Wednesday, June 8, 2011

Who needs High-Speed Rail? Five mayors in California do.

This article, jointly written by the Mayors of Fresno, San Jose, San Francisco, Los Angeles and Sacramento, is what my colleague, William Grindley, calls an act of desperation.  These mayors are sensing the possibility of funding losses.  You do remember that this project is about the money, not the trains, right?  

It turns out that all that money may not show up on their doorsteps after all.  Well, maybe Fresno since it's in the Central Valley, but not the other cities, and certainly not Sacramento. Oh, and by the way, where is Jerry Sanders, the mayor of San Diego?  Perhaps he already knows that this is a hopeless bunch of expensive nonsense.

This article has been around for several days and I tried to ignore it, but today is a slow news day, so let's use it for what it's worth.

I'll make my comments in blue italics.
Case for high-speed rail grows only stronger

By Edwin Lee, Kevin Johnson, Chuck Reed, Ashley Swearengin and Antonio Villaraigosa

Special to The Bee

Published: Tuesday, Jun. 7, 2011 - 12:00 am | Page 11A

The last time many Californians thought about high-speed rail was in the voting booth. On that day, Nov. 4, 2008, more than 6 million of us voted to tell the state to get going, to build high-speed rail in California. [And 4% fewer of all the California voters voted against this project.  It was 52% to 48%.  There certainly was no mandate.  And the voters were scammed by marketing language approved by the Legislature.  Recently, an Appeals Court found this illegal in the Bond language.]

Now, 2 1/2 years later, the second guessing is in full swing. In recent weeks some have suggested that we should put the project on hold. [Actually, more Californians  are coming to agree that the project should not be put on hold; it should be terminated.]

We couldn't disagree more.

California will need high-speed rail in the coming years to do something about the gridlock on our roads and at our airports. [Where is that grid-lock, Mayors? It is on the roads and highways in your cities; not between them. There is no 'grid-lock' at our airports. And, "NextGen" could solve whatever crowding there is at terminals and in the sky.] Building it is a major investment, but the most recent estimates say it would cost twice as much over the next generation to build new highways and runways just to move the same number of people. [Your projections are in error.  There are too many hypotheticals in your statement which you borrowed from the rail authority.  If anything, we will need more highways and runways, regardless of whether a HSR system is built or not. And we certainly need to fix the ones we already have, not neglect them.] With California expected to grow by 12 million people in the next 25 years, investment in the state's transportation system is inevitable, and high-speed rail is a cost-effective alternative.
[Mayors, how do you know about high-speed rail's cost-effectiveness? We have learned that the DOT failed to conduct any cost-benefit studies.  Did you do any? I doubt it.  Furthermore, I would also challenge your population growth projections.  And no investment is ever "inevitable." It's non-persuasive nonsense to say so.]

In the last 2 1/2 years the case for high-speed rail has gotten stronger, not weaker. [That's a questionable assertion; not a statement of fact.  I respectfully disagree.] When voters approved the plan, a barrel of oil cost about $55; today the price is almost $100. Unemployment was around 8 percent back then, and it is now over 12 percent statewide and even higher in many areas. Californians need the jobs. [Your argument is based on a non-sequitor. Oil costs and unemployment are serious problems, but there is no reason to think that HSR is the solution just because you say so.  We have already demonstrated otherwise.]

There are bound to be questions with any project of this size. [You are right. And a large number of California government agencies have raised those questions which have not yet been satisfactorily answered.] We welcome the dialogue. Last month the Legislative Analyst's Office published a report calling for at least a temporary halt to the project. The report alluded to a number of concerns about the project:

• The amount and timing of future federal funding are unclear.

• Spending state funds on rail will mean there is less money for other things.

• We do not yet know how much private investment the system can attract, or when it will come.

• Starting construction in the Central Valley is "a gamble."

Let's take the criticisms one at a time.

First is federal funding. While we don't know precisely how much we will get in future years, we've competed well up to this point. California's project has received the largest slice of federal high-speed rail funds to date – $3.6 billion out of $10.2 billion. This is in large part due to the extensive planning already under way at the state level and the ability to leverage voter-approved Proposition 1A funds. There is no other program where California competes so well for federal funding. We will continue to encourage additional investment – both public and private – while promoting efficiencies that allow us to stretch every dollar in creating jobs and planning for the future growth of this great state.  [This is all wishful thinking and blather.  There is no inevitability in future federal funding. To the contrary.  All indicators suggest that all that funding success has run out.  The AOL has it right.  There is no Plan B. As they say in the investment business, "Prior results are no guarantee of future performance."]

Second is state funding. The voters said high-speed rail was a priority and authorized spending $9 billion in state funds. The state continues to experience fiscal constraint due to diminishing revenues, but because construction is ramping up slowly we will only need 2 percent of these funds in the coming year to keep the project on track. The amount approved by voters will be spent over many years, keeping the impact on our state's budget low in any given year. [More nonsense.  The spending is slow now due to no construction having begun.  Once the digging starts, the cash will also start flowing. The fact is that once under way, the real costs to California will be continuous and in ever increasing amounts, until it becomes over one billion per year.]

Third is private funding. Our high-speed rail system is expected to make money and attract private investment – similar to systems in Europe and Asia. Twenty-two different funds have shown investment interest in financing part of the system's capital costs. Demonstrating our commitment by beginning major construction and finalizing all the approvals will minimize investor risk and net the best terms for the taxpayers.  [This is the biggest fantasy of all.  Twenty-two manufacturers have shown an interest in getting CHSRA contracts.  That's not the same thing as lending funds for which there will be no R.O.I.. No profits, no private investment.  This HSR train, like all the rest in the world, will need to be massively subsidized.  That's not legal with this California HSR project.  Therefore, no private investments.]

Finally, there is the matter of where to start building. Many Southern Californians have said we should give priority to their part of the state; same in the Bay Area. [And, there are many who say, don't start it anywhere.] We know that this system will never be a success until it connects these two population centers and does so in a way that is sensitive to local concerns. But the question of where to start does not require complicated analysis. The place to start is the place where we're ready to start, and that's the Central Valley.  [The reason for that has nothing to do with anything other than the FRA told them to do it there since they can squeeze more miles out of the existing dollars.  Also, they didn't anticipate how upset people would be in the CV.  They are finding that out now, however.]

No one thinks we should build the line through the Central Valley and then stop. And we won't. There is a parallel to the building of the Interstate Highway System more than 50 years ago. When we started building the Interstate Highway System, the first segments to be completed were not in New York or Los Angeles. The interstate was born in the middle of the country, America's heartland, with the very first sections laid in Kansas and Missouri and then connected to the rest of the nation. [The biggest fallacy around is the Interstate Highway analogy. This project is the opposite of everything the IHS is and was.  There were funding assurances at the outset.  90% came from the government because Eisenhower anticipated possible military uses. ]

On the day that first segment of interstate was dedicated we did not know where all the money would come from to build a 40,000-mile network throughout the nation, and we did not know when it would be finished. [We did know where the money was coming from or we wouldn't have started.  And the fact of a 40K mile network that connects ALL AMERICANS right up to their driveways and parking spots makes it totally the opposite of a luxury train for rich people.] However, it was because of the vision of those who were willing to initiate the effort that, today, America has the most extensive highway system in the world. [And that's one of the reasons we don't need HSR. We also have a great commercial aviation industry.  That's another reason.  And, information technologies reduce the need for business travel.  Yet another reason.]

California and the United States need high-speed rail, so let's keep going.  [Wouldn't you think that five mayors of major cities in California could assemble a rational argument without repeating the CHSRA clap-trap?  Need? What does that mean? Does California need a high-speed rail system? For over $100 billion?  Requiring state subsidies forever? For that small passenger cohort that constitutes the upper middle classes who have transit options? (9 million air travellers a year between LA and SF) At the cost of massive property and business value losses throughout the state? No. It is not California that needs this project; it is the five mayors who see major revenue benefits for themselves and their cities with federal government supplied funds.]

No comments: