“The Pennsylvania Project” High Speed Maglev A Cost Benefit Analysis Presented by: Shawn Buckner, Poonsri O’ Charoen, Chia-Hui Lan & Afshan Yousuf April 25, 2003

Agenda Overview of Maglev Costs Benefits Synthesis Conclusion

What is Maglev? Short for Magnetic Levitation Magnetic Levitation is an advanced technology in which magnetic forces lift, propel, and guide a vehicle over a guideway Authorized by Congress in the Transportation Equity Act (TEA 21), encouraging the development and construction capable of safe use by the public New and proven mode for high speed ground transportation Maglev permits cruising speeds of over 300 mph, or almost 2 times the speed of conventional high-speed rail service Source: Final Programmatic Environmental Impact Statement Vol. I

Technology Propulsion Travelling magnetic field (guideway) Source:

Vehicle Structure and Dimensions Vertical Structure Passenger Vehicle Source: End SectionMiddle Section Length m24.77 m Width 3.70 m Height 4.16 m Passenger Seating Total 62.0 t64.5 t

Why Pittsburgh?

Objectives and purpose of The Pennsylvania Project Bring high speed Maglev to the U.S. –Begin in SW PA –Expand across PA –Expand to neighboring states Capture the economic benefits of PA –Develop new technology –Create new jobs –Become a tourist attraction –Technology for the Maglev Guideway Provide benefits to the traveler Source:

MAGLEV, Inc Creation of the high- speed rail by CMU 2001 Downselect to PA and MD Late 1999 Downselect to 7 Projects: PA, Nevada, Baltimore-Washington, California, Georgia, Louisiana, Florida Early 1999 Downselect to 11 projects 1997 Technology transfer Agreement (MAGLEV, Inc., and Transrapid International 1995 Preliminary study On suitability of Maglev in PA 1991 Completion of Maglev demonstration/ design/development Source: May 2003 Decision will be made 2005 Construction begins

Proposed initial high speed maglev line Pittsburgh International Airport Downtown Pittsburgh Monroeville Greensburg 19 Miles/7 minutes 15 miles/10 Minutes 13 Miles/6 Minutes 47 Miles in 26 Minutes With Stops

Cost-Benefit Analysis

Assumptions Project planning period30 years Construction period5 years Monetary valuesMarket/Nominal term Discount rate10% Principle of accountingAnnual cash basis Salvage valueExcluded from PV Bond period20 years Bond coupon rate7% annual rate Life cycle of vehicle15 years

Ridership Source: The Pennsylvania Project High Speed Maglev Presentation on May 2000.

Ridership Projection Approach Number of passenger 140 in 1 section. Total hour operating 20 hours per day with 6 hours rush hour Number of vehicle service in 1 hour is 7 vehicles while 6 vehicles for off Peak Ridership per vehicle = # of section * # of seat available *% of passenger filled Ridership per one day = ridership per vehicle * (#of rush hour* # of vehicle per one rush hour) + (#of off-peak hour*# of vehicle per one off-peak hour) Ridership per year = ridership per one day* 365 Year # of section % of passenger per one vehicleper one dayper year Year %182 22,932 8,370,180 Year %294 37,044 13,521,060 Year %315 39,690 14,486,850 Year %336 42,336 15,452,640 Year %357 44,982 16,418,430

Cost Methodology Detail$ Infrastructure including guide way and vehicle $1.8 billion ($360 million per year for first 5 years) Other related costs$1 billion ($200 million per year for first 5 years) Operating and maintenance 10 cent*annual ridership* # of total kilometers of the route (increases by 20% every ten years) Vehicle replacement$70 million outflow at year 16 Parking construction$3 million Operating and maintenance for parking $2.83 million per year (increases by 20% every ten years) Interests on bondsPrincipal*annual interest rate

Financing of the Initial Project Total initial Cost: $2.8 Billion 1.6 billion 575 million 500 million 125 million

Cost Analysis Year0 Beginning 5 Full completion 16 Veh.repla- cement 20 Last year of bonds 30 End of Project Infrastructure$ Other related costs$ Operating and maintenance -$102.76$ $ Vehicle replacement --$70-- Parking construction $3---- O&M for parking-$2.84$3.41 $4.09 Interests on bonds-$35 $535- (In Million)

Cost Allocation NPV of Total Cost: $3, Million

Benefit Methodology Revenue from riding (real revenue) Fare*Ridership (Increase at 10-year interval) Revenue from parking (real revenue) Fee*Ridership (Increase at 10-year interval) Value of time saved$10.88*1.3hr saved*70%Ridership Energy savingsFuel cost/mile*Miles of Maglev*70%Ridership Savings from air pollutionAir pollution cost/mile*Miles of Maglev*70%Ridership

Benefit Analysis Year3 Partial completion 5 Full completion 1020 Last year of bonds 30 End of project Revenue from riding $23.02$108.17$115.89$148.35$ Revenue from parking $9.75 $10.40$11.05 Value of time saved $82.87$113.87$143.43$152.99$ Energy savings $22.03$35.59$38.13$40.67$43.21 Savings from air pollution $5.56$8.35$8.99$5.78$3.70 (In Million)

Benefit Allocation NPV of Total Benefit: $2, Million

Cost-Benefit Analysis Net Social Benefit = Total Benefit – Total Cost Total Benefit$2,815.57Million Total Cost$3,657.12Million Net Social Benefit-$841.55Million Total Benefit$1,160.99Million Total Cost$3,657.12Million Loss-$2,496.13Million Profit/Loss = Revenue – Cost

Synthesis Analysis

Synthesis Discount rate Bond coupon rate Percentage of bonds issued Total cost Fare Price Economic development

Discount Rate Break-even discount rate: 4.27%

Percentage of Bond Issued

Bond Coupon Rate

Total Cost Base Case 50% increase 100% increase

Fare Price (In Million)

Economic Development

Conclusion

Circumstances that Warrant Investment in Public Project When society’s resources are under utilized When public funds are idling and can be invested When the potential project will lead to a higher level of productivity than any competing project

Economic Impact Maglev Productivity Multiplier Effects Benefits Investment Productivity Multiplier Effects Benefits Investment Alternative Investment

The Maglev Project Vision

Conclusion Maglev is a worthy pursuit, although the CBA study does not directly reflect this conclusion “Sometimes the numbers do lie!” Professor Shawn Buckner, Clinton School, Hovard University

Thank you Afshan  Shawn  Chia-Hui  Poonsri Prof. Strauss