Jerry Brown’s Rail Fantasy Keeps Getting Pricier

High Speed Rail Fresno“That’s bulls**t,” Gov. Jerry Brown told a group of union leaders in Sacramento this week as he addressed the latest bad news about his pet project to build a bullet train connecting San Francisco with Los Angeles. The union folks probably loved the tirade, given that the proposed rail system is more of a make-work project for union members than a transportation system. But the governor’s promise that the state can build the railway if “we don’t let these small-minded people intimidate us into lowering our expectations” rang a bit hollow.

Brown said he is “so tired of all the nonsense that I read in the paper and you hear from other politicians.” But the latest nonsense comes from his own High-Speed Rail Authority, which released its latest business plan. The project already is over budget and behind schedule. The new plan bumps the predicted costs from $63 billion to $77 billion — and delays the opening date by four years, to 2033.

Those costs will surely grow even more given that the current overruns are taking place on the flat, easy-to-build section of the system through the Central Valley. Just wait until the real engineering challenge is confronted, as rail planners figure out how to take the train through the Tehachapi Mountains separating the valley from Southern California.

Look at other major California infrastructure projects for an idea of realistic cost overruns. Rebuilding the eastern span of the Bay Bridge, following the Loma Prieta earthquake in 1989, was 2,500 percent (that’s not a typo) over the original estimate and wasn’t completed until 2013.

Apparently, it’s “small minded” for Californians — including one of the authors of the 2008 statewide initiative that secured $9.95 billion in funding for the train project — to question the overruns, delays, and failure of the latest plan to live up to the promises made to voters. That author, former Sen. Quentin Kopp, remains an advocate of high-speed rail in concept, but he calls the current alignment “foolish” and said “it is almost a crime to sell bonds and encumber the taxpayers of California at a time when this is no longer high-speed rail.”

Kopp is right. To make it feasible, rail boosters created a route alignment that shares tracks with commuter trains (the blended route) on the peninsula south of San Francisco and in the Los Angeles area. It’s highly unlikely that it will connect the state’s two megalopolises anywhere near the promised time of 2 hours and 40 minutes given how slow the trains will go in these areas.

It’s magical thinking to expect the project to do that as 2008’s Proposition 1A promised – with no operating subsidies and at an affordable price funded by private investment. Investors have run for the hills and the subsidies are a given. And why is this project even needed? I just took a Southwest Airlines flight from Sacramento to Los Angeles for under $100 roundtrip (on a special deal, which you can regularly find) with a flying time of a little more than an hour. It’s not as if Californians have no options to travel up and down the state.

The project has been unable to tap federal funds now that the Obama administration, which supported the project, is history. The initial bond funding is a pittance of the project’s estimated total cost. The auctions of cap-and-trade credits are another funding source, but even the Democratic-controlled Legislature is reluctant to open up those spigots given its other priorities.

But Brown has a plan: “I’ll tell you how we’re going to fund the railroad. We’re going to take back the Congress and then a Democratic Congress is going to put the high-speed rail in the infrastructure bill and then we’ll get that trillion dollars and we’ll put America back to work.” That’s far from a certainty — and it’s a bizarre way to plan for a major investment. Let’s just start building and hope that the political winds change and a new Congress will dole out the money. OK, I guess.

That approach is reminiscent of the one detailed by flamboyant former Assembly Speaker Willie Brown. In a July 2013 San Francisco Chronicle column addressing $300 million in cost overruns for the city’s Transbay Terminal, he argued, “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.”

The bullet-train project epitomizes such public-sector cynicism. Proposition 1A offered myriad detailed promises to woo skeptical voters. A superior court initially halted the sale of the bond funds to begin digging the hole, so to speak, because the authority wasn’t following requirements that it identify enough cash to complete the first 300-mile segment. Unfortunately, a higher court ultimately gave the project the go-ahead. That shouldn’t be a shock to Spectator readers, who are used to hearing the absurd promises made by politicians. But voter initiatives are written laws, not suggestions.

In recent months, the governor’s other large infrastructure boondoggle has also run into trouble. Brown wants to build two giant 35-mile tunnels underneath the Sacramento-San Joaquin Delta to bring water from the relatively rainy north to arid Southern California. It’s a way to keep water flowing even when the state shuts the pumps to protect the endangered Delta smelt.

“The $17-billion bill for the twin-tunnel version was supposed to be paid by the San Joaquin Valley agricultural districts and Southland urban agencies,” reported the Los Angeles Times. “But the farm districts have for the most part declined to open their wallets, saying the water is too expensive for them.” Not all of the urban agencies are all that excited about paying for it, either.

These projects are unfathomable given that Brown last year insisted that Californians raise gas taxes — or else their roads and bridges will continue to crumble. As Brown leaves the public stage after decades of elected office, he is reduced to hurling insults at Californians who make perfectly reasonable criticisms of costly projects that divert money from far more pressing priorities. In my view, that’s very definition of small-minded BS.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

This article was originally published by the American Spectator

CA High Speed Rail Continues to Fail in Search for Private Investment

High Speed RailAt the last High-Speed Rail Authority board meeting, on Oct. 6, a presentation was given by CEO Jeff Morales, who had been ballyhooing that 36 private party organizations had responded to the Authority’s “Request for Expressions of Interest” invitation which was sent out a couple of months ago.

Mr. Morales would have you believe that there is now intense interest on the part of private investors to become a part of the project. Private party funding was always envisioned to be a major source of capital to build the project, along with Prop. 1A bond funds, and federal government grants. According to Morales, the now approved addition of state funding from cap-and-trade funding in the amount of around $500 million per year, was going to push private investors to invest their funds, which they had been thus far, now about 8 years into the project, been unwilling to contribute.

Well the board discussion of these responses clearly did nothing to convince the board that such funding was on the horizon.

Director Rossi, made the flat-out statement, “The section that pertains to finance … there is absolutely nothing new in all the conversations we have had since day one.”

Chair Dan Richard was more reserved, saying another source of funds (around $20 billion) would be obtained from the operating profits generated from operation of the train. His optimism is pretty amazing. Operation of the many HSR around the world has shown only two systems, a line in Japan with ridership of 150 million passengers per year, and a line in France, operate without a subsidy, much less generate profits.

Richard added, that to get private funding, “two ways either you give them a guarantee or they see enough ridership history that they’re willing to take that risk and we’re not there yet and what I’m seeing from these proposals does not put us there yet in terms of a revenue concession model that adds twenty billion dollars of new money that we’ve estimated could be supported from the projected revenues of this project we’re getting in that direction but we are not there yet so I just want to be careful because when people start to sit down …”

The project has become a nightmare. Original cost estimates of $32 billion for Phase I from San Francisco to Anaheim have now grown to $68 billion, not including Anaheim at the southern end. The Authority is also proposing to share the use of CalTrain tracks in the north, rather than the needed for safety and speed, fully dedicated and grade separated tracks everywhere. The Federal government, once counted on to contribute $12 to $15 billion, after its initial grant of about $3.2 billion, has said no more funds from us.

The key to any private party investment would be a guarantee their investment would be secure, and any failure of the project would result in the state repaying them for any capital they have lost. Thankfully, when Prop. 1A was drafted, such a guarantee was forbidden.

Now being again rebuffed by the private sector, at what point is this project going be abandoned? The sooner the better.

The video of this discussion can be viewed here.

esident of Menlo Park and Founder of DERAIL, a grassroots effort against the California high-speed rail project.

The article was originally published by Fox and Hounds Daily