WASHINGTON - A futuristic passenger train streaks quietly over the rolling hills of the Texas countryside at 200 m.p.h.

It's the electric-powered Texas Supertrain traveling the 250 miles between Dallas and Houston, unclogging Texas highways and Commercial airline routes, and reducing U.S. dependence on foreign oil.

Actually, it's a promotional film about the Supertrain, which doesn't exist yet. The film features a French train, using French technology, rolling over French soil.

Looking at the TGV train in France or the bullet trains of Japan, officials in Texas and a lot of other states want high-speed trains that would carry passengers much faster than conventional trains ever did in this country. The Clinton administration wants that too. But to date no project has advanced beyond the planning stage in this country.

A single high-speed rail project would cost several billion dollars to build. Cheerleaders of high-speed rail suggest the funds could come from various combinations of sources, including federal, state, and municipal coffers, and private investors.

But so far Wall Street is showing little interest. An informal survey of transportation specialists at the largest bond underwriters revealed that most either have strong doubts about the financial feasibility of high-speed rail or no opinion at all.

It's difficult to find anyone on Wall Street who is very anxious to talk about the subject.

A spokesman at one of the largest tax-exempt bond underwriters said he could find no one at his firm interested in high-speed rail, nor did he know of anyone else on Wall Street who was.

At another one of the largest firms, a deputy director of investment banking said it was "very premature" to talk about underwriting for superfast trains. "We're years away from high-speed rail - I don't care what Clinton says," he said. "We're here to make money."

He and officials of several other underwriters agreed to discuss the financial feasibility of high-speed rail only if their names were not mentioned because they were not actively studying the matter. Nonetheless, many of them hold definite opinions on the subject.

A senior vice president at another firm speculated that for several years to come high-speed rail will be Suitable only for high-risk venture capital.

John Pincavage, partner and director of the Transportation Group, a spinoff from PaineWebber Inc. associated with the financing of the French TGV, said he doubted that most proposed high-speed rail projects in this country would turn a profit.

Dallas and Houston could be usefully linked by high-speed rail, he said, but few other cities in the United States are large enough and close enough together to make the projects worth the cost.

In general, experts say highspeed rail is best suited for linking cities 100 to 300 miles apart. Those distances are too great for routine business trips by car, but short enough so that a fast train could compete with airlines. And trains have the advantage of delivering passengers into a city's downtown instead of forcing them to find a taxi from the airport.

High-speed rail service can be competitive in terms of time and price with short-haul air service," Transportation Secretary Federico Pena argued in recent testimony to the Senate Transportation subcommittee on surface transportation.

But Pincavage doubted that travelers would want to make the switch. "The country is not oriented that way - people think in terms of cars and planes," he said. Consequently, he said, it is unlikely there will be many private investors enthusiastic about highspeed rail in this country. "It will be very difficult to raise private-sector funds for such a project," he said. "If the government wants it, they're going to have to do it themselves."

Robert C. Brown, senior vice president for public transportation at Lehman Brothers, said highspeed rail is probably a good longterm investment for the country. Interstate highways had excess capacity when they were first built but that soon changed, he said. But, even if there is an eventual need, Brown said the private sector could not shoulder the burden of getting high-speed rail rolling because the initial investments are too great.

"I think of myself as a high-speed rail advocate, but I want to be can-did and realistic going in," Brown said. "These are multibillion projects we're talking about.

In all probability, he said, a highspeed rail line would generate enough revenues to pay for its operating costs but not enough to also handle debt service. "You could call that initial investment equity if you like - but it's equity with no return," he said.

Brown, a member of the High Speed Rail/Maglev Association, was involved in a Florida highspeed rail project that was eventually abandoned. The bottom line, he said, is that high-speed rail in the United States will require large sums of federal and state money, not unlike the way the interstate highway system was built and maintained.

Brown said tax-exempt funding will be essential because it allows much lower rates for the projects' financing. "Tax-exempt funding is the way to go in this case," he said.

But, he said, tax-exempt debt - namely private-activity revenue bonds - could be just one piece of the funding puzzle. "It's very difficult for me to imagine that any high-speed rail project proposed in this country could be fully funded with bonds and be able to service that debt," Brown said. On the other hand, John Crew, managing director of the Dallas office of Dillon, Read & Co., said tax-exempt bonds could be left out of the puzzle.

"Tax-exempts would be an advantageous route," said Crew, who is working on the Texas Supertrain project. "But they aren't essential if [taxable] rates are low enough."

As to high-speed rail's need for government money, Crew said the Texas Supertrain could probably survive on its own. "In theory this is a great project," he said. "As it starts to take shape, you'll have a lot of people interested." But the undertaking is still very much in the planning stage, he said.

Talking to Wall Street

The U.S. General Accounting Office also talked to Wall Street about high-speed rail.

"Investment bankers told us that without a substantial federal investment to reduce the perceived risks, few private dollars would flow towards high-speed ground transportation systems," said Kenneth Mead, director of transportation issues of the GAO, in testimony to the Senate subcommittee on surface transportation.

High-speed rail has not received much attention from Congress until recently. In 1987, lawmakers did approve legislation permitting tax-exempt bonds to be used for the projects, but the measure is considered nearly worthless. It requires issuers to obtain an allocation under the private-activity bond volume cap for 25% of each issue, and the projects are so big that one could gobble up all of a state's capacity.

This year, however, President Clinton has put high-speed rail on Washington's agenda. Clinton has proposed spending $1.3 billion over five years to promote high-speed rail in the United States, as well as eliminating the volume cap restrictions on using tax-exempt bonds to finance privately owned or operated high-speed rail projects.

That figure represents $982 million in grants to states and municipalities to upgrade existing routes, $300 million to develop new technologies, and $25 million for applied research, according to the Department of Transportation.

Those funds are expected to generate at least another $2 billion in funding from state and local governments, according to John Fitzpatrick, spokesman of the Federal Railroad Administration.

Perhaps more importantly, Clinton's plan would make it possible for states and localities to issue tax-exempt bonds to finance highspeed rail projects that primarily benefit private owners or operators, according to the department.

Under current law, a state can use private-activity bonds to finance a high-speed rail project in which 10% or more of the benefit flows to a private firm. But the 25% volume cap requirement essentially eliminates the use of private-activity bonds for high-speed rail.

States currently could get around that restriction by issuing general obligation or traditional revenue bonds for high-speed rail and owning and operating the system themselves.

However, most states are reluctant to do that because if a project does not break even they would have to provide huge operating subsidies or else risk default.

And both the administration's high-speed rail proposals are in jeopardy.

The grant proposal is contained in legislation called the "High-Speed Rail Development Act of 1993" that is pending in the transportation committees of both the House and Senate, but neither panel has taken action.

No provision for the grants has been included in the huge omnibus budget package that House and Senate negotiators are about to start finalizing. Unless funds are included in the current package, it is unlikely that any rail grants can be made until a budget package is approved sometime in the fall of 1994.

Prospects are almost as dim for the provision in the tax section of the budget package that would exempt bonds issued for high-speed rail from the volume cap.

The House version of the tax plan included a provision that exempted high-speed rail bonds, but the Senate dropped a similar provision to save money when it replaced Clinton's original energy tax with a more modest tax on fuels. State and local lobbyists expect that arrangement to stick.

And once the budget and tax package is signed into law, it is unlikely that Congress will revisit the tax code this year or make room for large new spending projects.

High-Speed Rail Defined

What exactly is high-speed rail? There are different definitions floating around.

Amtrak says it is any passenger train running no slower than 125 m.p.h., a speed that Amtrak already matches along the New York-Washington, D.C., corridor. Joseph Vranich, president of the High Speed Rail/Maglev Association, says it is any train going fast enough to coax passengers away from air travel. Others say 150 m.p.h. marks the cutoff point.

In general, there are essentially three types of advanced technologies talked about regarding high-speed rail. All run on electricity in place of fossil fuel.

The tilt train is used in Sweden. It is equipped with a specially designed suspension system to run on existing tracks and tilts sideways to negotiate turns at high speeds. Florida is preparing for the possible use of this type of train.

The French TGV runs on a specially designed steel track. Currently, the TGV is the world's fastest regularly scheduled passenger train, running at speeds around 180 m.p.h. Texas made the TGV its choice.

The Japanese and Germans are developing separate prototypes of the superconducting maglev train, which is propelled along and held to its tracks by magnetism. A 250-mph maglev, or magnetic levitation, line running from downtown Pittsburgh to the nearby airport is currently being contemplated.

Not surprisingly, the cost of these trains increases with their speed and level of technical sophistication. The General Accounting Office estimated that the tilt train would cost $2.7 million to $13 million per mile to build in the United States, the TGV would cost $17 million per mile, and the maglev would cost $20 million to $60 million per mile. "Because maglev is a developing technology and no high-speed maglev systems have entered revenue service anywhere in the world, cost estimates vary widely," GAO's Mead told the Senate surface transportation subcommittee.

Despite the high costs, proponents say it is only a matter of time before high-speed rail becomes a reality in the United States, as roads and airports grow more congested, and environmental concerns render fossil fuels less appealing.

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