How many people will use California’s bullet train? Planners lower ridership estimates

Changing commuter patterns stemming from the COVID-19 pandemic and sluggish expectations for population growth in California are driving down forecasts for ridership on the state’s future high-speed rail project. In a report due to the state Legislature on Wednesday, the California High-Speed Rail Authority unveiled the latest incarnation of its ridership projections for its Merced-Bakersfield section, anticipated to be the first interim operating segment for electric bullet trains. The new numbers represent a significant drop in the anticipated number of passengers for the first year of service when — or if — operations become reality sometime between 2030 and 2033. Forecasts for future expansions of what is planned to be a statewide high-speed rail system are also lower than previous projections from the rail agency’s 2020 business plan.

The report, which also addressed rising costs and schedule slippage, drew a sharp reaction from state Assembly Minority Leader James Gallagher, R-Yuba City. “Think how many students we could educate, how much water we could capture,how many acres of forest we could restore,” Gallagher said in a prepared statement, “if we had pulled the plug on this debacle years ago.” Senate Republican Minority Leader Brian W. Jones, R-San Diego, offered similar thoughts. “The broken promises on this project are breaking the bank for Californians,” Jones said. “It’s time to pump the brakes on the hot mess express and defund the High-Speed Rail.” In a February preview of the report to the rail agency’s board of directors, authority CEO Brian Kelly said that for the Merced-Bakersfield segment — which includes construction now under way in the central San Joaquin Valley — the expectation for overall train ridership in the Valley dipped from almost 8.8 million passengers per year forecast in a 2019-2020 financial plan to about 6.6 million in the 2023 project update.

That translates to a decline of almost 25% in the ridership forecast, which represents collective rail ridership including existing passenger rail service offered by Altamont Corridor Express (ACE) trains in the North Valley and Amtrak’s San Joaquin trains, as plans call for the high-speed rail route to connect with both ACE and Amtrak at Merced.

“Transit ridership in California is generally down and we are not immune from those impacts, … “ Kelly told the board at its meeting in Sacramento. “Even though we are not a current operator, when we estimate what our ridership will be, we are informed by what’s going on in the real world. And we are seeing this pressure everywhere.” Kelly attributed the lower forecast to a trio of factors confronting not only high speed rail but other public transit systems in California: slower population growth than previously predicted in the state, a slowdown in employment and new jobs, and sluggish recovery of overall transit commuter ridership in the aftermath of the COVID-19 pandemic as more people worked from home rather than commuting every day to an office or workspace. POPULATION SLOWDOWN, FEWER COMMUTERS “There was a time when California was going to have about 50 million people by 2040,” Kelly said. “That (forecast) now is 41.5 million.” That means an overall lower potential pool of riders for the high-speed rail system. “Transit operators up and down the state saw a huge impact when COVID struck,” he added. “Those ridership numbers have not come back, and (operators) are seeking operational funding (from the state) to help.”

“Because we are connecting to ACE and Amtrak in the Central Valley, the reduction in commuter ridership in California post-COVID is lingering,” Kelly said. “Part of that is while people are still employed, they’re not necessarily gong t work five days a week as they were before. They’re going fewer days, so transit ridership has been impacted by that.” The report also notes lower ridership projections on a future “Valley to Valley” line that would connect San Jose and the Silicon Valley to the Merced-Bakersfield line compared to the authority’s 2020 business plan. The previous forecast for operations in the year 2040 was for about 18.4 million passengers annually; the 2023 update now anticipates ridership of about 11.5 million per year – a decline of almost 40%. For an entire Phase 1 bullet-train system between San Francisco and Los Angeles/Anaheim, projected 2040 ridership in the 2020 business plan was 38.58 million per year; that has been reduced in the 2023 update by about 19%, to 31.28 million.

“These are preliminary numbers,” Kelly added. “We’re going to do a lot of refinement with these with our partners over the course of the next several months and report further in the 2024 business plan.” He said the rail authority’s efforts will include Caltrans, which oversees intercity rail in California, as well as the two joint powers authorities that operate the ACE and Amtrak San Joaquin train services. WHAT THE NEW NUMBERS MEAN While local and commuter transit systems may be feeling more of the effects of fewer people commuting to work daily, “longer distance trips like air travel or longer-distance train trips, that ridership is more stable,” Kelly said. Air travel “has come back further from COVID, and our analysis shows that as well,” he added. “I think anyone who’s been to an airport can see that air travel is pretty robust again.” For the 171-mile trip between Merced and Bakersfield aboard electrified high-speed trains, the average trip time would be reduced by 190 to 100 minutes, and “we have greenhouse gas reduction benefits by electrifying the corridor,” Kelly said. “So while we’re seeing reduced ridership, we’re still seeing important benefits from building the Central Valley system.”

One potential repercussion of diminished ridership projections include the effects on operating revenues for the rail system. Proposition 1A, the $9.9 billion high-speed rail bond measure approved by California voters in 2008, includes a key provision that requires the system to be self-sufficient and be able to cover its own operating costs without any subsidies from taxpayers. “I’ll just say this about the subsidy issue: It’s true that for the full Phase 1 system, the bond bill says the program shouldn’t be subsidized, but even at the lower ridership estimate we now see 31.5 million riders between San Francisco and Los Angeles,” Kelly told rail authority board members. “We think that is still going to be a net operating system surplus.” “We’ll need to do a couple of things,” he added. “If the demand for transit is lower, you have to look at how you might need to shift your service plan, and how you shift your fare structure. In so doing, you can reach sort of a sweet point between number of riders and revenue generated.”

The rail agency, in its 2022 business plan, offered the contention that the authority would not face the same prohibition on subsidies for the interim Merced-Bakersfield service because some other agency — and not the rail authority — will operate the system. “The authority recognizes that its implementation strategy for interim high-speed rail service connecting Merced, Fresno and Bakersfield may expose the authority to potential litigation over Proposition 1A compliance” related to subsidies, said Annie Parker, a spokesperson for the authority. But “the authority believes that there will be no violation of the subsidy language because … the implementation strategy for the Central Valley segment is to lease its track and rail cars to another operation,” Parker added. “The entity leasing the assets from the authority will bear the revenue risk as it pays a fixed lease fee and receives revenue from the operations and a lower-than-current subsidy from the state.”

The California High-Speed Rail Authority has a memorandum of understanding with the San Joaquin Joint Powers Authority – the nine-county public agency that operates the Amtrak San Joaquin train service – to serve as the high-speed rail service provider in the Valley. “This will put the completed infrastructure into service with greater benefits to passengers while the interim service is being run,” Parker said. “The authority is confident that it will prevail in any future litigation touching on these areas.” OTHER COMPLICATIONS The report to the Legislature also deals with other complicating factors facing the rail project, including rising construction costs as a result of inflation and the potential slippage of the schedule for completion of the Merced-Bakersfield line in the San Joaquin Valley. In the California High-Speed Rail Authority’s 2022 business plan, the estimate cost to complete planned Merced-Bakersfield segment to become operational ranged from $22.5 billion to about $24 billion. The 2023 update now projects the cost in a range between $29.8 billion and $32.9 billion.

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High Speed Rail On Track to Incur Billions in Cost Overruns

high speed rail trainHigh-speed rail continues to be an expensive, sick joke for California. Under the current plan, it is no longer “high-speed” and projected costs, which seem to change almost daily, appear to be doubling.

In the latest news, the nascent California high-speed rail system is running $50 million over budget for a two-mile stretch in Fresno.

Let that sink in for a moment.

$50 million, over budget, for just a two mile stretch.

Let’s see, HSR has a $50,000,000 cost over run on 2 miles of a 32 mile job. Does that mean we can expect total cost overrun of $25 million per mile times 32 miles or $800,000,000?

Better yet, let’s extrapolate that to the entire project. You know, the one sold to voters. According to High Speed Rail Authority itself, over 800 miles of track are needed. So, at $25 million of cost overruns per mile, that works out to $20,000,000,000. That’s $20 billion in cost overruns!

In just 3 years, from the original passage of Proposition 1A authorizing about $10 billion in High Speed Rail bonds, the estimated cost for high-speed rail had gone from $40 billion to $98 billion, the amount that independent expert analysis had predicted prior to the bond’s being approved.

Responding to public outrage, the High-Speed Rail Authority came up with a plan costing “only” $68 billion. The new “blended” system would combine high and low speed rail, doubling the travel times as well as ticket prices.

Fearing a voter revolt, the High-Speed Rail Authority rushed to break ground, hoping that once they dug a hole, the pet project of Gov. Brown and the majority of Sacramento lawmakers, who receive backing from construction contractors and labor unions that expect to be the primary beneficiaries of billions of dollars of public spending, would be safe from outside interference.

By beginning a first segment between Merced and Fresno, the rail authority engaged in the classic Willie Brown strategy. The former Assembly Speaker, in a moment of candor, once told the San Francisco Chronicle, “In the world of civic projects, the first budget is really just a down payment. If people knew the real cost from the start, nothing would ever be approved. The idea is to get going. Start digging a hole and make it so big, there’s no alternative to coming up with the money to fill it in.”

Constant cost overruns and a lack of accountability plague California’s infrastructure projects. Perhaps, as a public service, it should be required that Brown’s words be reprinted in every ballot summary for every construction bond placed before the voters.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

Special Report Slams CA High-Speed Rail Progress

high speed rail trainLike a punch-drunk fighter, the High Speed Rail Authority must be reeling from the blows landed by Ralph Vartabedian’s Special Report in the Los Angeles Times asserting with expert testimony that the project is likely over cost and behind schedule. And, an even bigger blow could come from the courts removing the rail’s one steady income stream.

The Times’ article questioned many experts about the train’s progress and potential obstacles. Chief among those were the difficulties with tunneling through Southern California areas riddled with earthquake fault lines.

Cost overruns are almost assured according to the experts. “You have an 80 percent to 90 percent probability of a cost overrun on a project like this,” according to Bent Flyvbjerg, a University of Oxford business professor and a leading expert on megaproject risk, quoted in the article. “Once cost increases start, they are likely to continue,” he added.

The project, now slated to cost $68 billion, was promised to cost $33 billion, when voters approved a nearly $10 billion dollar bond in 2008. At one time, before scaled back to the $68 billion mark, projections ran close to $100 billion.

Here’s betting, if the project is completed, it will end up in that high-priced neighborhood again.

Money was supposed to come from the private sector and the federal government. While the feds sent some seed money to California for the train, future payments appear doubtful. The private sector has not rallied to the train. Many outside investors want to see government step in with greater funding.

The main revenue stream for the project, aside from the bond money, is the dedicated cap-and-trade funds authorized by the California legislature at the behest of the governor. This revenue stream will grow annually and allow, potentially, the rail authority to seek bonds, using the revenue stream as guarantee.

However, the cap-and-trade funds could be in jeopardy depending on court action.

The California Chamber of Commerce has sued asserting that the cap-and-trade funds are a tax and thus require a two-thirds vote to take effect. Since the action creating cap-and-trade did not receive a two-thirds vote from the legislature, the Chamber argues that the funds collected under cap-and-trade are illegal.

A superior court ruled against the Cal Chamber but the Chamber appealed the ruling to the Third District Court of Appeal. The Chamber notes Sacramento Superior Court Judge Timothy Frawley called the issue of whether the levy was a tax or a regulatory fee “a close question.” The Chamber is counting on the appeals court to see the issue differently.

If so, then the revenue source for the rail would have to be reconsidered by the legislature. Given the change in public opinion on the bullet train since the 2008 bond was passed, the legislature forthrightly voting for a tax supporting the train is doubtful.

If the court rules in favor of the Chamber on the tax question, that could result in a knockout blow against the bullet train.

Originally published by Fox and Hounds Daily