In the prior blog, I mentioned that we would look a little more closely at the Florida project. To remind you, Tony Daniels of Parsons Brinkerhoff, formerly working as the head engineer on the California HSR project, went to Florida as a senior engineering executive. And now, Robert Doty of the Caltrain/CHSRA is also headed there as a senior HNTB executive. You know, of course, that Florida is the other state that intends to build a "true" high-speed rail between Orlando and Tampa, or to be more correct, near Orlando and near Tampa.
Just to state, parenthetically, both PB and HNTB have had their arms around the CHSRA project and now the Florida project as well. You could call these HSR projects as dedicated pork for this corporations. Have they been sponsoring lobbyists and providing campaign support for politicians? What do you think?
Both the Florida and the California project are the consequence of endless political manipulation. Florida voted both for and against HSR in the past, and now, here they go again. Hopefully, like a few other Governors, Rick Scott will impose a little reality on his state which faces major fiscal problems. We're waiting for Jerry Brown to do the same.
The bottom line on all this is that projects such as this are always -- ALWAYS -- over-estimated with their productivity (ridership and revenues) and grossly underestimated about their costs. You'd think that we would learn this lesson, but, we never do. We have to be taught over and over with each and every project.
So what's the problem for Florida and for California? The federal government primes the pump with their seed money, but the state ends up carrying the major burden of the costs (to mix several metaphors). And the real costs, as they say about yachts, is not the buying it, but the owning and operating of it. And those costs are forever.
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http://reason.org/studies/show/tampa-to-orlando-high-speed-rail-pl
The Tampa to Orlando High-Speed Rail Project
A Florida taxpayer risk assessment
Wendell Cox and Robert Poole
January 6, 2011
Governor Rick Scott is evaluating whether to proceed with construction of the proposed Tampa to Orlando high-speed rail project. The potential cost to Florida taxpayers is a principal factor in this evaluation. Capital cost escalation, revenue shortfalls and higher than projected operating costs are common in high-speed rail projects. Governor Scott Walker of Wisconsin and Governor-elect John Kasich of Ohio have cancelled projects funded by the Obama administration's high-speed rail program and foregone the federal funding because of cost concerns such as these.
Construction cost escalation recently led New Jersey Governor Chris Christie to cancel a federally funded tunnel to avoid up to $4 billion in projected cost overruns that would have been the responsibility of the state's taxpayers.1 Perhaps the ultimate example of an over-budget megaproject is the Boston "Central Artery" ("Big Dig") highway project, which exceeded projected costs by $16 billion, including interest.2 While there was considerable federal funding in the project as originally planned, much of the cost overrun became the responsibility of Massachusetts taxpayers.
Florida taxpayers face two potentially significant financial risks from the project:
1. Capital Cost Escalation: If construction cost projections prove overly optimistic, costs could increase substantially from the current estimates. The state of Florida would be responsible for virtually all of any such increase. This report estimates that the cost to Florida taxpayers could be $3 billion more than currently projected.
2. Operating Subsidy Liability: If ridership and revenue projections prove overly optimistic, it could become necessary for the state to provide an annual operating subsidy for the service. A state operating subsidy could also be necessitated by operating costs that are greater than projected. This risk could easily run into the hundreds of millions of dollars per year.
THIS STUDY'S MATERIALS
•Tampa to Orlando High-Speed Rail Could Cost $3 Billion More Than Expected, Press Release
Wendell Cox and Robert Poole
•The Tampa to Orlando High-Speed Rail Project Risk Assessment (.pdf), PDF, 631.9 KB
Wendell Cox and Robert Poole
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International research shows costs are underestimated on nine out of every 10 large passenger rail transportation projects, with cost overruns averaging 45 percent. If the Tampa-Orlando rail line were to go over budget by 45 percent Florida taxpayers would be on the hook for $1.2 billion more than the $280 million currently forecast.
However, Florida may be miscalculating the costs of high-speed rail by even more than that. A comparison with the costs of the first segment of the California High Speed Rail line (the Corcoran to Borden "train to nowhere") suggests that the eventual cost overrun on the Tampa to Orlando rail line could reach $3 billion.
The Reason study also flags concerns about ridership numbers.
"It's understandable that some are dreaming of flashy high-speed rail trains carrying tourists and residents between the two cities," said Robert Poole, director of transportation at Reason Foundation and a transportation advisor to Governor Rick Scott's administration. "Unfortunately, the numbers just don't add up. When you look at realistic construction costs and operating expenses you see these trains are likely to turn into a very expensive nightmare for taxpayers."
"The risk to Florida taxpayers is likely to be many times greater than current projections for this high-speed rail proposal," said Wendell Cox, author of the report and head of Wendell Cox Consultancy. "History tells us that cost overruns could run into the billions and ridership shortfalls will likely leave taxpayers with an open-ended bill for operating subsidies."
http://reason.org/files/florida_high_speed_rail_analysis.pdf
"The Tampa to Orlando High-Speed Rail Project: A Florida taxpayer risk assessment"
By Wendell Cox
Project Director: Robert W. Poole, Jr.
