Wednesday, April 16, 2014

More evidence that Californians are overpaying for High Speed Rail


Correction to the headline. It really should read "More evidence that Californians are overpaying for transportation infrastructure". But since this fact is related to HSR, we'll keep the debate centered around this proven rail transit technology that has quickly moved people since the 1980's.

As we've pointed time and time again, artificially inflated public works infrastructure price tags in California have long obstructed the progress of building, maintaining, and operating a first-rate multi-modal transportation system within the state even though we are paying record-high taxes at the gas pump. Of course, that leads to slim budgets for both Omnitrans and RTA. We have more evidence of this troubling trend relative to HSR.

Dallas to Houston HSR by the Texas Central Railway

An editorial from the The Dallas Morning News newspaper reports that a proposed bullet train line in Texas that will connect riders between Dallas and Houston in 90 minutes and will be funded by the private sector is estimated to cost about $10 billion. What is very interesting here is that no public funds are being thrown at this project. It will be paid for entirely by the private sector. The editorial opined that they favor the Texas system over California's, stating "we'd place our money on the Texas model any day."

According to local sources, a similar HSR proposal between the two Texas urban centers surfaced back in 1989 using France's TVG bullet train technology. Like the present-day proposal, no public money was purposed for the project. Long story short, intense opposition form the airline lobby--namely Southwest Airlines--and lack of private investments killed Texas TVG's SuperTrain project back then. Two decades later, the Texas Central High-Speed Railway has risen to give HSR another shot and for good reasons.

Some facts: Unlike California High Speed Rail, there is no public seed money to get it off the ground. However, airline service has since declined since the late 1980's. Air fares are up. Southwest Airlines has remained neutral. Also, both the local economies and gas prices are up which would drive up the ridership pool. In addition, smart growth development around the stations could infuse additional private funding through development rights. Infill transit-oriented development has more recently proven to be beneficial than the late 80's; just stroll through the historic downtown districts through the San Gabriel Valley or head over to Old Town Temecula to see some clear examples of that. The HSR technology will also be very similar to the Shinkansen system in Japan. The facts seem to support a better outcome.

Like the previous project, the line has won political support. It has the endorsements through a joint agreement of Dallas Mayor Mike Rawlings, Fort Worth Mayor Betsy Price and Houston Mayor Annise Parker.

HSR Costs: Doing the Math

When California voters approved Proposition 1A which provided the $9.95 billion in borrowed seed money, we anticipated and expected that state officials would do the right thing by enticing private investors to get on board to pay for the rest of the project. Because the project is mired in many unnecessary problems and trivial rules which panders to labor unions and private contractors, it has become too expensive and too risky of a public works infrastructure project to invest in. According to the 2014 Business Plan, the 520-mile Phase I segment between Los Angeles and San Francisco is estimated to be $68 billion. That adds up to $131 million per mile.

In contrast, the first phase of the $10 billion Texas project spans about 240 miles. That's $41.7 million per mile. Even more alarming is that the market economy in the Lone Star State is growing at a faster rate than here at home. It should cost less to build HSR in California than it does in Texas simply because the job market in the Golden State is still saturated in experienced construction workers who need work and are willing to take a smaller salary, especially within the Inland Empire.

To be fair, the land between Dallas and Houston is relatively flat and the per-mile cost to extend the line further west to Fort Worth will be higher given that the region is already developed. But at $41.7 million per mile to build a clone of the Shinkansen system on flat land, California has the money to build the entire Central Valley segment between Sacramento and Bakersfield with the seed money alone since it is flat and can use the awarded $3.3 billion in federal money to develop the segment through the Tejon Pass to Sylmar. If the trivial rules were set aside, the state can get the per-mile costs down. That will entice the private sector investments to finish the statewide master plan and pay off the seed money bond debt.

It's very clear that pandering, overspending and public works price tags well above the market rates obstruct our transportation infrastructure in general. Governor Jerry Brown backs high speed rail.

But why hasn't the governor put together a campaign that addresses the artificially bloated cost issue very specifically? How many more examples will it take to get this message of government waste to state politicians and voters?

Come on guys! Enough's enough! Statewide high speed rail has long proven to work and Texas could be another example. Do it right!

2 comments:

  1. I don't trust cost estimates from an early-stage business proposal. When the train pulls into the station and it cost just $10bn and required no public money, call me back.

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    1. Even if Texas Central Railway's budget doubled from $41.7M per mile to $83.4M, that's still far less than CHSRA's $131M per-mile price tag. We understand that Texas Central Railway may or may not get the required private investments to get it finished and opened. That's why we backed infusing some public seed money into the California High Speed Rail project. The point we're making was the need to get CHSRA's massive $131M per-mile price tag down which would better incline the private sector to pay for the rest of the project. Lower HSR per-mile costs have already been proven by other systems. The LGV Sud-Est bullet train in France was $20 million per mile in today's currency. The Shinkansen HSR in Japan had a per-mile cost of $63 million. China's Wuhan-Guangzhou line was $28 million per mile.

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