The California High Speed Rail Authority (CHSRA) released its latest business plan. And the plan is a trainwreck. Better in some ways than its predecessor and worse in other ways, the plan is more of a political exercise than a sound business plan.
Why did the authority release a new plan? (For those keeping track this is the fourth business plan the agency has released). Governor Brown ordered the board to rethink the previous plan after a majority of voters became disillusioned. The proposed high-speed rail line between Los Angeles and San Francisco has been much criticized. The $98.5 billion price tax was about triple what voters were told the line would cost when they approved it in 2008. The California High Speed Rail Peer Review Group expressed doubts in January concluding that it “…cannot at this time recommend that the legislature approve the appropriation of bond proceeds” because the project “represents an immense financial risk” to the state. This was in addition to criticism from the Bureau of State Audits, Legislative Analyst’s Office, the UC Berkeley Institute of Transportation Studies, Treasurer Bill Lockyer, democratic state senators, etc…Partly as a result two top board leaders, CEO Roelof Van Ark and Chairman Thomas Umberg, resigned in January.
What changes does the agency’s latest plan make? First, the plan will save money by merging the bullet train with existing commuter rail lines in San Francisco and Los Angeles. An additional $1 billion in voter approved bonds will be used to upgrade the commuter rail tracks. The new first phase will link Merced and the San Fernando Valley by 2022, expanding on the original 130-mile Madera to Bakersfield section. However, the plan delays arrival of high-speed rail into Silicon Valley and the Bay Area. By running the bullet train on commuter rail lines, $30 billion is saved. However, the $68.4 million price tag is still $23.4 million higher than the plan voters approved four years ago.
While train service will now reach Los Angeles by 2028 instead of 2033 and the costs are somewhat smaller, the shared tracks will make service worse. Trains will not travel at average speeds of 150 miles per hour from Los Angeles to San Francisco, but at 150-200 miles per hour only in the Central Valley. In other areas where the service shares track with commuter railroads, trains will average between 30-60 miles per hour. This is slower than a car travels at highway speeds.
This slower speed will make a big difference in attracting passengers. In order to attract passengers high-speed rail has to be time-competitive with airlines. In no country in the world has high-speed rail succeeded in luring drivers out of their cars. Automobiles offer many benefits that trains cannot match such as flexibility and comfort. In other countries, the high-speed rail passenger mix has been 90% former flyers, 5% former drivers and 5% people who previously did not make the trip.
And the new business plan fails to solve many other problems. The plan’s funding component is still in Fantasyland. First, the plan continues to rely on billions from the U.S. Congress. With both Democrats and Republicans opposed to California high-speed rail that money is unlikely to be appropriated.
Second, the network relies on fees from an untested cap and trade system. California is planning such a system to reduce its greenhouse gasses. Economists are wary about economic consequences from a cap and trade system. Many environmental policy makers do not think a cap and trade system is the best way to reduce pollution. And even environmentalists who support such a system think the funds should be used on environmental purposes, likely setting up a major fight over revenue.
Third, the association is relying on mysterious private investors who will jump aboard and risk their own money once construction begins. This is the most ludicrous part of the proposal. (And for this project that is really saying something.) The private sector will become involved only when there is profit potential. This project uses artificially low costs and artificially high benefits. Nobody believes the agency’s math; and no transportation expert thinks this project could hope to break even, never mind turn a profit. No serious investor would touch this project.
This high-speed rail line has several problems that no business plan could realistically fix. Los Angeles to San Francisco is not an ideal high-speed rail corridor. High-speed rail works best in short corridors from 200-350 miles in length. The 381-mile trip is already a little long to be ideal for rail. In addition, this rail line does not take the shortest path. California’s chose a 600-mile circuitous route because local municipalities lobbied for train service to their city, but the greater the number of cities served, the slower the train will travel. The Obama administration did not help by mandating the train served cities in the central valley.
Why is this project still alive? Governor Jerry Brown sees this as his legacy. While he cuts other state services and proposes to raise taxes, high-speed rail remains the sacred cow. If California builds this line he will have a legacy but it won’t be anything to be proud of. This latest business plan is no better than the first three, California citizens should use all legal means to pull the plug on this trainwreck.
My colleagues Adrian Moore, Sam Staley, Adam Summers, and I have written extensively on California high-speed rail. Articles include:
Jerry Brown Continues to Push High-Speed Rail Boondoggle while California Drowns in Debt
California’s High-Speed Rail Fibs