On April 26, 2001, the Southern California Association of Governments (SCAG) Maglev Task Force approved the California Maglev Business Plan. The Business Plan lays out the steps for deploying the 92-mile, $7 billion high-speed Maglev line from LAX to March Inland Port in Southern California. The Business Plan will be considered for adoption by the SCAG Regional Council on May 3, 2001. There will also be a one hour session on the Business Plan at the SCAG General Assembly in the afternoon of May 3rd. The General Assembly consists of Mayors and City Council members from the 185 cities that make up the Southern California Association of Governments and represents a total population of 17 million people. According to the Business Plan, revenues from passenger fares and cargo fees will cover all construction and operating costs for the 92-mile high-speed line. Once approved, the Business Plan near term action steps will be initiated. One of the key early steps is the issuance of a request for proposals from private consortia who desire to compete for the opportunity to serve as the private partner in the public-private partnership that will deploy the Maglev system. Please let us know if you are interested in this solicitation.
Why is it possible to fund Maglev from operating funds when public transit projects in the U.S. generally depend upon huge subsidies? The answer is, Maglev is structured as a business enterprise, not as a publicly subsidized service. Fares and other user fees and revenues are set at rates to fully recover all capital construction and operating costs. In this sense, Maglev is more like an airline service than a public transit service. Imagine Maglev as an airplane flying close to the ground -- a "groundplane." There are three key attributes of Maglev that make the financial plan for Maglev viable. The first is its very high speed. At top speeds exceeding 200 mph and average speeds over 90 mph, Maglev is able to attract sufficient ridership to secure the necessary revenues required to fund the system. The second feature of Maglev is its relatively low capital and O&M costs. The system is automated and this reduces operating costs. The absence of wheels and physical contact with the monorail guideway reduces maintenance costs. Use of available public rights of way for placement of the elevated system minimizes real estate acquisition costs. These factors combine to achieve a system plan that is self-financed using revenue bonds and loans. The Maglev project from LAX to March Inland Port represents a new business model that offers the federal government some key benefits. By supporting the project through the environmental review process and providing construction loan guarantees, and by allowing construction and operation to be funded from operating revenues, the federal government plays an active but limited role in the project. The California Maglev Project could be a model for future transportation infrastructure projects.