Review of the California High-Speed Rail Business Plan


Review of the California High-Speed Rail Business Plan

Testimony to the California Senate Transportation and Housing Committee

Good morning. Thank you for the opportunity to be here Mr. Chairman, Mr. Ashburn.

I was asked to appear here not because I am a high-speed rail critic, but because I’ve been an advocate for nearly 40 years. This is the first time I am unable to endorse a high-speed rail plan. Why is that? Because after having reviewed countless rail plans over many years, I have found the California High Speed Rail Authority’s work, regrettably, to be the poorest I have ever seen.

Mr. Chairman, I will provide you with some of the risks that should be in the Authority’s business plan, if one existed.

High-speed rail could serve legitimate public or environmental purposes or be a financial success. But the current proposal is untenable. The train will be slower than they say it will, will carry fewer people than they claim it will, and will cost much more than they admit it will.

The Market: Ridership Estimates

The Authority’s ridership projections are considerably higher than independent forecasts developed for comparable California systems in studies by the Federal Railroad Administration, the University of California Transportation Center at Berkeley and in the recent Due Diligence Report.

Here is just one comparison: Using generous assumptions, the Due Diligence Report projects a 2030 base of 23.4 million intercity riders. This is 64 percent below the Authority’s base of 65.5 million intercity riders. Our figure is above the Federal Railroad Administration’s figure so we have actually been generous here. Moreover, the Authority’s projection of 117 million annual riders is so far from reality that I have to call it what it is-science fiction.

Unachievable Load Factors

The Authority’s projection is far higher than what is found on high-speed rail systems around the world. The Authority anticipates an average load factor of nearly 85 percent. The Federal Railroad Administration’s study for California placed the average at 51 percent. The TGV system in France-which I’ve been on and I love-claims a load factor of 71 percent. The Authority’s projected load factor is nearly 20 percent higher than the very impressive French figure.

Unrealistic Traffic Intensity Projections

Let’s look at ridership intensity projections, a demand measurement. The Authority projects intensities that are far above those achieved in Japan, France and the Boston-Washington Corridor. In 2005, Japan’s Bullet Train system registered a ridership intensity of 33 million passenger miles of travel per route mile. The Authority projects a far higher figure of up to 62 million intercity passenger miles of travel in 2030-almost double. This, simply put, cannot be believed.

Travel Time and the Market

Among the unreal estimates is that the trains will connect San Francisco with Los Angeles in 2 hours and 42 minutes. For that to occur, the trains would have to operate at an average speed of 197 mph, a feat that has yet to be accomplished anywhere in the world. That combined with routing problems means the trip is likely to take an hour longer.

Fares: A Big Hoax

The ridership projections rely on super-bargain fares in 2030-far lower than fares are in 2007 on high-speed rail systems. The Authority wants us to believe that per-mile charges in 2030 will be 1/7th what Amtrak charges today between New York and Washington. This also cannot be believed.

Construction Costs & “Profits”

By 2008 it was estimated that costs had risen to more than $45 billion for only part of the originally proposed system. A more realistic estimate is that the ultimate cost will be between $65 billion and $81 billion. The Authority talks in 2006 dollars, but our figures are in 2008 dollars. Our estimates exclude the billions of dollars of interest on the bonds.

Claims of profitability could not conceivably be credible under even the most optimistic assumptions unless some or all capital and debt costs are ignored. The Authority holds out the promise that profits will pay to build extensions to Sacramento and San Diego, which means they will probably never be built.

The Non-Existent Train Design

Rail service planning usually determines early on what the general train-design parameters are. I’ve done work for the Pennsylvania High Speed Rail Commission, I supported the Texas high-speed rail program, I was involved in some planning in Amtrak’s early days as a member of what was called the Passenger Service Committee. I don’t know anybody who has ever planned a rail service in the way I’m about to describe.

The Authority’s planning documents cite trains with a capacity of 450 seats, 500 seats, 650 seats, 1,175 seats, 1,200 seats, and a jumbo train of 1,600 seats. And because the documentation is so jumbled, it is difficult to determine what the operating costs are for which size train. What are the GHG emissions for which size train?

All of that matters. I may be the only person who has read thousands of pages of the last ten years of this Authority’s work and it’s like looking at a bowl of spaghetti, it’s so jumbled.

Lack of a Business Plan

I make my living as an executive coach. I won’t go into that today except to say I have clients who develop business plans so I know something about the subject.

According to the Bakersfield Californian, only two weeks ago the Authority’s executive director said most of the information the business plan will contain has already been made public. That is something the Authority’s chairman, Quentin Kopp, asserted here again this morning, which is absolutely false.

What appears in thousands of pages of documentation fails to address the disclosure mandates in AB 3034. Moreover, some documents on the Authority’s Website have disappeared in 2007. (I retained them on my computer.) What circumstances justify the Authority having less information available during the very year when more information should be accessible to the voters?

I’d like to see high-speed rail built, but not this boondoggle.

High-speed rail holds great promise in certain sections of the country. But the work of the Authority is so deficient that if the current plan is implemented it has the potential of setting back the cause of high-speed rail throughout the United States. The Authority has not learned the lessons: What caused Texas high-speed rail to fail? What caused it to fail in Florida? What caused the prior project to fail between Los Angeles and San Diego?

A common element in the failures were high ridership estimates, low cost estimates, disregard for local environmental impacts and the planners losing credibility. The California Authority is repeating all of the mistakes as if they have never read a single page of history.

Dissolve the California High Speed Rail Authority

It is time to dissolve the California High Speed Rail Authority. Give it no more funding than is required for terminating contracts, transferring data and duties to a more responsible agency, and conducting an orderly shutdown.

High-speed rail in California may be salvageable-after all this poor work-but someone else must be in charge. If the Authority is unable to conduct studies that have credibility, then how will they ever effectively deliver a mega-construction project on time and within budget?

In conclusion, Mr. Chairman, you asked back in June: “What assurance can the Authority provide that California taxpayers will not be stuck with a massive bill in the future?”

My answer: Sir, there is no assurance whatsoever. Under the current plan, taxpayers will have to subsidize a poorly designed system in perpetuity.

Thank you.