Give Privately Funded Texas High Speed Rail Line a Chance

Ever since Japan, in 1964, built the first high-speed rail line in the world linking Tokyo to Osaka, U.S. policymakers have researched how they might build such a system in the U.S.

In 2009, President Obama promised a national high-speed rail network. However, six years later that promise has been nothing but a dream. The President focused not on the most fiscally realistic place to build HSR, such as the northeast corridor, but on dispersing funds to 38 states to improve his political standing.

In addition to the national agenda, a Florida project fizzled as well. The Florida high-speed rail project’s first leg from Tampa to Orlando did not rank among the top 100 corridors for HSR in the country. It was selected because the state had planned and abandoned a high-speed rail line along the corridor 10 years earlier.

The only high-speed rail project to begin construction is the California line from Los Angeles to San Francisco by way of the Central Valley. However, politics forced the project to take a circuitous route through the Central Valley making it physically impossible for the train to meet its travel time obligations causing politicians to bend environmental review and debate the intent of a ballot question.

While these factors make potential high-speed rail success in the U.S. look doubtful, there is one key difference between these failures and a new line proposed in Texas linking Houston and Dallas: the failed lines were proposed and funded by the government and the new line is being proposed and funded by the private sector.

Many experts have speculated that a true 200-mile per hour high speed rail line would be financially successful, if it could be operated by the private sector with competent management, and be free of government restrictions such as Buy America. And if the private operator sought advice from successful rail operators in Japan instead of from the bungling bureaucrats advising the California and national rail lines, significant profits could be possible.

Texas Central Railway’s early plans are intriguing. It intends to raise 65% of the cost of its financing plan from loans. The remainder will come from equity investors including pension plans, insurance companies, infrastructure funds and, potentially, stock. Japan Bank for Infrastructure which finances overseas infrastructure believes the plan may be viable and has sponsored a $1 million study to examine the details. In contrast, the California line is still looking for a dime from anyone other than the feds or state government. Most importantly of all since the project does not need federal funds, project sponsors can use technical expertise to build the project. They will not have to rely on the political favors that government funded infrastructure needs to receive funds.

The Texas line, currently being planned, shares several characteristics with successful European and Japanese lines:

  • Similar to the French line connecting Paris and Lyon, Dallas to Houston is a popular air route, flown by three of the four largest U.S. airlines.
  • The 250-mile flat distance between the two cities is perfect for high-speed rail. Across the world, 200-400 miles is the ideal range in miles; for distances of less than 200 miles, there are insufficient passengers. For distances longer than 400 miles, planes have major cost advantages.
  • Metro areas each having more than 6 million folks are plenty big enough to serve as the endpoints. Compare that to the 250,000 people who live in metro Merced, an endpoint for the first segment of the CA high speed line.

The company is also using a different alignment than the public proposals. Instead of trying to position the line in the middle of the highway or use existing tracks, the company is planning to build the line along a utility corridor. In addition to providing a dedicated right of way, such an alignment limits the number of folks living in the train’s path since people do not live in utility right of ways.

However, there are several obstacles to the route. Neither metro area has an extensive transit system, nor the density to create such a system, so the train stations would have to feature parking garages. This is different from European or Japanese HSR. And whether residents living in expansive suburbs, especially near an airport, would drive to the center city to take the train, or drive to the airport is an open question. In both metro areas there are folks living in the train’s path. Living next to an Interstate highway is unpleasant; living next to a train would be unfeasible. The cost of relocation would have to be offered to some homeowners, increasing cost and opposition.

The Texas high-speed rail proposal is intriguing. Proposed as a private operation with funding and guidance from Central Japan Railway Company the proposal is already far more promising than any of the Obama Administration’s previous lines. Nobody knows if such a private line can succeed, but Texas Central Railway certainly deserves a chance to try.