The first full-scale Hyperloop, a new transportation method dreamed up by entrepreneur Elon Musk, will be built in central California next year.
The five-mile (8km) test track will be built halfway between Los Angeles and San Francisco.
The system uses depressurised tubes, as well as magnets and fans, to propel up to 28 people at a time at high speeds.
This model will be slower and shorter than the full-sized near-supersonic system envisioned by Mr Musk.
Hyperloop Transportation Technologies announced the agreement with the developers of Quay Valley, California, a planned community that emphasises sustainability.
The system will be built alongside the Interstate 5 freeway in central California, and the developers claim that it will be the first passenger-ready Hyperloop to be built in an urban area.
Mr Musk - who founded companies like Paypal, SpaceX, and Tesla Motors - first announced the idea of a Hyperloop in a 57-page white paper in August 2013.
In his original envisioning, Mr Musk imagined the system transporting people between Los Angeles and San Francisco- a distance of about 400 miles (645 km) - in 30 minutes.
Shortly after the announcement he handed the concept over to the public for anyone to develop, saying that he was too busy with other projects.
Since then hundreds of engineers have contributed ideas to the project during their spare time.
Mr Musk has described the design as a cross between Concorde, a railgun and an air hockey table.