High-speed rail's recent pivot toward the Bay Area may have energized the project's Silicon Valley supporters, but it is also raising new concerns from local and state watchdogs about the project's viability.
The rail system, which now has a price tag of $64 billion, would be launched with construction of a stretch between Bakersfield and San Francisco under a business plan that the California High-Speed Rail Authority released last month. This is a dramatic change from the rail authority's prior plan, which called for constructing the entire first segment in the Central Valley.
The decision was driven by financial constraints, officials acknowledged at a Monday hearing in front of an oversight committee of the state Assembly. Dan Richard, chair of the rail authority's board of directors, said that financing has limited the agency's range of actions for the program. These restrictions include the rail authority's commitments to the federal government (for the allocated federal funds) and the requirements of Proposition 1A, the voter-approved measure that authorized a $9.95 billion for high-speed rail and related transportation improvements.
"Our charge wasn't to deliver to you a politically correct business plan; it was to deliver a correct business plan," Richard told the Assembly committee.
Jeff Morales, CEO of the rail authority, said the goal of the plan is to get a system segment in place as quickly as possible so as to encourage private investment in future system expansions. Rail officials asserted at Monday's meeting that the document offers, for the first time, a plan for fully funding the first segment. It relies on a combination of bond funds, federal grants and allocations from the state's cap-and-trade program.
But according to the Legislative Analyst's Office, there is a flaw with this plan: It assumes the availability of cap-and-trade revenues (which make up roughly half of the funding plan for the first leg) beyond 2020, something that the current law doesn't authorize and that would require new legislation.
The LAO also noted that the rail authority plans to securitize the net revenues from the first segment to pay for other line segments. But it is unclear, the LAO report states, "whether the system will actually generate an operating surplus."
"Moreover, the plan estimates that the amount of funding that could be generated would fall significantly short of the level needed to complete Phase I and does not identify how this shortfall would be met," the LAO report states.
The rail authority also made a case in the business plan that connecting Central Valley and Silicon Valley will create great opportunities for both regions.
"New job markets will be opened up for people living in the Central Valley, and creating a high-speed connection to the Central Valley would help address the affordable housing crisis in the Bay Area," the business plan states.
But not everyone was thrilled about the change. Rep. Adam Gray, D-Merced, expressed frustration about the rail authority's recent shift away from Merced (which was the line's northern bookend under the prior plan and which would be completely bypassed in the first segment of the new plan) and criticized the rail authority for not notifying the project's proponents in the area about the change before the plan was released.
"There was no heads up, no input, no notice of this significant change," Gray said.
Richard apologized for what he acknowledged to be inadequate communication but argued that the only thing that has changed when it comes to the project's plans is the sequence. No part of the state, he said, will be left behind.
"We're not doing things in a way that would necessarily be optimal or that would be a logical sequence if we didn't have those constraints," Richard said.
Committee Chair Jim Frazier, D-Oakley, also expressed frustration about the shift away from Merced, even as he touted the project's potential to give the Central Valley a boost. He characterized the Merced situation as one in which "people were putting skin in the game and then there was a bait-and-switch."
The LAO also raised concerns about the new plan, noting that the southern terminus of the first segment "does not appear to be an effective approach because it would not have the necessary facilities to support train passengers."
On the Peninsula, where the project has been galvanizing significant opposition since 2009, local officials are also finding causes for concern. Last Wednesday, the Palo Alto City Council's recently reconstituted Rail Committee authorized two of its members to work with city staff on a draft letter to the rail authority, expressing concerns about the project.
Mayor Pat Burt, who sits on the committee and who is also a member of policymaker group that meets monthly to discuss the project, said the business plan raises a "bunch of questionable issues" about the project's cost. He cited the fact that the plan relies on cap-and-trade funds that may never materialize and that it only accounts for the costs of stretching the line from Bakersfield to San Jose and not to San Francisco, the proposed northern terminus of the first segment.
Committee Chair Marc Berman concurred and said that there are "a lot of arguments to make about the inadequacies of the plan, and the impacts it would have."
Comments
Cuernavaca
on Mar 30, 2016 at 11:41 am
on Mar 30, 2016 at 11:41 am
"New high-speed rail plan faces criticism"
New article content but this headline could have been at any time in the last 7 years.
Cuesta Park
on Mar 30, 2016 at 3:03 pm
on Mar 30, 2016 at 3:03 pm
"creating a high-speed connection to the Central Valley would help address the affordable housing crisis in the Bay Area"
I'm not unbiased, but even with that, I don't know how anyone can make this argument with a straight face. "Honey, even Santa Clara is expensive now; let's go house-hunting in Merced this weekend." Get real.
Old Mountain View
on Mar 30, 2016 at 4:23 pm
on Mar 30, 2016 at 4:23 pm
House of cards... Terrible idea , terrible execution of idea and will continue to waste tax payer money for years to come. This is a total black hole.... It makes all the VTA ideas look like peanuts in terms of waste, and the VTA only has incompetent ideas that are a total waste.
Cuesta Park
on Mar 30, 2016 at 4:50 pm
on Mar 30, 2016 at 4:50 pm
When debating the high speed rail cost, we need to remember that the money is spent on new jobs, from attorneys to ditch diggers to jobs producing construction and administrative materials (plus some purchasing right-of-way and on bond interest). The money injected into the economy by the jobs will be enormous, and most will stay in the state economy (review Econ 101). Hopefully the state's portion of costs will be spent within California.
Sylvan Park
on Mar 30, 2016 at 7:49 pm
on Mar 30, 2016 at 7:49 pm
This terrible project with only 20% funding at best and no way to meet the travel time and ticket cost was dead, now we have to fight to kill it again.
High speed rail is 9060s technology that will be a burden on the tax payers for the remote hope that it will help a few people. We have airline companies current providing far faster and better service with little government funding.
Lets kill High Speed Rail
Old Mountain View
on Mar 31, 2016 at 10:14 am
on Mar 31, 2016 at 10:14 am
@vonlost
You have just repeated one of the most common economic fallacies, praising the benefits of what is seen while ignoring what is unseen.
What is seen are the overt benefits of a rail line which may be economically wasteful. What is unseen is what removing $64 billion from the state's coffers sacrifices in order to build the rail. That $64 billion dollars could do a lot put to other means. Imagine how much housing it could build directly, or how much economic benefit a correspondingly lesser tax load could produce.
Imagine the economic benefits of building a giant wall with Mexico! All those wall builders would see a payday and stimulate the local economy. What about the economic benefits of burying money in a mine and then sealing it, so that people start digging for money (If you did indeed take econ 101, you might get this reference).
Generally, subsidizing unprofitable ventures is a net economic loss.
Cuesta Park
on Mar 31, 2016 at 4:50 pm
on Mar 31, 2016 at 4:50 pm
@Resident,
Building and operating a rail line provides economic benefits, compared to building and operating a wall; but I do like your illustration! The money spent is not instead of other items; it's additional.
A public rail line's operation need not be profitable to provide economic benefits; it enables other benefits.
another community
on Mar 31, 2016 at 8:21 pm
on Mar 31, 2016 at 8:21 pm
Two scenarios:
First, let's see what $64B will buy in transportation. Assuming plane tickets from SFO/SJC to LA airports cost $200 round trip, you could bug 320 million round trip tickets. If an average of 6 million people per year fly between LA and SF that means you could buy everybody a free ticket for 53 years.
Second, given the pace of development on driverless cars, I think it's safe to assume they'll be ready to roll long before high speed rail is complete. If so, what would you rather do, A) Drive to the train station, go through security, spend 4-5 hours on the train, get off the train and go rent a car, and finally drive to your destination or, B) go to your driveway, enter your destination, and then kick back in the comfort of your car for roughly the same door-to-door time watching a movies, working, chilling, etc. ?
Why are we even considering HSR?
another community
on Mar 31, 2016 at 9:52 pm
on Mar 31, 2016 at 9:52 pm
Talk about ENCOURAGING SPRAWL. The plan acts like people will gratefully reside in Fresno or Bakersfield or anywhere out in the isolated central valley that a stop can be added.
That's some commute?
What's the weekly fare? $500 ?
Hmmmmm. Someone needs to consider the environment.
another community
on Apr 1, 2016 at 12:13 pm
on Apr 1, 2016 at 12:13 pm
Evolving California High Speed Rail Now Degraded To Only A Commuter Train!
Web Link
Cuesta Park
on Apr 5, 2016 at 4:27 pm
on Apr 5, 2016 at 4:27 pm
I think the sure way to relieve traffic congestion, thereby enabling people to better get around the whole West Bay Area and southward, and to provide jobs for sure in the building, is to invest in a transportation corridor that lowers the grade of Central Expwy and the railroad tracks from east of the San Antonio overpass into Sunnyvale. Then that city can lower the same trough the Mary intersection and it will line up with the rest of the corridor that Sunnyvale had the excellent foresight to build right in the first place! Palo Alto has also been talking about this, and San Mateo, too. The more cities to do it, the better!
Think of the advantages:
No stops required for traffic at intersections for those crossing over or under, thus greater traffic flow and easier.
Greatly enhanced SAFETY with separate grade level crossings.
Pedestrians and cyclists can flow better across as well.
Quieter for miles around with the expressway and train tracks sunken.
Joe Simitian has explained that there is a ton of money, like a billion dollars available to do this! Ask him about it!
And wouldn't it be great for this solution to kill the need for VTA's weak idea of dedicated bus lanes on El Camino?