Tag Archives: California

California Densifying

California has decided it needs to densify all of its cities to meet its greenhouse-gas emissions targets. The state’s goal is to reduce emissions by 40 percent from 1990 levels by 2030. Since the state’s leaders don’t believe fuel efficiencies and other energy economies will be sufficient, they want to reduce per capita driving by 12 percent.

California already has the densest urban areas in the United States. The 2010 census found that, among urban areas (areas above 50,000 in population), Los Angeles is first at 7,000 people per square mile. San Francisco-Oakland is second at 6,266, San Jose is 5,820, while New York is a distant fourth at 5,320. The average density of all California urban areas was 4,577, more than any other state except New York, whose average density was just slightly above that at 4,580. California’s average was nearly twice the rest of the nation whose urban area densities averaged 2,347 per square mile. Remember, these are urban areas, not cities.

The idea that increased densities will reduce California’s greenhouse gas emissions is an urban-planning fantasy that the legislature has imposed on the state’s residents. The state’s population is expected to grow by 4.5 million by 2030, and if every single one of those people settles in an urban area, the densities will increase to around 5,200 people per square mile. While people drive a lot less in New York City (not the urban area), whose density is 25,000 people per square mile, increasing densities to 5,200 people per square mile isn’t going to much change travel habits. As University of California Irvine economist David Brownstone says, the effect of density on driving is “too small to be useful” in reducing greenhouse gas emissions.

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CO2 Glut Threatens High-Speed Train

Jerry Brown’s brilliant plan to fund the California high-speed rail line out of greenhouse gas emissions allowances appears to be coming to a screeching halt. California’s most-recent sale of such allowances was expected to bring in at least $600 million; instead, it earned just $8.2 million. At the projected average cost of $200 million per mile, that’s enough to build about 200 feet of rail line.

The problem is that there is a “glut of emission allowances on the market” because so many entities, including various European nations and, in California, various public utilities, are trying to earn money selling them. On the other hand, potential buyers are unsure about whether the program will continue; if it is cancelled, the allowances they buy will be worthless. The California law is supposed to sunset at the end of 2020, and if revenues remain so law the legislature is not likely to renew it.

The other problem is that Brown was counting on emissions sales to fund projects the state can’t really afford. While the efficiency benefits of cap-and-trade are proven, it is far from efficient to use permit revenues to fund boondoggles. Even the Pope questions the morality of selling the right to pollute.

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High-Speed Lies

Here’s a rare example of a headline asking a question whose answer is “yes”: “Did bullet train officials ignore warning about need for taxpayer money?” Although the headline would have been more accurate if it had stated, “Bullet train officials cover up warning about need for taxpayer money.”

When the California High-Speed Rail Authority put the 2008 measure on the ballot for the state to build the line from Los Angeles to San Francisco, they claimed that the line would earn more than a billion dollars a year in operating profits (compare tables on pages 21 and 22), and that private investors would gladly invest around $7 billion in the project in order to get a share of those profits (figure 26).

As recently as two months ago, when asked at a legislative hearing if other high-speed rail operations earned “a substantial profit,” rail authority chair Dan Richard replied, “all of them, virtually all of them, make operating profit.” But Richard had to know that was a lie.

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Higher Cost = Less Affordable, Not More

Portland columnist Steve Duin laments that the city is not doing more to make housing affordable. He proposes to either tax new homes and use the money to build affordable housing or to mandate that developers to sell or rent a certain percentage of their new homes at below-market prices (inclusionary zoning).

The problem with either of these policies is that they create a few “affordable” homes by making housing more expensive for the vast majority of renters and homebuyers. Taxing new homes obviously makes them more expensive. But like the rising tide lifting all boats, it also raises the price of existing homes because sellers of those homes see that their competition–new homes–is more expensive so they can ask for more too.

Research has shown that inclusionary zoning leads developers to build fewer homes and then to sell the market-rate homes they do build for higher prices to make up for the losses on the below-market homes. Since inclusionary zoning pushes up market rates for new homes, that same rising tide makes all other homes less affordable as well.

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California High-Speed Rail Will Be Late,
Over Budget, and Obsolete

The Los Angeles Times has a special report finding that the California high-speed rail project will cost far more and take far longer than the rail authority is promising. The official cost estimate remains $68 billion for an abbreviated system despite the fact that a 2013 Parsons Brinckerhoff report to the authority said there was no way the project could be done for that price.

P-B’s report was “never made public” and the rail authority refused to release it under the state public records act. However, “an engineer close to the project” slipped a copy of the report to the Times.

The rail authority has established a record for ignoring such reports. In 2012, another consultant told the authority that costs should be revised upwards by 15 percent. The authority simply fired the consultant.

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Low-Speed, Infrequent Rail

Quentin Kopp, who once chaired the California High-Speed Rail Authority and led the effort to persuade voters to pass the 2008 law authorizing its construction, is speaking out against the project as currently planned. To succeed, he says, high-speed rail needs to run on dedicated tracks at high speeds and frequencies.

Instead, the current plan calls for California’s high-speed trains to run on the same tracks as slower Amtrak and commuter train. This will greatly reduce the average speeds because high-speed and conventional trains can’t be safely operated together. The current projected frequencies are two to four trains per hour (half in each direction), while Kopp says 10 to 20 trains per hour is needed for the trains to be “financially secure,” which presumably means that fares cover operating costs as required by the 2008 law.

When Kopp first proposed the project, it was supposed to cost $33 billion. Now it is expected to cost $68 billion for slower, less-frequent trains. Kopp has personally been involved in legal challenges against the project.

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You’ll Have to Build It to Find out the Cost

California Representative Nancy Pelosi famously told Congress it would have to pass the Obamacare bill to find out what it said. Now California officials are telling residents they will have to spend tens of billions of dollars building the San Francisco-Los Angeles high-speed rail line to find out how much a ticket will cost. As one official says, “We will not know until late in the game [meaning after the line is built] how everything will turn out.”

On one hand, all of the ticket prices quoted to date–which range from $50 to $105 a ticket–are based not on rail costs but on airline prices: the quoted fares are set to be below, and supposedly competitive with, airfares. On the other hand, the ballot measure approved by voters in 2008 requires that fares cover operating costs–and proponents claimed that the trains would earn such a large operating profit that private investors would willingly put up billions in exchange for being able to keep those profits.

The high-speed rail authority projects that the line will attract 18 million to 31 million riders a year and, at the currently projected ticket price of $86 from LA to San Francisco, would earn $700 million more per year than its operating costs. Yet even the low figure of 18 million is unrealistically high. In 2014, Amtrak attracted fewer than 12 million riders on its Boston-to-Washington Northeast Corridor, which has more people today than the California corridor will have in 2030. While Amtrak’s trains aren’t as fast as the California rail line might be (although it won’t reach its full promised speed until sometime after 2040), the Northeast Corridor is anchored by the New York urban area’s 19 million people. By comparison, the middle of the California route is Fresno with fewer than 700,000 people. That means most of the trips in the Northeast Corridor are less than 250 miles long, while most in the California corridor would have to be much longer for it to be a success.

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California Housing Is Expensive

The Wall Street Journal observes that high housing costs are hurting the California economy. This brilliant conclusion is based on a report by Mac Taylor of the state legislative analyst’s office. Unfortunately, the report misses a few important details and as a result comes to entire the wrong conclusion.

Housing is expensive, the report says, because California isn’t building enough of it. Well, duh. Why isn’t it building enough? According to the report, it’s because there is a “limited amount of vacant developable land.” The solution, the report concludes, is to build higher densities in the land that is available.

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California Pretends to Start Building High-Speed Rail

With great fanfare, Jerry “Moonbeam” Brown and a host of other politicians signed a rail in Fresno as a symbolic gesture toward starting construction of California’s high-speed rail project. But, despite what they say, California can’t afford to build it, and the plan they can’t afford won’t really be high-speed rail all the way from Los Angeles to San Francisco anyway.

Recall that back in 1994, California estimated that this high-speed rail line would cost less than $10 billion (about $15 billion in today’s dollars). At that price, experts at the University of California calculated, taking the train from Los Angeles to San Francisco would cost almost twice as much as flying and more than driving.

By 2008, when the measure reached the voters, the project’s estimated cost had grown to $33 billion in 2008 dollars (about $36 billion in today’s dollars). Soon after voters approved it, the cost quickly zoomed to $65 billion in 2010 dollars (about $71 billion in today’s dollars).

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Do the Math, Governor

Jerry Brown proposes to use cap-and-trade revenues to help pay for the state’s high-speed rail boondoggle. It’s questionable whether this is legal, and even more questionable whether high-speed trains will actually reduce greenhouse gas emissions after their entire lifecycle emissions are considered.

What everyone seems to be missing, however, is that the cap-and-trade revenues won’t come close to covering the cost of a high-speed rail line. Brown proposes to dedicate $250 million of annual cap-and-trade revenues to the rail line, but even at an unrealistically low 2 percent rate of interest, that won’t even repay $6 billion worth of bonds, much less the $9 billion in bonds that voters approved in 2008 or the far greater amount it will actually take to complete the line.

The media keeps reporting the cost of the high-speed train as $68 billion, when everyone knows that’s only for a moderate-speed train. The most recent estimate of the true high-speed train envisioned by the 2008 ballot measure is $98 billion to $117 billion–and there’s no reason to think that estimate is any more realistic than the previous estimates which started at less than $10 billion.

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