Thursday, December 16, 2010

A comment about the first segment in the Central Valley

The optimists see that HSR starting in the Central Valley is a golden opportunity to castigate this "Train to Nowhere." They say it will make California the laughing stock in Washington. I only wish!

The pessimists among us see this as a irrevocable foot in the door. Once the shovels hit the ground and the dirt starts flying, the entire HSR project is launched. Terminating it becomes much harder.

Of course, there is still at least a year and half before the bulldozers show up. If the Republicans act as promised, and in a timely manner, they can and should turn off the money-tap before it's too late. And, it's not because of the initial costs, the Central Valley pre-segment is now budgeted at a around $5 billion (thus combining all the ARRA federal funds with Prop. 1A funds). Of course, that still only starts this segment, it doesn't complete it. And that could very well be against the law.

Once construction starts, the project will begin draining the treasury at an accelerating rate. Inflation is due to kick in; labor costs will be pushed upward to Union scales; materials and equipment will have to be acquired from overseas. (A good example is the new Bay Bridge with it components being shipped over from China.) Remember, they haven't budgeted for electrification, rolling stock and many other costs.

The Rail Authority, and therefore the press, still talk about the overall costs for the California HSR being $43 billion. However, all kinds of costs have not been factored in, such as inflation, insurance, debt payments, etc. Those more realistic about such cost projections now take $100 billion for granted, and it could be far more.

Once the design work is in hand, and the Rail Authority goes out for construction bids, there will be new surprises and shocks. That's exactly what happened with the New Bay Bridge which was initially budgeted at around $2 billion until the bids came in. Those were twice as high. Since then, costs have climbed to $6 billion and are still climbing.

The recent addition of $614 million, taken away from anti-HSR (Republican) governors-elect from Wisconsin and Ohio, will add some miles to the California project. Now there is talk about from Fresno to Bakersfield. Let's see if that's the last word. Also, we need to wait for the real, total costs to become known. And, let's see if the Republicans in Congress can rescind the unspent ARRA funds and return them to the Treasury.


The Wall Street Journal/U.S. NEWS

DECEMBER 13, 2010

At Start of Rail Project, a Tussle Over Where to Begin


California's plan for high-speed rail service envisions bullet trains zooming from Sacramento to San Diego. To start off, the state intends to spend $4.3 billion to build a 65-mile stretch of track and stations linking two small towns in rural Central Valley.

Proponents of high speed rail say building this portion of track is a good way to launch a multiyear building program. Critics call the project the "train to nowhere" and are using it to fuel a broader attack on the Obama administration's rail strategy.

"It defies logic and common sense to have the train start and stop in remote areas that have no hope of attaining the ridership needed to justify the cost of the project," U.S. Rep. Dennis Cardoza (D., Calif.) wrote in a Nov. 30 letter to Transportation Secretary Ray LaHood.

Congress is signaling it could cut spending for high-speed rail across the board. An independent peer review group recently told the state Legislature that the Central Valley rail project's financing plan is a "critical concern" and the assumption by the project's backers that they will get significant additional federal assistance had an "air of unreality."

California has received more than $2.5 billion in federal funding to build the initial $4.3 billion stretch in the Central Valley, linking the towns of Corcoran and Borden. While the state's high-speed-rail plan calls for an 800-mile system from Sacramento to San Diego, officials are focusing on the main phase—a 520-mile span from the San Francisco Bay area to the Los Angeles/Anaheim area, proposed to be build and in operation by 2020 at an estimated cost of $42.6 billion.

Trains would eventually reach speeds up to 220 miles per hour—far faster than any existing passenger trains in the U.S., and rivaling those in Europe and Asia.

"This is a high-stakes game and we're going to be left holding the bag," said state Sen. Alan Lowenthal, a Long Beach Democrat who heads a legislative committee overseeing the project. "We're hearing a lot more concerns that the nation doesn't need this at the moment. Well why are we spending more money building this orphan site?"

Roelof van Ark, chief executive of the California High Speed Rail Authority, says the Central Valley link will be the "backbone" of a system and serve as a testing ground for high-speed locomotives. He says it is easier to start in the less-developed Central Valley because building there is less expensive than in urban centers and there are fewer landowners to negotiate with. Supporters also say the project will spur development and bring jobs to an area with high unemployment.

The federal government itself stipulated that the money allocated to the project so far should be spent on the Central Valley stretch.

Building in the Central Valley also meets a key federal requirement: If the high-speed-rail plans fail, any portion built with federal money must find a use. In this case, the Central Valley portion could be linked up with nearby freight-rail lines used by Amtrak.

Mr. Van Ark said the rail authority's plans and the 2020 scheduled finish date for the San Francisco-Los Angeles portion depend on more federal funding.

"It's without any doubt that we need funding from the federal government" beyond what's already been allocated, Mr. van Ark said. "We are aware of the changes in Washington, D.C., obviously, and there will be more caution on spending on all types of projects."

Obama administration officials say they remain committed to high-speed rail in California, and this week redirected more than $600 million in high-speed-rail stimulus funds to California. State rail officials said that money would likely be used to extend the Central Valley portion south to Bakersfield.

But the U.S. House this week voted to cut federal funding of high-speed rail programs nationwide to $1 billion in the current fiscal year from $2.5 billion in fiscal 2010. Congressional Republicans have pledged to cut government spending and suggested they may try to recoup the stimulus money for high-speed rail.

Project administrators said potential private investors, including train manufacturers, operators, and construction companies, have expressed interest in putting up capital, but that the project needs to be further along before companies would do that.

Ross Capon, executive director of the National Association of Railroad Passengers, which supports the California project, said opposition to the project could shift if there is a spike in oil prices, which could hurt air and car travel and lead more people to use passenger rail.

"It's those kind of events that people promoting the high-speed-rail project out there are trying to get ahead of the curve," Mr. Capon said. "It's hard to do that because politicians love projects that can be done before the next election, which this decidedly is not."

Write to Josh Mitchell at

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