Monday, April 18, 2011

High-Speed Rail: Telling it like it is, in the California Central Valley

Ray Reilly of Bakersfield is an engineer, now retired, with 60 years of experience, much of it international. He is a certified value specialist and a member of the Society of American Value Engineers.

Ray Reilly has credentials.  He is critical of the CHSRA and it's misbegotten mismanagement and endless parade of falsehoods.  

He speaks from Bakersfield in the Central Valley, where the HSR construction is intended to start in late 2012. There are about $5 billion in "the bank" right now, but no more in the pipeline.  So, the Rail Authority will start track laying and quit when the money is gone.  Then what?

RAY REILLY: High-Speed Rail Authority still has plenty of explaining to do about project's viability
The Bakersfield Californian | Sunday, Apr 17 2011 11:00 PM
Last Updated Sunday, Apr 17 2011 11:00 PM

This stop-restart request for high-speed rail in California is based on a March 21 news article, "Communications handicaps rail project," and all the other recent news about the project. Blaming communications failures for basic problems is a standard tactic for a badly dysfunctional organization.

Two years ago, the California High-Speed Rail Authority, at the time of the original $9.95 billion bond initiative, promised an annual ridership of 117 million; San Francisco-to-Los Angeles fares that will be half the price of HSR fares for the New York-to-Washington run; 160,000 construction jobs; and a total construction cost of $42.6 billion. The authority even promised improvements to the San Francisco cable-car system because it would feed the S.F. HSR terminal. It guaranteed that the system would be self-sustaining from the fare box.
But where are we now, in the second quarter of 2011?

In December, a CHSRA representative said that the system would produce 600,000 construction jobs. When prodded, HSR admitted that this was actually 600,000 man-years -- 60,000 per year of scheduled construction. However, with prevailing (union) wages, fringe, overhead and profit, this is $48 billion or so -- not leaving much in a $42.6 billion budget for materials, right-of-way and rolling stock.

The Bay Area is demanding major changes (with NIMBY suits) in the proposed right-of-way between their cities. The question of possible joint use of track in the Los Angeles Basin could affect costs and train point-to-point schedules. The question arises whether right-of-way costs include farming disruptions -- by slicing through farms and orchards, requiring significant irrigation system modifications and costs for extra manpower and equipment, making long detours to limited right-of-way crossings. Are there different construction costs for the Heavy Maintenance Facility -- whether it is in Fresno or Kern? 

There could be from 12 to 18 tunnels through the Tehachapi Mountains, according to some news reports. Another recent news article said that the engineers were re-evaluating the cost implications of miles of elevated track vs. level crossings through Fresno. What is the cost difference between the two possible right-of-ways through Bakersfield? A recent Wall Street Journal editorial reported construction cost estimates ranging from $62 billion (45 percent higher than the authority's official estimate) to $162 billion (275 percent higher).

There is also the specter of "intended/unintended consequences." What if the new business plan is not viable unless a special gas tax or acceleration of AB 32 (CAFE standards and percentage of plug-in electric vehicles, or PEVs) or road tolls is imposed? What about our freedom to go where, when and how we choose? What would be the effect on tourism? Jobs? I love Lake Tahoe, but I am not going down the wall from Echo Summit to South Lake in a PEV!

Therefore, the first step in a restated business plan is a realistic estimate of expected ridership, fares and income. Price points -- ridership vs. fare, with an absolute floor of a positive operational and bond repayment cash flow -- must be guaranteed.

The schedule must be realistic. Environmental impact studies invariably take longer than planned. NIMBY suits are already a factor. Right-of-way concerns, with inevitable eminent domain issues, must be dealt with.

The budget must be carefully reviewed and restated. There are simply too many issues, some listed above, that have the potential to drastically change the very viability of the project -- and the state.