The Jury Talks Back

3/12/2018

Confirmed: California High-Speed Rail Will Be Delayed and Overbudget

Filed under: Uncategorized — JVW @ 5:09 pm

[guest post by JVW]

In a move that surprised absolutely no one, an audit of the California High-Speed Rail Authority, the group tasked with building the voter-approved taxpayer-funded “bullet train” from San Diego to San Francisco via Los Angeles, Bakersfield, and Fresno has determined that the project will cost significantly more than initially believed and will be delayed at least thirteen years from the original target completion date promised to voters when the project was approved.

We Californians in our infinitesimal wisdom approved the high-speed train project in 2008 through Proposition 1A, a ballot initiative approved in the same rancid election that brought the nation Barack Obama, Al Franken, Alan Grayson, and Jared Polis. Prop 1A called for California to sell bonds to raise about $10 billion to initiate the project, with the rest of the $45 billion total estimated cost covered by other state funding sources, local funds in each city through which the rail would pass, private investment, and, of course, Uncle Sucker in Washington. Proponents of the plan included all of the chamber of commerce types, the union bosses, and urbanists who fetishize public transport. Governor Schwarzenegger (who was working feverishly to get back in the good graces of his lefty Hollywood friends) endorsed the plan, as did pretty much all of the state’s legislative Democrats. Lavish promises were made: Los Angeles to San Francisco in two hours and forty minutes, Downtown San Diego to Downtown Los Angeles in 80 minutes, fares less-expensive than corresponding flight tickets, ridership that would be at least 65 million rides per year and perhaps as much as 95 million rides, and — best of all! — the project once complete would be self-sustaining, i.e. the annual passenger revenue would equal the operational costs. This was such an obvious load of horse manure that only Californians could have fallen for it, and indeed we did. The bill to place Proposition 1A on the ballot passed the Assembly by a 58-15 margin and sailed through the Senate on a 27-10 vote with a handful of Republicans in each legislative body joining in support of the project. In the November election, Prop 1A was approved by a much more narrow 52.6% to 47.4% margin, suggesting that California voters are a hell of a lot smarter than their leaders, if not quite smart enough to derail the bullet train.

And now, ten years in, the shillelagh of buyer’s remorse has smashed into the kneecap of our dreams. The bi-annual status report mandated by the legislation (the one useful thing Republicans demanded in return for their support) now acknowledges that the Anaheim to San Francisco portion of the route, originally scheduled to open in 2020 (yeah, two years from now) will now be delayed until 2029. In a cruel irony, that is one year after Los Angeles is scheduled to host the 2028 Summer Olympics, meaning the High Speed Rail Authority now plans to miss its golden opportunity to reach a huge international Disneyland-Dystopia potential ridership (Europeans and Asians who love bullet train travel!) in a tourism-heavy summer. Instead, we’re hoping to have San Jose to Bakersfield ready to go in 2024 and then if everything goes strictly to plan maybe the San Francisco to San Jose segment ready by 2029.

Naturally, the cost of building the Anaheim-San Fran Line has now ballooned to $77.3 billion, and that of course does not include the costs for extensions to San Diego and Sacramento. Moreover, the HSRA admits that figure is an estimate and that the project could cost anywhere from a low-end of $63.2 billion (best-case scenario which includes steady progress and no unforeseen setbacks) to a high-end of $98.1 billion (worst-case scenario which reflects the way these things are likely to go). In the financing section of the HSRA Report (pretty interesting reading/scanning if you can plow through about 100 pages) is an explicit warning about the project’s funding:

To date, the Authority has secured significant funds from both state and federal sources. These funds are being used to deliver the Central Valley Segment and complete environmental planning and other early work for the entire Phase 1 [Anaheim-San Fran] System, consistent with our federal grant agreements. However, as we describe in this section, the challenges of funding a transportation system of this magnitude are significant and actions still need to be taken to secure a long-term funding and nancing strategy that can help us deliver the full Silicon Valley to Central Valley Line.

The Authority is currently operating on a pay-as-you-go funding approach which means that contracts are let as funding is received. However, the continuation of this approach indefinitely will not support our delivery schedule. This is because the large contracts needed for the Silicon Valley to Central Valley Line — such as track and systems, rolling stock and tunnel construction — are greater than the funds that the Authority anticipates having at the time those contracts need to be executed to meet the 2029 completion schedule. To proceed with these contracts the Authority needs to be able to rely on a steady stream of future funds that provide certainty to long term contracting partners.

And there you have it, taxpayers: the HSRA has money to build the Bakersfield to Madera section (estimated now at $10.6 billion, up from the original $6 billion) but pretty much nothing else, not even the money to complete the Madera to Merced add-on which requires building a 13-mile tunnel at Pacheco Pass in the Diablo Mountain Range. As mentioned earlier, the state sold $10 billion in bonds to kick-start the project after Prop 1A passed. During the first term of the Obama Administration, California was given federal funding of about $6.25 billion, but nothing further has come from Uncle Sucker and it doesn’t appear that the Trump Administration or a GOP-led Congressional chamber will reopen those spigots. Other funding has come from Governor Jerry Brown pushing to have one-quarter of the cap-and-trade funds allocated to the project. Of course, Gov. Moonbeam and his allies estimated this to amount to about $600 million per year expecting emissions trading credits to bring in $2.4 billion annually, but expectations have naturally fallen short of the mark leaving a hole in the state funding. Some local governments have chipped in in a parochial way, with cities such as Anaheim and San Mateo spending money to build new transit centers and help clear the way for new high-speed rail track by removing no-longer used track, but those efforts even lumped together have been fairly paltry. And private enterprise has simply not as yet answered the call (the HSRA report delicately suggests that private companies are waiting for the completion days to come closer). I’m sure that rail stations will make a nice bit of coin renting space to McDonalds and Apple, but given that the funding mix was supposed to be 33% from local & state government, 33% from the federal government, and 33% from private enterprise, I’m having a hard time seeing those rents and whatever Google and Apple kick in so their employees can move out of their shared barracks in Los Gatos and move out to the Central Valley (now only an hour away by bullet train!) make up for the massive shortfall that this HSRA report acknowledges.

As with so many other cases in which the central planners throw their lot in with the smart set and then use the political fixers to implement their dreams, the reality of high-speed rail in California is almost certain to fall woefully short of the extravagant promises made on its behalf. Even the zealous boosters at the California High Speed Rail Blog have fallen silent, last blogging over ten months ago. The idea in and of itself isn’t a horrible one, but in an era where big government fails at the most basic of tasks it is delusional to expect it to competently manage a project as massive and intricate as this one.

One and one-third centuries ago, Henry Morrison Flagler began the process of consolidating and building a trans-Florida railroad that would eventually run from Jacksonville to Key West. He completed the project in just about a quarter-century, including time lost when hurricanes destroyed key bridges forcing rebuilds, and he more or less exhausted his fortune in the process. Though the railroad no longer exists and the bridges from Key Largo to Key West were largely destroyed by 200 mile-per-hour winds from a Labor Day weekend hurricane in 1935, the bridge spans that Flagler built were repurposed in building Highway 1 along the abandoned train route, immortalizing Flagler’s heroic work. (Excellent book about Flagler and the railroad here.) With Facebook’s Mark Zuckerberg (estimated net worth of $71 billion), Larry Page and Sergey Brin of Google (each checking it at just under $50 billion, Elon Musk ($20 billion), and others leading the way, why not a privately-built high-speed rail for the Golden State?

– JVW

2 Comments »

  1. Sounds like something Trump would like:

    TRUMP INFRASTRUCTURE PLAN INCLUDES ELON MUSK-STYLE HIGH-SPEED RAIL TUNNELS AND EMINENT DOMAIN

    Comment by DRJ — 3/12/2018 @ 8:03 pm

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    Comment by Ozel Universite Anestezi Ucretleri — 3/14/2018 @ 2:13 pm

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