Draft response by the City of Palo Alto to the CHSRA Draft 2012 Business Plan

Here is a draft version of a letter intended for consideration of the Palo Alto Sub-Committee on Rail and the Palo Alto City Council.

It is a detailed response to the California High-Speed Rail Authority 2012 Draft Business Plan.  It dissects that plan and finds many issues that remain unresolved, inaccurate and incomplete.   

Warning: This is only a draft.  It could end up in the shredder, it could be completely re-written, or it could be tweaked and moved forward through the procedural pipeline. It contains language from City Staff (as well as other sources in bold).

I will let this document speak for itself. 

However, it has become the right time to say the following:  

To all intents and purposes, the California High-Speed Rail Project is dead-before-arrival. There will be no CHSRA project.  There are no funds for it. At even it's current cost forecast, there will never be funds for it. 

Nonetheless, the Democrats in Washington and in Sacramento refuse to acknowledge that highly plausible prediction. The reason is simple: $3.5 billion free dollars for California. Nothing more.  

Whatever construction will take place in the Central Valley has no purpose, particularly as a transit project. 

Correction: It will serve to employ many people.  

Correction: It will serve to appear as if it were to employ many people, and therefore is a political statement that is supported to benefit the Democrats. As a jobs program it will employ fewer than 100,000 people, and certainly nothing like the predicted million people. 

Therefore, barring a miracle, the Central Valley of California will be ravaged with the expenditure of over $6 billion, ruining homes, businesses and farmlands, and leaving Parsons Brinckerhoff and many other consulting firms richer.

Finally, a colleague of ours has made the point that even corresponding with the CHSRA, as this letter does, is a total waste of time.  Those people are charged with building a train.  Even if it's not possible.

The people who are in a position to stop this project do not work for the CHSRA.  They are the state legislature and the governor.  I do not see them taking such actions.

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Covering Draft Letter:

City of Palo Alto (ID # 2358) City Council Rail Committee Staff Report

Report Type:  Meeting Date: 11/28/2011

Summary Title: CHSRA 2012 Business Plan Draft Comment Letter

Title: Draft City of Palo Alto Comment Letter on the Draft CHSRA 2012 Business

Plan

From: City Manager

Lead Department: City Manager

Executive Summary

Following a through review of the California High Speed Rail Authority (CHSRA) Draft

2012 Business Plan, staff has drafted the attached City of Palo Alto comment letter for Rail Committee review and discussion. This letter identifies what staff believes to be some of the key short comings in the Draft 2012 Business Plan and recommends we request that the CHSRA address these short comings before finalizing the Plan.

In the meantime, staff will continue to evaluate the document and do independent research and will provide any further issues, clarifications, or documentation to the Rail Committee for review.

Prepared By:

Richard Hackmann, Department Head:

James Keene, City Manager

City Manager Approval:

 James Keene, City Manager

November 28, 2011 Page 1 of 1 (ID # 2358)

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November 23, 2011

Roelof van Ark, Chief Executive Officer

California High Speed Rail Authority

925 L Street, Suite 1425

Sacramento, California 95814

Subject: Draft 2012 Business Plan Comments

Dear Mr. van Ark:

Following a through review and discussion of the California High Speed Rail Authority (CHSRA) Draft 2012 Business Plan (Plan), the City of Palo Alto (City) is writing to submit our formal comments.   We have identified several shortcomings we request the CHSRA address before finalizing the Plan:

• There are multiple references in the Plan to the social benefits of HSR.   Despite how much the City may either support or object to these benefits, they are not relevant to the financial legitimacy of this project or the Plan (Page ES-4);

• Using European high-speed rail (HSR) data as the basis for California HSR predictions ignores too many cultural and geographic differences and in no way should be used as a basis for making California HSR predictions (Page ES-5);

• The following statement needs to be quantified with specific timeframes, types, and locations of job creation: “With implementation of the HSR system in California, as many as 400,000 long-term jobs could be created as the state's economy becomes more efficient.” (Page ES-5);

• In November 2008, at the time Proposition 1A passed, the CHSRA represented to the voters that construction of a true, statewide HSR system would be completed by approximately 2020.   Now, the Plan states the CHSRA does not plan to have a true, statewide HSR system completed until 2030 or beyond.  The CHSRA must account for this misrepresentation to the voters (Page ES-9);

• Comparing the cost of the proposed HSR system to the cost of constructing infrastructure with an equal capacity in the form of highway lanes, airport gates, and runways does not accurately account for the fact that many of those assets are not currently at maximum capacity.  The Plan should quantify remaining capacity of other transportation systems in order to provide an accurate comparison to the high estimate cost of HSR (Page 1-3);

      The methodology used to create these numbers is in serious question.  The Business plan says the capacity of the Rail system would be 117,000,000 passengers and uses that number to infer that highways would need to expand by that much in their capacity.

1.The train, by their own current ridership estimates, shows only about 35 million passengers will be carried, and that would be the correct extra capacity needed for roads.

2.Roads and rails capacity are not the same.  You can't use HSR to go to your neighbor's home 10 miles away.  You use roads to do that.  The point is that if new road capacity is needed in the future, it will be needed regardless of whether the HSR project is built or not.

3.In the future, we here in Silicon Valley surely realize that many trips that are currently  routinely taken for business conferences will, in the future, be done electronically.  The amount of business travel in the future will be greatly lessened as web-conferencing become more and more widely used.  This would affect ridership of the HSR train.

4.The analysis of the airport future needs is bogus.  If history has shown anything, it is the airline industry is flexible.  If much more capacity is needed in the future, the airlines will be making better use of current facilities, by flying larger planes, better integration of flight patterns etc.

• Environmental impacts that result from the disconnect between the way the system was segmented for environmental review versus the way the system is being segmented for construction of an initial construction segment (ICS) and initial operating segment (IOS) must be reconciled (Chapter 2);

• Terminology is used in the Plan that is not consistent with Prop 1A.   For example, no mention of an ICS can be found in Prop 1A.  As stated in the proposition language, Prop 1A only allows for bond expenditures on a HSR segment that is electrified and contains all  of  the  components  of  a  true  HSR  system. Therefore,  the City objects  to  the expenditure of Prop 1A funds on an ICS until, at a minimum, all of the funding for an IOS has been identified and secured (Page 2-9);

This is an extremely important issue and is the subject of a lawsuit just filed on behalf of King's County, etc. The Authority at its last board meeting passed resolutions approving a funding plan which would expend Prop 1A funds to start construction. They did this despite numerous violations of the plan.  Full CEQA compliance is one of the requirements in Prop 1A before a funding plan can be issued.  This has not been achieved and indeed, the northern IOS option, uses a program level EIR which the court has just determined must be de-certified.  The funding plan is grossly premature and illegal. 

• The Plan, like the 2009 Business Plan and other CHSRA documents, appears as though it is capital constraint driven.  The City feels this has been a continuing issue with the project and despite the CHSRA's desires to use America Recovery and Reinvestment Act (ARRA) funds the deadlines associated with them should not be the basis for construction and environmental review decisions (Page 2-9);

• The  total  cost  of  viaducts,  tunnels,  and  trenches  in  the  2009  Business  Plan  was estimated at approximately $10B.   That number has since increased to approximately $31.5B on the low end to $40B on the high end.  The City would like to see where the CHSRA plans on building these structures so the City can evaluate how the construction correlates with the mitigation (Page 3-6);

• Despite updates made to the ridership model prior to the publication of the Plan, inherent flaws in that model still exist and are reflected in the CHSRA ridership assumptions. Essentially, all the CHSRA has done with the ridership model is spread it out further over time (in correlation with the revised project timeline).  The ridership projection errors can only be fixed by the development of a new ridership model and release of a new ridership study.   Until that is done no assumptions about ridership reflected in the Plan can be considered accurate (Chapter 6);

• The Plan states that, “Population has a direct correlation with ridership.”  However, it is not population alone which determines ridership estimates.  Rather, it is population that can afford to ride HSR located in its vicinity.  Therefore, generating ridership figures with projected population growth alone as an input is not reliable.  Further, the consequences of this are exaggerated in a phased approach (Page 6-5);

• The cost of this project has essentially tripled since 2008.  The City would like to know what process the CHSRA intends to use to ensure that 1) the project cost does not increase any further, and 2) this cost increase is appropriately vetted with stakeholders (Chapter 8);

• AB 3034 states the business plan shall include, identify, or certify a number of items including, “the sources of all funds to be invested in the corridor, or usable segment thereof, and the anticipated time of receipt of those funds based on expected commitments, authorizations, agreements, allocations, or other means.”  Therefore, the City feels that the identification of funds for an ICS does not satisfy AB 3034 and only until the source of funds for an IOS is identified does the CHSRA even have the legal grounds to move forward with construction (Chapter 8);

• It is not clear who would be responsible to make up the funding gap if private funding doesn't materialize (Chapter 8)
• 
  
• The CHSRA's assertion that a dedicated HSR funding source similar to the Highway Trust Fund could be created is highly speculative and should in no way be relied upon (Page 8-6);

• In  continuation  from  the  previous  issue,  the  CHSRA's  claims  relating  to  availability payments and Qualified Tax Credit Bonds (QTCB) are equally speculative and unreliable (Page 8-7);

• The City  would like more information on  what  is being considered by the following statement, “In addition, opportunities to attract other private-sector revenues through locally generated commercial and land-use activities are expected at the future high- speed rail stations.” (Page 8-11);
•  
• In year of expenditure (YOE) dollars, the total capital cost of completing the “Bay to Basin” (B to B) portion of the system is $54.3B.   Thus, to complete what many would argue is the minimum system necessary to avoid an operating subsidy, the CHSRA is currently relying upon the receipt of $30.3B of additional federal money (or 56.2% of the total B to B cost).  This figure is on top of the $3.316B in ARRA funding the CHSRA has already  secured. This  assumption  seems  to  completely  ignore  the  current  federal government fiscal, economic and political landscape and puts the state at great financial risk if this prediction turns out to be false.  The likelihood of securing this funding is highly speculative at best.  Therefore, the CHSRA must have measures in place to mitigate this risk and a clear contingency plan (Page 8-34);

• Additional ridership projection work should be done now, before construction begins, not “prior to initiating a private-sector financing transaction.” (Page 9-11);

• Vulnerabilities associated with private financing are not a “perceived risk” but a real risk (9-12);

• Outstanding conflicts surrounding Union Pacific ROW are yet to be accounted for in sufficient detail and have a direct impact on any business plan that assumes said ROW will be available for use (Page 9-13);

• The CHSRA has not accurately represented Palo Alto's position of not wanting a HSR station (Page 10-18).

The “blended” plan in so many ways does not meet requirements of Prop 1A.

1. Prop 1A states passengers do not have to transfer trains to get from one point to another.  The blended plan talks about cross platform changes needed to make a trip of say SF to LA.

2.Prop 1A states the from  LA to SF shall be accomplished in 2 hr 40 minutes.  This is impossible under the blended plan because of train changes and slower speeds at both ends of the trip.  4 hr will be a minimum to make a trip from LA to SF with no intermediate stops other than changing trains at both ends.  With intermediate stops the trip will be 5 to 6 hours.

3.The much longer trip times will gross affect the already flawed ridership estimates.

4.Prop 1A states that the HSR train be able to by-pass intermediate stations at full speed.  The blended plan will not allow this.

Sincerely,

Sidney Espinosa, Mayor

City of Palo Alto

Cc: Palo Alto City Council

Palo Alto City Manager

US Senator Barbara Boxer

US Senator Dianne Feinstein

US Congresswoman Anna Eshoo, 

California Governor Jerry Brown 

California Senator Joe Simitian

California Assemblyman Rich Gordon