Wednesday, November 2, 2011

The Christian Science Monitor says high-speed rail sticker-shock. Is it?

The Christian Science Monitor cannot be accused of political bias, left or right.  And, we know that high-speed rail is a political project pure and simple.  It certainly isn't a transportation project; it is only made to look like one.  Just like on reality TV.

What this article suggests is that this high-speed rail vision nationally, and as a project in California, is ill conceived.  It shouldn't have been allowed to happen.  Wiser heads should have prevailed.  

Those in the know knew it would be out-of-reach expensive.  They knew it would do enormous damage to every environment through which it passed, unless even more expensive alternative alignments were chosen.  They knew that it remain a financial burden on the host state with massive revenue short-falls and subsidies required for the huge costs of operation.

But, no one in Sacramento (or in Washington) listened to those wiser heads who were in the know. So using marketing hype, the project appeared on the ballot, pushed by the back-room politicians who would have a lot of skin in the game, and their contractor croneys.  Also interested were the various financial interests with land speculation in mind, and the corporations that saw a government cornucopia of money sustaining this project with its promise of many decades of costly construction.

Let's just agree that the title of the article is somewhat erroneous insofar as there really has been no sticker-shock.  The rail authority itself certainly isn't shocked at these new cost forecasts.  They have known for a very long time just how expensive this nightmarish project would be. The Democrats also must have known what such mega-infrastructure projects entail.  After all, the Boston Big Dig has been no secret.  And the Republicans have known for some time already and have said so.

There have been a number of $100 billion forecasts since before the 2008 elections.  The most significant was The Due Diligence Report, to which I refer at least once a week.  The writings of Prof. Bent Flyvbjerg, writing about rail projects worldwide and their low-ball cost forecasts have acquired almost biblical significance. So, no sticker-shock.

What this article, below, includes are some voices of moderation.  These authoritative voices substantiate what we have been trying to say in these blog entries for a long time.  The California project is like putting icing on a cake, for which there is no cake.  Our current Amtrak passenger service in this state is deplorable and could, I won't say should, be upgraded.  However, upgrading ought to come first, if for no other reason than to create a far larger market for inter-city rail travel than now exists. 

Why do I recommend this?  Because that is exactly what has happened in Europe and Japan's rail growth. High-Speed Rail in those countries complimented and enhanced an already existing very extensive passenger rail network. The latter -- the existing passenger rail system -- was critical to obtain the success of the former -- high-speed rail. 

Let me add that none of these passenger rail systems, with or without high-speed rail "icing," are surplus revenue generating; that is, producing revenue beyond operating and replacement costs, all the noble assertions to that effect from CHSRA Board members to the contrary notwithstanding. One or two exceptions may exist (although I'm skeptical), ACELA among them, but the idea of generating surplus revenues; that is, net surplus revenues beyond the costs of operations and replacement, is sheer fantasy. All HSR is subsidized by the host governments, directly or indirectly; it's all a matter of book-keeping.

If the intention in California had been to build the train in segments or sections, starting in the Central Valley would have been the last, not the first place to begin.  For example, the second busiest transit corridor in the US, after the NorthEast Corridor, is the San Diego/Los Angeles route. Additional dedicated tracks for a fast train would have been a significant and successful first start, the train speeds elevated based on market needs.  

Likewise, the Sacramento to Bay Area route is almost as intensive and there too, a faster train, also on dedicated tracks, complementing the Capital Corridor ACE trains would be met with success, and this route also could have been upgraded with ever faster trains based on demand.

As it happens, those are the last, not the first places the rail authority intends to build.  There can be no market if there is no market creation.  That error in planning is testimony to incompetence and arrogance, both available in ample quantities with the California High-Speed Rail Authority and its minions. 

More articles will be on their way after this one.

Can Obama's high-speed rail plans survive California sticker shock?
California's high-speed rail authority announced that its project will cost nearly $100 billion – two times higher than original estimates. Other regions supportive of President Obama's high-speed rail plans have started more modestly. 
By Daniel B. WoodStaff writer / November 2, 2011

In what transportation experts say could be a cautionary tale for the rest of the country, the estimates for the cost and finish date of California's signature high-speed rail project have been dramatically altered.
The new cost estimate, formally released Tuesday by the California High Speed Rail Authority, is $98.5 billion, more than twice the previous estimate of $43 billion. The finish date is 2034, 14 years later than first predicted.

California voters approved a $10 billion bond in 2008 in support of plans to build a high-speed rail corridor to link northern and southern California, with trains reaching 220 m.p.h. The system would link to other rail lines that fanned out across the state.

Supporters of the project say this new estimate gives the state planning certainty. But critics are aghast. State Sen. Doug LaMalfa (R) announced plans to introduce legislation asking state voters to reconsider the bond measure they already approved.

“The voters were deceived in the original go-around with highly optimistic ridership and cost numbers that have not been borne out,” Senator LaMalfa told The Sacramento Bee, saying the larger figures “should have been in front of voters to begin with, so they would have the truth.”

Officials are rolling out other details of the plan to soften the blow, touting the connections to existing Metrolink rails in large cities, for example. They are also trying to be frank – and more conservative – about ridership estimates that critics say are way too high. 

"This plan represents a new day, a new train, a new beginning for the California High Speed Rail Authority and for our system," said Tom Umberg, chairman of the authority board, in a statement.

Some analysts say the turn of events is a welcome bit of honesty, given that massive public-project costs generally balloon beyond expectations.

“The story is both shocking and unsurprising at the same time. It’s shocking because of the sheer size of the price tag,” says Jack Pitney, a political scientist at Claremont McKenna College. “It’s unsurprising because big projects often cost far more than the initial estimates.”

The episode could have an impact on plans for other rail projects nationwide. In February, Vice President Joe Biden announced a plan to put $53 billion in federal funds into a national, high-speed rail network, which could be built in regional sections.

But such projects are often more difficult than they seem at first, and California might have bitten off "way too much," says Steve Schlickman, executive director of Univeristy of Illinois at Chicago’s Urban Transportation Center.

"That is based on my personal project experience,” he says. “They should have taken a more incremental approach, like the Midwest, which is starting with higher speed of 110 m.p.h.”

Mr. Pitney says political opposition is likely to grow, especially in California’s current fiscal climate. “At a time when government at all levels has to cut back, many voters will wonder why California is spending so much on a system that so few of them will ever ride,” he says.

But the bad economy could also be a selling point. California has the second-highest unemployment rate in the nation. Studies show that for every $1 billion spent on infrastructure remediation creates between 18,000 and 34,000 jobs, says Barry LePatner, author of “Too Big to Fail: America’s Failing Infrastructure and the Way Forward."

Others, however, see this as evidence of what happens when government tries to trump the private sector.

"The idea for this was generated out of Washington in an attempt to stimulate the economy," says Peter Zaleski, an economics professor at the Villanova School of Business. "In the free marketplace, producers try to earn a profit by efficiently producing something that customers will value. Rarely are such calculations performed when the decisions are made by government administrators and elected officials."

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