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).
Los Angeles Times architecture critic Christopher Hawthorne–who claims to be an “unabashed supporter” of high-speed rail–reviews Anaheim’s new train station and finds it “oddly antiseptic.” Hawthorne doesn’t care that taxpayers spent $2,764 per square foot for what is essentially a big glass tent. He is a little disturbed that the design is so dysfunctional that train passengers “exit onto an uncovered platform, take the elevator or stairs [up] to a pedestrian bridge, and then enter the building at its highest interior level” only to have to go back down again to get to ground level.
What really bothers Hawthorne is that the building is “empty of context and obvious character,” and–most devastating of all–“placeless” meaning it would be “equally at home in Tacoma, Wash., or St. Louis.” The architects, he thinks, should have adapted regional forms, similar to the way L.A. Union Station used the Spanish Mission style.
While Hawthorne’s critique is pretty negative, it is also naive. He thinks that reducing “California’s reliance on the automobile is going to require architectural as well as infrastructural leaps of faith.” Sorry, even the most perfect architectural design won’t overcome rail’s inherent disadvantages over the convenience of cars and the low cost of flying.
In the hierarchy of dumb projects, building a high-speed rail line to connect two cities that are just 32 miles a part would rank very high. Yet the Texas Department of Transportation and the Federal Railroad Administration are proposing just that: a line from Dallas to Ft. Worth. They are currently asking for comments on the scope of the environmental impact statement, due next Monday, December 15.
Not surprisingly, the biggest beneficiary of this project, so far, is Parsons Brinckerhoff, which seems to have its fingers in every ridiculous rail project in the country. One of the company’s employees is acting as “communications manager” for the project and delivering PowerPoint presentations about it to the public.
After going to the effort of writing an environmental impact statement in order to be eligible for a federal Railroad Rehabilitation and Improvement Financing loan, All Aboard Florida has suddenly switched tracks and says it wants a private activity bond instead. Private activity bonds are issued by cities or states, but the funds are given to private entities that are responsible for repaying them–for this reason, they are sometimes called conduit bonds.
Since they are issued by a government entity, they are tax exempt. Yet the private companies that get the funds range from American Airlines, which built new terminals at JFK and other airports, to Transurban, which built HOT lanes on Virginia’s I-495. The tax exemption allows bond issuers to pay lower interest rates, giving companies that receive such bonds an advantage over their competitors. The tax exemption is also controversial, as it effectively costs the federal government money.
All Aboard Florida, which is part of the Florida East Coast Railway, promises to build a moderately high-speed (110-125 mph) rail project without any subsidies. Yet it also wants government loans of one sort or another to do it. It has already issued $405 million in bonds paying a whopping 12 percent interest–which one critic notes puts them in junk bond territory–with the up-front expectation that the bonds will be repaid out of a much lower interest $1.6-billion loan that the company expects to get from the federal and/or state governments.
Given that President Obama supports high-speed rail and noted fiscal conservative Robert Poole, of the Reason Foundation, has specifically endorsed All Aboard Florida, why would the company suddenly switch from the planned RRIF loan to a private activity bond? The company’s press release emphasized that the new bonds wouldn’t pose any risk for taxpayers, suggesting that company was sensitive to local critics who claimed that the RRIF loan could leave taxpayers holding the bag when the company defaulted.
Another possibility is that the Federal Railroad Administration let the Florida company know that full funding of the proposed RRIF loan was unlikely. This would have been the largest RRIF loan in history and one of the few dedicated to passenger rail.
The Antiplanner remains suspicious that running sixteen trains a day in each direction between Miami and Orlando is not really a viable project. If it truly were viable, would Florida East Coast really need to get tax-subsidized loans to make it work? Why doesn’t it save itself the trouble and red tape that comes with federal or state support and simply go to the truly private bond market? I suspect the answer is that not enough private investors would have faith in the company’s ridership and fare projections to fully fund the project.
Tonight, the Antiplanner will be in Rochester, Minnesota to address a proposed high-speed train between Rochester and Minneapolis. I’ll speak at the Rochester International Event Center, 7333 Airport Drive SW, at 7 pm.
The Minnesota Department of Transportation is going through the process of preparing an environmental impact statement for the “zip train.” I suspect there is only a tiny chance that the train could be funded, but MNDOT wants to be ready in case money for high-speed rail falls out of the sky as it did in 2009 when Congress passed the stimulus bill. Not surprisingly, Parsons Brinckerhoff is also behind the effort.
The response to a request for comments on the scope of the planned EIS produced so much opposition that MNDOT is taking longer than it expected to produce a final scoping document. Among other things, MNDOT has decided to include a “no-build” alternative in the EIS, the absence of which would have been reprehensible. After all, the no-build alternative was found to be the environmentally preferred alternative in the EIS for the Tampa-Orlando high-speed train (see p. 2-38).
The New York Times had an article recently arguing that the $11 billion Congress has spent on high-speed rail grants since 2009 has produced little visible results, mainly because most of it was spent on increasing the speeds of existing trains by two or three miles per hour rather than building new, true high-speed rail lines. This was followed by an editorial saying that “American lawmakers have not given high-speed rail the priority it deserves.” Population “growth will put an incredible strain on the nation’s highways and air-traffic system,” the editorial predicted, and high-speed rail would alleviate that strain.
In response, Forbes contributor Tim Worstall says, “The New York Times is wrong; there is no case for high-speed rail.” Worstall accepts the conventional wisdom that cars make sense for trips under 100 miles and planes make sense for trips of more than four hours, but in between there is a “sweet spot” in which rail makes sense. However, he continues, with the development of self-driving cars, that sweet spot disappears because the only advantage of trains is that riders can work or relax while on board, and since self-driving cars will allow people to do that too, there won’t be any need for high-speed trains.
Worstall is right about the New York Times being wrong, but he is wrong that there is a sweet spot today in which high-speed rail has an advantage over driving or flying. In claiming that such a sweet spot exists, Worstall is underestimating both the advantages of driving when and where you want to go and the excessively high costs of high-speed trains.
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.
Sustainability advocate Kris De Decker argues that “high-speed trains are killing the European railway network.” A native of the Netherlands who currently lives in Spain, De Decker is irked that the replacement of conventional trains with high-speed trains has greatly increased the costs of rail travel, thus encouraging people to drive or fly.
De Decker offers numerous examples of routes where conventional trains were replaced by high-speed trains whose fares are much higher. In some cases, the high-speed trains really aren’t significantly faster than the conventional trains, yet typical fares might be three times as high. In other cases, daylight high-speed trains have replaced overnight trains that were slower but didn’t require any business time and cost less than the high-speed trains even with sleeping accommodations.
He also notes that low-cost air service is often far less expensive than the high-speed trains. “You can fly back and forth between Barcelona and Amsterdam with a low-cost airline for €100 if you book one to two weeks in advance, and for about €200 if you buy the ticket on the day of departure,” he says. “That’s compared to €580 for what the journey would cost you if you would take the high speed train.” He adds that, “Flying has become so cheap in Europe that it’s now cheaper to live in Barcelona and commute by plane each day, than to live and work in London.”
High-speed rail fortunately appears to be dead in the United States, but it is still alive and kicking taxpayers in England. In the last decade, the country spent 11 billion pounds (about $18 billion) building high-speed rail about 67 miles from London to the Channel Tunnel, a project known as High Speed 1. Ridership was disappointing: the private company that operates it expected revenues would cover operating costs, but instead has required government subsidies of more than 100 million pounds per year.
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Despite this, politicians and rail contractors want to spend at least 43 billion pounds (more than $70 billion) on High Speed 2, from London north to Manchester and Leeds. Manchester is about 200 highway miles from London, and the rail line promises to cut a bit more than an hour off of people’s highway journeys. However, the train will take about the same amount of time as flying, and by my count there are currently 13 flights a day between London and Manchester.
Sam Stein at the Huffington Post frets that “Obama’s vision for high-speed rail is in danger of stalling out.” Where has he been the last three years? High-speed rail was in danger of stalling out in 2010, when Florida, Ohio, and Wisconsin elected governors who turned back funds for their states’ programs. Today, Obama’s “vision” is dead, and so is high-speed rail in this country.
Unlike air and highway travel, with Obama’s high-speed rail vision, you won’t be able to get from anywhere in the country to most other places in the country.
Like other rail nuts, Stein tries to make it appear we are in some kind of race for supremacy with Japan and other countries. “With countries like Japan already investing in the newest form of rail technology –- magnetic levitation, which LaHood called “way too expensive” for the U.S. –- the nation is very much set to be left in the proverbial dust.” The problem is that “the newest form of rail technology” is just as obsolete as the previous form. Stein might as well worry that we aren’t keeping up with the Japanese on floppy disk technology.