Assessing the Cost of High Speed Rail

Aug 16th, 2010 | Posted by

As with any major infrastructure project, the question of cost is an important one. And so the San Jose Mercury News on Sunday examined the issue of HSR costs in a front-page article. The article, by Mike Rosenberg and Gary Richards, has some good points about HSR, but overall seems to repeat the common flaw of not assessing HSR costs in context. To properly understand HSR costs, we have to not only look at the project itself, but the cost of doing nothing – which is not zero – and the cost of expanding freeways and airports to meet the travel demand HSR is to meet.

Let’s take a look at the article.

For California, the lure of its new ride — a bullet train system capable of whisking passengers between the Bay Area and Los Angeles — has proved so enticing that the state jumped at the deal, even though it has only a quarter of the money needed.

That’s leading some critics to ask whether the state’s largest project ever could also prove to be its most financially disastrous.

California voters jumped not at a “deal” but at an opportunity to provide for fast, sustainable passenger rail to connect their major cities, in a year when the cost of oil dependence was brought home to voters in a powerful way. HSR shouldn’t be framed as a business proposition, but as a lasting piece of infrastructure that will provide economic growth and meet the state’s travel needs for decades to come.

I don’t fault Rosenberg and Richards alone for approaching HSR as if it were a business proposition. They’re merely reflecting the reality that in the early 21st century, American policymakers no longer think of infrastructure as a public good that should be built because it serves a need, but as an enterprise that ought to fund itself. Still, as we’ll see, even under the latter view, HSR makes sense for California.

It has the potential to create jobs while offering a cheaper, greener and faster form of travel. It could also be another nail in the state’s financial coffin.

As we know, critics have made the latter point quite often. But it’s not a point that makes sense. There’s no possible way that HSR would be “another nail in the state’s financial coffin.” The annual debt service that the $10 billion bond adds to the state budget is about $600 million. Our current budget deficit is about $20 billion. As we know, HSR will generate significant economic benefit to the state, including increased tax revenues. Will it be enough to offset the cost of the debt service? Maybe, maybe not. But it’s hard to see how the HSR bonds are at all risky to the state budget.

Rosenberg and Richards deserve credit for properly explaining why the HSR project’s cost estimate rose in 2009:

The Rail Authority’s estimate has risen mostly because when the measure went on the ballot, it didn’t account for inflation, which is expected to total 19 percent over five years of construction.

Keep in mind that’s merely an estimate. In fact, inflation right now is extremely low, and many rail projects have had initial bids come in well under budget as labor and materials costs have declined during the recession. While there’s an epic debate among economists about whether we’re going to see deflation or inflation over the next several years, the overall forces appear to favor at best cost stability, if not outright deflation, as high unemployment and low consumer spending will combine to make inflation unlikely.

The central piece of their article is an assessment of the project’s cost estimate, currently pegged at $42.6 billion:

A Bay Area News Group analysis of high-speed systems around the globe suggests that the project could cost less than the current estimate, as little as $38 billion. But it is most likely to cost more — up to $73 billion, even if built on time.

That analysis is based on the per-mile capital costs of high-speed rail systems built in Europe and Asia in the past decade, as outlined in a World Bank report released last month. The report said costs varied widely depending on terrain, the complexity of engineering work required, how many rail cars were needed and the extent to which routes passed through urban areas.

Unfortunately, the article does not explain the reasoning behind the figure of $73 billion. As such, it has to be considered a mere assertion, a figure that we should not take seriously until we see some explanatory detail.

The World Bank report that was cited in the article estimated that costs for HSR outside China “range from USD 35-70 million/km.” Considering that San Francisco to Anaheim is 748km according to the California High Speed Rail Authority, that produces a low end estimate of $26 billion and a high end estimate of $52 billion. I’m still not quite sure where the reporters’ $73 billion estimate comes from, so for now I don’t think we should treat it seriously, at least not without further explanation. (And it’s worth noting that the World Bank’s report doesn’t explain the cost range they provided either.)

The question of possible cost increases is important, though it has to be considered in context. I’ve always said that it’s possible, maybe even likely that the final price tag will be higher than $42.6 billion. I don’t think it’ll be very much higher, but it might well be. That wouldn’t represent a “boondoggle” because we still have to ask whether HSR is a better deal than the alternatives. As we’ll see, I firmly believe the answer is “yes.”

One of the primary reasons why costs rise is that the design changes thanks to political pressure. Here’s an example from the article:

Costs along some parts of the rail line zoomed up earlier this year, including one five-mile stretch on the Peninsula where estimates soared $135 million. The reason? Engineers had estimated the cost of building two tracks there when they actually needed four.

Of course, technically engineers originally thought they would indeed be building just two HSR-specific tracks. Then it was decided to instead build four tracks that would be shared with Caltrain. That’s a fundamental shift in HSR design. It’s also the right move, and well worth the extra $135 million (which isn’t a “soaring” estimate when you’re looking at a $42.6 billion project).

There is a growing tendency, however, to see megaproject cost increases as somehow being inevitable, as if they were a force of nature. And sure enough, as with any discussion of cost increases, the article trots out good old Bent Flyvberg to make that very point:

A research team led by Oxford University professor Bent Flyvbjerg has studied the estimates and final price tags of 258 megaprojects across 20 countries, including bridges, rail systems, tunnels and freeways.

What they found was astonishing: Nine out of every 10 projects finished over budget, and the average urban rail system ended up costing 45 percent more than projected.

Flyvbjerg says projects in California haven’t bucked the trend. Taxpayer-funded initiatives such as the Bay Bridge rebuild, BART’s extension to San Francisco International Airport and the Los Angeles Metro rail system all failed to meet estimates.

Of course, this excludes those projects that have met estimates, such as the Metro Gold Line Eastside Extension or the Seattle Central Link project – the latter of which was cut by 1/3 in 2001 when costs spiraled out of control.

As to the Bay Bridge, that project shows that a combination of design changes and unexpected inflation pressures can drive project costs higher (as can happen on any project, public or private). Mayors Willie Brown and Jerry Brown both demanded and won a “signature span” for the East Span replacement project, pushing back the timeline and driving up the cost. By the time bids were solicited in 2004, the global economic boom, especially in China, drove the cost of steel through the roof. Had the original plan proposed by Governor Pete Wilson been adhered to, the cost of the design change could have been avoided, but the cost of the steel price inflation might not have.

Flyvberg’s theory is familiar to many of us by now:

The researchers noticed two problems over and again: “optimism bias,” the tendency to focus on an idea’s potential while downplaying pitfalls; and “strategic misrepresentation,” which means officials lowballing costs to make a project look more attractive.

This is because projects aren’t proposed by accountants and engineers, but by politicians, who operate in an environment where taxes are seen as verboten and every cost is closely scrutinized, unless it’s for something that’s seen as politically mainstream like wars or freeways, in which case the sky’s the limit. In other words, the problem Flyvberg identifies isn’t with megaprojects, but with politics. And as I noted above, it doesn’t necessarily mean it is impossible to bring in a project on-budget.

Further, it’s interesting to see what is and isn’t considered a boondoggle. Here’s Wikipedia on the costs of the Interstate system:

The initial cost estimate for the system was $25 billion over 12 years; it ended up costing $114 billion (adjusted for inflation, $425 billion in 2006 dollars) and taking 35 years to complete.

That’s a rather stunning boondoggle – costs were over 4 times what was expected and it took almost three times as long to complete as was planned. But how many people, aside from some of us hardcore transit bloggers, would call the Interstates a boondoggle?

The point is that Americans have come to believe that Interstates were necessary and the costs justified. That was a political choice, just as were the numerous political choices in cities and states across the country that resulted in the higher costs and longer construction times.

As the article acknowledged, it is plausible that the HSR project could be brought in for the projected cost. But it is possible that political choices will be made to increase the cost. For example, the PCC might well prevail in their desire to have the tracks tunneled. That would represent a significant cost increase, but the political leadership could decide that’s justified. The point is that a choice would be made to increase the HSR project cost. It’s not inevitable, and a choice could be made that a tunnel won’t happen. And a choice could also be made that the Peninsula will themselves fund a tunnel, or that a federal earmark will be won, or that the Chinese will pay for it.

If those are the desired choices, than a higher project cost shouldn’t be seen as some example of a flawed project, but of a belief that it is worth spending more money. Too often, it’s argued that keeping project costs low is the overriding imperative for any project, and in a democratic political process, that’s not always the case. People might decide something else is more important.

These points notwithstanding, the current practice of the HSR project would seem to undermine the notion that Flyvberg’s theory applies to it. The CHSRA did not hide the fact that accounting for projected inflation would add nearly $10 billion to the project cost. They made this public as soon as they learned of it. And the Authority has been up front about the financial consequences of various design alternatives. They’ve been trying to keep the line on project costs, rejecting a tunnel for much of the Peninsula precisely because of the costs, to the outrage of some on the Peninsula.

As we know, this is an academic discussion if the CHSRA cannot fund the project as currently budgeted. The State Auditor noticed that not all of the project cost has been accounted for and thought it was a scandal, despite the fact that most infrastructure projects have to finish their planning before they get funded. The Mercury News article explored this:

The authority has $9 billion in state bond money and a $2.25 billion federal stimulus grant committed. It says the remaining three-fourths of the construction costs will come from government and private investors.

The state is banking on at least $15 billion more from Washington, D.C., by 2016 and has applied for up to $1 billion from this year’s federal budget. Even if it gets the full amount this year, the authority would need at least $2.3 billion each subsequent year from Uncle Sam, a plan the state’s nonpartisan legislative analyst recently characterized as “highly uncertain.”

The U.S. government’s entire high-speed rail budget this year was $2.3 billion, and that was its biggest such layout ever; the feds have tentatively sliced next year’s amount to $1.4 billion. California has the largest and most advanced project in the nation but must compete for the grants with 13 high-speed rail corridors across 31 states.

Rail officials argue that the competition actually increases the odds Congress will keep money flowing across the country.

“We’re not going it alone in D.C.,” said Barker of the Rail Authority. “It’s something we’re confident the federal government wants to do.”

It would have been useful had the article included mention of the $50 billion for HSR that is planned to be included in the upcoming Transportation Bill reauthorization, which would have suggested that the plans for federal funding aren’t far-fetched at all.

Of course, if no federal funds materialize, then the whole system doesn’t get built. That’s why the Prop 1A bond and the federal HSR stimulus require whatever money we do spend in the interim to have “independent utility” so that if we never do finish the project, the infrastructure that does get built can actually be used.

The authority plans to ask local cities, transportation agencies and developers to foot another $4 billion to $5 billion. The final $10 billion to $12 billion would come from foreign countries, companies and other investors. Specific plans for those two pots of funding have yet to be established.

San Jose Mayor Chuck Reed, for one, thinks the Rail Authority is dreaming. “I don’t think there is any hope local governments can come up with that kind of money,” he said. “I’m looking at my city’s own finances and resources, and we don’t have money to spare.”

One might ask the city of San José, then, whether they will insist on a “signature span” for the HSR viaduct just south of Diridon Station, given this concern. And in any case, the CHSRA does not appear to be expecting cities to spend money out of their general fund, but to find ways to leverage revenues from things like TOD and redevelopment districts.

The article then examines the question of operations, and here they would definitely have benefited from a comparison with other countries’ HSR experience, rather than relying on Flyvberg’s study:

Still another financial challenge for the authority is operating the line once it’s built. That, too, already looks harder than initial indications.

The high-speed rail line’s revenues depend on two factors: how many people ride it, and how much they pay.

The state predicts the line will carry 41 million passengers annually by 2035. UC Berkeley experts hired to validate those ridership numbers recently reported them to be unreliable.

And in the dozens of urban rail projects studied by Flyvbjerg’s team, the average train system produced half the number of riders that planners expected.

As we know, the UC Berkeley ITS report did not deem the ridership numbers to be unreliable. They instead said they disagreed with some of the methodological choices used by Cambridge Systematics in the HSR ridership study, and concluded that the ridership numbers could be correct – or they could not be.

Further, we have plenty of evidence from around the world that HSR projects – which is what the California HSR project ought to be compared to, not the nebulous “average train system” Flyvberg describes – that HSR is a clear success with riders. The Taiwan HSR system, which was plagued with financial problems relating to construction, has had dramatic success at gaining riders and recently began generating a profit. The Acela has over 50% of the travel market on the US Northeast Corridor. The Madrid-Barcelona AVE high speed train has been a dramatic success in just two years.

Of course, there are examples from the US of non-HSR systems that have had ridership success, such as Phoenix’s light rail project, which has exceeded expectations and the Seattle light rail project is on track to meet theirs – and both are projects that opened in the last two years.

The article also took a shot at the proposed higher fare:

Meanwhile, the authority has nearly doubled the estimated price of traveling from San Francisco to Los Angeles to $105, as measured in today’s dollars. The original number was based on the notion that a bullet train ticket would be half the price of a comparable air ticket; the authority changed that to 83 percent in hopes of generating more profit.

But the Rail Authority concedes pricier tickets will cost them millions of riders.

Two things here: The CHSRA has not “changed” the price of a ticket. They instead offered a second scenario where prices might be higher than originally planned. No final decisions have been made yet.

And that leads to the second point: even if pricier tickets will cost them millions of riders, the system is expected to make even more money, over $2 billion a year in free cash flow within a few years of operation. The whole point of the second scenario, with ticket prices set at 85% of airline prices is to show how the system could be priced to maximize profitability instead of maximizing ridership. Show me an interstate or airport that creates over $2 billion a year in free cash flow and we can talk about the comparable profitability of road or air versus high speed rail.

The article closes with a litany of examples of HSR projects that didn’t cover their construction costs, and a welcome acknowledgement that “most lines cover their operational costs.” As we know, the HSR project isn’t necessarily intended to cover its own construction cost – that goes back to the point I made at the outset about infrastructure being a public good, not necessarily something that pays back its construction cost.

But even the examples they give all had specific reasons for their problems:

When Italy first planned to run high-speed trains between Rome and Florence in 1977, officials estimated 60 percent of the $3 billion project would come from the private sector. But costs more than doubled and no private investor participated, leaving Italy to issue bonds to shoulder the entire burden.

Of course, there was a major global recession in the late 1970s and early 1980s, along with massive inflation, both of which explained that outcome. And Italy solved the problem, floating bonds to pay for the cost – another example of a political choice that HSR was worth paying for.

After tracks were extended to Milan in 1991, though, private companies enticed by ridership figures joined in and helped raise more than half the cash needed for extensions to other cities.

Meanwhile, France saw high-speed rail ridership soar from 12.5 million in 1980 to nearly 23 million in 1992; it’s now a moneymaker.

Rosenberg and Richards deserve credit for including these examples; too many other journalists would not have offered this evidence that proves HSR can attract riders and private investors.

But in Japan, where government funded the entire system, there were problems when some cities demanded more stations be built. The result was a $200 billion debt in 1987. To spare taxpayers that crushing burden, the government had to sell part of the system to private groups.

Here again, we see that higher costs were driven by political demands, not by any inherent flaw in the project. Further, Japan had a national debt crisis far beyond HSR by 1990, which it is still dealing with 20 years later. Privatizing the HSR system is one of the few success stories in Japan in that long era of economic difficulty.

Still, the overall point is that if HSR costs do rise, it will likely be because a political choice was made that they should go up because of a belief that what was being bought was worth the extra price. If that’s the decision that Californians come to, then that’s the choice they make, and it shouldn’t be seen as flawed – nor should it be seen as flawed if Californians make another choice, to hold down project costs and resist calls for more expensive HSR design alternatives.

More importantly, we must always consider the cost of doing nothing. It isn’t zero. The cost of widening Highway 99 alone in the San Joaquin Valley has been pegged at $25 billion – but HSR could help serve those transportation needs and those of other parts of the state for not that much more. The CHSRA has estimated the cost of expanding freeways and airports to meet the demand that HSR can handle to be between $80 and $150 billion – which makes HSR a savings even under the worst-case scenario.

The impact of rising oil prices, global warming, and the ongoing recession are all further costs that can be lowered with high speed rail. Those costs need to be included in the discussion. If there is a risk that the HSR project will go over the projected $42.6 billion budget, there’s a bigger risk that California will suffer significant costs by NOT building it.

In conclusion, any discussion of HSR costs has to include the context – that includes the cost of doing nothing, accurate comparisons to other countries’ experiences, and the political decisions that societies make all the time. I believe we can and should build HSR for the current projected price. I’m also willing to pay a bit more if it’s justified and if the additional costs are funded. We can be cost-effective and provide Californians the system they want.

  1. Richard Mlynarik
    Aug 16th, 2010 at 13:20
    #1

    This is because projects aren’t proposed by accountants and engineers, but by politicians …

    Sure. CHSRA was dreamed up by Rod Diridon, civil engineer, Quentin Kopp, transportation macro-economist, and Gavin Newsom, project management specialist. They had a dream, they had the vision, they had the skills, and there was nothing that PBQD could do but follow their lead and implement what our democratically elected officials had conceived.

    Much like this episode.

    Good God.

    Matthew Reply:

    Richard, I’m pleasantly surprised that we have something in common. We both think Bush is an idiot. I still don’t agree with you on most things related to HSR, but I’m willing to call a temporary truce on this one. Cheers.

  2. mikeorama
    Aug 16th, 2010 at 14:23
    #2

    I’m never really satisfied when I try to rebut the anti-HSR criticism about the project not being fully funded. It is certainly true that plans must be finalized before the actual cost can be known … in fact, to be even more precise, construction must be complete and all construction claims settled before the full cost is known. But in this case, there’s no doubt that the cost is going be several multiples of the known-available money, and there’s not a real solid plan for the rest. And the plan is to start construction before having all of the money in hand or even clearly on the horizon.

    I guess the fallback argument is that whatever is built must have independent utility. If this really is the key point in this argument, then I feel like there needs to be a much better PR. I’m a huge HSR supporter, I try to stay informed, but I can’t explain to an HSR opponent in any detail how this independent utility thing will truly work. Can anyone help?

    Robert Cruickshank Reply:

    A couple of points.

    1. There is a “solid plan” for the rest. It’s a plan, however, not a guarantee, and not money in the bank. Every major project encounters the period where some of its financing is there but not all of it. Right now HSR critics are using that period to try and argue that the project never will be funded so we should just quit now.

    2. “Independent utility” means anything we build right now with the funds we do have in the bank has to be usable even if the entire system never gets built. For example, if the money goes to the Peninsula, it would build a fully grade-separated railroad that Caltrain (and potentially other passenger rail services) could use even if the rest of the HSR corridor never gets done. So people will be getting something useful for their money; there aren’t going to be half-finished concrete viaducts just sitting there like the Embarcadero Freeway.

    mikeorama Reply:

    You’re right, there *is* a “plan” for where the full $40+ billion comes from, and it’s actually a pretty reasonable plan in my view. But it is also speculative, and I do see why this fact can be used to create concern among those who are committed to neither pro or anti camps. I don’t think it’s sufficient for us to say “every major project faces this issue,” because most major projects don’t start construction before having full funding commitments. Which is why this “independent utility” thing seems so important and why it needs to be better understood, explained, and promoted. I get the *concept* as described, but how can we explain it to undecideds in a way that will make them comfortable that independent utility will actually be achieved with all investments? For example, I find it easy to deal with the “operating cost black hole” concern by referring to experience of other HSR operators and the prohibition on operating subsidy in Prop 1A. But I don’t know what to point to as assurance that CHSRA will *actually* produce independent utility with its early stage capital expenditures.

    Matthew Reply:

    I don’t want to add ammo to the anti HSR crowd’s arsenal, but one of the potential problems of independent utility is that the whole of the project is greater than the sum of its parts. I think that LA to SF is a good investment even without the rest of the network, but it would be much more valuable with additional connections to the many millions of people that would be reached with the Sacramento and Inland Empire / San Diego segments. Improvements to LA to Orange County rail infrastructure is a good idea, and I also think that Peninsula / Caltrain upgrades are a good investment, but we’d still be stuck with improved commuter service instead of the full benefits of commuter and intercity rail. A Central Valley segment that doesn’t connect Southern California to Northern California with a one seat connection is not entirely worthless, but wouldn’t exactly be the best demonstration of true high speed rail in North America (it at least would be comparatively cheap as it’s the flat and fast section). It’s possible to have a transit line that misses all major nearby destinations that still has arguably decent ridership, but it’s not very good PR and it misses out on the real opportunities that generate phenomenal ridership. Unfortunately, this will continue to polarize opinion between people who don’t believe the funding will be found, and people who believe in the overwhelming economic sense of building the whole system. I put myself in the latter camp, but people in the former don’t seem likely to be convinced by the independent utility arguments.

    Tony D. Reply:

    Matthew,
    Keep in mind that the anti-HSR crowd is minute compared to those who want the project completed (see my post below). Like Diridon said in the Merc, it’s the same “20″ people showing up meeting after meeting crying and bitching about their NIMBY “concerns.” This isn’t some groundswell. Of course, they do have the ear of their small-town politicians and tend to get favorable press in the local print media. But when all is said and done, the majority wants this project and, as an SF supervisor stated the other day, you’re crazy if you think the Peninsula is going to stop HSR in San Jose.

    mikeorama Reply:

    Yeah, there’s not that many active HSR opponents. There’s also not that many active HSR supporters. What there *are* a lot of is people who are favorably inclined to HSR but can still be swayed to oppose it if they’re convinced that it’s a boondoggle. Which — sorry to keep beating a dead horse — is why supporters need to have really good answers to the legitimate-sounding issues that opponents raise. This “not fully funded” concern is the one that worries me the most, and I’m still not hearing any answers that would ease the concerns of an undecided Californian who read the Merc article. Unless supporters have a good response — not just one what *we* believe, but one that is true, compelling, and believable to the general public — the opponents can keep sowing (and growing) doubt. Which, obviously, is exactly what we don’t need.

    Caelestor Reply:

    See my point about my article. I will state again that there is a lot of apathy in this country nowadays. People are often too concerned with the present and fail to plan for the future…

    Caelestor Reply:

    Change the first sentence to “See my point about the media below.”

    mikeorama Reply:

    Well, it’s unsettling that no one here has a compelling response to the “not fully funded” attack.

    How about this one: early construction is going to be funded with federal stimulus funds, and those funds can only be used for projects with independent utility. If CAHSR can’t show independent utility for its early stage construction, it won’t get the money and nothing will get built.

    Assuming that this is true, it seems somewhat convincing. Though not as convincing as being able to say: “California has $x billion right now. Here’s what we can build with that money. And this is how it will be useful even if nothing else is built”

    flowmotion Reply:

    Because nobody involved is inclined to start negotiating down on the price, nor are they inclined to tell anyone their section is less important than the others, nor are they inclined to compromise on any design elements. So it is “Give us $30 billion or we knife the baby”.

    You do have a point, and the authority better have have something useful built when they inevitably run low on funding. But you won’t see the issue discussed here.

    Peter Reply:

    I would mention that a number of private and public entities have expressed interest in investing in CA HSR, such as SNCF. Additionally, I believe that the Chinese government has also expressed interest. Others are likely just biding their time until the time comes to put out bids.

    synonymouse Reply:

    Ain’t no way in hell any “private” investors are going to sink money in the Palmdale neo-BART without taxpayer-funded loan guarantees.

    Sovereign investors, one in particular, would be accompanied by serious and ongoing worries about industrial and ordinary espionage.

    Peter Reply:

    Why are you worried about China conducting industrial espionage in terms of rail? They have already secured all the technology they need to build their own HSR trains by legal espionage, as in technology transfer agreements.

    GE is going to benefit tremendously from China’s knowledge gleaned from its deals with Siemens, Bombardier, and JR-(can’t keep them apart).

    And yes, there will always be concerns with Chinese espionage. Those won’t change with HSR.

    Peter Reply:

    I mean, seriously, what are they going to learn from us? How NOT to build/operate railroads?

    synonymouse Reply:

    Taking money from sovereign sources would be a very risky policy. Any unpopular behavior on the part of a government investor could provoke a public boycott against the railroad. Oppression of minorities, rigged currency, support of rogue regimes, jailing of American citizens on trumped-up charges- you name it – it could provoke boycotts or demonstration. I would put taking funds from regimes in the same category as receiving money from organized. Tainted, like blood diamonds.

    synonymouse Reply:

    Meant to say organized crime. This software sucks.

    political_incorrectness Reply:

    Either way, you will piss somebody off with any major project. Question is, which is the least controversal? The European countries are much more promising but with the stupid disclosure act in the state assembly, it might be left up to the Governantor to kill the bill. Although I do not know the override procedure in California or if there is such a policy.

    Richard Mlynarik Reply:

    Oppression of minorities, rigged currency, support of rogue regimes, jailing of American citizens on trumped-up charges …

    So we won’t be taking any money form the US federal government, then.

    wu ming Reply:

    given how backwards american train tech is right now, the only possible industrial espionage would be going the other way (and for our sake i hope we do).

    Nathanael Reply:

    Actually, plenty of private investors will offer to run the system without taxpayer-funded loan guarantees. They’ll probably demand something like a 999-year lease and all the revenue for the entire period, plus a specific level of taxpayer subsidy each year, though — so it will probably be wiser to fund it other ways. :-P

    Private investments might make more sense on a more limited level, such as individual stations.

  3. nobody important
    Aug 16th, 2010 at 15:45
    #3

    “Privatizing the HSR system is one of the few success stories in Japan in that long era of economic difficulty.”

    Japan privatized their ENTIRE rail system, not just the HSR system.

    James Fujita Reply:

    Much of which was already private to begin with. Google “Tobu Railway” or “Kintetsu Railway”, just to name two.

  4. Tony D.
    Aug 16th, 2010 at 18:10
    #4

    What I didn’t like about the Merc article (s) was that they dedicated an entire piece to the wealthy-minority “opposition,” even to the point of validating frivolous lawsuits to delay/kill the project, yet totally ignore the vast majority of people in San Mateo County who STILL want high-speed rail. Our modern day print media…UN-FRICKEN-BELIEVABLE! (thank God for the blogosphere!)

    YesonHSR Reply:

    sadly they still reach alot of people and can very easily paint a negative impression of somthing or someone

    Caelestor Reply:

    Unfortunately for you, the media is a powerful propaganda machine due to its sheer extent of coverage. It’s like the center 4 squares of the chessboard: not a guaranteed win if you hold them, but it sure makes your objectives easier.

  5. William
    Aug 16th, 2010 at 18:39
    #5

    Robert, I think you should submit this article to SJ Mercury as a pro-HSR opinion. We could always use more pro-HSR opinions in the newspapar.

    YesonHSR Reply:

    Yes that would be nice…they probally would not print it..as its not enough drama for todays rags

    Robert Cruickshank Reply:

    Yep. Although I am planning to shorten it significantly, since they’re not going to print 3,500 words.

  6. Clem
    Aug 16th, 2010 at 18:46
    #6

    So when are the Feds going to start coughing up 3 billion a year?

    Joey Reply:

    That depends on how soon (dare I say … if?) the new transportation bill gets passed.

    Robert Cruickshank Reply:

    Exactly. I’m hoping it happens soon.

    If not, we get to deal with this issue for several more years.

    Fun!

    political_incorrectness Reply:

    I’d see about getting Jim Obestar’s bill amended from $50 billion for HSR to $100 billion as highways would still have $337 billion. Over 60% of the total bill. Most European nations are investing half of their dollars into rail. Congress needs to get on the move and amend the Highway Trust Fund for maintenance and less construction.

  7. John Burrows
    Aug 16th, 2010 at 22:22
    #7

    Rosenberg and Richards mention a length of 520 miles for the San Francisco-Anaheim route. I wonder if they used this figure in their cost calculations? If you use 748 km (467 miles), instead of the 520 miles they may have used for the San Francisco-Anaheim route you get a cost range of 34 billion to 65.5 billion. CHSRA’s 42.6 billion dollar estimate doesn’t look quite so bad in this range.

    Elizabeth Reply:

    why would you use 467 miles?

    John Burrows Reply:

    I was using Robert’s figure of 748km, divided by 0.624, equals 467miles.

    John Burrows Reply:

    My mistake, (never liked metric), I meant multiplied by 0.624

    morris brown Reply:

    The calculator on the home page of the Authority’s website gives the distance as 465 miles from the TBT to Anaheim.

    Of course, as we know know from Kopp’s remarks at the end of the Authority’s last meeting that 2.8 billion for the extension from 4th and King to the TBT has not been included in that figure.

    Apparently neither has the sometimes estimated 4 – 5 billion for local stations which the Authority thinks local governments will raise on their own been included either.

    As I have mentioned several times before, the Reason Foundation estimation of 60 – 82 billion seems to become more and more accurate, especially on the high side.

    Robert Cruickshank Reply:

    Yep, that’s where I got the distance figure – the CHSRA’s route map.

    Joey Reply:

    Different sources yield very different numbers in terms of route-miles. This is even true within the Authority’s own documents, although this is most likely a result of different preferred alignments during different stages of planning. The business plan says 500 miles, though this is likely rounded. Older documents (from back when they said it would cost $30 billion) say even more – 544 miles. A quick estimate on Google Earth along the program alignment (imported from CHSRA’s Google Map) shows about 475 miles, and the numbers I’ve heard are around 480. So unless you can find a definitive (and recent) source that says exactly how many miles Phase 1 will be, no number is better than any other.

    Clem Reply:

    The nebulous distance figures would tend to cast doubt on trip time calculations. Is the 2 hr 38 min SF – LA time even realistic? I have the tools to perform this complicated analysis, just not the time or inclination…

    Peter Reply:

    Well, the nebulous distance figures are obviously in flux from the fact that the route has not yet been determined. For example, if HSR runs through downtown Gilroy, it will add a few track miles versus East Gilroy. Or the difference between A1 vs. A2 between Merced and Fresno, or the new Chowchilla bypass, etc.

    Elizabeth Reply:

    PDF Page 89 of the business plan gives section by section mileage and this has 520 miles, which is in line with the detailed costing information by segment. This is before the changes to the area around Madera which may add 10 miles to the route.

    Peter Reply:

    I’m guessing the 520 includes the distance of the tracks from the mainline to Merced, which does not go towards the SF-LAUS runtime.

    Me Reply:

    Correct. But that extra stub does go to the cost of phase 1 and is in contention to receive the first $5 billion of construction funds.

    mike Reply:

    A road route that parallels the proposed HSR route comes in at 499 miles. This is an upper bound for the TBT-to-Anaheim route as it is generally more circuitous than the HSR route that it is attempting to parallel, particularly in mountainous areas (where HSR will use tunnels and viaducts).

    It does not include the Merced spur, which would add another 20 miles. Of course, that spur is irrelevant to SF-LA timings, but it likely explains where Elizabeth’s 520 mile figure comes from.

    synonymouse Reply:

    Of course nobody would build “A road route that parallels the proposed HSR route” because we already have one that is a lot shorter. Not even crooked LA politicians.

  8. Al-Fakh Yugoudh
    Aug 16th, 2010 at 23:30
    #8

    There is a reason why the support (especially in the media) for HSR is higher in other countries, like in Europe for example, as opposed to the US.

    In Europe (like Japan) you have many established stakeholders who are going to benefit from an expansion of HSR. Namely the train manufacturers (Siemens, Alstom, Fiat Ferroviaria, Breda Ansaldo etc.) and corporations as a whole which have seen their business travel costs go down thanks to HSR (which is often substantially cheaper and more convenient than business air travel).

    these stakeholders are very large enterprises with extraordinary lobbying power, at a par with oil companies and car manufacturers which may have the opposite interest. In addition until recently (the early 1990′s) airlines in Europe were often state owned flag carriers, just like train operators. The government was the owner of both and therefore airlines were not lobbying against it.

    In America this lobbying effort by entities which will benefit from HSR does not exist or is weak, and therefore the opposite lobbying effort (by oil companies, auto makers, airlines, etc.) prevails in the media and in the political discourse.

    This situation will not change until major US players enter into the train manufacturing business. If GE or Boeing or GM were major players in the train manufacturing business like Siemens or Alstom do you honestly think they wouldn’t be pushing hard federal and state governments to build HSR? Or do you think you wouldn’t hear the media trying to push the HSR agenda? I can guarantee you that you’d have Fox News singing the virtues of building a high speed rail between Winnemucca and Billings.

    America’s politics is all about money. You put enough onto the plate, and the politicians will sing like canaries.

    Richard Mlynarik Reply:

    This situation will not change until major US players enter into the train manufacturing business.

    This is nonsensical.

    The big pork is in civil engineering (essentially building new state-wide freeway systems, only with rails laid on top of all the concrete and regraded earth) and in systems “design” dwarfs the comparatively small rolling stock and even the expensive signalling/systems components.

    It’s no surprise that CHSRA was instigated by, is controlled at every level by, and directly serves the interests of large civil/systems companies like PBQD-Soprano.

    Certainly there will be all sorts of grandstanding about “American jobs building American trains for American conditions” (and 100% price markups to deliver worse performing lower quality products as a result), but in the big scheme of things this is a bit of a side show.

    I don’t know what planet you’re living on, but here on Earth in California the “stakeholders [that] are very large enterprises with extraordinary lobbying power” are right on the job and things are going along just swimmingly per their interests.

    You put enough onto the plate, and the politicians will sing like canaries.

    You must be deaf or something if you’re not hearing the chorus.

    Brandon from San Diego Reply:

    That is silly talk. The public and politicians certainly know the names GE and Boeing before Bechtel, Flour or Parsons in this country. And, I bet it is the same in Europe…. Alstom and Siemen’s surface as recognizable names before the local engineering firms names do… There is much more influence with jobs/employment numbers than consulting contract amounts!

    Richard Mlynarik Reply:

    Look at the numbers. Arm yourself with some facts. Never popular, I know.

  9. Andre Peretti
    Aug 17th, 2010 at 05:44
    #9

    “these stakeholders are very large enterprises with extraordinary lobbying power”
    I don’t know for Japan but I can speak for France. First, lobbying as exists in America is unknown. It would be considered corruption. The usual weapon for firms is layoff blackmail (“if you vote this law, 100000 jobs are at risk”). And in that respect carmakers are far more powerful than trainmakers. 10% of the French population more or less directly depends on the car industry for their livelihood. Alstom’s influence is far lower than that of Renault, Peugeot or Airbus. In fact, apart from cities where it has factories, few French people even know about Alstom. Some may remember it built the Queen Mary II, but Alstom Marine is now defunct.
    The difference between the US and France is not lobbying but public opinion. The French want trains, the Americans don’t. Even people who never ride a train are pro-rail. If a French politician allows a rail link to be abandoned, he is likely to lose the next election. His American counterpart will be celebrated for killing a boondoggle.

    rafael Reply:

    The French decided to invest in HSR after the 1973 oil crisis. Their domestic reserves of oil and other fossil fuels are negligible, so they decided to build a lot of nuclear power plants. At the time, the only scalable electric transportation technology was trains. High speed was a prerequisite for getting French consumers to embrace them once again.

    In other words, public investment in the TGV network was and remains a matter of French national energy security. To this day, the vast majority of motorways in that country are expensive privately funded toll roads, even though the French car industry employs far more people than Alstom does.

    Why did the US respond differently to that oil crisis? In a nutshell, because domestic oil production covered well over 50% of total demand at the time. In 2009, the share had shrunk to about 35%.

    Matthew Reply:

    Hmmm, not so sure I agree with your rosy picture of French politics, Andre. While lobbying in France has traditionally been looked at with suspicion as being undemocratic, the result hasn’t actually been the absence of lobbying, but that lobbying hasn’t been regulated. In fact, there have been recent moves to try to formalize the lobbying process to make it more transparent. In EU level politics, lobbying is overt, and is massive in scale. Politicians in every developed country rely on industry to shape policy, for better or worse.

    Andre Peretti Reply:

    I just said lobbying was considered corruption. This doesn’t mean loopholes don’t exist, but it’s very marginal because the risks are too big. Our finance minister is currently under investigation because as treasurer of his party he allegedly received campaign contributions from the firm L’Oreal disguised as gifts to “independent” associations. Even though no evidence has been found yet, he has sunk to less than 20% in the polls and is now an embarrassment for the government.
    I agree that lobbying at the European commission works on the US model, but with a big difference: the commission has not budget to speak of. Each country contributes less than 1% of its own budget to Europe. So, the lobbying is mostly about standards and regulations, which can have industrial repercussions. For instance, French carmakers lobbied for stringent CO2 emission standards while Mercedes and BMW lobbied against them.
    Rafael’s analysis is right, but I can add another element explaining the non-aversion of French people towards trains: French cities were built along waterways and roads, not railways which came later. So, you have no communities separated by railtracks, no grade crossings in built-up areas.

    StevieB Reply:

    There is growing evidence that american desire for high speed rail is growing. Just in the past week Tennessee and Texas news has covered their states new plans for rail. Reuters today reports

    The U.S. Department of Transportation said on Monday it continues to see high demand for funds to build high-speed passenger rail. The department said it had received 20 applications from 10 states totaling $7.8 billion for developing high-speed rail corridors and 57 applications from 18 states totaling $700 million for smaller projects within rail corridors.

    an examination by The Center for Public Integrity found that more than 50 public and private groups explicitly lobbied on high-speed rail policy last quarter — a three-fold increase from a year ago. Even that number fails to capture dozens of other actors likely lobbying on high-speed rail that keep their specific lobbying targets as vague as Washington does its spending plans.

    political_incorrectness Reply:

    With applications more than three times the value of what is available, we need to really step up investment in high-speed rail. There is no longer any reason to hold back. The interest is now there, airlines are not in fierce opposition with some airlines wanting high-speed rail to help relieve air traffic. It is especially needed in the Northeast. w

    jimsf Reply:

    Its my impression that the French, aside from being just plain fabulous in every way, are also very pragmatic. As with rail and energy, so with nuclear. Its not that they adore nuclear power, but they can accept the reality that they have no coal and no oil. So they did what they had to do. And they are far better off for it no doubt. Clean nuclear energy, instead of smoke belching coal and gas plants, and national system of high speed rail gradually growing to encompass the entirety of regions. Throw in the food, art and architecture and viola. Instant fabulous. Sure the Italians are good…but they’re just too much. I also admire the French for not being afraid to stand up demand what they want, march strike, and have have you. They don’t seem to be such pushovers when it comes to being sold a bill of hogwash by wall street and madison avenue.

    I could be wrong. But that’s how it seems to me. I also like how they stand a respectful distance apart and shake hands and poke their noses into each others bedrooms unless they plan to stay. Vive la France that what I say. Now send us some of those AGV’s please.

  10. AndyDuncan
    Aug 17th, 2010 at 09:26
    #10

    I’m still not quite sure where the reporters’ $73 billion estimate comes from

    Probably by adjusting the World Bank numbers for inflation, to make them equivalent units to the CHSRA numbers. I get about $70b on the high end WB numbers based on the CHSRA’s rough 35% increase from base year to YOE.

    BruceMcF Reply:

    But taking the high end figure for a range of projects as the mid-point estimate for the cost of the California project would be absurd.

    Unless, of course, the highest number with some vague connection to an official estimate, even if absurd, is the precise point of the exercise.

    Richard Mlynarik Reply:

    Are you aware of any other $1 billion “estimate” highway bridges that have gone to $6 billion (and climbing) elsewhere? How about “light” rail lines for $150 million/mile? How about 2 mile subway-technology extensions in far exurbs for $500 million/mile? A $2 billion elevated bus station?

    By any rational accounting, the highest global costs for any project would be taken as the minimum possible cost for Californian private contractor welfare undertakings. We’re off the scale, quite literally, there’s no incentive from any direction to change this, and as a result it will never change.

    Alon Levy Reply:

    I *wish* Second Avenue Subway were $500 million a mile.

    AndyDuncan Reply:

    The point of the exercise is only to try to get people talking about the same units of currency. Either you count inflation or you don’t.

    Just like one can’t claim that the price of the project has gone up by 30% because the authority decided to report the numbers in YOE instead of 2008$, one can’t sit here and say that the un-adjusted range of $26-$52 is somehow supportive of the YOE estimate of $42 because forty two is between twenty six and fifty two.

    If the Mercury News indeed got their numbers by taking the World Bank numbers and converting them (roughly) into YOE, then good for them, that’s what they should have done, otherwise they might as well be talking about Canadian and Singaporean dollars… or newtons and pound-feet.

    BruceMcF Reply:

    They wrote, “A Bay Area News Group analysis of high-speed systems around the globe suggests that the project could cost less than the current estimate, as little as $38 billion. But it is most likely to cost more — up to $73 billion, even if built on time.”

    Someone reading that would easily get the impression that $73b is the “likely” cost … “could … but most likely …”

    Suppose they had not chosen to deliberately frame it to emphasize the high end of the range, “A Bay Area News Group analysis of high-speed systems around the globe suggests that the project would likely cost in the range of $38b to $73b”.

    AndyDuncan Reply:

    I think we’re arguing two different things. I’m saying

    1: the units should be the same

    2: Robert’s claim that they pulled this number out of their ass is a bit harsh since it looks like they did in fact use the World Bank numbers, adjusted for inflation, just like they should have done

    3: Robert’s claim that the project estimates are realistic because they fall within the range given by the World Bank is misleading because the World Bank numbers are in 2010 (or earlier) dollars, not YOE dollars, either he needs to use the unadjusted $32 billion (or whatever it is) or he needs to convert the WB numbers to YOE.

    Your claim seems to be:

    4: Taking the high number of a range of prices and claiming the higher number is more likely shows bias, or at best, pessimism.

    I agree with that, though as others have mentioned, we don’t have a great record of bringing projects in under budget here in the US.

    BruceMcF Reply:

    The record of bringing projects under budget over the past two years is much higher than five years ago … because of the difference in the competitive bidding environment during a deliberately engineered asset-inflationary construction boom and the long term consequence of that in the current construction bust.

    The prospect that California will be experiencing an extended construction boom during the wave of oil price shocks coming in the next decade seems a bit remote.

    And of course, a lot of projects are brought in over budget due to design creep, and it seems many of the same people turning that from a problem to be managed into an inevitable part of all big construction projects in the US are also demanding massive design inflation in the form of absurd sprawl suburban HSR subways.

    And the idea that budget creep is a uniquely American phenomenon, so that the high end of the world experience should be taken as the most likely outcome, suggesting to most casual readers that its as likely to be higher as to be lower … that’s just silly. There is no reason to believe that Stage One will be built like the Italian system with all of its bypasses around town for Express services and HSR corridors through town for stopping services. There’s going to be tunneling, but nothing like the Swiss base tunnels. They aren’t trying to bring the trains in at 220mp into the middle of large cities.

    Reading that segment of the Mercury News piece more carefully, it (1) does seem to have a basis for its numbers, which is partially masked by the fact that (2) it deliberately frames the way that the range is stated to make it seem like the extreme upper end of the range is, instead, the central point of an estimate.

    Parsing it carefully and reading what it literally says, independent of composition intending for it to be misread, it seems likely that they just took the range on hand and inflated them into YOE to get maximum scare number status. Reading it as they intended it to be read, the $73b number is pulled from their ass by a shell game.

  11. Drunk Engineer
    Aug 17th, 2010 at 13:55
    #11

    But taking the high end figure for a range of projects as the mid-point estimate for the cost of the California project would be absurd.

    Absurd? If anything, they are being wildly conservative.

    In the case of Northern California, there is 5 decades of precedent where construction cost for virtually every rail transit project was more than 100% over the originally “projected” amount.

    Hoocoodanode!

    BruceMcF Reply:

    So you are saying they better hurry up and get the project under control of Southern Californians, then?

  12. mike
    Aug 17th, 2010 at 15:35
    #12

    No doubt NorCal rail projects are far more expensive than necessary. The “good” news is that most of the cost escalation here happens prior to the Draft EIR stage. Consider the two most recent examples:

    SFO Extension:

    Final Cost (2003 completion): $1.5 billion
    Cost Estimate in 1995 (year of Draft EIR release): $1.3 billion (SJ Mercury News, 6/24/1995)
    Cost Estimate in 1994 w/Airport Station: $1.3 billion (SF Chronicle, 3/28/1994)
    Cost Estimate in 1992 w/no Airport Spur or Station (terminate in Millbrae): $700 million (SF Chronicle, 6/5/1992)

    Dublin Extension:

    Final Cost (1997 completion): $517 million
    Cost Estimate in 1990 (year of Final EIR release): $514 million (SJ Mercury News, 5/25/1990)
    Cost Estimate in 1989 (year of Draft EIR release): $382 million (SJ Mercury News, 6/11/1989)
    Cost Estimate in 1987: $181 million (SJ Mercury News, 6/11/1989)

    The SF-SJ Project Draft EIR is expected to be released in the next 6 months, so if there are going to be big cost escalations (beyond what we’ve witnessed since the original circa-2000 proposal), now is the time we should expect to see them. Stay tuned!

    Peter Reply:

    Hmmm, that’s an interesting point. Do you know if that carries over beyond BART?

    mike Reply:

    The only major NorCal rail transit projects in the last five decades besides BART are RT Light Rail and VTA Light Rail. I don’t know as much as those as I do about BART, but here are the numbers I could quickly find:

    RT Light Rail South Line:

    Final Cost (2003 completion): $228 million (Sac Bee, 9/27/03)
    Earliest Published Cost Estimates (1995): $200 million (Sac Bee, 10/24/95)

    For VTA it’s hard to find meaningful numbers because the extensions were built in stages. The “Tasman Corridor” line (East + West) was originally forecast at $449 million in 1991, but it opened in several phases. The Mtn View extension (Tasman West) came in at $325 million (SJ Mercury News, 12/1/99), while the Alum Rock extension (Tasman East) came in at $454 million (SJ Mercury News, 11/6/06). Combined they would total $777 million. But the Alum Rock extension was significantly longer than the original Tasman Corridor proposal in 1991, so it’s not an apples-to-apples comparison. Overall I doubt that VTA Light Rail had a distinguished history though.

    Other NorCal rail transit projects are on the scale of the Ponderosa Project (Caltrain), the CTX Project (Caltrain), or the second main track on the Yolo Causeway (Capitols). That’s pretty small stuff…probably not relevant to the discussion at hand.

    Drunk Engineer Reply:

    The “good” news is that most of the cost escalation here happens prior to the Draft EIR stage.

    That isn’t good news. It is very, very bad news.

    It means that during the MIS and/or “alternatives analysis” phase, artificially low estimates are used to preclude more cost-effectively solutions. Only after better solutions are eliminated can the actual price be revealed. By then, it is too late.

    Richard Mlynarik Reply:

    Exactly.

    mike Reply:

    I think you misunderstood what I meant by “good”. It’s “good” in the sense that the cost estimates are relatively accurate (key word: relatively) once you reach the Draft EIR stage. Thus we will soon reach the stage at which one would begin taking the cost estimates seriously, based on historical experience.

    But that’s not the same as analyzing at what point it’s “best” to have cost inflation, assuming you’re going to have it at all. Obviously the true best solution is not to have it at all.

    D. P. Lubic Reply:

    An interesting point to contemplate. . .

    In the book, “Old Man Thunder,” by Bill Hosokawa (which I highly recommend, by the way), it is revealed that the original chief administrator of the Japanese Shinkansen system, Shinji Sogo, deliberately mislead the Japanese Diet on the cost of building the Shinkansen system, giving its members cost figures only half of what his engineers were coming up with. He told his engineers that their costs were accurate, but that the Diet would never go for the system with honest figures, hence his choice to take this route. He would pay for this with eventually being relieved of his post, and would not be invited to the opening of the system. It may be suspected he thought something like this would happen, yet he did this anyway, due to his strong belief that a rail system was the best thing for Japan. I have at least one other source that suggests part of what drove the Japanese and the European decisions on high speed rail years ago was that even then they could see where America’s car-driven system was going.

    This says a number of things to me, particularly that politics is still pretty much the same everywhere (including legislative members who are apparently pretty clueless about technical matters), although its styles and formats may be different due to whatever culture you’re working with.

    Equally important (although not raised directly by the book), is the question, how do we get a better transportation system, particularly one with a strong rail component? We are beyond the limits of practical automotive use, due to traffic congestion and fuel concerns.

    Build more roads? Where are you going to put them, particularly in a built-up urban environment?

    Double deck roads, as once proposed by Wendell Cox? How do you pay for essentially miles of viaduct construction, and miles of viaduct maintenance, and who would want to drive on the lower level?

    Alternative power, particularly electricity? Good idea, but where are you to get the power for all that battery charging in addition to the demand for air conditioning on hot nights in the summer? What about your supplies of lithium for batteries? How do you pay for your road network if you start getting significant numbers of vehicles that do not burn fuel, and hence do not contribute to highway revenue with fuel taxes?

    We still have problems of driver error; how do you deal with that? What about older people who lose vision, hearing, reflexes? What about drunk or drugged drivers? What about fatigued drivers? How do you get a big jump in performance, such as the higher speeds a train can have, and do so with improved safety?

    How do you improve passenger comfort, without someone getting leg cramps on longer trips from being cooped up in that rolling tin can? How do people work while they travel, something brought up as an important part of the future for rail customers?

    How do you find a parking space?

    How do we make the change if we are totally expected to be angels, when the opposition has certainly been so devilish over the years?

    How do we honestly get this rail system, or address the problems I just mentioned above?

    I tried an honest sales pitch, and had good numbers and logic for an interurban rail line, and failed miserably, being called a Communist and other things. I didn’t necessarily expect that my rail proposal would be chosen, but it at least should have been seriously considered–and was just brushed off. What would Richard or Robert suggest that I should have done differently?

    http://extras.denverpost.com/books/book298.htm

    Richard Mlynarik Reply:

    How very exciting.

    So it’s OK to commit outright fraud in the pursuit of gigantic civil engineering projects, stuffing them to the gills with goodies for the contractors, because trains are infinitely cool?

    We as a society need to just turn a blind eye to things like return on investment, opportunity cost, value engineering, any sort of trade offs of benefit versus socially borne cost because … LOOK OVER THERE A TRAIN!!!!!!!!!!

    When the elected government is allocating limited public funding between, say, the collapsing University of California education system, the schools, basic social welfare that keeps people from dying on the streets, hospitals, other physical infrastructure, etc, they just shouldn’t even think about it and should just whip out the blank check for PB, even knowing that costs will double, because OOOOOHHHHHHHH ZOOMY TRAIN GO FAST COOL WOW.

    Modern societys’ resource allocation conundrums can be reduced to a straightforward weighting function: high speed train = infinite, everything else = whatever.

    Learn from old man Shinji Sogo: extremism in the defence of choo choo is no vice.

    D. P. Lubic Reply:

    Richard, what’s the matter with you? Do you need to take liver pills or something?

    What I was trying to bring up was the dilema that an honest and earnest effort seems to be a waste of time and energy, while the crooks win. You have to admit that is very frustrating, and you seem to have seen enough of it yourself. I’ve faced it, too, and have really been on the losing end. Yet you accuse me of being in favor of corruption! I have to wonder if you’ve ever tried doing anything at all.

    As for people in dire straits, I’ll have you know I work for the unemployment office in West Virginia. I see the claimants come in, without work. I’ve personally helped out some of them with my own money, not always easy on a civil service salary, although as an auditor I’m better paid than most. And my own wife has been out of work for a year, and hasn’t even gotten a phone call from all her applications in that time.

    I don’t know how things work out west, but I’ve been told about 75% of the state budget and about 80% of the property tax receipts are used for education at all levels, ranging from grade school to college, a significant bit of money for a state with a population of about 1.8 million. One of the problems we have is that too many of our best have to leave the state to find proper opportunities. It has been argued that supposedly dumb hillbilly West Virginia is really subsidizing much of the country with brainy people. I can personally tell you that both our political and our business leadership is too conservative, as in too cautious to try anything different (consider my comments about being called a Communist for suggesting an interurban system tailored to a semi-rural area.)

    And believe me, I know the business community. I audit employers for the unemployment agency, to make sure unemployment taxes and payrolls are properly reported. Half the people in business have no business in business. They can be good people (in fact, only a handful aren’t), they can be skilled people, but they are not good business people. My guess is the same thing goes out west, too. I can tell you I have, in terms of numbers of audits, about as many refunds as collections. I’ve helped people save money.

    Part of the job a friend of mine had may help illustrate my point. He used to work for the US Park Service in Harpers Ferry, W.Va., interpreting the history of this town for the tourists who come to learn of the John Brown raid and the Civil War. One of the stories he told was of how Harpers Ferry was a boom town in the period just before the John Brown raid in 1859. There were many skilled factory workers in a government armory there (which was Brown’s objective, by the way) who were making $30 a month at a time when the average farmer in America had a cash income of about $125 for a whole year.

    All those $360 per year salaries at this government-owned industrial complex represented a lot of money rolling into Harpers Ferry, and a lot of businessmen opened up shops to attempt to get some of this money. These shops included dry goods stores, boot shops, opticians, leather shops, etc., and lots and lots of saloons. The business situation is very competitive; the average life expectancy of a business worked out to about six months.

    Now, if you spoke with someone from the Small Business Administration at least until fairly recent years, you would have been told that about half of all small business startups in any given year would fail in the first year of operation, and that up to 90% would fail in the first five years. That works out mighty close to the six-month life expectancy of the 19th century, in which there was no income tax, no sales tax, no unemployment tax, no workers compensation coverage, no minimum wage law, no overtime law, no child labor law, no Social Security tax, no Medicare tax, no health or sanitation code, no building code, no public sewer or water system–in short, “no nothing”–and maximum economic freedom–and the business success and failure rates were, if anything, worse back then than they are now!

    This tells me that success in business depends on the skill and ability of the management, and on a good deal of luck in being at the right place and in the right time. Regulation and taxation, while certainly requiring a good deal of thought and care that it too often doesn’t get, does not seem to be that much of a factor.

    This is part of why I have developed an extreme distaste for the Republican party of late, which I didn’t have before; in fact I was registered Republican for 10 years (and am currently independent). Needless to say, their anti-regulation and anti-tax talk that doesn’t seem to hold up in my experience, combined with arguments that rail travel is socialized transport and we should be forever grateful for our continuing debt to the oil, auto, and road industry, simply means I have no reason to vote for any of the candidates they have (and by the way, I have never voted straight ticket, but have always voted for individuals). It would be different if they spoke more to reality, but they don’t. Essentially, the conservative movement for the most part seems to me to be clueless to the point of danger, while the so-called liberal group is simply incompetent.

    This brings us back to our original commentary. You argue that the work of Parsons-Brickerhoff is overpriced and perhaps incompetent. I will not argue against that. What I want to know is how to get an alternative to Parsons-Brickerhoff that we may have an alternative travel mode that doesn’t depend on an oil source from people who don’t like us. Let’s admit it, P-B has been successful in getting their contracts–and the highway builders and others were successful in keeping my light rail line totally out of the picture. Keep in mind the “cost of doing nothing” really does cost something (i.e., an oil war or two); we do need to get away from using cars the way we currently do, for national security reasons as much as anything else. Yet an honest effort, done probably as you would have liked it, failed.

    Again, I ask, what would you have done differently?

    jimsf Reply:

    I don’t know about the whole west, but in California the education budget is bankrupting the state. We give half the entire budget to education and everything else combined goes begging for bits of the other half. And its money down a rat hole trying to teach kids who aren’t even literate in their own native language let alone english. The parents don’t raise their kids. The kids act like hoodlums, drop outs, criminals, htey tag and destroy public property, then wind up in the criminal justice system. Schools keep the problem kids in cuz that’s how they get funding when what they need to do is kick out the ones who don’t bother showing an interest.

    Meanwhile at the CSU and UC levels, students and their families seem to think that they should attend for next to nothing instead of paying for the cost of the education. The whole system is a mess. WE have so many school districts.. some only consist of a couple schools… and they need to consolidate and eliminate layers and layers of bureaucracy. Its a giant money pit.

    adirondacker12800 Reply:

    Meanwhile at the CSU and UC levels, students and their families seem to think that they should attend for next to nothing instead of paying for the cost of the education.

    It used to be free before Saint Ronnie came along and changed that. It’s one of the reasons California went from being an agricultural state to what it is today.

    jimsf Reply:

    Thats true. But now we can’t afford to give away education to the whole world. Frankly Id be all for making it free for native born californians only, and charging the rest of country and world a lot more. I mean California taxpayers should not be funding education for foreign students.

    The state was much easier to manage 50 years ago, in the same way that smaller, more homogeneous countries have an easier time providing for their people.

    America is a big ole clusterF*** – it like herding cats. No matter how much money you throw at our problems it just blows off into the wind.

    wu ming Reply:

    the hell we can’t afford it. the cost of educating students is not the driving force in higher education budget woes, and every out-of-stater or foreigner that goes to our universities has a high chance of staying in-state after they graduate, thus generating both business tax revenue and income/sales tax revenue that very quickly more than makes up the money the state contributes to their education.

    the reason why CA’s budget is so messed up isn’t our economy/society’s inability to pay for it on the aggregate level, it’s the disappearance of CA’s liberal and moderate republicans and their replacement with anti-education, anti-taxation, anti-infrastructure, anti-public services howard jarvis radicals, who play ransom games with the budget where a generation or two ago they were willing to fund the basic functioning of the government for the benefit of business and the common good.

    we can’t afford not to pull in educated people from other states and abroad. we get far more from their presence than the state pays out in their education, even were we to restore the 1960s plan’s state-funded tuition policy. this does not mean that we should not also rebuild our primary school system so that native-born californians don’t also get a world-class education. we need both, and can afford both.

    jimsf Reply:

    ok but do you get that half the budget goes to education already? how much do we give? 75 percent and leave the remaining 1/4 to fund EVERYTHING else? I pay o third of what I make in taxes. I can’t pay anymore or can’t afford rent. Who is going to pay more? I mean raise more money yes. But not my taxes. I can barely afford groceries Im sure not paying some foreigners education too. I suggest we raise money by charging people to move here, and paying people to leave ( to reduce the burden of overpopulation) Some one has to pay. The outside students should pay their full share. They’ll come anyway because california is always desirable. We don’t need to lure anyone. I mean really where are we suppose to get this money? Exactly?

    adirondacker12800 Reply:

    The outside students should pay their full share.

    They did back when it was free for Californians and they do now.

    wu ming Reply:

    do you know what out of state UC tuition is going for these days, jim? $35,958.91 a year for undergrads, $28,359.36 for grad students, and between 42 and 50,000 bucks for professional students. i can guarantee you that far exceeds those student’s cost of instruction. even in-state tuition covers the cost of education, the UCs are a private school as far as cost of education goes.

    noone’s getting a free ride here, except for the people a generation or two ago that got free state school tuition and then froze their own property taxes after they graduated and are now making later generations pay their own way so that their taxes don’t go up. i’m not talking about working class urban renters, i’m talking about well-off suburban homeowners who were happy to take the benefits of a bunch of state subsidies but then turned around and pulled the ladder up after them.

    Richard Mlynarik Reply:

    The BART Millbrae extension “budget” doesn’t include nearly half a billion off the books, including zero-interest, indefinte-term “loans” rammed down by the thoroughly corrupt MTC executive staff, and dozens of “by others” projects (Millbrae Avenue bridge, flood control district “improvements”) that were undertaken solely to keep project costs off the books.

    The limitlessly corrupt MTC, Alameda CMA and Santa Clara VTA are doing the same thing today with the BART Fretmon-Warm Springs boondoggle (stalking horse for the PB-designed PB-promoted PB-profiting Pacheco-HSR-determining Fremont-San Jose-Santa Clara fraud): Fremont just happens to be doing road grade separation projects that just happen to be where PB’s BART line will go, and VTA just happens to buy a rail corridor that just happens to be where PB wants to build, but it’s all just a giant coincidence and has nothing to do with the project “budget”.

    jimsf Reply:

    Bart has been planning to go to warm springs and beyond long before pacheco hsr was on the horizon. I know tweekers who are less paranoid than you.

    Elizabeth Reply:

    That is actually not really true. The decision to switch the fremont – sj project to traditional BART technology from standard rail and the decision to switch to Pacheco from Altamont were both circa 1998.

    jimsf Reply:

    No. bart has been planning on warm springs as regular bart since I was a kid, forever ago. I don’t recall there ever being any question whatsoever about regular bart going to san jose. It may have come up for a minute in the 90s, during the ” maybe we could ebart for the antioch and livermore extensions, but that was a brief moment, not real plan. Only the antioch ext. get ebart now. Even livermore has stuck with regular. No one in the bay areaaelr ly likes the idea of the cheapened fake bart extensions.

    Elizabeth Reply:

    it was regular bart (your childhood), then it went to regular rail (1996?) , then it went back to regular BART (1998?)

    jimsf Reply:

    In any case. I for one am glad its going to san jose. Some people here don’t like the idea. But a lot of us have been waiting 30 years.

    Joey Reply:

    BART technology is SOOOO 30 years ago…

    synonymouse Reply:

    But PB-Bechtel will defend their creation to the death. BART’s white elephant technology(thanx to Bechtel)will be so ustaged by either Caltrain or the hsr. No love lost here especially since all three will be competing for scarce operating subsidies.

    Peter Reply:

    Double-yawn.

  13. EJ
    Aug 18th, 2010 at 20:56
    #13

    Will it be enough to offset the cost of the debt service? Maybe, maybe not. But it’s hard to see how the HSR bonds are at all risky to the state budget.

    Um, “maybe, maybe not” is basically the definition of “risky.”

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