Maglev Line Hopes Vanishing in the Air : Transportation: Financing and problems in Germany slow the development of the high-speed train.

Plans by a group of California and Nevada officials for the world’s first long-distance, high-speed magnetic levitation rail line between Las Vegas and Anaheim now face so many obstacles that it may never be built.

It has long been clear that promoters would have to lobby hard for changes in state and federal laws to facilitate the project, which also could serve Palmdale and Los Angeles International Airport. Some California transportation authorities think resources ought to be committed instead to north-south high-speed lines between Los Angeles, San Francisco and San Diego.

But the major problem appears to be financing for the $5-billion project.

An official of Bechtel Corp.--which was awarded a conditional franchise last summer to construct the Las Vegas-Anaheim line--recently acknowledged that construction hinges on the sale of tax-exempt bonds to private investors. Not only would Congress have to act to allow the German-engineered train to be eligible for such bonds, but the amount needed far exceeds the annual limit on private purpose, tax-exempt bonds that can be issued by California and Nevada.

Mary Kittleson, executive director of the California Debt Limit Allocation Committee, said the state will be allowed this year to issue slightly less than $1.5 billion in such bonds, and 85% of that is tentatively reserved for housing projects. By contrast, the price to build the train is expected to reach $9 billion when financing costs are included.

Last week, Bechtel officials also disclosed that they are in danger of losing the commitment of C. Itoh, a major Japanese investor.

If that happens, “it would make an already difficult financing situation even tougher,” said a Bechtel spokesman, who added that negotiations are continuing.

This comes on top of a Bechtel announcement in February that its initial goal to finish the line by 1997 had been extended five years.

The company blamed the economic downturn for discouraging investors in Japan and elsewhere. It also cited delays in Germany, where the train will be subjected to protracted tests. This includes an unbudgeted 600,000-mile run on new guideways to determine whether there are operational shortcomings or unexpected high maintenance costs.

Noting the mounting obstacles to early construction of the Las Vegas-Anaheim line, Bruce Nestande, who heads the California Transportation Commission, said: “People from Las Vegas have been pushing this thing. Maybe the bottom line is that it just ain’t ever going to get there, because it’s not really a realistic plan.”

Rail supporters fear that the troubles facing this project may signal problems for other efforts to develop high-speed train service in California. Thousands of miles of such lines have gone or will shortly go into service in Europe, but none have broken ground in the United States.

Seven years ago, a proposed Los Angeles-San Diego “bullet” train foundered under environmentalist and other community opposition.

So-called maglev trains are quieter and thus may draw less opposition. But the lack of state resources, questions about government’s commitment plus indications of an emerging political struggle over where high-speed lines should go, bode ill for other projects.

The lack of government commitment for the project is reflected in an uncompleted, $3-million study of high-speed rail options in California that the Legislature ordered last year. The money to finance the study was to have come from Caltrans funds. Now, the Transportation Commission is considering pressuring the Legislature to pay for the study from the state’s deficit-ridden general fund. In the meantime, the study is in limbo.

Impediments to the Las Vegas-Anaheim project include at least four required changes in federal or state laws--to allow free use of federal rights of way, to authorize the setting of fares free of regulatory control, to lift federal and state bond limits and to designate the project as eligible to use bonds. None appear close to passage.

The Anaheim-Las Vegas project also would require the approval of the California and Nevada legislatures.

Project supporters may have to persuade transportation officials and legislators that high-speed service connecting Disneyland to Las Vegas casinos is more important than such a service between California urban centers, although there are no competing proposals.

In a recent interview, Bechtel’s project manager, Tom A. Marlow II, compared the company’s efforts to the early steps taken by those planning the English Channel tunnel between Britain and France.

“The work done preparing the project in 1970 wasn’t successful then, but it allowed the tunnel eventually to go forward,” he said. Marlow acknowledged that Bechtel’s prospectus last year on the project had been “over-optimistic.”

“The world we perceived slipped away from us,” he said. “We couldn’t perceive what would happen with German reunification, the economic downturn and the Gulf War.”

Marlow conceded that the project “could not be financed” without state-issued bonds. He added that Bechtel is a “very strong, very capable” company, and “if anyone can do this project, we can.”

Marlow’s remarks are in line with a somber assessment made by an outside consultant that financing the project with taxable bonds would drive interest costs so high that building the Las Vegas-Anaheim line could become impossible.

By obtaining 80% of its financing from the sale of tax-exempt bonds, Bechtel would probably face 8% or 9% annual financing costs, said the consultant, who asked to remain anonymous. “If they had to borrow money on their own, it could be an 11% to 16% interest cost,” adding billions of dollars to the project’s cost, the consultant said.

“Yes, you could finance the project, but there are a lot of what ifs,” the consultant said. “Will they get the free rights of way they are counting on? Will the states be able to issue that kind of debt? Would they want to? What kind of financial safety net is there? What are the ridership estimates? Are they solid?”

In Sacramento, Kittleson of the debt limit committee said that even if Congress were to make development of high-speed rail service eligible for tax exempt financing, there would be a problem with state bond limits and competition for financing from housing projects, industrial development and pollution control facilities.

Kittleson said it is possible that legislation could create a new classification so the Las Vegas-Anaheim line would not compete with these projects.

Don R. Roth, an Orange County supervisor and chairman of the California-Nevada Super Speed Train Commission charged with overseeing Bechtel, said he cannot foresee leading a lobbying campaign to persuade Congress or the Legislature to change laws that would allow the project to proceed.

“We’re in this bumpy position because of the whole economic situation, not only in the U.S., but in Germany and Japan,” Roth said. “But it’s a little early. I’m not going to get excited yet or do anything crazy. . . . I want to hold on and see how the financial situation will develop.”

He added: “I think if we let this opportunity go by and lose this technology in California for the 21st Century, it will be 50 years before America catches up to Europe. . . . If this 270 miles (to Las Vegas) is ever built, it will be like measles, it will be so contagious. After all, we can’t keep building freeways.”

Meanwhile, in Germany, budgetary problems are holding up the maglev testing program.

“This train is ready to go, but you have to undertake a mass of studies and experiments before it can be introduced into public use,” said Guenther Marx, head of traffic research for the German ministry of research and technology.

“We need a drive program of more than 1 million kilometers (600,000 miles) to learn the conditions of repair, stability and so forth on a realistic guideway between two cities rather than on the existing test track.”

Marx said that “in any normal year” the budget would be ready, “but in this year the budget is being completely redesigned because of German unification” and that designing the new guideways will have to await a budget.

An independent university source in Berlin said he fears that bureaucrats devoted to more conventional high-speed lines are resisting new concepts such as maglev.

Pushing it to full certification will depend as much on diplomatic skills as on its technical performance, he said.

The German government’s concern that maglev trains be tested on dual tracks--passing one another to ascertain wind effects--suggests that the tracks would have to be constructed so far apart that they would exceed existing rights of way along California highways.

Even if Congress were to authorize free use of public rights of way, the need to purchase additional land could make the maglev line prohibitively expensive.

In addition to its quiet, pollution-free operation, the maglev technology has appealed to super-speed commissioners and Bechtel because it promises high-speed operation over California’s mountain passes.

The promoters point out that conventional high-speed trains, such as the French TGV or the German ICE, are unable to maintain high speeds over gradients steeper than 4%, while the maglev can operate well over gradients of as much as 10%.

As German delays mount, several commissioners say they think the commission may soon have to decide whether to reopen the question of which technology to use.

“Right now, I’m torn,” said state Sen. Bill Leonard (R-Big Bear), a member of the commission. “I wouldn’t mind throwing out the Bechtel bid and going back to a whole new cycle of requests for proposals to see whether we would get other bids.

“There are a lot of environmental advantages to the technology, and it is sexier. But the exotic technology may be difficult to get off the ground.”

Although the commission invited bids for conventional high-speed trains last year, none were submitted.

Times staff writer Tyler Marshall in Berlin contributed to this story.

RIDING THE RAILS OF THE FUTURE What Is a Maglev Train?

* A high-speed train that wraps around and is held aloft on an elevated guideway by electric magnets. When under way, it levitates on a slight cushion of air without contact with the guideway.

How Maglev Works

* Individually controlled electromagnets are arranged in strips on both sides of the train, while magnetic packs are installed on the underside of the guideway.

* The attracting forces generate an electromagnetic field that draws the vehicle down the track at speeds up to 310 m.p.h. The speed can be adjusted by varying the power and frequency of the current.

* By reversing the magnetic poles, the driving force turns into a braking power.

California-Nevada Maglev

Some facts about the proposed by delayed project:

* SPEED: Although maximum design speed is 310 m.p.h., the maximum service speed of the proposed Las Vegas-Anaheim line would be 265 m.p.h. The average speed would be 212 m.p.h.

* CAR HEIGHT: Just under 13 feet.

* CAR WIDTH: About 11 feet, 4 inches.

* CAR LENGTH: About 92 feet.

* FARES: Fares were projected last year at $115 one-way in 1990 dollars, with discount fares at $80. But these are subject to further study.

* NUMBER OF PASSENGERS: 800 per eight-car train; there could be as many as 52 trains a day.

* BUILDING COST: $5 billion. With financing costs included, $9 billion.

* TEST TRAINS IN OPERATION: A train has completed more than 60,000 miles of tests on a 20-mile test-line at Emsland, Germany. The German government is now proposing that a dual-guideway, two-train, 600,000-mile test be held on lines to be built between two German cities to ascertain practical operational facts and maintenance costs.

* ADVANTAGES: Maglevs are quieter than an automobile traveling at 65 m.p.h. Because these trains are powered by electricity, they are not a direct source of air pollution or hazardous waste.

* DISADVANTAGES: Investment costs are higher than most transportation systems, although operational costs are expected to be lower. Changes in state and federal laws would be needed to authorize the use of tax-exempt bonds to finance the project.

SOURCE: Bechtel, Los Angeles Times