Pushing Back Against the Flawed State Auditor Report

Apr 30th, 2010 | Posted by

Predictably, the State Auditor’s flawed HSR report has led to its share of “omg HSR is DOOOMED!!!1!1” articles in the media – as well as some more measured and sensible pieces. Mike Rosenberg and Will Oremus again show they’re two of the best reporters on the HSR beat with this article – and I’m not just saying that because I’m quoted in it:

Robert Cruickshank, chairman of Californians for High-Speed Rail, called the criticisms in the audit “generally sensible.” He chalked up some of the rail authority’s oversight problems to “growing pains.”

But Cruickshank said he found it “weird” that the audit held the rail authority responsible for the shortage of federal funding for the project.

“It’s worth keeping in mind that California voters approved $10 billion in state funding at a time when there was no federal funding for high-speed rail and none had been proposed yet,” he said. “Everybody realizes that if there is no additional federal funding, then the project falls.”

The auditor’s comments, he said, should have been directed toward members of Congress instead.

As Spokker put it yesterday, it was a “cheap shot” by the Auditor to use the ongoing fight for federal funding as a reason to claim the HSR project is flawed and in trouble. It indicated a fundamental lack of understanding of the federal HSR funding situation as well as a lack of understanding how the planning process works.

The Auditor made it sound like there’s just $2.25 billion in federal funding for California, no more is coming, and we’re screwed. And we would be screwed if there were no more federal funding – although crucially, as the Auditor’s report did not mention, the federal funding we do have requires “independent utility” so if that is all we get, the money still will go to something we can use.

However, the Auditor is totally wrong to imply that we’re only getting $2.25 billion. There are four additional sources of federal funding that have either been enacted, approved by part of Congress and awaiting final action, or proposed:

$2.5 billion is definitely in the FY 2010 budget

$50 billion in the new transportation bill has been approved by a House subcommittee and has support from over 100 members of the House. President Obama has supported some form of long-term HSR funding in the transportation bill.

$4 billion is proposed for the FY 2011 budget

• And there’s still a proposal out there for a National Infrastructure Bank that the Obama Administration has backed.

Could the $50 billion fall through? Might a National Infrastructure Bank die? Possibly. But that’s out of the Authority’s hands. To blame the Authority for the federal funding issue is unfair. And it’s misleading to suggest the funding isn’t there.

Unfortunately, the Auditor’s flawed report has led some HSR critics in the media to use it to repeat their previous opposition to the project, like the Sacramento Bee’s Dan Walters:

California’s high-speed rail project leaders tell us it’s on track and that the state’s residents can confidently look forward to a future of superfast bullet trains whisking them from one end of the state to the other at airlinelike speeds.

However, the state auditor’s office is saying officially what outside analysts already had concluded – the bullet train isn’t ready to roll, lacking the tens of billions of dollars in federal and private financing the project will require.

Again, this is a misleading way of reporting on the issue. Federal funding has not yet been secured, but that’s nothing new. It is on its way, and any criticisms about the slow arrival of those funds needs to be directed at Congress, not at the Authority.

The High-Speed Rail Authority is hoping for a big wad of federal funds – about half the total – but so far has received just a fraction, with no commitments for any more.

This too is misleading, implying that the CHSRA is wrong to expect more money. It has not been “committed” in terms of the budgeting process, but it has been “committed” politically. There is every reason to believe that funding will arrive. And if there’s doubt, again, the target must be Congress, not the HSR project itself.

However, the biggest unknown, as state Auditor Elaine Howe points out in a report issued Thursday, is whether private investors would be willing to commit at least $10 billion.

The enabling legislation says the bullet train will not have any state operating subsidies, but the authority’s own documents say that private investors need “revenue guarantees” to protect their investments. That raises the specter of operating subsidies, as another recent report by the Legislature’s budget analyst also points out.

“To plan adequately for private investment, the authority should further specify the potential cost of revenue guarantees and who would pay for them,” the auditor’s report recommends.

In some ways this is a problem of the Authority’s own making – they didn’t need to put a “revenue guarantee” in the business plan. But we know that the private sector doesn’t need one. Siemens USA president Oliver Hauck explained that private companies will shoulder the risk.

Further, there is every reason to believe we’ll get private funding. The Auditor doesn’t seem to have known that China is actively seeking to bring the private funding the Authority seeks, as are several other countries.

All in all, the Auditor’s report is a badly flawed document that basically argues “the HSR project hasn’t nailed down all of its funding, so it’s DOOMED” while ignoring the fact that the funding is in the process of being secured. The Auditor would have done well to limit their criticisms to the operational matters they identified and not delved into a set of issues they clearly do not understand.

It is unfortunate – and troubling – that the Auditor, like the LAO before them, seems to be willing to make strong criticisms of the HSR project without really understanding the project. If California’s state analysts lack the expertise to properly examine HSR, then we have a very serious problem in getting 21st century infrastructure built.

  1. mara
    Apr 30th, 2010 at 13:12

    This is my third attempt to leave a comment. Let’s see if it’s the charm.

    One of the many points that you miss about this mess, Robert, is that the Authority is planning this system as if they have all the money lined up. Without a Plan B, as you noted yesterday, there is a very real risk that this train won’t be finished, and impacted communities will be left in shambles, and the taxpayer holding the bag. A much more responsible approach would be to build one segment at a time. Proof of concept, if you will. If this is completed on time and on budget, with minimal distress among the communities affected, it should be fairly straightforward to roll it out to other segments. In fact, I’d go so far as to say that completing the first segment would not be necessary to start a second (contiguous) segment, but the program should be advancing in a manner that builds trust based on performance, not promises. Thus far, the Authority has done little to engender trust, other than pledges of “Trust us.”

    Robert Cruickshank Reply:

    Don’t know what happened to your other two – we’ve had an avalanche of spam in the last 3 days, and yours may have been caught in it.

    Regardless, you are quite wrong on the key details.

    Without federal funding (no matter if there’s a Plan B or not) there is a real risk the train won’t be finished. But the plan is *already* to build it in segments. And anything built with current federal funds requires “independent utility” so even if we never got another dime, we have enough to make improvements to the rail infrastructure.

    You’re implying that the Authority will just dig up a community and suddenly say “oops, we’re out of money! Have fun with the open pit and pile of dirt!” But that is absolutely NOT the case and disallowed under existing federal and state rules.

    I fault the State Auditor for a careless and uninformed report that has some in the media making the baseless insinuations you’ve repeated.

    mara Reply:

    The Feds are not fully funding any part of this system. They may ask for independent utility, but Prop 1A funds do no such thing. They are tied to the whole system being built, including the attainment of private funding. And as I noted in my first reply, the auditor’s job was to look objectively at the books. You haven’t addressed the office furniture and other misspent and insufficiently tracked expenditures. From your commentary, you seem to believe that the LAO and others whose jobs are to critically analyze government spending should be joining you on the cheerleading team, and not being impartial. That is ridiculous.

    Risenmessiah Reply:

    What’s ridiculous is watching a technocrat argue with an advocate.

    There’s a material difference between LAO analysis and the BSA, although both report to the Legislature. Though both frequently overstep their bounds, the BSA is more oriented to operational and technical considerations and looking backward. I’m not exactly surprised that the Auditor would complain about misspent funds.

    The LAO is about fiscal and policy analysis and making prospective statements. It’s always possible to have the BSA completely endorse what an agency does, have the LAO cut it to shreds or vice versa. Government is a dynamic process, it doesn’t stop moving.

    The issue here is that Robert is afraid that in their zeal to attack Schwarzenegger’s operational issues at the agency….etc….etc…the Legislature will lose it’s ardor to complete A high speed rail system. It’s not a surprising fear because of the political atmosphere, but it’s also not the most likely option.

    Why? Because California and America’s infrastructure is in woeful shape. We will degrade into a third world country if it is not addressed. This isn’t about high speed rail as some fancy wet dream of Europhile liberals. The people today that are agnostic about this are going to get religion soon enough, but we want to build HSR and other projects right to preserve the state and nation’s competitive advantage.

    To that end, the project isn’t doomed if there’s no federal funding. It would be a major departure to say the least, but not doomed.

    Joey Reply:

    Err … Prop 1A explicitly provides for segmented construction. It states that any segment (a section of the line containing at least two stations) can start construction under the following conditions: (a) All funds are in place for the completion of that segment (b) Prop 1A funds do not account for more than half of the money used for construction and (c) High speed service may begin on that segment once construction is done. Now, whether or not any of those segments would actually be useful by itself depends entirely on the segment and how it is constructed, but the Authority can and is pursuing a segmented approach to construction.

    mara Reply:

    I’m referring to comments on this blog about using ARRA dollars plus HSR bond funds to electrify Caltrain, thereby creating independent utility. This is a nonstarter if HSR doesn’t run on the line. And can you imagine the public uproar on spending all those billions to cut 15 minutes off the baby bullet. I know, you’ll cry about how Caltrain says its going broke if HSR doesn’t underwrite electrification, but this whole idea is a nonstarter in the rest of the state, who will be repaying the bond.

    Bianca Reply:

    ummm, no. It’s not billions for Caltrain electrification. It’s hundreds of millions, and that is a real difference. HSR is funding Caltrain’s electrification in exchange for getting to use the right of way, so it’s not the case that Caltrain is getting something for nothing. There’s a pretty significant quid pro quo there. And that right of way is the link to San Francisco, which *is* critical for the entire line and the entire state. There have been lots of alternatives to the Caltrain corridor suggested, but I have yet to see anyone propose an alternative to the Caltrain corridor that serves downtown San Francisco, is technically feasible (this rules out 101/280 alignments) and would cost less than using the Caltrain corridor.

    I don’t actually think there is a risk the train won’t be finished. There may be a risk that completion will be delayed, but given the direction that fuel prices are going over the long-term, HSR will be completed in California. The alternatives are all a lot more expensive. Opponents may succeed in slowing down the process, but when oil is back at $200/barrel, that opposition will look mighty short-sighted. In the meantime, even if opponents temporarily succeed in delaying completion, there will be tangible benefits to regional rail, and those tangible benefits will be felt in more places than the Bay Area.

  2. AndyDuncan
    Apr 30th, 2010 at 13:37

    And speaking of funding, included in a business week article about saftey standards is news that JR East will be getting state backing for a CA bid:

    JR Central will receive state backing for a bid to build high-speed rail in Florida and for a magnetic-levitation line in Baltimore. East Japan Railway Co. will get assistance for high- speed rail tenders in Chicago and California, Maehara announced on April 27 before he traveled to Washington.

    While we’ve heard about JR Central’s plans for US rail (plans that did not include CA), that’s the first I’ve heard about JR East looking to bid on US contracts. And with state backing to boot.

    E5s for everyone!

    Peter Reply:

    I think they should bring back additional airbrakes…

    Peter Reply:

    *the additional

    Spokker Reply:

    Neko train? http://img158.imageshack.us/i/tky2005062403555ff.jpg/

    Peter Reply:

    Yes. Those would be sweet!

    Alon Levy Reply:

    Yep. And don’t forget that they tilt 2 degrees, at full speed.

    Victor Reply:

    What No JR Central CA Plans? Oh crap, Maybe the Chinese scared them off? Ouch.

    swing hanger Reply:

    JR Central hired a US based consultant firm to identify the markets and states with most potential to build a HSR system relatively quickly (emphasis on quickly)- Florida came up first, so that is what they are pursuing. One of the reasons the various HSR builders are so interested in building a line in the U.S. is for marketing to other foreign markets- i.e. showcasing their technology. Another possible reason JR Central is not so keen on California was that they were burned back in the eighties (albeit it was JNR then) with the first bullet train proposal between LA and S.D.- they may not want to deal with CA politics again.

    Risenmessiah Reply:

    That’s the exact impression I got.

    The Florida project is just so people can see and experience a HSR train the next time they are in Orlando, rave about it, and call their local politicians to support it.

    The reason to go with Japan of course is that in many way it has the same problems as California: longer than it is wide, seismic issues…and very dense urban areas with one area far larger than the rest.

    Peter Reply:

    “very dense urban areas”

    Well, one area at least. The rest is suburbia.

    Victor Reply:

    Only Japan is much densely packed and they resorted to tunnels where needed. But otherwise Yeah Japan is like California, Long and Narrow. Now If the moronic nimbys would just go away.

    Alon Levy Reply:

    Japan resorts to tunnels through mountainous areas; so does every other country. Unlike California, which needs three long tunnels but can run at-grade elsewhere, Japan has to use multiple shorter tunnels.

    And yes, Japan is dense. That’s why few HSR builders compare themselves to Tokaido, and the ones who do fall far below projections. However, based on the populations of the cities served, California HSR should be doing as well as or better than the Sanyo Shinkansen.

    Victor Reply:

    I knew Jerry Brown advocated for HSR back when He was Governor back then, But I didn’t know about JNR as It was never that much in the News back then, My Dad thought wrongly that trains were only good for freight, To Him It was automobiles or airplanes and nothing else. I’d hope JR Central will not give up on California, We certainly could use their expertise.

    Andre Peretti Reply:

    Japanese high-speed trains totally exclude the presence of slower trains on their tracks. They can’t be used in Europe where TGV and ICE share portions of track with other trains. This won’t be a problem in Florida where they will run on entirely dedicated tracks.

    Here are the specifications for “compression loads without permanent deformation”:
    – Shinkansen: 100 tonnes
    – UIC: 200 tonnes
    – FRA: 360 tonnes (coach), 945 tonnes (power car).

    While the FRA is probably ready to accept UIC standards if proper signalling is installed, it will probably consider Japanese trains too flimsy to be mixed with others.
    That, in theory, leaves California choice between Chinese or European. Only in theory, because the Europeans can’t match the financial conditions the Chinese offer.
    To counter the argument of their lack of experience, they can always take a European as a junior partner, just for the name, as they did in Saudi Arabia with Alstom for line contruction and Siemens for the rolling stock.

    AndyDuncan Reply:

    The article I linked to talks about just that problem, the Japanese want assurances that their rolling stock will not be “unfairly” excluded due to safety issues.

    With regards to the Japanese trains needing completely isolated tracks, that is (much to Richard’s chagrin) precisely what the Authority has so far been designing. While the Authority has recently said they will investigate a “shared track” alternative for the LA-Anaheim segment, all current designs point to an isolated, Shinkansen-style system (for better and for worse).

    By “Chinese” rolling stock, I’m assuming you mean their version of the Velaro, since the CHR2 is a modified E2. (Who knows what the new CRH380 is, it appears to be some sort of conglomeration of E2 and Velaro parts).

    adirondacker12800 Reply:

    Shinkansen use standard gauge. The rest of the Japanese network uses narrow gauge. Even if they wanted to run trains on the other set of tracks, which ever set of tracks you are viewing from, they couldn’t.

    Andre Peretti Reply:

    I suppose the rolling stock will owe much to Siemens and Bombardier, and a bit less to Alstom and Kawasaki who stopped collaborating as soon as they realised they were shooting themselves in the foot. In particular, I doubt the Chinese have the technology for the lighweight honeycomb aluminium sandwich panels used in Shinkansen carbodies. Any imitation of this technology by a trainmaker with insufficient experience of metal fatigue would result in dramatic accidents.
    The weight/axle of the Chinese trains shows that, so far, they are not using that type of panels.

    Victor Reply:

    Awesome pics AndyDuncan, Nice, Only one problem I can see, Their not in Blue and Yellow. ;)

    Alon Levy Reply:

    Andre, you’re repeating Alstom’s talking points again. The Shinkansen can and does share tracks with slower trains, whenever the gauge is compatible. The plans for running Shinkansen trains to Hakodate call for dual-gauge track through the Seikan tunnel, which was built to Shinkansen loading gauge; I believe some of the mini-Shinkansen lines are dual-gauge as well.

    What any of this has to do with the possibility of running Shinkansen trains in a standard-gauge country I don’t understand.

    The buff strength issue is the same. The FRA will accept whatever it thinks solves the not-invented-here problem, and from its perspective, 200-ton buff strength is the same as 100-ton strength. At any rate, with automatic train control, it doesn’t matter what the buff strength is; what matters is whether the train is going to derail or not. The record of the entire Japanese rail industry there is good, and the Shinkansen’s record is stellar: 1 derailment in its entire history, with zero casualties. Unlike SNCF, the JR companies don’t leave sinkholes in their tracks.

    What does matter is that Shinkansen trains have an axle load of 11.5 tons instead of 17 tons. This may not matter to Alstom, which is not going to have to pay for maintenance, but it should matter to California.

    Andre Peretti Reply:

    I didn’t even know these were Alstom’s talking points. My opinion is that Alstom, like other European trainmakers, has no future in HSR. It will have to re-focus on its core business: power plants and turbines, where it has 25% of the world market and 50/50 partnerships with Chinese firms.
    After all, no-one believed it would sell its shipbuilding division after building the Queen Mary II. I may be wrong, but I think the AGV is Alstom HSR’s swan song, just as the Queen Mary was for shipbuilding. Even the SNCF is repeatedly speaking of opening its future bids to non-European firms. I certainly can’t imagine Alstom having any part in CHSR, except marginal.

    To sum it up I see the situation like this:
    – For dedicated HSR, the future is in lightweight trains. The only offer, so far, is Japanese.
    – For UIC-compliant HSR, the Chinese will dominate. They offer European technology at cut price, plus funding. It’s an unbeatable package.

    Alstom lacked vision when it put its research on carbon composites on the back burner. They could have given it an edge over the heavier aluminium used by the Japanese. How composites behave when ageing is still unknown, but it didn’t prevent Boeing and Airbus from taking the risk.

    Concerning sinkholes: some French regions have received so many bombs and shells during the two world wars that the subsoil is like Swiss cheese. Sinkholes appear after flood rains even in places with no roads or railtracks.

    Alon Levy Reply:

    Japan got carpet-bombed in World War Two; somehow it manages to keep its tracks sinkhole-free.

    The talking points aren’t necessarily due to Alstom, but they’re definitely due to French industry. It’s too bad – Alstom’s one top product, the Pendolino, does not have articulated bogies.

    Even then, there’s no need for UIC compliance when there are other options – for one, options tht realize heads-on crashes offer no such of survival at high relative speeds anyway. It’s the same issue with ETCS: yes, it’s one of the top products around, but it’s not the only one, and to invent excuses why real-world variants would be inappropriate for Unique American Conditions is just stupid.

  3. Tony D.
    Apr 30th, 2010 at 18:37

    The “Jerry Springer” media! There’s no other way to describe the ultra-sensationalism, and flat out lies, of the Dan Walter’s of the world. Let us all be thankful for the blogosphere and the truth.

    YesonHSR Reply:

    unfortunally many americans read just this kind of crap ..and it is a big dealas many peoplewill see it . Justl ook at all the raging stupid comments about this even in a paper like SF Cronicle/SFgate..the comment section has been bombarded with stupid backward thinking about this article

    flowmotion Reply:

    SFGate’s comment section is always a right-winger outpost, made up of outstate and out-of-state “repressed” conservatives with a “hardon” for San Francisco local news. I wouldn’t take the comments too seriously, they don’t reflect Bay Area political opinion at all.

    Spokker Reply:

    It depends on the slant of the article. A pro-HSR article will have comments composed mostly of “BUILD IT NOT” and anti-HSR articles will have the usual boondoggle discussion.

    YesonHSR Reply:

    Very true…you can click on someones name and see all there posts..many of the HSR negative commentors have a huge list of right-wing comments for anything posted in the paper..and yes some even post where they live..not even in Cali

  4. jimsf
    Apr 30th, 2010 at 20:22

    What’s most disturbing, annoying really, is that I have heard this story on several different media outlets from public radio to kgo and there has been no follow up, no digging deeper, no reporting of the rest of the story, and no questioning of the facts whatsoever. The media is weak and lame. Right now the only person – people I see in the media who go for the throat are RAchael and to some extent , Ed. If the current state of media in the US is all we have to keep our democracy in tact, then we are doomed.

    YesonHSR Reply:

    This was an terrible almost personal opinion ..horrible it needs totally redone and peer review..The damge is done.. run in many main stream meida..I had 3 people at work ask me today if the HSR is not going to be built…Now is the time for CAforHSR to hit up the same media with a rebuttle..Call your state Senator and complain about what is a very poor writen report full of self opinion.

  5. rafael
    May 1st, 2010 at 02:43

    O/T –

    high speed rail discussion on Bill Maher’s “Real Time” (starts at the 10:25 mark of the video):


    Too bad the people who get the airtime tend to get their facts wrong on speed and Acela profitability.

    Spokker Reply:

    Chris Matthews is arguing for high speed rail but even he is kind of getting it wrong. Chicago in a day? The point of high speed rail isn’t to spend a day on a train. It’s to connect cities that are, you know, a few hundred miles away from each other.

    And yeah, don’t these hosts have writers to make them look better? Someone could have googled it real quick and told Maher that the Acela makes like $40 bucks per passenger. Northeast Corridor makes back $5 I heard.

    These shows are awful anyway. The audience is applauding after every other point made.

    Spokker Reply:

    Northeast Regional, rather.

    Alon Levy Reply:

    The Regional breaks even before depreciation.

    Nahanael Reply:

    You can already get to Chicago in a day. Connecting the close-together cities on the “string of pearls” from Chicago to New York with high-speed rail would get you to Chicago in much less than a day, even though that would really just be a side benefit (of connecting Albany-Syracuse, Fort Wayne-Toledo, et cetera).

  6. jimsf
    May 1st, 2010 at 10:03

    while politicians and pundits wring their hands and fret over a few hundred miles worth of choo choo tracks here in california – are biggest adversary and competitor in the world is moving ahead with this

    The network would link up with Europe’s high-speed rail (HSR) system under development in France, Germany, Spain and Italy for the past four decades, building on Japan’s pioneering Shinkansen project of the 1960s. It would also be the greatest infrastructure project in world history, and China hopes to complete it in 10 years (for map and details see http://www.thetransportpolitic.com/2010/03/09)

    notice how “usa” is missing in action, just like it is in every other aspect of 21st century progress. O k granted, we have cornered the market on Hollywood gossip shows and unpopular military actions but those things are so 19990s.

  7. jimsf
    May 1st, 2010 at 10:04


  8. jimsf
    May 1st, 2010 at 10:09

    So ten years from now, while we are still hemming and hawing over our big bad “choo choo go to fast make noise” China will completed a system spanning three continents and more than 15 countries.
    And no one in the US is even the slightest bit embarrassed by our soon to be globally witnessed ass whooping.


    mara Reply:

    Who cares? I didn’t realize that we were in a race with China on who has the fastest trains. Your comments remind of the classic jokes about men entering middle age. If you buy a little two-seater roadster, maybe we can focus on what is smart for the state, and save the taxpayers some pain and suffering.

    Bianca Reply:

    You do understand that if without HSR, California will have to build 3,000 miles of additional freeway lanes, five more airport runways and an additional 90 departure gates? That is just to maintain the status quo. California is going to add another 12 to 15 million people to the state in the next 20 years.

    All that freeway and airport construction will consume more land and more dollars than HSR. If you really want to save “taxpayer pain and suffering”, you’d support HSR. HSR is smart for the state.

    Risenmessiah Reply:

    12 to 15 million is probably unrealistic. The Census estimates put the California at around 46 million, which is only 1% growth a year or so.

    The REAL problem isn’t that we need HSR to avoid 100-lane freeways and football length airport security lines. It’s that infrastructure deteriorates and unless the price of oil drops to $30 a barrel unexpectedly replacing the current infrastructure as is becomes pointless. We already have urban blight, half-built exurban subdivisions, absurd traffic congestion, and a national economy on life support.

    Japan and Europe, which felt these impacts first because of population changes saw the writing on the wall and has made changes. It’s the Brits and the Americans that keep clinging to “Pax Americana” like the “Lost Cause”.

    Joey Reply:

    Who cares?

    Ummm … I CARE. As a relatively young person I’m going to have to face rising gas prices, congested highways, and soul-killing airport security for most of my adult life. I’m the one who is going to be left without decent transportation options, and I’m the one who is going to be footing the bill for all the things we should be doing now but aren’t (and as Robert has said multiple times — the cost of doing nothing is not zero).

    Tony D. Reply:

    Good point Joey! Ever notice how MOST of the NIMBY’s and opposition to HSR (and anything that represents “progress”) are age 60+ and members of the AARP. Add myself, and thousands of young progressives, to the “I CARE” column. I’m sure my 3-year old daughter would want HSR to.

    Alon Levy Reply:

    Who cares?

    Anyone living within 5 meters of sea level. And, by extension, anyone who realizes that since all of Greater Shanghai is within 5 meters of sea level, China is going to get pissed over other people’s emissions sooner than you think.

    wu ming Reply:

    that is the main reason why i think the chinese will come around on carbon emissions faster than people think. they’re severely hosed from even the smallest sea level rises. once the boys at zhongnanhai start to crunch the costs of inaction vs. action, they’ll change policy around with great force.

  9. jimsf
    May 1st, 2010 at 10:17

    I think Ahnold needs to get Beijing on the phone and order up some hsr delivery. ( hey- free egg roll with purchase of 40 billion or more)

    I am just baffled as to american’s complete lack of concern, and vision. Is the tea party really the new face of america? Will walmart start selling coonskin caps? Where is the best place to purchase a musket? Will I be allowed to use my wolfgang puck immersion blender to make homemade butter or do I need to find a churn on craigslist? What are the new rules?

    Risenmessiah Reply:

    No… the new face of America is the ageing, working stiff baby boomer who just sweated his whole life to serve a country as a pawn of a wealthy super elite who don’t really care what happens to the world as long as they can afford to be separate from it.

    jimsf Reply:

    oh. well that sucks even more.

    Victor Reply:

    yes indeed, that does suck. :(

    Victor Reply:

    Some still equate Trains with Freight and Freight only and that People should get on an Airplane if they want to travel, Times are changing and some fear any change and will drag their feet to prevent It from happening and change is impossible to stop.

    jimsf Reply:

    Yet millions of americans ride trains every year… in fact, everyday, in one form or another. So it’s not like the idea is revolutionary. Not only that but the largest segment of our population, the baby boomers, were alive when train travel was still common.

    I think that people in the media, those who call themselves “journalists” and “broacasters” are severely lacking in many areas.

    Are news outlets so pressed for time that they have only time for a 30 second blurb on any given story? Somehow, 40 years ago we had like 2 or 3 guys reporting national news for about an hour a day and we were more informed then than we are now with 8000 24 hour cable news channels and every tom dick and mary reporting up to the minute.

    Victor Reply:

    I’m not typing about those millions, It’s the ones Who want nothing more than to stop HSR.

  10. EJ
    May 1st, 2010 at 10:39

    You don’t seem to understand what an audit is for. It’s not to pat the Authority on the head and say, “Don’t worry, Congress says they’re most likely going to send you more money.”

    It’s to examine the agency’s plans and identify significant financial risks. If the Authority is forging ahead without secure federal funding and without a plan B, that’s a risk. It doesn’t matter whose “fault” it is. And “independent utility” is highly questionable since the Authority’s own business plan has identified the whole SF-LA route as the minimum financially viable product – a partially completed line doesn’t cut it.

    YesonHSR Reply:

    the audit was for lowenthal..i dont know what his plan or motive is? He says he is a HSR supporter than always has some snid crack or overstated concern..Prop1A say money will not be released without a match..It was really to bad the ARRA did not have that 50 billion for HSR so each project would get big money needed to move forward without woory of funding

    Joey Reply:

    Prop 1A explicitly requires matching funds, though only for construction I believe. And that’s not to say that matching funds won’t appear.

    Elizabeth Reply:

    Prop 1 gives $600 million as starter money without a lot of strings:

    environmental studies, planning, and preliminary engineering
    activities, and for (1) acquisition of interests in real property and
    right-of-way and improvement thereof (A) for preservation for
    high-speed rail uses, (B) to add to third-party improvements to make
    them compatible with high-speed rail uses, or (C) to avoid or to
    mitigate incompatible improvements or uses; (2) mitigation of any
    direct or indirect environmental impacts resulting from the
    foregoing; and (3) relocation assistance for property owners and
    occupants who are displaced as a result of the foregoing

    After that, there is only money available for usable segments (track with at least 2 stations) that will be profitable, has all money to complete segment secured etc etc.

    Joey Reply:

    Actually there’s an interesting loophole in there. A usable segment must be ready for high speed service upon completion, and that high speed service must not require subsidies, but not that said high speed service must begin immediately…

    Joey Reply:

    Whoa? How did that happen? This was supposed to be in response to mara’s comment…

    Robert Cruickshank Reply:

    Prop 1A created a voter mandate for the Authority to continue planning the system. It is no different from a local transit agency moving forward with planning a light rail line and expecting to receive federal grants/New Starts funding. If that money fails to come through, then some other solution must be found.

    This is totally normal, but the Auditor misleadingly framed it as some sort of problem or crisis. Because of the way Prop 1A is written, there is no risk to taxpayers if the federal funding doesn’t come through. If we get it, great! If not, California taxpayers won’t be left holding the bag.

    EJ Reply:

    If the state sells bonds, the taxpayers are ultimately on the hook to repay them, if the capital project funded by the bonds doesn’t generate enough revenue to pay them back. How financially ignorant can you possibly be? So yeah, there’s a risk to taxpayers. That’s what audits are intended to do, evaluate risk

    The $10 billion authorized by prop 1A wasn’t just for planning, it’s intended to start building the system.

    Spokker Reply:

    The project will never generate enough revenue to repay the bonds. It’s a public project with a public benefit.

    Peter Reply:

    And it was NEVER intended to repay the bonds. How financially ignorant can YOU (as in EJ, not Spokker) be?

    Spokker Reply:

    Well, I’m pretty ignorant too.

    Peter Reply:

    As am I, but at least we admit it…

    Elizabeth Reply:

    The project was never intended to payback the PUBLIC bonds, but it was intended to payback the private revenue bonds – $10 -12 billion of the project’s financing.

    (and please don’t shoot the messenger – this is not an opinion about whether or not it should, whether or not there should be private financing etc etc)

    Spokker Reply:

    I agree. The capital costs will not be repaid no matter what the business plan says.

  11. Observer
    May 1st, 2010 at 18:12


    Spokker Reply:

    It only goes 140 MPH. I don’t know what they are doing wrong but even the Acela covers its operating expenses.

    AndyDuncan Reply:

    It takes a while to ramp up ridership. The CA system is expected to run at a loss for the first few years as well. Unfortunately the article doesn’t have any specifics about how much of a loss, how many riders, etc.

    Elizabeth Reply:

    It is not to supposed to operate at a loss (excluding financing costs), even in year 1 – according to the 2009 biz plan – table J page 84.

    Alon Levy Reply:

    Does the business plan say anything about the cost of rolling stock? HSR sometimes loses money early on because of the need to buy trains.

    At any rate, if you’re afraid of losses, you should bear in mind that Taiwan HSR became operationally profitable four months after opening, never mind that it went ridiculously under the ridership projections.

    Joey Reply:

    Isn’t rolling stock usually included in the initial capital costs?

    Elizabeth Reply:

    It is included in the initial capital costs, not in operating.

    On some level, I don’t care about initial losses. What I do care is about whether plans are realistic, particularly given the constraints of the bond measure and whether there are plans a, b,c and d. And right now, there is only plan a – the train makes money from day 1. This goes back to the whole problem of trying to put a risk management plan in place AFTER you have done a substantial amount of the planning/ after a bond measure that can’t really be changed has been passed. You have really boxed your self into some corners that you might not really want to be in.

  12. Richard Mlynarik
    May 2nd, 2010 at 08:59

    Dear Elizabeth,

    What you’re saying makes perfect sense, but only in an environment in which public works are undertaken for any public benefit.

    That’s not the case here, just as it hasn’t been the case every time the same cast of characters have undertaken other projects in the past.


    Service level “predictions” exist SOLELY TO JUSTIFY HIGH CAPITAL COSTS.

    Once the project is built, cleaning up the mess is somebody else’s problem. They aren’t built in order to turn a profit, they aren’t built in order to minimize losses, they aren’t built in order to improve public mobility; the only criterion is to have the highest possible construction cost.

    Any lack of system phasing, any lack of “Plan B”, any painting into boxes, is PART OF THE PLAN.

    I mean, just look at the PB-designed and Kopp-promoted BART line to Millbrae. Stations, structures, flyovers, parking lots were sized for “predicted” levels of traffic proven to be 3x reality — and even then over-built by a factor of 50% or so compared to an operations-optimized design. There was never any Plan B. In fact, CONSTRUCTION STARTED AT THE FAR END OF THE LINE (Millbrae), to ensure that there could be no fallback position, no phasing, no cost containment. This is the way these people always work.

    Remember, they WROTE Proposition 1A, down the the finest detail. (eg SF-SJ run time to the minute. There Is No Alternative.) It suits their interests perfectly. There’s nobody involved anywhere in the process (ie with any connection to CHSRA) who is not as happy as as pig in swill with the voter-approved requirements within which they operate.

    Brer Rabbit sure hates being flung into that there briar patch.

    It’s hard for those of us who pay the taxes and breathe the air to understand, but what we regard as abject failure (promises broken, goals fallen short by 70%, budgets blown out by 100%, etc etc) is regarded as and, in very utilitarian fiscal profitability terms, DEFINED AS success among the class of people who instigated, designed, are controlling, and will build this system.

    What you or I might call “failure” has never been any sort of problem for them in the past — quite the contrary! A $2 billion failure is rewarded with a $40 billion promotion — and I don’t see how it is going to be a problem for them in the future. And God knows I wish I could.

    Elizabeth Reply:

    Dear Richard,

    I get this. In fact, a little piece of dies of me every time I have to make the transfer at Millbrae Station.

    But I also get that the accepting status quo “planning” methodology for Bay area transportation has some outcomes that most of us don’t want. That methodology can probably be summarized by “the ends justify the means.”

    If anyone has any doubts that Bay Area transit is a bad model, check out MTC’s latest annual report (http://www.mtc.ca.gov/library/AnnualReport-09/MTC_AR_2009_Final.pdf)

    “Thus, transit’s current difficulties are akin to a spike
    in the fever of a patient who was already ill, although the symptoms had been brought under control for a time. When the fever passes, this patient will not be restored to good health. Unless fundamental changes are made, the underlying, chronic conditions will reappear, and all energies will be channeled into the struggle to cope, with no real hope of thriving.”


    “when we look at the results of the transit
    investments we have been able to make in
    recent years, we find a shortfall of a different, but
    equally troubling kind: a shortfall in performance. Since 1997, total transit costs in the Bay Area have increased by 52 percent, after factoring out
    inflation (see chart on page 12). But during that
    period, revenue hours of transit service rose
    by only 16 percent, and ridership grew by only
    7 percent. That is a terrible return on our
    region’s transit investment, and it should cause us to think long and hard before committing future funds to such a low-yield strategy. Because even if we as a region could somehow find more money to devote to transit, we would have an obligation to make sure we use that money wisely to attract new riders.”

    There are three different possible responses to the mess.

    1) Cheerlead through it. Kind of fun.
    2) Take the “we’re doomed” approach. Kind of depressing.
    3) Advocate for a better process / be a stickler for the details/ educate the public and policymakers. Kind of boring.

    We’ve chosen #3, which we realize is a lonely place to be and we realize may be futile.


    Nathanael Reply:

    It’s true the Bay Area has really a pretty bad rep as far as transit planning goes.

    You should be glad that CAHSR is being designed largely by LA-area planners, then.

  13. synonymouse
    May 2nd, 2010 at 10:42

    An eloquent and spot-on summation by RM

    Now if he only agreed with Tolmach on the routing. Still the key point comes thru clearly: the most expensive, kitchen-sink, alternative was was chosen at the outset. The selection process was only going thru the motions, with the outcome set in concrete from the beginning by the insiders.

    Tony D. Reply:

    RM and Mouse,
    Just go back to sleep, will yah!

    Travis D Reply:

    I wasn’t aware that the 500 mile deep bore electromagnetic vacuum tunnel by route of Bishop had been selected. Are you privy to information the rest of us are not?

    Oh, silly me, this was another backhanded slap to the “subhumans” of the Central Valley and Palmdale. I keep forgetting that you hate us.

  14. synonymouse
    May 3rd, 2010 at 00:00

    Palmdale has no more entitlement to be on the hsr line than any other town in California. By detouring way east thru Palmdale you deprive the northern part of the LA basin of their station, just as big a market.

    Metrolink is perfectly adequate for Palmdale. You seem to have no problem downgrading Sacramento to Metrolink-like service.

    Bakersfield and Fresno would receive faster service via a branch to the I-5 tunnels. So where’s the “slap”.

    Nahanael Reply:

    And when the tunnels collapse due to crossing the intersection of two fault lines underground, you’ll be saying “Why didn’t we build it through Palmdale?”

    Seriously, you can’t read, can you? The route through Palmdale exists solely for geological reasons, as the geotechnical report makes very clear. I read the whole thing. Get over your obsession already.

    If you want to advocate against giving Palmdale a station — running non-stop from Bakersfield to the San Fernando Valley — I’ll be right on your side.

    Peter Reply:

    Only until Desert Xpress is running to Palmdale, though. Then we need some place to transfer…

  15. synonymouse
    May 3rd, 2010 at 10:22

    Palmdale is an LA machination. Could be that Sin City interests are quietly behind it as well. If that proves to be true there will be a nasty poltical backlash in broke California.

    The San Andreas would be crossed at grade, the Garlock in tunnel.

    With the current crowd in place we’ll never know becaue the fix is in.

    “You think you know what you’re dealing with here, Mr. Geddes; but you don’t.”

  16. Bob L.
    May 3rd, 2010 at 16:32

    The BIG PROBLEM is we do everything piecemeal and never get anything do. How for down does our limited supply of oil have to be before we realize that we have to do something now, fast and more expensive than it would be today, even accounting for adjusted dollars.

    Today, we are letting the selfish few ruin the U.S. for their own immediate gratification while other countries are building and planning for the future.

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