Sunday, July 3, 2011

When is enough, enough? Californians better wake up to a HSR project out of control.

This editorial appeared in several LA area papers yesterday. It should all sound very familiar to you since this is much of what we've been saying since 2003.  However, one of the things I've learned over these years should take the fantasy glaze out of your eyes when you look at high-speed rail videos for California.  And that wake-up call is the stunning cost to build this train, costs which continue to climb like the nation's debt-counter.

People come back to the US from Europe or Japan where they have had a HSR trip.  Fantastic, they say.  Usually, they don't tell you how much the tickets cost. Or, they got a very special deal.  When you Google those train rides and look at the prices, the information may shock you.  Often, the costs for HSR are twice as much as the same distance on regular trains. 

Also, all those countries with HSR also collect really high taxes to pay for conveniences like high-speed rail.  In the US, we don't want to pay taxes. In fact our tax rates are lower than most industrial countries.  OK.  But, who do we expect will be paying for this train, to build and operate it?  

Henceforth, any time anyone suggests that they want HSR in California, they need to be asked if they are willing to pay $1000. per year additional taxes both to build and operate the train.

There are obvious costs associated with the project, but there are also hidden ones. Towns that anticipate receiving a train station on the HSR route are in for a big surprise.  They will have to pay for most of it.  The rail authority probably will build nothing more than the platforms in order to meet FRA requirements, but the rest will be up to each train station town.  

The rail authority is taking the position that those towns stand to generate a lot of revenue for themselves and therefore should be investing their own funds.  So, that means that those tax payers will be paying for HSR not only out of their federal and state taxes, but also being taxed to build the local train station and parking facilities.  Some deal!

There is one exception, well, two actually.  The Transbay Terminal in San Francisco and Diridon Station in San Jose will be getting a bunch of million dollars of HSR funding from the FRA to help built those train stations. Politics matters.

Property values of all kinds that border the rail corridor will tank, some more than others.  Also, there will be a ripple effect of the "new" HSR corridor on both sides of the right of way outward ever further, changing the demography downward. Towns will lose businesses, especially those without a train station so that their downtown becomes a fly-over environment, dominated by this highly intrusive industrial, concrete development such as an elevated viaduct.  The rail authority will offer no compensation, you can be sure.

Even the most passionate HSR advocates will have to admit that the rail authority has made as many mistakes as it is possible to make.  Too many.  No wonder there are several pieces of legislation to take the project out of the CHSRA's hands.  

But what's become even more obvious are the ridiculously high costs of everything associated with this project.  It will make the Interstate Highways project in the 50s and 60s, and the 19th century transcontinental railroad look like nickel-and-dime bargains.  The smart money would run, not walk, away from this project.

High-speed rail project has gotten away from us

Posted: 07/02/2011 04:44:29 PM PDT
Updated: 07/02/2011 09:56:18 PM PDT

Reasonable people can argue about the concept of a bullet train, but not the facts of the bullet train. Californians had better face it: Our train is going off the rails.

Voters, enthralled with the concept, approved a $10 billion bond issue in 2008 to help pay for a high-speed train connecting Northern and Southern California. The idea was that the federal government, local governments and private investors would put up the rest.

But here is the hitch. Voters specified that if the system ever gets built, no tax money can be used to operate it, and there is no backup plan if the train were to turn out to be unprofitable.

That might be an acceptable risk, except that three years into it, promoters of the project still haven't come up with an acceptable business plan. Their guestimates about costs and ridership have been rejected by outside experts and even the state's own legislative analyst.

Cost estimates have risen from $15 billion to $45 billion, and a Stanford University management professor speculates that if this project goes like virtually any other major state construction project, the costs could end up totaling more like $243 billion. 

Nobody, other than the promoters, believes the revenue projections or even - considering that it would ride part of the way on ordinary tracks, rather than those designed for high-speed rail - how fast the train would go.

Plus, it's very unlikely that this project will ever get finished, since the federal government's relatively small contribution of $3 billion looks like the last of the Washington handouts for a long while. It's the same with private investors, none of whom have stepped forward, and local governments, most of which are on the edge of bankruptcy.

But even if it did get built and turned out to operate at a loss, which is the usual case with train systems, then what happens? Nobody has an answer.

Critics within state government, such as Sen. Alan Lowenthal, D-Long Beach, say the first leg of the project should be built in the Los Angeles or San Francisco Bay areas, not in the state's mostly rural midsection. Yet the spending continues with the midsection as the likely starting site. That's what the federal government insisted on, because the political fantasy was that pumping a few billion into the Fresno area would light up the state's economy. That won't happen, either.

The federal government has nothing to lose but its $3 billion, which is like crumbs from its trillion-dollar recession spree. But California has a lot to lose.

Fortunately, thanks to pressure from a few legislators like Lowenthal, the state has told the California High-Speed Rail Authority it can have only half of an allotted $2.5 billion for engineering and other preliminary costs. Unless it then, at last, can come up with a credible business plan, the state will stop the money supply.

That is a good time to stop this whole project. Bullet trains are exciting, and maybe even worth subsidizing on a manageable scale when well conceived, well planned and well run.

This project is none of those things. It presents monumental risks at a time when the state can't even get its budget under control, and a money drain that has gone on long enough.

It was a wonderful dream, but it's time to wake up and throw the switch.

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