Friday, January 21, 2011

Wendell Cox on the Florida HSR financial challenge

Just a house-keeping comment or two.  There are around 100 blog entries on this site now, with many more salient articles.  While in the recent past, many of you were receiving emails from me each day, this is the communication vehicle going forward. Same content, but in this blog format.  

I urge you to keep up with your reading.  If you're an anti-HSR activist, or merely concerned about the possible adverse impact of HSR on you and our neighbors, you have a duty and obligation to get as well informed as possible about what HSR really means to all of us in the US, and especially in California.  That's the purpose of this blog, to pay "attention to the man behind the screen." contrary to what the Wizard says.  We cannot defeat what we don't understand.

The Florida HSR debacle.  Ideological differences aside, Wendell Cox is among the most respected academic authorities on urban development and transportation.  He takes a very calm, reasoned look at  high-speed rail developments nation-wide and doesn't like what he sees.  His opinions are empirically based.  His most important (to high-speed rail) publication is the Due Diligence Report of 2008, put out by the Reason Foundation.  http://reason.org/news/show/1003044.html

Let me say, parenthetically, that if the press had taken notice of this Due Diligence report prior to the November elections in 2008, we might not have to have this conversation right now; Proposition 1A would have been defeated.

Florida is 'the other state.'  So far, only California and Florida have high-speed rail ambitions; that is, for trains going over 200 mph.  That's different than all the other, slower "high-speed trains" that the FRA is willing to fund, since these other trains are merely as fast as the fast passenger trains that used to run in the 50s, before the Interstate Highway System made those trains obsolete. 

Confused?  That's because this is not a rational high-speed rail strategy for the United States, it's a political pork-barrel program. Blue California has been generously awarded for its blueness by a blue Administration.  Florida is next on the DOT 'good boy' list. 

Keep in mind that Florida's program is just as nonsensical as the California one.  Theirs is an 84 mile train from nowhere to nowhere.  It runs from outside Tampa to outside the Orlando airport. You will need to have a car at either end. The Floridians have been screwing around with the HSR concept as long as we have.  They were going to do this; then they weren't.  Now they're back at it.

The only thing right about their designs is that the rail corridor will run between the East and the West lanes of their cross state highway.  That way, unlike ours in California,  it won't devastate any real estate, or natural/ urban environments.  I could, of course, be wrong about that.  

Even less expensive per mile than the California project, it's nonetheless going to enjoy huge, massive and big cost overruns. Did I say very large?  And, like us, Florida will inevitably have to come up with the endless subsidy support to keep this monstrosity running.  Critics point out that it's easier to drive the 84 miles. That obvious fact has little to do with the politically driven agenda of the rail developers and advocates.  Sound familiar?

As Wendell says:  Taxpayers would be on the hook.  Watch out, California.
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Against Florida high-speed rail
Derail it: Taxpayers would be on the hook

By Wendell Cox | Guest columnist
12:00 a.m. EST, January 21, 2011
As Gov. Rick Scott contemplates the proposed high-speed rail system from Tampa to Orlando, some argue it is simply too good a deal to pass up.

After all, federal taxpayers will pay $2.4 billion of the $2.7 billion estimated price tag, leaving "just" $280 million for Florida taxpayers — unless the rest is paid for by the successful bidder on the rail project.

The history of big rail projects, however, indicates Florida taxpayers would be fortunate if the final tab were only $280 million.

A team led by Oxford University Professor Bent Flyvbjerg studied more than 258 infrastructure megaprojects across the world and found passenger-rail systems experience cost overruns of 45 percent on average. If the current Tampa-Orlando cost estimate is off by that average — 45 percent — the project would need an additional $1.2 billion. Who would pay for that? Florida taxpayers or the builder?

When you consider that the Tampa-to-Orlando line's estimated construction cost per mile is less than half of the first segment of California's proposed high-speed rail line, it's hard to see how Florida can build the train system so cheaply.

California's anticipated cost is $67.8 million per mile, compared with $32.1 million per mile in Florida.

The Tampa-to-Orlando line has two things going in its favor in the comparison to California: Right-of-way has largely already been obtained, and there will be less construction on viaducts.

But California's Central Valley construction will take place in far more rural and less challenging environments than the Tampa-to-Orlando line. And Florida plans to build five expensive high-speed rail stations, while California plans to build only two cheaper Amtrak-quality stations.

Additionally, California isn't factoring in the cost of trains, electricity infrastructure, train yards or maintenance facilities — all of which will raise its final price tag even further. And yet, despite leaving all those things out, California's cost per mile is still more than double Florida's pie-in-the-sky estimate.

Just as worrisome: These types of large rail projects don't just cost more than expected to build; they cost more to operate. Flyvbjerg's research finds: "There is a massive and highly significant problem with inflated forecasts for rail projects. For two-thirds of the projects, [ridership] forecasts are overestimated by more than two-thirds."

If high-speed rail ridership doesn't meet projections, taxpayers could see the rail system lose $300 million over the first 10 years of operation. It is hard to see how the Florida rail system is going to reach its predicted number of riders. It will provide virtually no intercity travel-time advantage compared with cars.

And it would cost more than driving (a lot more if you have to hail an expensive taxi or rent a car to get from the train station to your ultimate destination, as would be the case for many trips).

Obviously, Florida could be spared these potential costs by canceling the rail project. But, if the lure of federal funding proves irresistible, the state must provide ironclad provisions to limit taxpayers' financial exposure to $280 million or less. As it has suggested it will do, the Florida Department of Transportation needs to ensure that the private builder-operator is responsible for any construction overruns and operational losses.

And if the state insists on moving forward with the plan, the independently operable Orlando tourist-shuttle segment (Orlando International Airport to International Drive and Walt Disney World) is the one section that should be initially built. Then, if — and only if — there is enough money left over, the full extension to Tampa could be completed.

A century of rail projects shows they cost more than estimated and generate fewer riders than predicted. Florida taxpayers need to make sure they don't hand over a blank check that puts them on the hook for endless cost overruns and annual financial losses if the train system's rose-colored forecasts don't pan out.
Wendell Cox is principal of Demographia, a consulting firm based in St. Louis, Mo., and author of a recent Reason Foundation study of the financial risks to taxpayers in Florida's proposed high-speed rail system.