Monday, April 30, 2012

If you can't lie about high-speed rail, what's a metaphor?

At first, I wasn't going to bother with this article. It's in the Huffington Post, a liberal online publication, and generally, a supporter of high-speed rail.

However, the interviewer of Governor Jerry Brown and the author of this article raises some issues that warrant further attention and discussion.

We've covered this turf already. Jerry Brown, analogy lover, this time cites Chartres Cathedral. (For other silly analogies, he might also consider all the sand castles at the beach he built as a kid.) 

He asks and answers the question, how did the peasants pay for this cathedral?

"How did the peasants of medieval France afford to build the cathedral of Chartres?"

His answer?  "They did it slowly... they did it with community investment and a great belief in the future."

It's the wrong question and therefore the wrong answer. You would think that Jesuit-educated Jerry Brown would know better.

The peasants -- serfs -- of the Middle Ages could barely afford to survive, had no community outside of the Church and they certainly had no future. They could not and did not pay for building the great cathedrals; they had no disposable incomes. They owned nothing; they barely survived.  They lived a short, hard-scrabble life and endured staggeringly high mortality rates. 

The peasants worked the land owned either by the Church or the aristocracy. Their life expectancy was measured in decades.  They had no sense of time; they had no sense of any future except in the next world.

It was the rich nobility of the feudal aristocracy who owned the lands that built the great cathedrals to ingratiate themselves with the Catholic Church and to buy their way into Heaven. In effect, they bought "Indulgences," first-class tickets to Heaven. Princes and kings -- royalty -- contributed immensely to these multi-generational construction projects. As did wealthy Bishops and Arch-Bishops. It was, relatively speaking, a Theocratic world and culture. 

The great wealth accumulated by the Church also provided the building funds. In the later Middle Ages, the wealth of rapidly growing commerce centers, the cities, made investments in the Gothic Cathedrals that were to dominate their towns. Craft guilds became enormously rich; think woolens, leather, gold and silver, etc. They would buy and dedicate one 'transept' of a Cathedral to their guild, with appropriate sculpture and stained glass iconography. 

But, enough about medieval history.

What a mindless analogy. What's Governor Brown's point?  That we are those peasants who will chip in to pay for this Cathedral-Railroad to assure ourselves a future in railroad heaven? 

His other analogies are just as ridiculous.  The Panama Canal? The Canal that connected all transportation between the entire Eastern Hemisphere with the Western Hemisphere? Compared to this dinky 500 mile train from San Francisco to Los Angeles? 

Does our Governor even think about or care about what he says? Does he hear himself when he makes these off-the-top-of-his-head declarations?

Most of the analogies that the Governor has cited previously, such as the Transcontinental Railroad or the Interstate Highway System, either had sufficient funds in hand or were funded by a reliable source, such as in the case of the highway system by the newly created highway trust fund which collected gasoline taxes, as they do today.  

The Four Railway Robber Barons, Stanford, Hopkins, Crocker, and Huntington, received generous government loans and land grants and thereby made vast fortunes from the railway construction. Is this what Governor Brown sees as HSR's future in California?  A railroad built by self-aggrandizing venal greed? Lincoln wanted that train and threw a lot of federal funding at it. Much of it lined a few pockets.

And, by they way, it's not only the Governor who uses these irrelevant analogies so freely. Congressional Senators have done the same.

Are these the examples he seeks to emulate with the high-speed rail project? If so, he's going about it in a strange way.  There are no funding sources to build this train, not even the promise of all the many bilions that are required.

Or does Brown wish us to believe in this train as if it was our Cathedral as an act of faith, the provider of religious and spiritual experience? How stupid does he think the California voters are?

Is it to early to consider a recall movement?

For a smattering of that cathedral history, see also: 


Alison van Diggelen
Host, FreshDialogues
Can California Afford High Speed Rail? Jerry Brown Still Bullish, Likens it to Cathedral Building
Posted: 04/28/2012 8:06 pm

Governor Jerry Brown responded to questions from Fresh Dialogues Tuesday about high speed rail and electric vehicles at the Silicon Valley Leadership Group's CEO Summit in Silicon Valley. Is he still an advocate for high speed rail in light of pressure, negative HSR reports and the sorry state of California's budget? The emphatic answer is: YES.

And he's got a historic precedent to support his case -- from Medieval France no less.

"It's a very powerful idea that could become something of great importance to California," he said. "New ideas are never received as well as old ideas, but I think California is the one place where high speed rail can get its start for the United States."

But with California's budget in the red and more spending cuts on the table, can California afford to spend a penny on high speed rail?

The 74-year-old governor took a page from history and replied with a question: "How did the peasants of medieval France afford to build the cathedral of Chartres?"

He then enlightened Fresh Dialogues with this answer, "They did it slowly... they did it with community investment and a great belief in the future."

This echoes Brown's 2012 State of the State Speech in which he said, "Those who believe that California is in decline will naturally shrink back from such a strenuous undertaking... I understand that feeling, but I don't share it because I know this state and the spirit of the people who choose to live here."

Governor Brown is thinking very long term. In fact, the high gothic Chartres Cathedral, famous for its flying buttresses, took almost 60 years to build.

But it's an unfortunate analogy. In the 13th Century, the cathedral's "free trade zone" was also the cause of bloody riots between bishops and civic authorities over tax revenues. An ominous sign indeed for the Governor of California. Plus ca change...

Join the conversation at our Fresh Dialogues Facebook Page and check out exclusive VIDEOS AT THE Fresh Dialogues YouTube Channel. Read transcripts, see photos and check out our archives featuring exclusive interviews with Tom Friedman, Paul Krugman, Vinod Khosla and many more green experts and visionaries...

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You can buy what the high-speed rail authority is selling on some street corners at night.

Good article in the Modesto Bee (related to the Sacramento Bee) by Lance Williams.

Let's specify some basic facts about the California High-Speed Rail Project and the people who are actively promoting it.

1. The project has become a "bait-and-switch."  What it now is planning to construct is NOTHING like what the voters voted for.

2. The rail authority has NEVER told the truth about anything.  A handful of citizens have devoted huge chunks of their time and life to disproving all the lies told by the rail authority and its supporters, including elected officials, high and low.

3. At face value, a great deal of what is now being proposed is explicitly illegal. The rail authority has the temerity to break the laws because of the unquestioning support by the State's Governor, Jerry Brown. Wouldn't you think that this Governor should also be the State's head law enforcer?  Well, you would be wrong about that. 

4. The rail authority has around $6 billion dollars more or less in hand to play with. And that's all. It is now absolutely clear that there will be no further high-speed rail funding for California from Washington so long as the House of Representatives remains a Republican majority.

5. Whatever the rail authority calculations about total costs are, and they have fluctuated wildly, they are far too low. This is based on the history of most recent other projects, both in the railroad construction industries and other infrastructure mega-projects world-wide. Typically, the final costs are several orders of magnitude greater than the initial low-ball estimates.

6. And in this article, Lance Williams identifies the untruths about the cost of operating the high-speed trains if indeed they ever are built.  The rail authority insists that the train will be "profitable." The also insist, against all the facts, that other high-speed trains in both Europe and Asia are profitable. This is simply not true.

One of the best sources of the factual basis for these claims which I have repeated in this blog many times is the following: 

And here is the specific documentation about operating costs:

These documents are the work of William Grindley and several others.  I can only urge you to download and read all this documentation for verification of all the claims made on this blog and, spreading like wildfire, the criticisms levelled at the rail authority in the press. 

It has become painfully obvious that the Democrats who continue to support this project do so knowingly; that is, they have been made aware of the facts, but are totally indifferent to them for the sake of the $3.5 billion free dollars from Washington.  

I call it political prostitution. 

Sunday, Apr. 29, 2012
California bullet train's operating costs questioned
By Lance Williams 
California Watch

By hitting the reset button, Gov. Jerry Brown bought some time for the embattled California high-speed rail plan.

In recent months, the chief executive officer of the controversial project resigned. Brown installed Dan Richard, an official with political and transportation industry connections, as new board chairman.

More importantly, the California High-Speed Rail Authority dramatically revamped its business plan, slashing as much as $30 billion from the price tag for building the San Francisco-to-Los Angeles system via the San Joaquin Valley — from $98 billion to as little as $68 billion.

But none of those changes addressed what a panel of outside financial experts has styled "the elephant in the room" for California's proposed high-speed rail system — its extraordinarily low projected operating costs.

If the bullet train project is to pencil out, it must operate far more economically than any high-speed rail system in the world, according to the experts, who include former World Bank executive William Grindley.

Unless these extraordinary economies are achieved, the train will require alarmingly high annual operating subsidies "forever," as the experts wrote in a report last month. The annual operating deficit could top $2 billion, they wrote.

The rail authority disputes the experts' conclusions. The issue is of crucial importance, because by law, the state is forbidden from subsidizing the bullet train.

"We showed that their (projected) operating costs and revenue costs per mile were significantly lower than what anybody anywhere in the world had ever been able to achieve," said Alan Bushell, a retired technology executive and co-author of the study. Other authors include retired Stanford University economics professor Alain Enthoven and Silicon Valley financial expert William Warren.

The rail authority's business plans indicate that the bullet train would cost about 10 cents per passenger mile to operate, Bushell said in a recent interview.

That means it would cost 10 cents to carry one passenger one mile on the rail system. But international high-speed rail systems cost on average about 43 cents per passenger mile, he said.

"They have to have worked some incredible operating efficiencies to justify those kinds of costs," Bushell said of California's rail planners. "I doubt they have."

International cost data

The financial experts' study reviewed operating cost data for international bullet trains.

The experts found the world's lowest operating costs were in Italy — about 34 cents per passenger mile. Highest costs were in Germany and Japan — 50 cents per passenger mile. In the United States, Amtrak's Acela Express, a high-speed line linking Washington, D.C., and Boston, costs about 44 cents.

The rail authority contends that its operating cost projections are sound, derived from a sophisticated computer model. The system will turn a profit and won't require operating subsidies, rail officials insist.

In a statement, rail board member Mike Rossi said the bullet train's planners used conservative assumptions to verify that the rail line will operate profitably.

Regarding the outside experts' critique, Rossi said, "We have met with the authors of the report in an attempt to correct their flawed assumptions and conclusions."

That's not precisely true, countered Grindley.

He said he and his co-authors have repeatedly asked the rail authority for the data that underlies their calculation of the bullet train's projected operating costs. The rail authority hasn't made the information public, he said.

California Watch is a project of the nonprofit Center for Investigative Reporting. For more, visit

Saturday, April 28, 2012

High-Speed Rail in California: A Religious Crusade based on Faith Alone

First, a background comment. This article by Adam Summers is from the Reason Foundation online blog.  To remind you, the Reason Foundation, with additional support from the Jarvis Anti-Tax Group, supported the research by Wendell Cox, Joe Vranich and Adrian Moore to produce their seminal major report on the high-speed rail project just before the elections of 2008.  That's when the voters approved  Proposition 1A.

Had a majority of the voters read that Report, called the Due Diligence Report, not only would the voters have voted against this Proposition which initiated the high-speed rail project, it would have inspired the voters to come to Sacramento to ride the members of the rail authority out of town "on a rail!"

And here's a thumbnail summary of that report in bullet form: 
California High-Speed Rail Findings at a Glance

Analyzing the impacts of the state's proposed train system
September 18, 2008

Private Investment Impacts
•Investment losses are likely.
•Commercial bond default is likely.

Traveler Impacts
•Promised travel times are unlikely to be achieved.
•Trains will fail to meet the statutorily required maximum travel times.
•Airlines will continue to dominate the market between northern and southern California.
•Few travelers are likely to be attracted from cars in the shorter distance markets.
•San Diego and Sacramento extensions may not be built for decades, if ever, due to high costs.

Capital Costs
•Construction cost overruns are likely.
•Proposed state bonds will likely be insufficient to complete Phase I, Phase II or complete plan.
•Federal funding is likely to be far less than projected.
•Private funding is likely to be insufficient to finance the complete plan.
•Political "meddling" could increase capital costs.
•Additional state capital subsidies are likely to be required.
•Political "meddling" will require additional stations, more stops and slower train schedules.
•CHSRA's capital cost projections for highway and aviation alternatives are implausibly high.

Operating Costs
•Operating costs are likely to be substantially higher than planned.
•Taxpayer subsidies to cover operating costs are likely.

Greenhouse Gas Impacts
•Impact on greenhouse gas emissions reduction to be small.
•GHG reduction to be far more costly than the international ceiling of $50 per ton.

Public Response
•Opposition may spread as site-specific urban, suburban and rural impacts become better known.
•Opposition by communities is likely to require reduced operating speeds and slower schedules.
•Mitigating unpopular neighborhood impacts could increase capital costs.
•Elevated tracks could create objectionable sound walls and other "Berlin Wall" structures.

•No train in the world meeting the operating specifications can be used legally in the U.S.
•It is unclear that any train redesigned to meet U.S. safety requirements can also meet the CHSRA speed and performance requirements.
•The train's capacity is not set, which calls into question the accuracy of ridership, revenue and cost forecasts.
•Train weight is not set, which could affect speed, schedule, ridership, energy use and cost forecasts.
Road and Aviation Impacts
•HSR will fail to divert significant traffic from highways and airports.
•The Authority will fail to implement the bargain rail fares it currently proposes.


The Medieval Crusades (1095 - 1291)(See Wikipedia) were generated and driven only superficially by a belief in the necessity to liberate Jerusalem from the Muslim residents, but more fundamentally by political and economic reasons.  

Funny why Governor Jerry Brown, who loves analogies for the high-speed rail project, hasn't considered this one. After all he did have a Jesuit education and should be very familiar with the Crusades. Particularly since he is leading one in California today.

Which is to say that underlying these Crusades were imperial ambitions and in the long run, they were not successful in their intended goal to "liberate" Jerusalem. However, they were devastatingly costly in terms of blood and treasure.

What Adam Summers gives us here is a description of the similar fruitlessness of the HSR endeavor, also based in misconceived faith and totally oblivious to reason, reality and the facts.  Said another way, this high-speed rail project is not based on scientific and rational foundations, but on "Intelligent Design" and "Creationism."  Build it and they will come.  It's a fantasy "field of dreams."

But, at the same time there is a very cynical underlying strategy that is far more rational, and that is the greed and lust for discretionary funds from Washington.  Billions of dollars are promised to California if our state initiates construction in the Central Valley, and puts down around a hundred miles of track.  

What both the federal Department of Transportation and the California Governor choose to ignore is the following:

1. The $3.5 billion from Washington is all there is; there won't be more.

2. That and whatever bond funds can be extracted will only scratch the surface of what this rail system will actually cost.

3. The federal government's advocacy for HSR is an "unfunded mandate." They say, you must build it but we won't pay for it.

4.  There is actually no systematic, independent cost-benefit analysis either at the federal or the state level to justify this project. With full-cost accounting, this mode of transit is ridiculously high per passenger-mile.

5. What the public has been told by the rail authority, from the beginning, is not true.  We have been lied to, to get our vote and our support. The rail authority continues to do so. 

6. When most Californians voted for it, they were ignorant of the facts.  Now that they know the facts, they oppose it. That's why the Governor doesn't want it back on the ballot.

7. It is outrageous that the entire US should be taxed to fund construction of this California-only train.

Many of you won't remember this, but during severe fuel shortages in our 20th century past, the saying on bill-boards was: "Is this trip necessary?"

Now is the time we all should be asking, "Is this high-speed train necessary?"  The affirmative answer will come only from those who have actual skin in the game and stand to profit handsomely.

To quote Nancy Reagan:  "Just say No!"

Out of Control Policy Blog
Being Taken for a Ride on High-Speed Rail in California

Adam Summers
April 27, 2012, 4:21pm

In my latest commentary, I once again tackle the boondoggle that is the California high-speed rail project, specifically, the most recent version of what passes for a business plan from the California High-Speed Rail Authority (CHSRA).

When the High-Speed Rail Authority recently released yet another version of its purported business plan, it was just another day in the world of the ever-changing high-speed rail plans and assumptions made by the Authority and its backers. The fourth incarnation of the plan relies upon sharing tracks with commuter trains in both Los Angeles and the Bay Area in order to trim estimated costs from $98.5 billion to "only" $68.4 billion—still more than 50% more expensive than the plan voters thought they were approving in November 2008. But, as the non-partisan Legislative Analyst's Office (LAO) observed, this plan makes no more sense than any of the previous ones.

The LAO analysis concludes,

We find that HSRA has not provided sufficient detail and justification to the Legislature regarding its plan to build a high-speed train system. Specifically, funding for the project remains highly speculative and important details have not been sorted out. We recommend the Legislature not approve the Governor’s various budget proposals to provide additional funding for the project.

The vast majority of the expected funding continues to be wishful thinking. As I relate in my article,

As with every other attempt at a plan, the latest effort from the CHSRA lacks any basis in reality. Once again, most of the funding is to come from unidentified federal and private-sector sources that almost certainly will not materialize. In fact, 83.2 percent of the project’s proposed funding is unaccounted for, including $38.6 billion the CHSRA hopes to receive in federal funds (in addition to the approximately $3.5 billion in federal stimulus and transportation funds that has already been allocated), $13.1 billion expected from private investors, and $5.2 billion to come from other sources such as local governments.

In response to such criticisms, CHSRA Chairman Dan Richards argued that it is simply common practice for transportation projects to go forward without knowing from where the money will come. “I spent 12 years on the [Bay Area Rapid Transit] board in the transit world; we never knew where all of the money was coming from,” Richards said. “Our colleagues in Southern California just adopted a $540 billion regional transportation plan for the Southland, for the next 20 years, same time period we’re talking about here. They don’t know where all of the money is coming from.” Added Richards, “It is just part and parcel of the transportation world that people don’t know these things now.”

If ever there was a window into the mindset of a government central planner, this is it. So the excuse for such irresponsibility and carelessness with scarce taxpayer dollars is the notion that “Everyone else (in government) is doing it!” Besides, who needs to know minor details like how something is going to be paid for when your state faces yearly multi-billion-dollar deficits?

Yet CHSRA board member Mike Rossi calls the new business plan “credible, reasonable, and transparent.” Many of the high-speed rail planners are clever people, so it is hard to believe that they could be so divorced from reality. 

There are many special interests involved in a project of this scope, however (which is yet another reason why such things should be left to the voluntary decisions of people in a free market, rather than forced down people's throats through the political process), so perhaps it is simply an attempt to intentionally delude taxpayers whom they hope will be too apathetic or uncritical to notice otherwise.

One of the things that continually amazes me is how basic assumptions such as the cost of the project and the estimated ridership—which affects everything from how much revenue the system will generate to how much it will affect traffic congestion and greenhouse gas emissions—can change so dramatically, so quickly, and yet the supporters of high-speed rail cling to the project with religious fervor and never question how these seemingly arbitrarily-determined numbers affect the viability of such a large project. As I argued in my column,

The CHSRA and many advocates of high-speed rail have demonstrated that they are beyond reason, despite all the facts that contradict their hopes and assumptions. High-speed rail advocacy has become more of a religious crusade than a policy position. Avoiding the facts stacking against this project is how cost estimates can triple, then be reduced by one-third. It’s how ridership estimates can magically plummet to one-third of their original estimates (see this CalWatchdog article for a good summary on the project’s changing assumptions). It’s how major decisions such as changing from dedicated high-speed rail tracks to tracks shared with slower commuter trains on both ends of the system can be made. And yet with all these arbitrary changes, high-speed rail acolytes have not batted an eye or even questioned how the plan can still be considered feasible, much less profitable.

Moreover, the bond measure (Prop. 1A) that voters narrowly passed back in 2008 requires that a trip between Los Angeles and San Francisco on the high-speed train system take no more than 2 hours, 40 minutes. That probably would not have happened even under the older plans, but seems to be pure fantasy now that the high-speed trains will have to share tracks with slower commuter trains at both ends of the system. As Quentin Kopp, former California state senator and CSHRA chairman who was a leading figure in pushing for the passage of Prop. 1A and the creation of the CHSRA, admitted of the new plan, “This isn’t high-speed rail.” Added Kopp, “High-speed trains have separated tracks. That’s how they could achieve speeds and travel times promised to voters in the 2008 ballot measure.”

The high-speed rail project is such a disaster on so many fronts—economically, politically, even environmentally—that one can only hope that the plug will be pulled before California wastes more billions of dollars it does not have. At the very least, voters should have the chance to re-vote on such a project that is so different from the one put before them in 2008. Barring that, it will be up to the voters to use the initiative process to kill the high-speed rail system in order save themselves from more financial waste and abuse.

Here is  Adam Summers' complete article from which he draws the material for the article above:

Friday, April 27, 2012

A major overview of the California High-Speed Rail Project and its implications nationally

Before I get into this article, it also includes a video that I'm unable to transfer into this blog. (error message) The video shows a Carlyle Group representative, Robert Dove, discussing private investment in high-speed rail. You should watch it.

Why the USHSRA would have this guy on video and even at the conference where he spoke is surprising, since he was really discouraging about private investment for HSR in general.

Dove did allow that such investments had the greatest plausibility in the NorthEast Corridor, however and that confirms what Republican Chairman of the Transportation and Infrastructure Committee in the House, John Mica, has said numerous times. 

We already know that private investment in California won't happen, if for no other reason than the state government can't and won't guarantee returns for those investments and it is highly conceivable that any such investors would lose their shirts. 

The author of the article, Carl Franzen, does a good overview job, but includes the blathering of Andy Kunz who heads the USHSRA.  That association is obviously intended to be a promotional umbrella for all the HSR industries, and Kunz is its frontline salesman.  

The central thrust of the article is about California's project which is, by HSR standards, "the only game in town."  Franzen indicates the necessity of the sale of $2.6 billion worth of state bonds. I'm not sure that such a bond sale is actually necessary in order for the rail authority to receive funding, since the HSR bonds are GO, general obligation, and the required funds can be drawn from the treasury, whether those bonds have been sold or not. As I say, I'm uncertain about this. 

Since we are all fond of quoting the LAO for its stinging reports on the HSR business plan, we should also note that what the LAO spokesman, Brian Weatherford, said was “some minimal funding be provided to continue some of the planning efforts that are currently underway."  

In other words, while the LAO discourages further funding for the project, at the same time, it wishes the project to stay in business in order to conduct further planning efforts. I don't know why they would say that.  If funding for the project is terminated by the Legislature, as the LAO recommends, we can be sure that the federal government will have little choice but to follow suit and terminate the promised ARRA funds inasmuch as the project would have to come to a complete halt.

Meanwhile, Senator Simitian has made it clear that he intends to delay a budget decision for HSR as long as he possibly can, perhaps even beyond the August deadline.  Of course, if he can get away with this procrastination until after the elections, the Senator will have been termed out, along with Senator Lowenthal, and neither will have to confront the Governor or Party seniors about a decision up or down. 

I don't want to spend any time on Andy Kuntz' comments except for the first one quoted here, “The tide is turning in favor of high-speed rail.”

The fact is that, to the contrary, the tides were strongly in favor of high-speed rail in 2008, when a majority of the voters supported Proposition 1A and put the project on the California map. Since then, the truth has spilled out from under the curtains, like blood in a mystery play, and as more is revealed, the more hostile the media and the public have become.

Carl Franzen answers Kunz' platitudinous HSR endorsements and all their flaws, as does Prof. Samer Mandanat from Berkeley. Mandanat was principal investigator in the major study done by Berkeley's Institute for Transportation Studies that illuminated the procedural flaws in the rail authority's ridership studies, 'incorrectly' conducted by Cambridge Systematics Inc. 

The best example of misconception by Kunz regards the possibility of private investment, as he seeks to quote the Carlyle Group's Robert Dove, who cites the four most densely packed rail areas in the country, including the West Coast.  Kunz mistakenly regards that comment as an endorsement if not a promise of major investment.  In fact, if we listen to Cody's words on the YouTube segment, he only endorses private investment in the NorthEast Corridor, not the other rail regions.

Franzen's last paragraph in this article mistakes the cost reductions emanating from the rail authority -- from $100 billion to $86 billion -- as more parsimonious book-keeping.  Actually that reduction is false inasmuch as it is merely a temporary reduction in construction scale.

The rail authority now claims that they will utilize existing rail corridors and existing tracks, thereby spending much less of the funding in the population centers essential to their operation. What they don't say, but intend, is for these reductions to be temporary, not permanent. By any other name, it's still lying. 

The article does not answer its own question in the headline. We don't know, from what Franzen says, what this battle in California means for the America's high-speed rail future.  What we do know is that the California project is a very, very bad idea in all the ways that we have been outlining in this blog for well over a year. 

And that stopping it would be the smartest thing we can do, thereby instructing our fellow Americans that it's possible to be very stupid about a project, but that, with great dedication and effort, as well as armed with the facts and the truth, such costly and destructive disasters can and should be prevented.

What Does The Battle Over California’s High Speed Rail Project Mean For America?

APRIL 20, 2012, 5:46 AM 

In California, the car is still king. But that could be a different story by 2028 — when a proposed massive, 520-mile-long high speed rail project, intended to span the state from north to south, Sacramento to San Diego, is supposed to be completed, ideally making the Golden State into America’s first-ever bullet train hub.

But the project, which is projected to be able to take riders from Los Angeles to San Francisco in 2 hours and 40 minutes, traveling at up to a peak of 220 miles-per-hour in some sections, costs an estimated $68 billion and is backed vociferously by Democratic Governor Jerry Brown, has run into heavy interference recently.

The California Legislative Analyst’s Office (LAO), an independent state budget watchdog agency, on Tuesday released a cautionary report on the project proposal, recommending that legislators vote down the Governor’s plan to fund the initial phase of the project — which would connect Madera, just north of Fresno, to north of Bakersfield — by selling $2.6 billion worth of state bonds.

If the sale doesn’t go through, the high-speed rail project will effectively be stuck in limbo for the foreseeable future, as the bond sale is necessary to raise enough money to begin construction and to receive $3.3 billion in federal matching funds. In total, federal funding is supposed to pay for 61 percent of the project. Only 4 percent of these funds have been secured so far, according to the LAO, and it’s that uncertainty that has the agency urging caution.

Brown’s office isn’t so optimistic as to think all of the remaining federal funding will come through, so they’ve devised an alternate and somewhat controversial, funding source: auction revenues from the state’s own cap-and-trade program if the federal funding fails to materialize.

The LAO report, prepared by economist and policy analyst Brian Weatherford, concludes that “funding for the project remains highly speculative and important details have not been sorted out,” namely whether Washington will be able to provide federal matching funds later down the road, say in 2020, when the project is half-finished.

Yet the report still advocates that “some minimal funding be provided to continue some of the planning efforts that are currently underway,” although not specifying exactly how much.
“Our concerns are really legitimate and serious,” Weatherford told San Jose Mercury News, “We don’t really see how you could get [the money from Washington] to build this thing. That’s our primary concern.”

Following the report, on Wednesday, the California state Senate and legislature launched their first hearings on the finalized version of the project. While no final decisions were made, a prevailing attitude emerged: slow down, with lawmakers on both sides stating that they wouldn’t be able to come to a conclusion within eight to ten weeks, coming uncomfortably close to the August 31 majority vote deadline necessary to get the project started on time.

Still, the U.S. High Speed Rail Association (USHSR), a lobbying group founded in 2009 to push high-speed rail projects across the country, believes that both the LAO report and legislature’s skepticism are only temporary roadblocks, ones that will eventually be overcome by public and industry pressure in favor of high-speed rail.

“The tide is turning in favor of high-speed rail,” said Andy Kunz, founder and president of USHSR, in a telephone interview with TPM. “Sure there will always be entrenched interests against it…this is a huge paradigm shift for the country, anytime you begin a paradigm shift, there will be battles and fights with existing power brokers, because they’ll do everything they can to prevent change. But high-speed rail is inevitable.”

Kunz pointed to steadily rising gas prices and the woes of California’s interstate system, such as gridlock and congestion, as pressure points that would shift public opinion in favor of high-speed rail, and thus, voter sentiment.

But gridlock and congestion primarily occur in dense metropolitan areas, and the high-speed rail project would skirt those, or rather, switch over to traditional, slower-speed commuter rails, at least under the latest proposal unveiled on April 2nd by the California High Speed Rail Authority, the state agency in charge of the projects.

“For congestion within metropolitan regions, the highspeed rail offers no solutions, except that it compliments or substitutes commuter rails in Los Angeles or San Francisco” said Samer Madanat, the director of transportation studies at the University of California, Berkeley, in a telephone interview with TPM.

Madanat and his colleagues at Berkely’s Civil and Environmental Engineering school have vocalized their doubts about the project before. They were asked by the state Senate to do an analysis of ridership projects by the California High Speed Rail Authority back in 2010. Those findings concluded that initial ridership estimates were flawed, and that it was “not possible to predict whether the proposed high-speed rail system will experience healthy profits or severe revenue shortfalls.”

Madanat, for his part, candidly told TPM that if he “were in charge of deciding where to put a high speed rail project, from a technical standpoint, California is not the geographic location in the U.S. where high-speed rail is most needed.”

In Madanat’s perspective, the problems California faces with congestion and gridlock can only be solved by expanding commuter rail systems within metropolitan regions, not between them, as the high speed rail system would seek to do.

“High speed rail is certainly justified in the Northeast corridor,” Madanat told TPM, citing the more fully developed commuter and light rail systems already available in the region, which would be able to augment a high speed rail system.

“A system extending from Boston to Washington, D.C., through New York, Philadelphia and Baltimore would make sense,” he said. “All the appropriate factors are there: population density, existing public transit density. I would start in the Northeast corridor.”

However, Madanat told TPM that the issue was now so politicized, it was out of the hands of technical experts. Madanat said that if the project did manage to get approved and turned out to be a boon for the state and for commuters, it still wouldn’t necessarily prove that high speed rail projects should be undertaken in other parts of the country.

“Each region would need to compare themselves to the conditions that led to success,” Madanat said, “If they don’t have these conditions, then they have an incentive not to go forward.”

But Kunz and his colleagues at USHSR disagree, arguing that high speed rail makes sense in several of the most populous regions of the country. In fact, as Kunz told TPM, private investors have already expressed an interest in backing high speed rail projects, once the initial investment and legal wrangling are dealt with by governments.

“There’s a whole line of private sector folks ready to invest in the project,” Kunz told TPM.

As evidence, he pointed to a videotaped talk given to the USHSR’s New York office in November 2011 by one Robert Dove, a managing director “focusing on infrastructure opportunities” for the wealthy private equity firm the Carlyle Group.

“We manage a massive $150 billion dollars of capital for institutions, pension funds, high net worth individuals, endowments, insurance companies and other money management groups, and they are looking for good, long term investments with superior returns,” Dove said in his presentation, adding, “Looking at where all the rail tracks are and all the people are, you can identify, in our mind, four areas: the West coast, Texas, Chicago and the Northeast corridor…”

“Every one of those areas, if they had a high speed rail system, could make billions of dollars in profits,” Kunz annotated.

Still, Carlyle’s Dove clearly states in the video that the Northeast corridor is “the one where we think is the most obvious and the most likely to receive private capital in the short term.”

Carlyle declined to elaborate on Dove’s comments for this story.

The newest proposal for California’s speed rail system scales the project back from a November 2011 estimate of the project, which would’ve cost an estimated nearly $100 billion, a far cry from the about $45 billion envisioned when it was first approved by voters a lifetime ago (at least in political and economic terms), back in 2008.

Mark Powell is preparing us to take the CHSRA to court for its High-Speed Rail Shenanigans

Mark Powell has done it again. My only complaint is that he doesn't write enough of these thoroughly researched articles. Even though this one comes from the on-line publication REDCOUNTY, as we know he has his own blog site:

And, I must amend my blog subtitle as the only blog that opposes high-speed rail, since he also writes one and does it so well. I should also say that his blog is immensely reassuring, knowing that there are others in pursuit of the same goals, the termination of this project in California.

In this article, Mark goes after the central issue of the project at its highly questionable current state of conception: is it legal?  

Many already are saying no and identifying the violations of the authorizing legislation which mandates a whole series of conditions being violated by the rail authority in the development of its implementation and construction strategy.

Mark looks at the CEQA-required steps that have not yet been followed as the construction start date draws ever closer.  Furthermore, though Mark doesn't touch on it here, there is the danger that the Governor will exercise his authority to "streamline" the review process, thereby letting HSR wiggle out of its legal CEQA requirements. That will be a stunning slap in the face of all Californians and will neutralize any objections by the California voters.

The rail authority has yet to issue a reliable and truthful funding plan.  Indeed, basically there can be no funding plan since there are no funds, even now certainly not enough and beyond that, no further funds. The rail authority has access only to $3.5 billion promised funds from the DOT and can match those with around $3 billion from the state bond issue (roughly one third of the total available for matching). And that's all that's available. An overreach exceeding their current requirements. 

Any additional funds are sheer speculation and based on excessive optimism given the economic temper of the state and the nation.

The legislation is quite strict about not beginning a "usable segment" without adequate cash on hand. The rail authority will attempt to wiggle around that issue as well, making a lot of claims that are both untrue and illegal. Back to court we go!

Many of the rail authority's legal problems are definitional.  The rail authority has concocted a lot of phrases and terms the intention of which is to mislead the California taxpayers into believing something is credible when, in fact, it isn't. "Usable segment" and "utility" are terms that will be distorted by the rail authority into justifying anything they are able to build with the funds they have.   

For example, as they currently define their Central Valley construction plan, the tracks built there will not support high-speed rail operations, lacking electrification, signalling and rolling stock. Therefore, that corridor is not and should not be called a "usable segment" for high-speed rail, which is, after all, what this legislation is all about.

Those tracks, in order to claim usefulness, are being labelled as 'useful' for Amtrak, not high-speed rail.  Part of this scam is the claim that all this is merely a first step, a"foundation," for the later full development of a high-speed rail system.  Can such a flimsy promise be sufficient to avoid their convoluted strategy being identified as illegal?

There are other terms and we have discussed these previously, such as "Initial Construction Section" (ICS), a length of incomplete rail corridor for high-speed rail not permitted by the legislation. As Mark has said in a prior blog, they are putting lipstick on a pig.  

Add to that the most recent Democratic accommodation, the "blended system," which denies use of four tracks by requiring use of existing tracks in existing rail corridors.  That also is not what was intended by the legislation.

Have we mentioned that all these new design changes slow the train down so that it cannot possible meet the 2:40 requirement? And that's not legal either?

In short, a new, misleading nomenclature does not an honest adherence to the law make!  

If "blended system" solutions to shave costs creates circumstances, no matter how temporary, and those conditions deny what the law requires, such as appropriate headway, that too must be found illegal and be denied the rail authority by the court. 

Finally, Mark tells us that there must be lawsuits about all this since the Attorney General cannot adjudicate the behaviors and mis-behaviors of the rail authority inasmuch as the AG represents the rail authority in adjudication conflicts.  

As we like to say on this blog:  "Sue the bastards!"

Thanks, Mark

California Rail Authority, Lawmakers Question the Legality of the Revised 2012 Business Plan

By Mark Powell (Scribe) 
April 27th, 2012

State Senators ask Legislative Counsel and Rail Authority asks Attorney General to Comment on Legality of the Business Plan.

Senator Joseph Simitian, Chairman of Budget Subcommittee, and Senator Mark DeSaulnier, Chair of the Policy Committee on Transportation wrote to the Legislative Counsel, Ms. Diane Boyer-Vine on April 18 in search of an opinion on the legality of the Authority’s Revised 2012 Business Plan. The entire body of their letter reads as follows:

On April 12, 2012 the California High Speed Rail Authority adopted a “business plan” for the statewide high speed rail project. We are writing to ask your office to review the adopted plan and advise us as to whether or not the plan is legally compliant with the provisions of Proposition 1A, as approved by the voters in November 2008.” [Note 1]

This letter was brought to light at the April 18 Senate Hearing on High-Speed Rail. [Note 2] As Senator Simitian put it at the hearing, if the Business Plan is found to be not in compliance with Proposition 1A, then “we can save ourselves a lot of time and conversation”. [Note 3] California High Speed Rail Authority Chairman Dan Richard, who was being questioned at the time this letter was revealed, responded by saying that the Authority was concurrently seeking a legal opinion from the Attorney General’s Office on this same issue.

According to a member of Senator Simitian’s staff, the senator will likely make public the Legislative Counsel’s opinion when it is received. That opinion is expected to be delivered one to two months from now. The senator’s diligent work in trying to be an honest broker and his level of transparency in his pursuit of the truth is refreshing and commendable. One hopes the Authority will be similarly transparent with the public regarding the Attorney General’s opinion of the Business Plan.
A look at the law behind Proposition 1A, Assembly Bill 3034 (the law), and a reading of the recently approved Business Plan reveals many issues where legality is in doubt. This article highlights only a few issues.

Environmental Clearances

The Business Plan calls for the Initial Operating Segment to run from Merced to San Fernando via Fresno, Bakersfield, and Palmdale. [Note 4] The law requires the Authority’s funding plan, which is integral to the Business Plan, to certify that “the authority has completed all necessary project level environmental clearances necessary to proceed to construction”. [Note 5]

In fact, four separate project level Environmental Impact Reports (Merced to Fresno, Fresno to Bakersfield, Bakersfield to Palmdale, and Palmdale to Los Angeles Union Station) need to be completed and certified at both a federal and state level before the Authority can truthfully claim to possess the “necessary project level environmental clearances”. Currently, the Merced to Fresno and Fresno to Bakersfield EIR’s exist in draft form. EIR’s for the Bakersfield to Palmdale and Palmdale to Los Angeles Union Station segments have yet to be issued even in draft form. [Note 6]

Funding Plan

The law requires that no later than 90 days prior to the submittal to the Legislature and the Governor of the initial request for appropriation of proceeds of bonds, the Authority shall have approved and submitted to the Director of Finance, the Peer Review Group, and the policy committees with jurisdiction over transportation matters and the fiscal committees in both houses of the Legislature, a detailed funding plan for that corridor or a usable segment thereof. The plan shall include, identify, or certify to the following:

• 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. [Note 7]

This requirement is restated again in the law where the funding plan is described as one that:

• identifies the sources of all funds to be used and anticipates time of receipt thereof based on offered commitments by private parties, and authorizations, allocations, or other assurances received from governmental agencies. [Note 8]

Moreover, the law requires that the Authority not be the judge of the adequacy of their plan. The law requires a report or reports, prepared by one or more financial services firms, financial consulting firms, or other consultants, independent of any parties, other than the authority, involved in funding or constructing the high-speed train system, indicating that:

• construction of the corridor or usable segment thereof can be completed as proposed

• if so completed, the corridor or usable segment thereof would be suitable and ready for high-speed train operation,

• upon completion, one or more passenger service providers can begin using the tracks or stations for passenger train service,

• the planned passenger train service to be provided by the authority, or pursuant to its authority, will not require operating subsidy, and

• an assessment of risk and the risk mitigation strategies proposed to be employed. [Note 9]

In fact, the Authority has no funding plan other than to hope for federal dollars far in the future or their dream that Cap and Trade fees will materialize by the 10’s of billions of dollars and be appropriated by the legislature to the high-speed rail project. 

The weaknesses of the funding plan would be more obvious if the Authority had complied with the law’s requirement to have a financial plan prepared by an independent financial consulting firm. The Authority has been using the services of KPMG, a large accounting and financial consulting firm and is about to exhaust the current $2.5 million contract. In early April the Authority’s staff recommended increasing the contracted amount with KPMG to $8.75 million and recommended that the Authority Board authorize the Acting Chief Executive Officer to negotiate a contract amendment. [Note 10] Unfortunately, for all the money spent on this contractor, KPMG has not issued a financial plan and KPMG’s name can be found nowhere on the recently issued Business Plan.

Corridors and Usable Segments

The law contains a list of “corridors” [Note 11] and defines “usable segments” as a portion of a corridor containing at least two stations. [Note 12] Nowhere in the law is a corridor mentioned linking Merced to San Fernando. Minimum travel time requirements are mentioned for seven corridors including San Francisco to San Jose (30 minutes), San Jose to Los Angeles (2 hours 10 minutes), and San Francisco to Los Angeles Union Station (2 hours 40 minutes). [Note 13] The law requires that the high-speed train system meet these required times. The Authority’s decision to build a “corridor” other than one described in the law may therefore be seen as illegal in two respects. It is not an allowed corridor in the first place and trains traveling on it meet none of the time requirements spelled out in the law.

Achievable Operating Headway

“Headway” refers to the time between successive trains, a measure of frequency of service. The law requires the high-speed train system to be capable of achieving headways of 5 minutes or less. [Note 14] The Authority’s Business Plan shows no headways of “5 minutes or less”. [Note 15] In the new “blended approach”, where high-speed trains will share track with Metrolink in the LA Basin and Caltrain in the Bay Area, it may be impossible to meet the headway criteria. Therefore, using rail bonds to upgrade and electrify Caltrain tracks connecting San Francisco to San Jose may be outside the requirements of the law. Additionally, the Initial Operating Section extending from Merced to San Fernando will likely use Metrolink track from Palmdale to San Fernando and encounter the same difficulty in meeting headway times.

The seriousness of this problem in both the Bay Area and the LA Basin is unclear because the San Francisco to San Jose, Bakersfield to Palmdale, and Palmdale to Los Angeles Union Station EIR’s, have yet to be released, even in draft form. Only when clearances are obtained for the actual alignments will the issues associated with Metrolink and Caltrain trains sharing track with high-speed trains become fully apparent making it possible for engineers to calculate the achievable headways.

The law was carefully drawn up to protect taxpayers by requiring that all environmental clearances be on hand, all necessary construction funds be secured, and system performance assured before bond money would be released to begin construction on a corridor or usable segment of the high-speed rail system. The Authority’s current Business Plan may be seen as falling short of all of these safeguards. Concerned Californians will anxiously await the findings of the Legislative Counsel, the Attorney General, and others who will be weighing in on these same issues including the Peer Review Group, the Legislative Analyst’s Office, and the State Auditor in the coming months. However, lawyers merely render opinions. In the end it will likely take a lawsuit brought before a judge to make the final call as to whether the Business Plan is legal.

Factual statements made in this article are footnoted below and can be accessed by clicking on the note shown in the body of the article.


Note 1: Transcript of conversation with member of Senator Simitian’s staff, April 25, 2012
Note 2: Video of Senate Hearing on High-Speed Rail conducted April 18, 2012; 13 minutes 20 seconds into video.
Note 3: Video of Senate Hearing on High-Speed Rail conducted April 18, 2012; 14 minutes 25 seconds into video.
Note 4: Revised 2012 Business Plan, Executive Summary, page ES-13, Exhibit ES-3 Summary of Each Phased Implementation Section
Note 5: Assembly Bill 3034, Article 2. High-Speed Passenger Train Financing Program, Section 2704.08, paragraph (c)(2)(K)
Note 6: California High-Speed Rail Authority website, Library, Project Sections link
Note 7: Assembly Bill 3034, Article 2. High-Speed Passenger Train Financing Program, Section 2704.08, paragraph (c)(2)(D)
Note 8: Assembly Bill 3034, Article 2. High-Speed Passenger Train Financing Program, Section 2704.08, paragraph (d)(1)(B)

Note 9: Assembly Bill 3034, Article 2. High-Speed Passenger Train Financing Program, Section 2704.08, paragraph (d)(2)
Note 10: Staff memo regarding Item #5 to be considered at the Authority’s April 2012 Board Meeting, Approval of Amendment to KPMG Contract
Note 11: Assembly Bill 3034, Article 1. General Provisions, Section 2704.01, paragraph (f)
Note 12: Assembly Bill 3034, Article 1. General Provisions, Section 2704.01, paragraph (g)
Note 13: Assembly Bill 3034, Article 2. High-Speed Passenger Train Financing Program, Section 2704.09, paragraph (b)
Note 14: Assembly Bill 3034, Article 2. High-Speed Passenger Train Financing Program, Section 2704.09, paragraph (c)
Note 15: California High-Speed Rail 2012 Business Plan, Ridership and Revenue Forecasting, Appendix F Details of Model Run Assumptions and Outcomes