High-Speed Rail Deathwatch

Will a high-speed rail line ever be built from San Francisco to Los Angeles? The California High-Speed Rail Authority (CHSRA) has less than 10 percent of the money it needs to build this line. The plan is increasingly under fire from local and state organizations. On one hand, President Obama’s vague and controversial proposal to spend $50 billion to “rebuild 150,000 miles of roads [and] construct and maintain 4,000 miles of railway” could keep the California project alive. On the other hand, if Republican Meg Whitman is elected state governor this November, she could kill the program.

Can’t afford to build it; can’t afford to run it. Maybe it isn’t needed?

A recent op ed in the San Francisco Chronicle succinctly points out that projected costs have nearly doubled since voters approved the plan, adequate funding is unavailable, and–“with 10 airports and six competing airlines”–the San Francisco-Los Angeles corridor doesn’t need high-speed rail anyway.

Perhaps most important, the measure approved by voters in 2008 forbade any tax subsidies for operations. Yet recent recalculations of ridership projections and costs make it clear that fares will never cover operating costs, so even if they build it, they would not be able to run it (at least, without changing the law and finding money for operating subsidies).

Curiously, the most active opposition to high-speed rail comes from so-called NIMBYs who appear mainly concerned about the proposed route, not whether it is built at all. The debate is over how to get from the central valley to the San Francisco Bay Area, with the two main alternatives being Pacheco Pass (which is favored by the California High-Speed Rail Authority) and Altamont Pass. On one hand, the Altamont Pass route would serve Modesto and come close to Stockton, while the Pacheco route would miss all population centers north of Modesto. On the other hand, the Pacheco route would allow trains to go through San Jose on their way to San Francisco, while the Altamont route would require trains to split into San Jose- and San Francisco-bound cars.

A local economist named Elizabeth Alexis reviewed the CHSRA’s ridership model and found that it projected the Altamont route would carry almost 7 million more riders per year if went only to San Jose than if it trains split and also served San Francisco. Having trains also split and go to Oakland caused a loss of another 8 million riders. Alexis considers these “nonsensical results and found that they were due to an unduly large penalty in the model for splitting trains.

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Moreover, the Pacheco Pass route depends on being able to share right of way with the Union Pacific Railroad, something the railroad has steadfastly opposed. Yet last week the CHSRA reaffirmed its decision to use Pacheco Pass, leading opponents to say, “see you back in court.”

The CHSRA accuses opponents of being NIMBYs because the court cases were joined by the cities of Atherton and Menlo Park, through with the Pacheco Pass line would run. But the Altamont Pass line would also run through those cities, so the name doesn’t really fit.

Regardless of route, the CHSRA ridership projections are, as the Chronicle op ed notes, “preposterous.” Though the California corridor has a smaller population than the Boston-to-Washington corridor, the CHSRA projects its trains will carry more than 10 times as many passengers as Amtrak’s Acela, and nearly four times as many as all Amtrak trains in the Northeast corridor. In order to avoid operating subsidies, more realistic ridership numbers mean higher fares, which in turn will push ridership down even further.

One of the co-authors of the Chronicle op ed, William Grindley, is an urban planner who happens to live in the city of Atherton. He is preparing a detailed review of the project, some of which is summarized in this PowerPoint show. He notes that the legislature required the CHSRA to write a business plan “similar to a financial prospectus prepared for investors” by September 1, 2008. When the plan finally came out, more than two months late and only after the election in which voters supported the line, it was “inadequate, amateurish and evasive.” By this time, he notes, the CHSRA had already spent a more than quarter of a billion dollars planning the rail project.

Between the $9 billion approved by voters in 2008 and a couple of billion in federal grants, California barely has one-fourth as much as it needs to build the starter high-speed rail line from San Francisco to Los Angeles. Worse than that, the $9 billion is only available when there are matching funds, so with only $2 billion in federal matching funds the CHSRA really has only $4 billion, less than 10 percent of the expected cost.

The CHSRA’s so-called business plan called for the feds to pay half of the $33 billion in construction costs, the state to pay a little over a quarter, and most of the rest to come from private investors who would be rewarded by getting to run the system and keep the operating profits. But since those profits were predicated on the unrealistically high ridership projections, it is unlikely that any private investors will put up any money. Moreover, projected costs have now increased to $45 billion, which means the state’s $9 billion has shrunk to just 20 percent of the total. Even if the feds were willing and able to put up $22.5 billion, no one knows where the other $12.5 billion would come from–and few believe the final cost will really be just $45 billion.

So the real question is how much will be wasted before the state gives up on this turkey. If California is lucky, the state will disband the CHSRA before it sells any of those $9 billion in approved bonds and taxpayers won’t be saddled with the cost of repaying them.