Congress offers a tax incentive to US high-speed rail builders
High-speed rail promoters are examining legislation passed in the closing hours of the 100th Congress, which made new rapid passenger trains more attractive for private investors. Congress permitted tax-free bonds to be sold to finance high-speed rail projects, something that is routinely allowed for other transportation modes, such as airports and ports. Tax-free bonds can save millions of dollars yearly in financing costs.
This is ``the single, most critical factor to determine if high-speed rail can be built anywhere in the nation,'' said Harriet Stanley, finance expert for the High Speed Rail Association. ``I've worked on or been exposed to every high-speed rail system proposed in this country, and the expense for each one is not land or construction, but financing.''
For example, the Florida High Speed Rail Commission is looking for a private developer to fund a Tampa-Orlando-Miami train. Financing $1.7 billion with tax-exempt bonds could save the developer $44 million a year during the first five years of construction.
High-speed rail - trains that travel faster than 150 m.p.h. - are common in Japan, where the Shinkansen, or Bullet Train, has been running since 1964. In France, the TGV, or Train `a Grande Vitesse, has been operating at up to 185 m.p.h. since 1982.
Now Japanese and West German engineering companies are working on the next generation of high-speed ground travel - magnetic levitation. These trains, which are running on test tracks in both countries, can travel faster than 250 m.p.h. on a cushion of magnetic energy.
But plans to bring high-speed rail to the United States have moved slower than a freight in a switchyard. Passenger trains still seem like relics to Americans, who have adopted the car and airplane as their favored mode of travel. And unlike the Japanese and German governments, Washington has shown little interest in paying for high-speed rail construction.
But now, as airports and highways become so congested that transportation planners are talking about national gridlock, high-speed rail is becoming a more serious proposal. The question is how far the federal government will go to back it.
``I've always said we've got to have tax-free bonds for high-speed rail to work,'' said Robert Blanchette, president of TGV of America, a high-speed rail systems promoter. ``That will be the limit of federal participation.''
Of the 11 states considering high-speed rail projects, Florida is furthest along. Rail proponents have moved slowly since 1982 to build a consensus for a privately funded system to link Tampa, Orlando, and Miami.
The legislature created a High Speed Rail Commission in 1984, which has narrowed proposals to build the train down to two competitors. It is planning to award a franchise in September 1991, with the hope that trains will be running by 1995.
Florida expects its rail line will be largely privately financed, because it has added real estate development as a plum to lure investors. The state will award the builder development rights around each station.
With about 800 people moving to Florida every day, rail proponents contend that real estate development along a rail line could produce profits high enough to offset the losses in building the train.
Last May, the legislature also directed the commission to award a franchise for a magnetic-levitation train - most likely from Disney World to Orlando International Airport - which could make it the first commercially usable high-speed magnetic-levitation train in the world. A slower version is already in use at the airport in Birmingham, England, and another low-speed mag-lev is slated for downtown Las Vegas by the end of 1990.
Promoters of a high-speed rail line to link Las Vegas with Los Angeles are trying to put their idea on a fast track. They are thought to have the second most likely high-speed line in the US.
The California-Nevada commission had its first meeting in September, and hopes to award a building franchise by 1992.
But high-speed rail promoters say more changes are still needed in the tax-free bond financing law to make sure that states will have authority to sell enough bonds to finance costly high-speed rail projects.
The bill that passed this year says that a quarter of the tax-exempt bonds sold for high-speed rail must come from the limited amount of bonds that a state is allowed to sell for private projects. Many states are already using all of that limit.
``A majority, if not all, of that cap is being used for other projects in both states [California and Nevada],'' said Richard Welsh, who has been helping to plan a Las Vegas to Los Angeles high-speed rail line. ``We are pleased with the passage of the legislation, but it still needs some modifications to enhance the possibility that a private company will come forward.''