Is High-Speed Rail Grinding to a Halt?

(Hear more from Kopp and former High Speed Rail Authority chair Mehdi Morshed on this NewsFix post.)

Three years after California voters approved a $9 billion bond measure to build a bullet train connecting LA and San Francisco, the plan appears to be under attack from all sides.

Residents in Los Angeles, the Peninsula and – as of last week, Kings County – are suing to stop high speed rail. Costs have swelled to $98 billion – triple what voters were told it would cost in 2008.

And last week, Republicans announced they'd effectively killed President Obama's high-speed rail initiative, which would have funneled $8 billion dollars to high-speed rail projects in 2012, and over $50 billion in coming years.

Kopp says he still firmly believes that high-speed rail is necessary, even inevitable, for California. But he's deeply concerned about the so-called "blended approach," which was outlined in the recent business plan released earlier this month by the High Speed Rail Authority.

Under the plan, high-speed rail trains will share tracks with existing commuter services, like Caltrain, and, at least initially, require customers to make several transfers along the SF-LA route.

The basic concept that voters approved in 2008 -- multiple trains that would take you from LA to SF in less than three hours – has become a goal, rather than a guarantee. At least initially, riders will have to transfer. And most trips, it seems, will take more than three hours.

"It’s not going to be attractive, in my opinion to riders," says Kopp. "And you need riders."

Why is ridership so important? Because it gets to what may be the thorniest issue of all: Who will pay for high speed rail?

How to Pay for High-Speed Rail

Outside of ticket sales, there are three basic sources of money.

First, Federal dollars.

If construction begins by next October, the state will pick up $3 billion in stimulus funds, which – combined with bond money from the 2008 vote – will pay to build the first leg of the route.

But rail officials say they need another $55 billion dollars from the federal government to complete the LA-SF route.

High Speed Rail Authority spokeswoman Rachel Wall said last week's announcement from Congress won't affect California's plans because the state won't have to ask Washington for more money until 2014.

highspeedrail 2 — The project has strong support from unions, who say high-speed rail would create 600,000 permanent new jobs in the state.

"We’re looking to federal funding in the long term, but not the near term," said Wall. "We’ll continue to work on this with Congress."

Second, there are state bonds, which California taxpayers pay interest on.

Betting on Private Investment

The third, and much-preferred, option is private investors: Banks or venture capitalists that would be willing to help cover the costs. But their participation isn't a sure thing.
At a hearing in Palo Alto last week, Assemblyman David Valadao, a Republican who represents the area between Fresno and Bakersfield, pressed members of the Rail Authority to be more specific about who would invest in the project, and when.

"I was told, in my office, that this was going to have private investment early on," said Valadao, "and that people were lining up to do this. Now the business plan has changed? Why would I have faith in the system now?"

The investors are out there, responded Roloef Van Ark, CEO of the High-Speed Rail Authority. "The people that want to fund these projects speak to us, and they continue to speak to us."

Van Ark and other officials say they believe investors will eventually fund the project because they’ll see that railways – unlike roads – can actually turn a profit, through ticket sales.

California will eventually have to make changes to its infrastructure to accommodate population growth, said High-Speed Rail Authority chairman Mike Rossi. So it might as well do so in a way that can generate revenue.

"These things last for 100 years and they cover their operating, maintenance and capital refreshment," said Rossi. "I don’t know any road that does that."

Riders on the "Rail to Nowhere."

But high-speed rail will only generate revenue if people ride it. And the issue of whether they will has become particularly controversial, especially given that the first stretch of the system won't be to either of the state's population centers, but through the Central Valley, what rail officials call the "spine" of the system.

Until recently, this was the least controversial route, the one where construction could start soonest. Rail officials, as well as Quentin Kopp, believe the middle section is a good place to try out the technology.

But critics, like Richard White, a professor of history at Stanford University and author of a book about the transcontinental railroad, have derided this route as a "rail to nowhere.

"It’s what’s gotten the project so much ridicule, says White. "And it deserves the ridicule."

White says from a financial standpoint, there are just too many things already starting to go wrong.

Federal funding may never re-appear. Private investors may never materialize. Either of those scenarios leaves California taxpayers holding the bag. He says the state can't afford to take the risk.

"This is a state that is essentially failing to fund its university system, is failing to fund its K-12 education. To propose to spend $100 billion on this is frankly ridiculous."

White says in order to accommodate population growth, the state should focus on improving existing systems that aren't working as well as they could, not building expensive new ones.

"The low-hanging-fruit is regional transportation around SF and LA. Why not build public projects that will get people off freeways in the places the freeways are most crowded?"

California: The Land of Big Dreams

But Congressman Jim Costa, who represents the Central Valley, where the first leg of the rail would be built, says critics, like White, aren't taking the long view.

"We built Hoover Dam in the middle of the 1930s in the midst of the depression" says Costa, "when our economic times were far more difficult than they are today. We didn’t need the water then, we didn’t need the electricity then. But we knew we would need the water, and we would need the electricity."

Mike Rossi, with the Rail Authority, says despite all the challenges, California can make the rail system work. "This state is still the most innovative economy in the world," he says. "We Californians can do big things, period."