Friday, November 11, 2011

How California, unless HSR is stopped, is getting ripped off

Being extremely pressed for time, and not contributing to this blog over the next several days,  I'm posting two articles today with very few comments.

Warner Todd Huston, below, writes a very right wing article.  I've edited out the last several paragraphs which are full of anti-Liberal rant.  It's OK to believe his ideological biases if you wish, but it's not productive in helping understand the high-speed rail situation in California.

Further down is an article by Richard Tolmach, whose understanding of the HSR situation is profound, although he and I differ about the need for HSR in California in the first place.  His article is below Huston's. 
Ripping Off California at the Speed of High Speed Rail

By publiusforum
-By Warner Todd Huston

One of President Obama's favorite go-to items to "stimulate" the economy is building new rail lines, especially high-speed rail. Many states have been smart enough to cancel the high-speed rail projects, but oh, not California. California's project rolls inexorably onward. Still, California does help show the rest of the country why high-speed rail is a boondoggle that should be avoided.

The high-speed rail line that is being built between San Diego and San Francisco was initially sold to California voters as a $40 billion project with Prop 1A back in 2008. That's a lot of cash, certainly, but its proponents said if it brings jobs to build it and improves the jobs situation in both cities after it’s built, it would be a good investment.

Prop 1A passed with just under 53% of the vote and was supposed to begin ferrying passengers by the year 2020. But now it has been found that the completion date and the $40 billion estimate both are, well, a bit off.

New estimates are proving the project to be a tad more expensive than originally thought. The newly minted California High-Speed Rail Authority (because we all need a new government "authority," right?) announced recently that the price tag for the rail line will be more like $98.5 billion -- instead of $40 billion -- and will miss the 2020 deadline to begin transporting passengers by 13 years, because the grand opening won’t happen until the year 2033.

In just three short years this project has more than doubled in costs and added 13 years to its construction time. And why has the cost skyrocketed? Has real estate that has to be bought up for rail lines gone up in this flat market? Has the cost of labor somehow gone up in this stagnant economy? Or is it that the public was sold a bill of goods and wasn't told all the facts when they were tasked with voting on this boondoggle in the first place?


This opinion piece is by Richard Tolmach, who has been a HSR critic long before I got into this game. I've learned a great deal from Richard over the years, although we disagree about some fundamental points.  After all, he is a high-speed rail supporter; he just doesn't want it built by this rail authority or built the way they intend to build it. For example, he would support the Altamont route over the Pacheco Pass route.  And that's where we differ.  Routes and alignments are not the central problem.  That has become more clear than ever with the release of the new business plan.  This is not a project that can be "fixed."  It can't be "done right."

That's OK, however.  His critique of this project and his understanding of all the politics behind this project are spot on.

November 09, 2011
Opinion: California High-Speed Rail Authority "Flatly Ridiculous"
Viewpoints: Dismantle High-Speed Rail Authority and start over

By Richard Tolmach
Special to The Bee
Published: Saturday, Nov. 5, 2011 - 10:00 pm 

For my organization and others who hoped to see a California high-speed rail line built in the next decade, the High-Speed Rail Authority has been a great disappointment. Instead of delivering a fundable plan with private industry support, clear benefits and low risk, the agency intends to break its promises to taxpayers and gamble $98 billion on a political pork barrel no private investors will touch.

Why not acknowledge California's fiscal constraints and propose something realistic? For example, it should cost only $7 billion to fill the Bakersfield-to-San Fernando gap in California's rail network, but the agency doesn't want to do anything that simple. Despite $12 billion in resources, the High-Speed Rail Authority proposes to begin only a Bakersfield-to-Chowchilla line, which it admits cannot generate any revenue.

The "new and improved" business plan still fails to answer legislative critics who have been asking the authority for three years how it would find private funds for an operable segment. Even more seriously, there is a threat that the authority will try to press ahead with construction of a vastly overpriced line with the public bearing all the risk.

A successful California plan would efficiently connect areas of high population while avoiding high-speed running through populated areas. The agency has failed to achieve either of these goals and stirs up trouble wherever it goes. The agency's obtuse idea to invade cities with 125-mph to 220-mph elevated trains lowered property values and made powerful enemies statewide. Its insensitivity to locals managed to unite venture capitalists on the San Francisco Peninsula, Latinos in Los Angeles and Kern counties, farmers in the Central Valley and anti-tax activists in opposition.

The High-Speed Rail Authority has spent more than $800 million of public funding over the past 14 years and hasn't produced a single mile of service or lined up a single private investor. The agency has set back the cause of high-speed rail nationally, and made itself a poster child for government incompetence.

Gov. Jerry Brown's unquestioning support of the destructive agency, upon release of its new plan, may be the final fatal blow to the controversial project. The $98 billion price tag for the project ballooned 300 percent from the $32 billion promised voters in 2008, and reveals that the governor's new team never reined in the engineers. Most of the price escalation was not increased unit costs, but new capital added in the past two years, including $14 billion in new elevated structures and $10 billion in tunnels since the 2009 business plan.

Costs per mile for the basic Bay Area to Los Angeles line are now $125 million to $145 million, triple typical European costs. Why is Europe so much cheaper? Tracks there are built on solid ground for safety reasons, with less than 2 percent of track mileage elevated. Another difference is that European operators and financial backers demand cost-effective projects. Here, magical thinking seems to have trumped sharp-eyed financial analysis.

Brown has promised a reform, and his team claims that the new plan is based on a new model and more conservative ridership assumptions. Sadly, this is not the case. For example, the starter line between Merced and San Fernando cited by the business plan as the most feasible option depends upon attracting more daily boardings in Merced (14,400) than Amtrak has in New York City. That doesn't seem possible or conservative. Merced traffic also constitutes three-quarters of all Central Valley ridership on that alternative, a clear signal that the ridership model is still broken.

The agency itself admits that neither Eurostar, nor the Paris-Belgium Thalys, nor Spain's Madrid-Seville AVE produced more than 7 million annual trips within a decade despite serving European capitals. Actual 10th-year increases in French traffic produced by high-speed rail were 5.3 million annual rides on TGV-Southeast and 6.7 million on TGV-Atlantique, due to pre-existing traffic. Compared with five European startups ranging from 5.3 million to 7 million new rides after a decade, the High-Speed Rail Authority's 10th-year projection of 100 million new rides is flatly ridiculous.

The California Rail Foundation fervently believes high-speed rail must be part of California's future. We are equally convinced that the High-Speed Rail Authority is incapable of delivering a viable project. The time has come to shut down this agency and seek competitive proposals from private industry.

Instead of letting bureaucrats design a fantasy project based on a wish for $98 billion, a better formula, one followed by Texas and Florida, is to ask successful high-speed rail operating companies to demonstrate what could be built, matching the existing $12 billion of public funding with private capital.

Railroad operating companies are much more capable than public agencies of convincing banks and investors that their projects are financially sound. The project might not be so vast as what is currently proposed, but it is far likelier to actually provide service within our lifetimes.


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