will also benefit from transportation enhancements.

Remember when the railroads were build the US Government gave away tax dollars to the railroads as an incentive to get the roads built and up and running. Was that a silly decision, too?

HSR projects overseas have consistently made enough operating profit to pay back construction costs. Low speed rail usually can't manage to cover operations and maintenance, and forget about capital costs. That's why governments the world over operate low speed rail with subsidies. So, really, which one is the bigger risk?

Another disturbing fact about this and any money loaned to the CalHSR is that those billions are now NOT available to other projects that could provide a much more immediate and dependable benefit to many more people all across the US!

No. Not really. The RRIF loan program is underutilized.

That said, clearly this project has a lot of political support which may be skewing the picture a bit. But this loan doesn't take one dollar from other programs. IIRC, it's a secured loan once the project is built. The big risk is that default occurs before it is substantially completed. This may be why they are demanding the backers put more skin in the game.

Think what Amtrak could do with that amount of money! Think about what kind of improvement could be made to other PROVEN corridors!

I think Amtrak needs capital grants, not loans. Why? Because everything it does is so political that it can't make pure business decisions like a private entity. Its hands are tied. Study the history of the Acela.

Increased track capacity on the Surfliner which could allow real express service and increased speeds. Added station platform capacity on the Capitol corridor to allow quicker stops.

It's public... those towns the stations are in could always issue municipal bonds to rebuild their stations if they think it makes sense for them. From what little I follow of California rail it seems like the state is attempting to enhance service in a fiscally responsible way. They are financing CAHSR. If the Feds step in with that, it will not come from the RRIF program anyway.

Or how about loaning the money to Amtrak for the NEC rebuild to allow it to reach its dream of actually running its Acelas at their designed speeds over the whole route in 5 years instead of 45 years!

No way that happens in five years even with infinite money. Where to even start with that one...

 

[Andrew]

I highly doubt Xpress West will get the green light this year. Can Nevada put it on the ballot in the next election?

 

[Eric S]

I highly doubt Xpress West will get the green light this year. Can Nevada put it on the ballot in the next election?

What is the "it" that you are wondering if Nevada can put on the ballot? Are you suggesting state financing for the Xpress West proposal?

 

[George Harris]

It's a loan. Loans make an income. Why shouldn't the government loan money for economic development? The government's balance sheet will also benefit from transportation enhancements.

Remember when the railroads were build the US Government gave away tax dollars to the railroads as an incentive to get the roads built and up and running. Was that a silly decision, too?

.

Loans only make money if they are repaid with interest. Otherwise they are simply disguised grants.

For the most part the government did not give away tax dollars to the railroads, they gave land. Remember, the term was, "Land Grant" railroads.

 

[jis]

HSR projects overseas have consistently made enough operating profit to pay back construction costs. Low speed rail usually can't manage to cover operations and maintenance, and forget about capital costs. That's why governments the world over operate low speed rail with subsidies. So, really, which one is the bigger risk?

The bit about low speed rail not making money is not necessarily true in all cases. For example when the politicians can refrain sufficiently from doling out too much money to their constituents from the coffers of Indian Railways, it actually makes enough money to pay off the dividends that it is required to pay into the general exchequer of India and have a bit of balance left over. It is another matter that often Railway Ministers have great difficulty behaving responsibly, and some are outright idiots. :angry2:

 

[afigg]

I highly doubt Xpress West will get the green light this year. Can Nevada put it on the ballot in the next election?

What would Nevada put on the ballot? If the reports are correct, Xpress West did get conditional approval for their RRIF loan application for around $4.9 billion. The key condition is that Xpress West has to raise around $2 billion in private capital or about 29% of the $6.9 billion needed to build and start the Victorville to Vegas HSR line. My guess is that XW is being asked to put up 30% in private capital ($2.07B out of $6.9B) with the FRA RIFF loan providing 70%.

Xpress West is apparently working to line up some $2 billion in private equity, but the private equity has to be firmly committed and vetted. The FRA is not going to accept vague promises from an investor that they will put in X hundred million if their crude oil short pays off later in the year.

 

[AlanB]

It's a loan. Loans make an income. Why shouldn't the government loan money for economic development? The government's balance sheet will also benefit from transportation enhancements.

Remember when the railroads were build the US Government gave away tax dollars to the railroads as an incentive to get the roads built and up and running. Was that a silly decision, too?

.

Loans only make money if they are repaid with interest. Otherwise they are simply disguised grants.
For the most part the government did not give away tax dollars to the railroads, they gave land. Remember, the term was, "Land Grant" railroads.

While of course there is no guarantee about the current & future loans, please let me point out that as far as the Fed is concerned those land grants were repaid in full by the RR's. The Fed marked that debt paid after WW II because of the RR's participation and efforts during WW I & WW II. Things like moving the troops at reduced costs, moving supplies & materials, etc.

 

[Andrew]

1. I meant that maybe Nevada voters could vote to use some of Nevada's tax revenue to fund the remainder of the funding.

2. What are different ways (besides ticket revenue) that Xpress West can repay the RRIF Loan?

 

[George Harris]

It's a loan. Loans make an income. Why shouldn't the government loan money for economic development? The government's balance sheet will also benefit from transportation enhancements.

Remember when the railroads were build the US Government gave away tax dollars to the railroads as an incentive to get the roads built and up and running. Was that a silly decision, too?

Loans only make money if they are repaid with interest. Otherwise they are simply disguised grants.
For the most part the government did not give away tax dollars to the railroads, they gave land. Remember, the term was, "Land Grant" railroads.

While of course there is no guarantee about the current & future loans, please let me point out that as far as the Fed is concerned those land grants were repaid in full by the RR's. The Fed marked that debt paid after WW II because of the RR's participation and efforts during WW I & WW II. Things like moving the troops at reduced costs, moving supplies & materials, etc.

And that post WW2 "paid in full" was a long time after the fact. The true paid in full may well have pre-dated WW1 just from the taxes resulting from the increased value of the territories opened up to the world by better transportation.

 

[Anderson]

1. I meant that maybe Nevada voters could vote to use some of Nevada's tax revenue to fund the remainder of the funding.
2. What are different ways (besides ticket revenue) that Xpress West can repay the RRIF Loan?

Presumably there will be incidental revenue from parking and station concessions (depending on the lot sizes, parking has the potential to rake in millions of dollars; leases on station concessions could rake in a decent bit more as well); you might potentially see some sort of station developments (an associated hotel somewhere on the LA end of things, for example...probably not on the Vegas end, though, considering who's bankrolling the project) and/or the purchase of a number of acres of land around the station(s) that could be developed in different ways or sold off later.

 

[Andrew]

1. I meant that maybe Nevada voters could vote to use some of Nevada's tax revenue to fund the remainder of the funding.
2. What are different ways (besides ticket revenue) that Xpress West can repay the RRIF Loan?

Presumably there will be incidental revenue from parking and station concessions (depending on the lot sizes, parking has the potential to rake in millions of dollars; leases on station concessions could rake in a decent bit more as well); you might potentially see some sort of station developments (an associated hotel somewhere on the LA end of things, for example...probably not on the Vegas end, though, considering who's bankrolling the project) and/or the purchase of a number of acres of land around the station(s) that could be developed in different ways or sold off later.

Thus, it seems that the RRIF Program is indeed a very powerful one, and that, it is quite possible that no RRIF Loans have been made in 2013 due to the pending decision on the Xpress West Program... But with that being said, could RRIF be used for Amtrak's Gateway Program (to increase tunnel and train capacity between Northern New Jersey and New York City)?

 

[Anderson]

In theory, it could. Amusing as it sounds, I am fairly sure that the federal government wold have to somehow give Amtrak dispensation to accept a loan, such are the tangle of the post-Warrington restrictions.

 

[Andrew]

The thing is, without the RRIF Loan, I can not possibly imagine the Gateway Project ever getting built. NY Senator Charles Schumer claims that he will seek "bonds and loans" to pay for the Gateway Project. But, if the RRIF Program is not an option, HOW would the Fed's contribute?

 

[Aaron]

Apparently the RRIF loan for Xpress West is dead. Someone posted this to new thread, but a mod closed it, saying it's being discussed here. Well, it hasn't actually been discussed here, so I'm just copying and pasting their post into this thread.

WASHINGTON — The government has halted its review of a multibillion-dollar loan request for high-speed rail line connecting Las Vegas and Southern California, a potentially staggering hit to the ambitious project.

The development is a blow for XPressWest, which has envisioned itself having a major role in the region’s future. The company’s plans call for electric trains whisking passengers at speeds up to 150 mph between Las Vegas and, for starters, Victorville, Calif.

More

 

[Anderson]

If they're dropping the loan, it took them fething long enough to say "no"...and even then, they don't have the decency to reject it.

 

[Andrew]

Can they use the $5.5 billion that was going to be given out from the RRIF Loan to the Gateway Project?

 

[Anderson]

If the RRIF fund was supposed to be a revolving fund (which I think it is/was set up as), I really have to wonder...just when do they plan to loan this stuff out? It's been there nearly a decade, the $35 billion would basically pay for any HSR project proposed in the last decade (and could have been teamed with the stimulus stuff to do some truly amazing things, with the stimulus providing the initial funding and RRIF carrying things through), but it's just...sitting there.

 

[afigg]

Can they use the $5.5 billion that was going to be given out from the RRIF Loan to the Gateway Project?

No. The FRA RRIF loan program is authorized to distribute $35 billion in US Treasury note backed loans that are intended to be paid back. The Gateway project is an entirely different deal from Desert Xpress.
As for Desert Xpress RRIF application being 'suspended', I don't see how they can proceed without government backed loans. Will be very difficult to get all private sector financing for an infrastructure project of this size.

 

[Andrew]

f

Can they use the $5.5 billion that was going to be given out from the RRIF Loan to the Gateway Project?

No. The FRA RRIF loan program is authorized to distribute $35 billion in US Treasury note backed loans that are intended to be paid back. The Gateway project is an entirely different deal from Desert Xpress.

As for Desert Xpress RRIF application being 'suspended', I don't see how they can proceed without government backed loans. Will be very difficult to get all private sector financing for an infrastructure project of this size.

But if that is the case, HOW can Amtrak's urgently needed Gateway Project get funded? (I understand that the Port Authority of New York and New Jersey would contribute, and maybe some money from New York City and NJ Turnpike Toll Authority--but what else)?!

 

[Paulus]

Begging Congress for grants. Though, honestly, it shouldn't be Amtrak paying for more tunnels, but NJT and LIRR since they're the ones who use almost all the capacity (and maybe, just maybe, they could learn to run through trains).

 

[jis]

f

Can they use the $5.5 billion that was going to be given out from the RRIF Loan to the Gateway Project?

No. The FRA RRIF loan program is authorized to distribute $35 billion in US Treasury note backed loans that are intended to be paid back. The Gateway project is an entirely different deal from Desert Xpress.
As for Desert Xpress RRIF application being 'suspended', I don't see how they can proceed without government backed loans. Will be very difficult to get all private sector financing for an infrastructure project of this size.

But if that is the case, HOW can Amtrak's urgently needed Gateway Project get funded? (I understand that the Port Authority of New York and New Jersey would contribute, and maybe some money from New York City and NJ Turnpike Toll Authority--but what else)?!

I hope that NJ will not break its own law again to try to dole out NJ Turnpike toll money for non NJ Turnpike work.
My guess is that the whole funding model for NEC will undergo a sea change before anything happens regarding Gateway or any of the other mega-projects, and it will bring in additional bond supported money with some interesting financial twists allowing additional private investments leveraged by the bond backed money, into the mix.

I don't think NJ will contribute any Turnpike money after having been burned once. They are actually not allowed to, but they thought they'd do so anyway by structuring it as a loan that is apparently never paid back - a brain child of the financial whiz Corzine, who is now probably going to finally land up in jail on another matter. PANYNJ should contribute some significant money amounting to something like $3 to $5 billion perhaps over the lifetime of the project (my guess). But currently they are preoccupied with finishing the World Trade Center affair and raising the Bayonne Bridge.

For now, as far as Gateway goes, Amtrak and NJT will somehow scrounge together the needed $20 to $25 million per year to continue final design work and keep the core staff together, until the dust settles on how the big funding will be handled. I also doubt that NY City will be a large contributor. It will have its hands full well into the '20s recovering from ESA and SAS. OTOH, NY State might find some money, but hard to see from where.

 

[Andrew]

f

Can they use the $5.5 billion that was going to be given out from the RRIF Loan to the Gateway Project?

No. The FRA RRIF loan program is authorized to distribute $35 billion in US Treasury note backed loans that are intended to be paid back. The Gateway project is an entirely different deal from Desert Xpress.
As for Desert Xpress RRIF application being 'suspended', I don't see how they can proceed without government backed loans. Will be very difficult to get all private sector financing for an infrastructure project of this size.

But if that is the case, HOW can Amtrak's urgently needed Gateway Project get funded? (I understand that the Port Authority of New York and New Jersey would contribute, and maybe some money from New York City and NJ Turnpike Toll Authority--but what else)?!

I hope that NJ will not break its own law again to try to dole out NJ Turnpike toll money for non NJ Turnpike work.
My guess is that the whole funding model for NEC will undergo a sea change before anything happens regarding Gateway or any of the other mega-projects, and it will bring in additional bond supported money with some interesting financial twists allowing additional private investments leveraged by the bond backed money, into the mix.

I don't think NJ will contribute any Turnpike money after having been burned once. They are actually not allowed to, but they thought they'd do so anyway by structuring it as a loan that is apparently never paid back - a brain child of the financial whiz Corzine, who is now probably going to finally land up in jail on another matter. PANYNJ should contribute some significant money amounting to something like $3 to $5 billion perhaps over the lifetime of the project (my guess). But currently they are preoccupied with finishing the World Trade Center affair and raising the Bayonne Bridge.

For now, as far as Gateway goes, Amtrak and NJT will somehow scrounge together the needed $20 to $25 million per year to continue final design work and keep the core staff together, until the dust settles on how the big funding will be handled. I also doubt that NY City will be a large contributor. It will have its hands full well into the '20s recovering from ESA and SAS. OTOH, NY State might find some money, but hard to see from where.

I expect the Port Authority to contribute somewhere around $4 billion. In addition, a few years from now, I am sure that more money will be available from the Port Authority due to an improved economy and much of the WTC work getting completed--or nearly completed...

How long will the design work take?

 

[jis]

How long will the design work take?

Depends on how adequately it is funded. Currently the chances of it being funded adequately before 2016 appears to be slim.

 

[Andrew]

Is that because 2016 is an election year? Also, I understand that a $15 million preliminary engineering grant was signed by President Obama for the Gateway Project in November, 2011. Thus, when is it likely for the entire engineering for Gateway (including environmental impact statements) become completed?

 

[AlanB]

OTOH, NY State might find some money, but hard to see from where.

NY State could find the money; that's not the issue. What's hard to see is if the politicians will make the effort to find it.