Texas High-speed Rail Promises Collapse Under Scrutiny


Texas High-speed Rail Promises Collapse Under Scrutiny

Texas Central keeps insisting its project will be privately funded but with upside down numbers taxpayers are at real risk.

For the past 18 months, Texas Central has been interested in independent assessments of a proposed high-speed rail (HSR) line running between Dallas and Houston. Now such a study has been published, but it finds that a private high-speed rail line in the corridor will have a hard time meeting ridership or revenue forecasts. As a result, Texas Central is attacking the report and its author — me.

After the brief was published, Texas Central sent me a list of complaints they had with it. The two complaints they chose to go public with are easily rebutted.

Texas Central’s first claim is that I used just one document to create estimates for ridership numbers. Estimates of the report’s ridership numbers use data from Texas Central’s legal filings, Texas A&M’s Center for Transport Policy, America 2050, the Congressional Research Service, the U.S. Government Accountability Office, Eurostat, the Union of International Railways, the World Bank, Transport Policy and previous Reason Foundation reports on high-speed rail. Additional sources were used for background material.

Texas Central claims the Texas Department of Transportation (TXDOT) 2013 Statewide Ridership report cited in my brief is flawed. The TXDOT report was a source that was used strictly as background information. Additional sources, including the Congressional Research Service, the U.S. Government Accountability Office, the Union of International Railways, a Louis Berger Group report and Texas Central’s own court filings were used to determine potential ridership of the Dallas-Houston high-speed rail line.

Readers should also note that there have been four other studies of high-speed rail in the Dallas-Houston corridor which all came to the same conclusion: high-speed rail is not feasible in Texas. These studies were High-speed Rail in the Rearview Mirror written by Marc Burns, Policy and Financial Analysis of High-speed Rail Ventures in the State of Texas written by Craig Roco and Leslie Olson of Texas A&M Transportation Institute, Independent Ridership and Passenger Revenue Projections for the Texas TGV Corporation High Speed Rail System in Texas written by Charles River Associates and the Lone-Star High Speed Rail Market Study commissioned by Texas Central. Further, as my brief’s endnotes indicate, I used numerous domestic and international sources to produce a realistic and accurate ridership estimate.

The TXDOT report that Texas Central is slamming also stated that care was taken to account for the variability and uncertainty in the forecasted ridership results produced as reported in ranges. So the report is not nearly as flawed as Texas Central would lead one to believe.

Texas Central’s second claim is that I was offered full access to its data about the project. I wish this were completely true. Unfortunately, Texas Central said it would only provide access to the data if I signed a non-disclosure form. I would not have been able to write a policy brief based on data that I was prevented from publicly disclosing. I told Texas Central multiple times that a non-disclosure form did not work for an independent researcher, yet they kept insisting on the non-disclosure agreement. As a result, I used the multitude of published data, including some information Texas Central revealed on its website and in lawsuits.

Last week, after my report was released, I spoke with Texas Central and again offered to look over their data and make changes or updates to my report if warranted. My only condition was that I was not going to sign a non-disclosure form. I’m still waiting for the data and would still be happy to use it to further evaluate the proposed rail line.

The biggest error in Texas Central’s calculations appears to be its ridership projections. Texas Central predicts 5.9 million riders will use high-speed rail per year. To put that higher number into perspective, only 3.2 million passengers use Amtrak’s busy Northeast Corridor, which serves multiple cities, including New York City, Boston, Philadelphia, Baltimore and Washington, D.C. Those cities have more than four times the population of Dallas and Houston but the established rail system is getting just over half the ridership that is being predicted for two cities in Texas.

The biggest reason for the difference between Texas Central’s ridership estimate of 5.9 million per year and my much lower estimate of 1.4 million per year is that Texas Central relies heavily on predicting that large numbers of Texans will switch from passenger vehicles to rail even though Texas Central commissioned a study, the Lone Star Market Study, that implied only 5 percent of automobile travelers will switch to high-speed rail.

In contrast, my report concludes that many travelers will continue to choose to make the Dallas-Houston trip via automobile for a variety of reasons. Some will want more individualized trips. Others may need to make specific stops along the way. Still others may be traveling to a suburb where they need a car after reaching their destination city.

In fact many of the vehicles on the two main roads between Dallas and Houston, I-45 and in some portions state highway 75, are not traveling the full distance to and from the two cities. Some are traveling to a location in between Dallas and Houston. Others are traveling through one or both cities. For example, high-speed rail from Dallas to Houston doesn’t help someone traveling from Oklahoma City to Galveston, or even Dallas to Galveston. Similarly, many of the vehicles on the road between Dallas and Houston are trucks delivering cargo that cannot switch to high-speed rail.

The highest percentage of automobile users who have switched to high speed rail, anywhere in the world, is 16 percent in Germany. Typically, the amount of people switching to rail is less than 5 percent, as it was in Paris. In the U.S., rail experts generally expect fewer than 5 percent of automobile users to switch from driving to high-speed rail. But to reach its estimated 5.9 million annual riders, at least 60 percent, and perhaps closer to 80 percent, of automobile users making the specific Dallas-Houston trip will have to give up their car trips in favor of high-speed rail. That is an unrealistic ridership assumption.

Finally, one of Texas Central’s concerns with my report was that I was using 40-years as a timeframe in the report. I used 40 years because, according to the International Union of Railways, that is the standard timeframe for constructing and operating a rail line. Certainly, parts of the rail line can last longer than 40 years, but 40 years is the time that lines need to start spending money on comprehensive reconstruction. The fact that Texas Central management would complain about the standard timeframe for planning and operating a high-speed rail line is troubling.

As my brief concludes, “Elected officials, lenders, investors and taxpayers should demand full disclosure and pay close attention to the details because we do not believe that Texas Central can build the rail line without significant public subsidies. We believe that loans could default and we are particularly concerned that Texas Central may receive an RRIF loan that lacks stringent taxpayer protections. While Texas Central may not be intending to take any public funding, we believe that if construction starts, the project will inevitably have to be bailed out by the taxpayers of Texas, which is unacceptable.”