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High-Speed Rail Costs Triple

Long-awaited business plan touts economic, environmental benefits, but comes with massive price tag.

After years without a viable business model, the California High-Speed Rail Authority released a plan this week that would create 100,000 jobs in five years, generate another one million jobs beyond that, and reduce carbon emissions by three million tons, according to the Authority.

The draft business plan for the state's huge high-speed rail project calls for a phased implementation of the sprawling rail system, an approach that would allow the Authority to make changes to the system design according to how much money it could raise.

The total cost for the system, which previously exceeded $60 billion, has now risen to nearly $100 billion. The chairman of the Authority insists, however, that it has developed a “fiscally sound project” that can attract private capital and generate a lot of cash for the state.

“We have carefully constructed a business plan that is mindful of the economic and budgetary constraints facing both the state and the nation,” said Authority Board Chairman Thomas J. Umberg. “It will deliver to California and Californians a cost-effective, efficient, and sensible alternative to more highways and increased airport congestion.”

The plan came under immediate attack by watchdog group Californians Advocating Responsible Rail Deisgn (CARRD), who said the most problematic element in the old plan—the ridership forecast—has not changed in the new one.

“The ridership model is the same one that was used in 2009,” said CARRD co-founder Nadia Naik. “If your model doesn’t work, it’s garbage in and garbage out. All they’ve done is put a fresh coat of paint on these numbers.”

In a statement, the Authority characterized the project as being vital to meeting the demands of California’s population growth, which is expected to nearly double by mid-century.

“It is estimated that without high speed rail California will need as much as $171 billion to meet its transportation needs,” according to the statement. “That means an additional 2,300 lane-miles of highways, 4 runways, and 115 airline gates will need to be built."

The statement also cites environmental benefits, including reduction of carbon emissions by more than three tons annually, and 146 million hours of saved travel time each year.

A major change in the new plan is in how, and when, the project will be funded. The Authority had previously said that private investment would be critical to funding the construction of the project, but in the new plan says private funding will not come until the very end.

This presents a conundrum for state lawmakers, says Naik, who may be reluctant to trust the Authority given the numerous critical reports that tore apart its previous business plan, including , Berkeley's Institute for Transportation Studies, Stanford, the state auditor, and the Legislative Analyst's Office.

“The legislature is going to have to give a thumbs up or thumbs down on this $100 billion project without having an independent review of the ridership numbers,” she said, “so it’s going to very much be a ‘trust us’ situation.”

Local elected officials were quick to weigh in on the decision by the Authority to move to a "blended" track system on the Peninsula that could . 

"The blended system proposal we put forward to integrate high-speed rail with a 21st Century Caltrain will save taxpayers billions of dollars while being responsive to the many concerns of my constituents," said Congresswoman Anna Eshoo (D-Palo Alto). "I’m pleased to see that the CHSRA draft business plan included many of the blended system provisions. There will be many thoughtful questions raised during the 60 day comment period, and I look forward to evaluating the draft business plan closely in the coming days."

California State Assemblyman Rich Gordon (D-Menlo Park) also expressed guarded support for the project's vision, but deep concern over its price tag.

“High-speed rail for California is a powerful vision and dream," he said. "I hope that we can eventually find the means to implement this vision. California remains in a fiscal crisis. We do not have enough revenue to meet our expenses as is. Until we address our structural fiscal problems, I do not see how California can afford additional debt from high-speed rail."

Governor Jerry Brown has made high-speed rail a legislative priority and pressured the legislature to back the project. Whether he can successfully convince lawmakers to agree to spend more money on a project that would pull money from the deeply cut General Fund, which pays for education and health care services, howoever, remains to be seen.

Jim Van Camp November 03, 2011 at 05:14 PM
Sounds like a lot of money that the state doesn't have. I don't know if high speed rail in other countries makes money but we enjoyed riding them in Europe. I think it would catch on here and cut down on highway traffic.
AR November 03, 2011 at 05:15 PM
HSR jumped the shark long ago. even these new estimates are too conservative. if we use the bay bridge retrofit and boston's big dig as models to inform a likely final tally, we should be looking at 7x the original estimate. that would bring the completion to nearly $250 billion. and since this project is on its way to becoming multigenerational, you have to factor in potential wild swings in inflation, borrowing costs, labor rates, etc. proponents talk about this project now in contrast to $100 billion in runway work at airports...but this misses the point: airports aren't going away, and the work to maintain them has nothing to do with HSR existing at all....unless they have somehow figured out a way to extend HSR across both oceans. HSR solves a problem no one has - commuting to visalia. the only reason the project has even progressed this far is construction pork spending and central valley pols. since the costs have dramatically changed, a re-do of the ballot measure should also take place...i don't recall the initial measure giving the state a blank check. without a doubt it would fail to garner even 20% support with the new estimates.
Sheila Sanchez (Editor) November 03, 2011 at 05:34 PM
Hi Jim and AR, thank you for the comments. Jim, you're right ... Where are we going to get $100B from, triple what voters were told in '08? Jim, check out Assemblywoman Diane Harkey's opposition to this project. AR, agree 100%. Seems like estimates are way, way low. Maybe in better financial times?
AR November 03, 2011 at 06:02 PM
no need to limit the scrutiny to state finances...i'm sure when the federal debt commission returns its plan to cut $1 trillion from the federal budget, the matching seed money for HSR will be near, if not at, the top of the list of cuts. given that the project hasn't started yet, and is a meaningful amount...its a no-brainer that it will appear in the list of cuts. listening to the HSR advocates, i hear the same mystery-meat approach to financing we heard in 2007 with respect to housing. the lobbyists for HSR know full well that the money does not exist, they are just trying to get the project started so that the state feels compelled to complete it, regardless of the cost. its shameful to visit other industrialized nations and look at the schools they provide for their children relative to our poorly-staffed, dilapidated dumps. if the state wants to run up $250 billion in multigenerational debt, pour the money into schools.
Steve November 03, 2011 at 06:05 PM
roundtrip on southwest still $99?

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