Wednesday, January 11, 2012

High-Speed Rail in California: A bad project badly done

One of the smartest and best informed guys objecting the the CHSRA and their plans is Richard Tolmach.  He has had a great influence on me and many of our colleagues.  Here is a December 2011 article from Tolmach's Newsletter, the California Rail News.

Tolmach is a passenger rail advocate.  He supports the development of high-speed rail in California.  However, he has been the CHSRA's harshest and most knowledgeable critic.  Tolmach wants superior passenger rail in our state and outlines all the mistakes being made by the rail authority that will prevent it from achieving even a fraction of its intended goal and purpose.

This project, as currently conceived, is fraudulent on the face of it.  All the promotional promises are wild exaggerations and untrue.  It should by now be totally transparent that the intention of the CHSRA and the Legislative supporters, as well as the Governor, are not intent upon improving rail transit in California.  They are intent on pulling in as many federal dollars as they possibly can, regardless of purpose.  

To the degree that this is a decades long project, that premise is based on the desire for a continuous cash flow from Washington over as long a period of time as possible.  Make no mistake.  Upon the expenditure of the currently available $6 billion, without further federal funding, the project is over, finito.  

Therefore, it is imperative that the project begins, holes are dug, property is acquired, and rail -- regardless of whatever length -- is put down and the sooner the better; preferably before the November elections.  

That way, the process cannot be reversed; the project will be here to stay. Or, shall we say, it will be exceedingly difficult to terminate it.  And that means, permanent lobbying for more funds, the creation of a permanent bureaucracy the purpose of which will be self-perpetuation and maintaining a revenue stream for this project from Democratic Administrations and/or Congress.

Indeed, there is no need to finish the project; that may be actually counter-indicated.  The idea would be to keep it going as a construction/development effort,  even as it is filled with all the mistakes that Tolmach enumerates in his article.  The analogy usually made is the Interstate Highway System which took decades to complete.  Of course, that project compared to high-speed rail is apples and oranges.

Reading between the lines in Richard Tolmach's article confirms the basic contention of this blog; it's not about the train, it's about the money.


Today's lesson about High-Speed Rail is brought to you by Josef Goebbels:

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

California Rail News
Volume 23 Number 4
Sacramento, CA
December 2011

HSR Route is a Jerrymander

Gov.'s Appointees Help Create a Monster

by Richard F. Tolmach

 A joint meeting of two Senate oversight committees on December 5 grilled newly appointed board members of the High Speed Rail Authority (HSRA) about its draft business plan issued November 1. Senators had sharp questions about where the capital will come from, the likelihood of subsidy and the overall value of spending $6 billion dollars for an inoperable Central Valley starter line.

 Sen. Joe Simitian (D-Palo Alto), told HSRA officials there would be a serious discussion on whether the project goes back on the ballot or “we just say give it up because the dollars aren't going to be there in the longhaul.” Simitian urged caution. “In all due respect, accessing 3 billion dollars unwisely if it's going to cost us $100 billion isn't anything I want to rush forward with.”

 The Legislative Analyst's Office openly challenged HSRA claims about the need to start construction by September 2012 to save $2.3 billion in federal stimulus funds. Farra Bracht, LAO Managing Principal Analyst, said her office reviewed grant agreements and did not find any construction start deadline. She said she had not been given the location of the start-of-construction language by either HSRA or the Dept. of Finance, although it was requested months ago.

 Sen. Simitian asked HSRA to provide the language by noon, December 16. Senator Mark DeSaulnier added, “…unless your administrative officer has gone to another planet, this is a pretty direct question that we need to have answered. Senator Simitian has been more than kind to give you two weeks to provide the information.”

 Legislators seem to have reached the end of their patience. Instead of delivering a fundable plan with private industry support, clear benefits and low risk, the Authority proposes to break its promises to taxpayers and gamble $98.5 billion on a political porkbarrel no private investors will touch.

 It would seem far more practical to acknowledge California's fiscal limitations and propose a project the state can actually afford to complete this decade.

 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 funds, the Authority would build only an inoperable segment in the Central Valley and not deliver through San Francisco-Anaheim service until 2033.

 The “new and improved” business plan still fails to answer the basic questions from legislators 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 the Authority will try to press ahead with a vastly overpriced 300 mile Merced-Sylmar line with California taxpayers bearing 100 percent of the risk, since the Business Plan identifies no means of involving private capital in the project design phase.

 Gov. Jerry Brown's uncritical support of the agency may have unwittingly doomed the controversial project. The project badly needed a haircut, but instead its price tag ballooned 300 percent from the $32 billion promised voters in 2008 for a system with the same mileage. The inflated price reveals that the governor's team never pushed project managers to slash the obvious pork.

 Most of the price escalation was not from inflation, but new capital added in the past two years. The Phase I network has 138 to 168 miles of elevated structures compared to 77 miles in the 2009 plan and has added 20 extra miles of tunnels. Since 2009, the cost of structures and subterranean work rose from $13 billion to nearly $45 billion.

 A successful California plan would have efficiently connected areas of high population while avoiding high-speed running through populated areas. The Authority has failed to achieve either of these goals. The new business plan is characteristically misleading about reasons for the addition of viaducts:

 Page 3-5 of the plan states, “California added nearly 5 million people between 2000 and 2010, with much of this growth along the project route. In many areas, the alignment has had to be relocated, elevated on bridges, or placed in tunnels to avoid severe community impacts and to navigate through densely populated urban areas.” On the contrary, the elevated railroad plans were found environmentally unacceptable by every com stubborn insistence on them turned 35 cities into project opponents. Its proposal to invade cities with 220 mph elevated trains has made powerful enemies statewide.

 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 operable track or lined up a single private investor. It is rapidly burning its little remaining credibility by putting forth overpriced unworkable plans.

 At $98.5 billion, the 520 mile Phase I line is $190 million per mile, while Rhin-Rhone, latest French line to open, cost only $25 million per mile. Why is Europe so much cheaper?

 European tracks are built on the ground for safety reasons, with less than 2 percent of tracks in tunnel or on structure, compared to about 40 percent in HSRA's latest plan.

 HSRA cites Taiwan's elevated line, but it is a world-class error, not something to copy. Taiwan authorities fear tracks have only a 10-year lifespan because the structures are sinking in alluvial soil. What's more, the Taiwan High Speed Rail Corporation nearly went bankrupt because it was faced by the crushing costs of elevated track, the highest HSR per mile cost worldwide to date.

 Brown promised a reform at HSRA, and his team claimed that the new plan was based on a new ridership model and more conservative assumptions. Sadly, this is not the case. For example, the Initial Operating Segment-South 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.

 HSRA's ridership projections don't seem possible, let alone conservative. Merced traffic also constitutes three-quarters of all Central Valley ridership on the Initial Operating Segment-South, a clear signal that the controversial ridership model is still broken. That is a major concern, because California taxpayers could be on the hook for billions of dollars of subsidy on top of the construction cost if politicians are stampeded into proceeding without private capital backing the project or proof that the line will be profitable.

 No leap of faith was needed by the French government on feasibility of fast trains, since 12.2 million riders already used conventional trains in the Southeast and 17 million on the Atlantique. Increases produced by highspeed rail in the first decade of fast service were only 5.3 million annual rides on TGVSoutheast and 6.7 million on TGV-Atlantique.

 Compared with five European startups ranging from 5.3 million to 6.7 million new rides after a decade, HSRA's “medium” projection of 36.8 million new riders on a Phase I system by its 10th year (Page 6-13 of the Business Plan) is dislocated from reality.

 The Authority's “medium” traffic claim is more new ridership than happened on five European systems together (see below). Those networks together serve a population of about 90 million, have a track extent of 1000 miles and service extending over 2000 route miles. The claim that California's rail traffic will grow to nearly 40 million annually on a single winding 520 mile line that fails to serve regional Southern California markets or the Capitol Corridor is just not credible.

 Despite repeated assurances from Gov. Brown's new appointees, the High Speed Rail Authority is clearly incapable of delivering a viable project. The time has come to shut down this wasteful agency and seek competitive proposals from private industry.

 Instead of letting bureaucrats design a fantasy project based on a wish for $98.5 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 and experienced than public agencies at the tasks of drawing up reasonable plans and of convincing banks and investors that their projects are financially sound. The project California is eventually presented with might not be so vast as what is currently proposed, but it is far likelier to actually provide service within our lifetimes.   

No comments: