Friday, December 30, 2011

What are the "hidden" High-Speed Rail costs in California?

Many people write letters to the editor criticizing the high-speed rail project in California.  Some letters are better than others. Include, among these letters, the so-called "guest opinion" articles which are, in a sense, longer letters.  It's a chance for the public to have an editorial voice.  And it's one of the reasons we prize the "fifth estate" in the US so much.  It's the quintessential vehicle for "freedom of speech." 

This lengthy article, by a radiologist residing in Bakersfield, is one of the best ones; well written and thought through.  Dr. Patel raises the critical issue, to which we have referred numerous times in the past, about the loss of revenues to the cities targeted by the rail authority. That is, such cities will lose a variety of revenue sources including homes taken by eminent domain, businesses and farms, while at the same time they are required to foot a number of bills connected to the rail project.

Did you know that Prop. 1A refers to "local funding contributions?" Several California cities have already declared bankruptcy or on the verge of doing so.  What "local contributions" could the rail authority be thinking about?  Meanwhile, local governments are struggling to make ends meet, and now must confront the nightmare of massive construction, disruption of businesses, traffic diversion, and being  tied up by this disruptive mess for perhaps ten years. 

And, the cost burden to the cities will not be met by the rail authority.  That is certainly an unfunded and undeclared HSR tax imposition. 

The point that Dr. Patel makes is one that we have tried to highlight on this blog.  Not only are all the voters and taxpayers on the hook for this train in California, but so are the Nation's taxpayers.

Furthermore, all the urban, suburban and rural areas through which the rail corridor passes, will take massive financial hits. Eminent domain will not replace market value to properties adversely taken. The cities and counties will lose tax revenues. Businesses will fold or suffer major losses. Farms' productivity will be severely impaired. 

There has so far been no adequate accounting of all the costs that HSR will impose on the environments through which it passes.  They are only looking at their construction costs.  Not their cost of impact.  That is a gross oversight.  And, those costs attach not only to the construction, but to the operation of the train if it ever gets running, and I'm including lots of job losses that also don't get talked about.

I'll give you one example.  The rail authority claims that they will take many flyers off the short-haul flights and put them on the HSR trains.  That's a loss of business for the air carriers.  And that, you can easily predict, means lay-offs.  Will the CHSRA see to it that all those laid off air-carrier employees find work with the railroads?  Yeah, right!

We have not yet fully realized what we are in for in this state with this project.  We better find out fast, before we get sucked into the high-speed rail black hole.

Post Script thought: I have to say this.  All the nation's taxpayers will be on the hook for this luxury train in California.  The train will carry only the affluent who can afford the most expensive train tickets available.  Most people in the US don't live in California and may never even travel to California.  Why should they be expected to have their tax dollars pay for this state's foolish, fancy train?  The immorality of this outrageously expensive project is stunning and unforgivable. 

Tuesday, Dec 27 2011 07:06 PM
GIRISH PATEL: Rail project through city must be stopped

The residents of California passed Proposition 1A in 2008, authorizing a $9 billion bond for a statewide high-speed rail project. The bond amount was based on cost estimates of $33 billion for the entire project. The project was to be a public-private partnership that included $8 billion in federal grants. Prop. 1A expressly prohibited any taxpayer subsidy for the project. The trains would run from the Bay Area to San Diego when completed.

Since initial passage, there has been strong opposition to the project in the Bay Area as well as in Southern California, and the plans for building in these areas have been shelved. The California High-Speed Rail Authority therefore decided to build phase 1 in the San Joaquin Valley.

On Nov. 1, the rail authority released a revised business plan for HSR. According to the plan, a number of properties in Bakersfield will be destroyed in order to construct railroad tracks through the city. There are almost 550 properties, including 250 homes, a number of existing businesses, churches, schools and city property. Kern County will lose highly valuable farmland.

Looking at my property tax bill, I notice that the first line in the bill is for general/local government taxes (1 percent). There are 13 additional lines of various tax amounts, which include payments for Kern High bonds, Water Agency debt, sewer and other assessments. These items add about 25 percent to the baseline tax amount. When the property is taken over by HSR, our community will lose all that revenue. Multiply by 550 additional properties of varying valuations, add lost revenue from losing farmland and it becomes clear that a large amount of revenue will be lost to Bakersfield and Kern County.

A number of existing businesses will be disrupted, and properties on both sides of the tracks will lose significant value -- and all this will cause additional losses of tax revenue. It is estimated that more than 1,400 existing jobs will be lost.

The draft business plan released by the rail authority grossly overestimates its ridership. Pages 6 to 17 of the plan forecast "medium ridership" at 53 million to 77 million riders, with a high forecast of 57 million to 98 million riders. These numbers got me thinking, so I checked how many riders Amtrak carries here and in the nation.

According to an Amtrak news release from June, the ridership in California broke a record. Amtrak carried 5 million annual passengers throughout the state after an increase in the ridership of 12 percent.

According to the most recent data available, Amtrak set a record and carried 30.2 million passengers nationwide for the fiscal year ending on Sept. 30. These include the Northeast corridor, South (New Orleans), Carolinian, Acela Express, special trains -- long and short distance -- all of them.

Now, it is impossible to believe that California HSR, after a couple of years of ramp-up, will carry almost 20 times as many passengers as currently are carried through California, or more than three times as many passengers as the entire country. Obviously, the ridership and revenue projections are outlandish to say the least.

Further, Amtrak states that Caltrans has spent nearly $2.3 billion in support since 1990. That comes to almost $110 million per year. Since Prop. 1A prohibits subsidy for the HSR project, it will not have enough revenue to sustain itself and it will go defunct. We will be stuck with railroad tracks, with no trains to run on them, and blight in the community.

Even if HSR begins operations, it will take Amtrak passengers. What happens to the existing tracks and brand-new Amtrak station in that case?

The rail authority also claims that the project will create a million jobs. As Mike Rosenberg of the San Jose Mercury News wrote in an article published Dec. 23 in The Californian, that claim has been called "bogus."

Thus, the community will give up existing property, facilities, jobs and tax revenue in favor of a nonviable pie-in-the-sky project concocted on improbable revenue and job creation estimates.

The state of California is broke and running huge deficits. The HSR business plan estimates cost of construction at up to $117.5 billion -- or $226 million per mile. The bureaucrats and politicians in Sacramento are spending money we don't have on a scheme we can't afford, and asking us to forgo our existing jobs and income in favor of such an improbable boondoggle.

The people of California must rise up and stop such nonsense in its tracks now.

Dr. Girish Patel is a practicing radiologist in Bakersfield and a longtime Bakersfield resident.


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