Missteps lead California high speed rail to crisis

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SACRAMENTO, Calif. – “A new statewide train system, over 700 miles in length, capable of travel at speeds up to 200 mph,” reads a 2005 brochure published by the California High Speed Rail Authority. The system will “carry as many as 68 million passengers annually by 2020.” Those dreams are stalled somewhere in the arid San Joaquin Valley between the oil derricks of Bakersfield and the cattle ranches of Merced.

High speed rail connecting Los Angles and San Francisco has been an idea, long in coming, that began to take shape in 1996 with the creation of the agency. But it was not until 2008, when California voters approved Proposition 1A by a 53 to 47 percent majority, that real money was on the table to make it happen.

The bond measure provided $9 billion for the construction of an 800-mile, high speed rail system and $950 million for improvements to connecting passenger rail services. Major newspapers in Los Angeles, San Francisco, San Jose, and Fresno came out in support of the proposal. Opposition came from Republican strongholds represented by the Orange County Register and San Diego Union-Tribune, along with the Sacramento Bee, which recoiled at adding to the state’s debt.

The authority’s first business plan, released in 2000, estimated total construction costs of $25 billion. By 2008, when voters approved Proposition 1A, it had grown to $33 billion. Today, the number ranges from $77 billion to $98 billion, three to four times the early estimate.

James Moore, director of the Transportation Engineering program at the University of Southern California and an admitted critic of the project, says the rail authority “put out financial plans that just crumble at the touch.”

The proposition put to voters was unusually detailed. It specified travel times between major city pairs and a total travel time from Los Angeles to San Francisco of two hours, 40 minutes. Trains must be capable of at least 200 mph speeds, no more than 24 stations can be served across the entire network, and the full system must be completed no later than 2020.

Those requirements posed a challenge for the agency, limiting its flexibility, says Adam Cohen, a researcher at the Berkeley Transportation Sustainability Research Center.

Of all the places to lay down 220-mph tracks, the 119 miles from Bakersfield to Merced would seem the least likely. The total population of the five counties is 2.6 million and the route is already served by Amtrak’s state-supported San Joaquin service. It was, however, designated as part of the Initial Operating Segment.

Cohen says the Central Valley is the optimum place to develop what amounts to a test track. If completed, riders would be able to reach San Francisco, although for now, would have no connecting or through train to the Los Angeles area.
Funding falls short
In addition to funding from Proposition 1A, the CHSRA relies on a share of revenues from California’s cap-and-trade program along with federal grants, which are now at risk of being rescinded.

Including the federal grants, the agency has the funding to complete the Central Valley segment. But it falls tens of billions of dollars short of completion costs for the full system.

Both construction costs and real estate have escalated since the 2007-2009 recession, explains Cohen. He also points out that the project has been “bogged down in cost-increasing litigation.”

Whatever the reason, Californians have seen ever-rising cost projections every few years. “When you do stuff like that to people, they feel like they've been duped,” says Lisa Schweitzer, a professor of urban planning at USC.

In 2018, a USC Dornsife/Los Angeles Times poll showed 49 percent of registered voters supporting the high speed rail project, but when told it would cost $77 billion, the same percentage said they would stop it. A separate 2018 poll by the Public Policy Institute of California found 64 percent saying that high speed rail is important for the future quality of life and economic vitality of California, but that drops to 48 percent when told the price tag.

“Public faith in this project is eroding,” admits Sean Jeans-Gill, vice president of policy at the Rail Passengers Association in Washington, D.C. Support is slipping among the state’s big-city mayors as well, says Schweitzer, as it becomes clear they won’t see a high speed train anytime soon.

State auditor issues 'scathing' report
Then a bombshell dropped in November 2018 when the California state auditor released its report on the High Speed Rail Authority.

“The auditor’s report was scathing,” Moore says. “There doesn't appear to be any aspect of the project that was well executed.”

The report criticized CHSRA for starting construction in the Central Valley in 2013 before it had acquired land, determined how it would relocate utilities, or obtained agreements with stakeholders. A contractor was told to begin construction within Union Pacific’s right-of-way before an agreement with the freight railroad was finalized. These issues led to $600 million in cost overruns and another $1.6 billion in additional costs to complete construction.

The agency rushed to build because it was concerned about meeting deadlines for the $2.6 billion federal grant, says the auditor. CHSRA’s chief engineer also told auditors that the decision to begin construction “was partially driven by a desire to show visible progress as various groups were trying to stop the program.”

In addition, the auditor cited “weak and inconsistent oversight” of vendor contracts, even though the rail authority has 56 contract managers.

In its response, the agency concurred with the auditor’s recommendations and said that it was committed to “active management and continuous improvement of this most important program.”

Missing element: Trains
While Californians were originally promised a dedicated high-speed rail system, around 2012 the CHSRA began introducing plans to share trackage with existing rail operators in the San Francisco Peninsula and Los Angeles Basin, and to share a freight corridor between San Jose and Gilroy. While reducing construction costs, this blended approach will lower train speeds on shared trackage, reduce frequencies, and potentially introduce service delays.

But first, there need to be trains to run. None of the cost estimates include trainsets. Nor has a train operator been identified. And, under the constraints of Proposition 1A, the passenger service is required to operate with no subsidies. Schweitzer calls that provision “nuts.”

CHSRA expects to contract with a private, for-profit firm to operate and maintain the passenger service. It would be required to invest in and provide rolling stock, control, and signal systems. The agency projects operations from San Francisco to Bakersfield beginning in 2029, with first-year ridership of 4.3 to 7.6 million. It says that total revenue from fares and other income would cover operations and maintenance costs, “even in a pessimistic scenario.”

USC’s Moore doesn’t agree. “The cost of operations will be high enough that a high speed train will be out-competed by airlines and automobiles.”

Before anyone can operate a high speed train from Bakersfield to San Francisco, though, the line through the Central Valley has to be completed, and the Trump administration’s threat to subtract $3.5 billion from the rail authority’s coffers puts that at risk.

It should not have come as a surprise. The state auditor warned last year that it was a real possibility: “Missing the deadline could expose the State to the risk of having to pay back as much as $3.5 billion in federal funds.” The Government Accountability Office also determined in a legal opinion that the federal government could demand repayment, and could recover the funds, if necessary, by taking them out of any other payments from Washington to the state.

Missteps, miscommunication, and mismanagement may have brought the California high speed rail project to a crisis point. According to Schweitzer, “The project boosters were so in love with the technology that they didn't really think about how to communicate the project or how to be straight with people about how costly a whole system would be, and how we really needed to find a dedicated funding source for it.”
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