I ask him if the new-and-improved business plan that Gov. Jerry Brown wants on his desk any minute now will have any surprises in it. “Yes, there’s a very big surprise,” Richard says, calmly removing his classes and rubbing his eyes. And that is…? “I think it will surprise everyone that we’ve actually listened to our critics for a change,” he says with a fraction of a smile. About what, specifically? “We simply can’t ignore urban areas when we build this thing,” he says.

Cryptic, no doubt, but potentially significant. What exactly is Richard saying here? Critics of the project may hope he’s saying that the money will be moved from the Central Valley Initial Construction Segment to the ends of the route, investing only in upgrades to existing rail service that could at some future time be used by high speed trains.

That is what Senator Alan Lowenthal has been gunning for since at least 2009, and it would mean essentially abandoning the high speed rail project. While upgrading urban rail is a very good idea, high speed rail’s promise is connecting Los Angeles to San Francisco via the Central Valley, providing a new form of transportation that can give travelers an alternative to flying and driving that they don’t have. It’s a choice that, as we’ve seen around the world, will likely prove very popular with Californians, create jobs, and provide a significant economic boost by saving money on oil.

If building better urban rail in SF and LA is the key to getting intercity high speed rail, well, wouldn’t that have happened by now? Metrolink has been around for 20 years. The Pacific Surfliner (originally the San Diegans) have been operating since the late 1970s. The passenger rail service now known as Caltrain has been in operation for nearly 150 years. Those are all very valuable, successful services that can and should be improved. But they haven’t helped produce statewide high speed rail.

That’s because the problem is the gap between SF and LA. The main gap lies between Bakersfield and Palmdale through the Tehachapi Pass. But even if that were closed, a lot of new track still has to be laid in the Central Valley and through the Pacheco Pass to connect the Bay Area metropolis to the SoCal metropolis.

In short, the key to California high speed rail is track in the Central Valley. Starting there makes sense because once that gap starts to get filled in, then you get the political momentum to connect that track to the Bay Area and to SoCal.

If you do it the other way around, however, and build better tracks in SF and LA, you do nothing to address the gap problem. Instead you’re deferring it to an uncertain future. Worse, by caving to the “omg you can’t build in the middle of nowhere” bullshit, you’re actually making it harder to eventually close the gap because the precedent has been set that building outside the urban areas isn’t a good idea.

There are other practical problems too. Could high speed service within the Bay Area or SoCal generate a profit? Neither the Surfliners, Metrolink not Caltrain do so. Nor should they have to, as the purpose of passenger rail is to connect people rather than make money. But Prop 1A forbids a state operating subsidy and more significantly, one of the political arguments against the Central Valley section is that it won’t attract enough riders to be successful. Never mind the fact the CHSRA has no intention to just operate a Central Valley-only system; the Initial Operating Segment would connect either to the Bay Area or SoCal.

But an urban-only rail system would have an even more difficult time generating ridership to be profitable. That’s because the universe of choice riders is likely much smaller. Around the world, in places like Spain, many of HSR’s riders switched from planes. And in California, spending less than 3 hours on a train from SF to LA would be a far more attractive option than spending 6 hours in a car, unable to use one’s digital devices.

Within urban areas, however, the choices are different. Nobody flies between SF and San José. A bullet train connecting those two points could save you 30 minutes over driving (perhaps more at rush hour) but that’s not as great a savings over driving between SF and LA. Perhaps there would still be enough riders to pay the operating costs of urban HSR, and I’m willing to be convinced if there are ridership projections indicating that’s the case. But based on what I can see, it doesn’t look promising.

In short, moving the money to the urban areas looks to be more risky than the current plan.

Now it’s not at all clear that’s what Dan Richard was intending to say. The federal government hasn’t signaled a willingness to move its share of the funding away from the Central Valley. And Richard may have been indicating a desire to fund upgrades to rail in the urban areas, perhaps with the $950 million in Prop 1A earmarked for rail systems that connect to HSR. That’s a good idea.

Prop 1A requires a federal or private match for any of the $9 billion that is directed to HSR, but perhaps the CHSRA has found a way to spend some of that money in the urban areas while also proceeding as planned in the Central Valley. I would be quite strongly supportive of this too.

But as of right now, it doesn’t seem like moving the money out of the Central Valley entirely makes any sense. I hope that’s not what Dan Richard has in mind. We will find out soon enough.

In 2011 a Republican House did gut HSR funding, but again this was not the CHSRA’s fault. But in a new report the State Auditor continues to hold the CHSRA responsible for Congress’ failures on funding transportation policy. The result is yet another flawed report from a State Auditor who does not appear to have a strong grasp of transportation funding.

Although the Authority has secured funding for the Initial Construction Section (construction section)—the first portion of the program—the program’s overall financial situation has become increasingly risky, in part because the Authority has not provided viable funding alternatives in the event that its planned funding does not materialize. In its 2012 draft business plan, the Authority more than doubles its cost estimates for phase one of the program, to between $98.1 billion and $117.6 billion. Of this amount, the Authority has secured approximately $12.5 billion to date. The success or failure of the program consequently depends upon the Authority’s ability to obtain between $85.6 billion and $105.1 billion by 2033.

So the Authority gives itself 21 years to get as much as $85 billion from the federal government (although they will need much less – once an Initial Operating Segment is open, private money will step up to the plate). They’ll obviously need money sooner than that, and while this present Congress isn’t likely to give it, this present Congress is not going to last beyond the end of this year. Democrats continue to dominate the generic Congressional polls, a key indicator of their growing chances to reclaim the House in November. So the chances of the Authority getting more federal funding in the near future are not nearly as bleak as critics imagine.

The State Auditor doesn’t explain any of this. Instead they continue to bash the project as “risky”:

In its 2012 draft business plan, the Authority identifies the federal government as by far the largest potential funding source for the program, yet the plan provides few details indicating how the Authority expects to secure this money. Further, the plan does not present viable alternatives in the event that it does not receive significant federal funds. In fact, one of the funding options the Authority characterizes as an alternative is not yet approved for use on high-speed rail projects. Although it is possible that the Authority may obtain the necessary funding to move forward with the program, it risks significant delays or the inability to proceed if it does not.

The problem is that this isn’t unique to high speed rail. Many transportation projects, like BART to San José, rely on getting federal funds that they’re not guaranteed to receive.

But we can make a bigger point. If Republicans prevail in November, winning the Senate and the White House in addition to the House, one could then say that pretty much everything the State of California does is “risky” since federal budget cuts could undermine virtually every service and program currently provided by the state, from schools to parks to roads. The State Auditor isn’t really telling us anything useful here.

Some of the State Auditor’s concerns border on the absurd:

Further, the Authority’s 2012 draft business plan still lacks some key details about the program’s costs and revenues. In particular, only within the business plan’s chapter about funding—more than 100 pages into the plan—does the Authority mention that phase one could cost as much as $117.6 billion, whereas it uses one of its lower cost estimates of $98.5 billion throughout the plan. Moreover, neither of these cost estimates includes phase one’s operating and maintenance costs, yet based on data included in the 2012 draft business plan, we estimate that these costs could total approximately $96.9 billion from 2025 through 2060. The Authority projects that the program’s revenues will cover these costs but it does not include any alternatives if the program does not generate significant profits beginning in its first year of operation. Further, the plan assumes, but does not explicitly articulate, that the State will not receive any profits between 2024 and 2060, because private sector investors will receive all of the program’s net operating profits during these years in return for their investment.

The State Auditor doesn’t examine the rising cost of oil or other globally successful HSR systems (virtually all of them, including the Amtrak Acela, cover their own operating costs), simply assuming that the system will somehow have trouble, unlike all the other HSR systems, in covering its costs. If the State Auditor still thinks gas will be at $4 a gallon 50 years from now they are simply delusional.

As to the state not receiving any profits, well, unfortunately that’s by design. But that isn’t a problem for the HSR project, since Prop 1A mandates that the state not subsidize its operations. That’s a moronic and stupid rule, but it is also a rule the system can meet. If the system covers its own costs, as global evidence suggests it will, then the state faces no obligations and if private sector investors get all the profits, that’s stupid but not necessarily a financial problem from the state’s perspective.

The State Auditor makes their own anti-rail biases clear in the way they attack the ridership studies by innuendo:

The accuracy of the Authority’s estimates of the program’s profits depends upon its ridership projections, which are thus fundamental to private investors’ interest. The ridership model the Authority presents in its 2012 draft business plan assumes an average ticket price of $81 and projects that passengers will take a total of 29 to 43 million annual trips by the completion of phase one. However, when the Authority’s chief executive officer commissioned a ridership review group to independently assess the ridership projections, he handpicked the group’s members, which may call into question the independent nature of their assessment.

OK, this is simply bullshit. If the State Auditor cannot actually find technical fault with the ridership recommendations or the peer review of those numbers, they have no business impugning the peer review group or Roelof van Ark for putting it together. This kind of baseless attack has no place in an official report such as this.

The report goes on to make a number of recommendations regarding contract oversight and those are all well and good. But it is frustrating to see the State Auditor continuing to hold the CHSRA responsible for Congress’ failures, and their unfair attack on the peer review of the ridership numbers is a particularly ridiculous move that shows their inherent biases.

The “Stop The $100 Billion Bullet Train to Nowhere Act” is currently pending at the Attorney General’s office, awaiting a title and summary before it can be circulated for signatures. The key question is whether LaMalfa and Radanovich have any money to pay for signature gathering to put this on the ballot – it would cost at least $2 million to gather the 800,000 or so signatures required and given that there is not a lot of time to do so, with most other paid signature gatherers busy on other pending initiatives, they’ll need deep pockets if this were to have a chance at all of making the ballot.

My guess is, as of right now, that LaMalfa and Radanovich don’t actually have the money. They’re filing an initiative in hopes that someone will step up and fund it for them. This is not so different from when LaMalfa helped file an initiative to repeal AB 32 in 2010 – once he filed it right-wing and oil company money flowed in to put it on the ballot as Prop 23. But Prop 23 went down in flames in November 2010, suggesting that Californians support green jobs and sustainable projects and have little interest in following Republicans down a path of oil dependency and ruin.

LaMalfa is also running to replace the retiring Wally Herger in Congress, so this may be a bid for national attention and potentially national money in his run for Congress. As we know, House Republicans are vehemently anti-rail, as they are currently in thrall to their oil company donors (such as the Koch Brothers), so this could be LaMalfa’s attempt to prove to a national audience that he is just as wingnutty as Jeff Denham, Kevin McCarthy, and the other yahoos in the California Republican caucus.

Unless funding materializes to actually put this on the ballot, I’m not going to worry about it. Still, it is a good reminder for HSR advocates that the opposition feels emboldened, and believes that Californians really would be willing to sacrifice their future on the altar of right-wing dogma. Now would be as good a time as any to push back hard in defense of high speed rail and in defense of California’s future.

Republicans are uniting in opposition, and three key Democratic state senators — Joe Simitian, of Palo Alto, chairman of the budget subcommittee overseeing transportation; Alan Lowenthal, of Long Beach, chairman of the Select Committee on High-Speed Rail; and Mark DeSaulnier, of Concord, chairman of the transportation committee — have started applying the brakes.

The three have supported high-speed rail and voted to put it before the electorate in 2008. But in separate interviews last week, they indicated that the current plan could not win their vote.

If these three legislators are going to buck the will of the voters as expressed in November 2008, they had better have a damn good reason. If they’re going to turn their backs on thousands of immediate jobs in a place with some of the state’s highest unemployment, they better have a damn good reason. If they’re going to side with right-wing extremists like Wisconsin Governor Scott Walker and California Republicans like Jeff Denham, they better have a damn good reason.

As it turns out, they don’t.

They voiced concerns about plans to start in the Central Valley with a 130-mile link that will not attract enough riders and could become California’s version of the Alaskan “Bridge to Nowhere.”

“This is an albatross potentially,” Lowenthal said.

What Borenstein doesn’t mention is that Senator Alan Lowenthal has been an opponent of this high speed rail project since at least 2009, and has been pushing since that time to gut the project and spend the money only on upgrades to local rail. That’s all he cares about. You’d think that would be important context, but it’s not given here.

More importantly, Lowenthal is deliberately ignoring the construction phasing plan. Nobody is talking about operating HSR from Fresno to Bakersfield alone. Lowenthal knows this. Instead the plan is to start construction in the Valley but have the Initial Operating Segment connect either to the Bay Area or to LA. The Authority’s business plan indicates that riders will use that and that the private sector will be interested at that point.

That distinction is lost on Lowenthal, who is deliberately using right-wing framing to undermine President Barack Obama, job creation in California, and intercity rail. And remember, this guy wants to become a Democratic member of Congress!

We know Lowenthal is a hater. But it is sad to see Senator Mark DeSaulnier, who I respect a lot, join in:

Instead, they are pushing to begin in urbanized areas. “You need to spend the money where the need is and where it will attract private-sector funds,” DeSaulnier said. “You need to put it where the ridership is.”

And the ridership, Senator, is in a statewide system that goes from San Francisco to Los Angeles. It’s not in the small pieces within those regions. After all, does Caltrain generate a profit? Does Metrolink? Does the Pacific Surfliner? None of them do. To be absolutely clear, those are all excellent passenger rail systems that do not need to generate a profit to be valuable, and they each deserve more investment (which they will get under the provisions of Prop 1A).

But the ridership comes with the Initial Operating Segment, which provides the intercity service that California currently lacks.

After all, if simply investing in regional rail was the secret to building high speed rail, we’d already have done so. But we’ve made those investments and it has not led to high speed rail. You have to fill in the missing link, and the Central Valley is a key part of that missing link.

But it’s Senator Joe Simitian’s quote that made me the most annoyed:

“Whether they are federal funds or not, they should be used wisely,” Simitian said. “Whenever someone tries to hustle you into a quick decision, that should give you pause. I feel like we’re getting jammed by the threat of losing the federal funds.”

As he points out, the state should not “make a $100 billion mistake to save $3 billion” from Washington.

A quick decision, Senator? California has been debating high speed rail for 30 years – since the last time Jerry Brown was governor. The current high speed rail plan has been under development since 1996. Californians heard the debate and voted in favor. This project has been developed for 15 years. The plans are solid and detailed and have been subject to endless scrutiny. An independent peer review found the ridership projections were sound.

So who’s husting and rushing who here? Looks to me like the hustle is coming from Simitian and Lowenthal, with (the mark) DeSaulnier falling for it. They’re the ones rushing to act, insisting that California side with right-wing extremists to abandon its high speed rail project and abandon federal stimulus funds. They’re making these claims based on flawed interpretations and in ignorance of the evidence.

Looks like a hustle to me.

Hopefully the rest of the Democratic caucus in Sacramento will side with President Obama, Senators Feinstein and Boxer, and Governor Brown rather than follow Lowenthal and Simitian’s lead and side with Scott Walker and Jeff Denham.

CA High Speed Rail Authority Responds to Peer Review

Their core conclusions:

In recommending against proceeding with the high speed rail development “at this time,” the Report ignores many components of the CHRSA’s recent Draft Business Plan and attempts to promulgate a new standard of project feasibility that is inconsistent with national funding of transportation projects.

The report’s conclusions, which would be premature at best, would place at risk $3.5 billion of federal funding for High Speed Rail currently in hand for the project and undermine extensive outreach efforts on the part of the Authority to develop greater integration with regional rail systems.

Consequently, the Authority believes this report does not provide a sound basis for critiquing the Authority’s Finance plan, nor for the public policy choices facing the Legislature.

It’s a strong defense that, as far as I can tell, is rooted in sound evidence and analysis. Since the core of the Peer Review Group’s assessment that the legislature should not release Prop 1A bonds was uncertainty about federal funding, it’s worth quoting in full the Authority’s powerful deconstruction of that argument:

The Committee states that “The fact that the Funding Plan fails to identify any long term funding commitments is a fundamental flaw in the program.” In so stating, the Committee attempts to set a standard that is simply not used for any other transportation program. By this measure, none of the unconstrained regional transportation plans of any transportation authority should be pursued. No project, in our experience, has fully identified funding sources for the entire project at this stage and it is both unfortunate and inappropriate for the Committee to apply this test only to high speed rail.

The Committee attempts to distinguish the high speed rail project because it does not have a “dedicated funding source” such as the Highway Trust Fund or Airport Improvement Funds. This analogy ignores the fact that the High Speed Rail project has funding in hand for the Initial Construction Segment, which even the Committee admits will have independent utility if constructed. Furthermore, the mere existence of a dedicated funding stream is no guarantee that any specific project or program will be funded. By this metric suggested by the Committee, Interstate 5 would not have commenced construction, despite the presence of the Highway Trust Fund.

This is a pretty good point. And it holds true of most other transportation projects in California. Take the BART to San José project. It is, in fact, not fully funded. Construction is underway on the Warm Springs extension, which I will guess won’t generate enough riders to pay the cost of operations on the extension (and to be clear I do not care whether or not it does; transit service should not based on 100% farebox recovery). The extension from there to Berryessa is, according to my read of the VTA site, not yet fully funded and depends on a New Starts grant application. The extension from there all the way to downtown San José is largely unfunded, and the recession’s impact on sales tax recepts forced VTA and BART to build only to Berryessa for the time being. The BART to San José project has a LOT of critics, but Santa Clara County voters have twice rejected those criticisms and shown their support at the ballot box and with their tax dollars. I am certain that this project is going to happen, regardless of the questions raised, the costs, and the funding shortfalls, because the public has repeatedly said they want it built.

The Authority continues:

Nor does the Committee recognize that the President has proposed that high speed rail be provided a dedicated funding stream in the reauthorization of the Surface Transportation Act. Accordingly, the High Speed Rail program is not significantly different in terms of its funding at this stage than are other major infrastructure initiatives.

Moreover, the suggestion that the high speed rail project be placed on hold because there is not a “dedicated funding source” ignores the clear mandate of the Legislature and the people of the State of California pursuant to the provisions in the Proposition 1A Bond Act (Act). Under the Act, $9 billion of bond proceeds were approved to initiate the construction of a high-speed rail system using these State bond monies as matching funds with other private or public funds, including federal funds. The CHSRA has now secured $3.5 billion in federal matching grant monies that have no cost to the people of California so that the mandate of the Act can be met. Nowhere in the Act is there a requirement that any particular amount of non-State matching funds be committed prior to the initiation of the start of the high-speed rail project. Nowhere in the Act is there a requirement that the project must be funded using a “dedicated funding source.” Future non-State match funding will be pursued by the CHSRA to progress the project beyond the Initial Construction Section in the Central Valley. Any delay in proceeding with the Initial Construction Section at this time will result in the loss of the existing $3.5 billion in federal funding and will likely jeopardize the possibility of any future federal funding for a California high-speed rail system.

The Committee fails to assess the risks of not proceeding with the program at this juncture. Those risks include the irretrievable loss of $3.5 billion of federal funds, the potential elimination of state funds, the impact on regional rail systems of the loss of $950 million in funding for “interconnectivity” which are tied to progress on the high speed rail development, the inevitable increase in costs of eventual high speed rail connection through California as a result of inflation, population growth, etc., the loss of economic opportunity and technology development. These risks are present and real and represent lost opportunity of enormous cost and lasting consequence.

The statement “Further, the ICS will not be electrified, and thus cannot serve as a high-speed test track for future VHSR rolling stock3” is misleading. The Authority never intended to use an un-electrified ICS as test track. Furthermore the foot-note (3) is also misleading to the public, as the AAR’s test track at Pueblo, CO cannot be used to test true high-speed rail systems as it does not have the capacity to test at 250 mph, although the mention of this facility in this report seems to indicate that this may be possible.

So this is a pretty thorough refutation of the Peer Review Group’s claims about the funding situation. And they fire back pretty strongly at the Peer Review Group’s contention that the ICS violates Prop 1A:

The Committee Report, after stating that it would not comment on legal questions pertaining to Initial Construction Section, then proceeds to do so and arrives at the wrong conclusion, by stating that:

“…the ICS as planned is not a very high-speed railway (VHSR), as it lacks electrification, a VHSR train control system and a VHSR compatible communication system. Therefore it appears not to meet the requirements of enabling State legislation.”

The Committee has no legal competence to enable it to make such a statement and the Authority rejects this assertion. Attorneys for the Authority and others elements of the State of California, as well as attorneys for the Federal Railroad Administration, have reached the opposite conclusion and are fully comfortable that the Initial Construction Segment is complaint with the state bond measure. It is also noteworthy that the legislative author of the bond measure has embraced this view as well.

Will the authors of the Peer Review Report, led by Will Kempton, acknowledge their error and walk this part back? I hope so.

The Authority’s defense of their business model practices is similarly strong, and calls into serious question the Peer Review Report’s assumptions about how to operate HSR systems:

The Committee complains that building the ICS or IOS without private operator involvement is not a “feasible” business model and states:

“Without input from the final private sector participant regarding route alignment and station location, the future value of the HSR concession/franchise may be greatly diminished and less attractive to potential private sector participants. In other words, the private sector needs to be brought into the process much sooner than currently planned.”

This conclusion is extremely simplistic and displays a lack of knowledge of the realities of private finance for such complicated projects. It is also not supported by any experience throughout the world for a project of this magnitude, of which we are aware.

As this canard has been reiterated by the Committee, it is worth a response in detail. Let’s compare the experience in other successful High Speed Rail systems:

• In Japan the network and the operations were built and funded by the Public sector (Ministry of Transportation). At a much later date they privatized the operations.

• In Germany and France the Ministries of Transportation decided on the routes and the funding, then turned to infrastructure companies (DB-Netz and RFF) responsible to build and own and operate the infrastructure (including some PPP components); they have associated operators (DB and SNCF), but they all are government- associated companies. Neither of these systems is thus operated by private operators.

• In Spain, when they decided to introduce HSR, they did their own designs (and still continue to do so today), and subsequently the AVE service was introduced on the lines being operated by Renfe. This is similar to having Amtrak being involved and operating the system in the end. But this has not resulted in a private operator.

• Companies such as Virgin Rail who operate on existing infrastructure in the UK, as the infrastructure was there and the government decided to farm out the operations as a concession.

• The latest example in Italy, where NTV will be operating HSR trains on existing infrastructure, supplying trains and depots, but having had no input into the system designs.

While it may make a good sound bite in theory to have a private operator on board from the start, it is neither practical nor feasible. There is also no example of this being done successfully anywhere in the world. The one case where a government turned to full privatization of HSR from the outset occurred in Taiwan, which experienced many problems as a result, and was much reduced in size compared to the California program.

Indeed it is a problem to decide on an operator too early. Choose a German company and you are most likely tied into German technology for the entire project; the same is true for French or Japanese operators. This eliminates all competition at a later date.

It is also the case that the California High-Speed Rail Authority will be “selling” a concession to a private operator, giving them the right to operate and maintain the system. In doing so, the Authority will be seeking the best deal for California. Entering into such an agreement too early in the process will lead to lower revenues from the concession company, as private investors seek to discount the amount to reflect the risk of revenue variability.

As this is a system for the people of California, the basic alignment is laid down by law (Prop 1A) and the major stations are determined. So it will not be possible for an operator to change these basic parameters. Furthermore the process is driven by CEQA and NEPA which again is not the strength of international operators. So, although international operators are important to consult (and many provided favorable peer review of our Operations & Maintenance Plans), it is simply wrong and not feasible to suggest that those operators must be brought in at this point.

To the extent the Committee can point to a comparable circumstance where what they recommend has been put into practice, the Authority will gladly review and consider alterations to our approach. Until then, we believe the Committee demonstrated its lack of understanding about how high speed rail has been built throughout the world.
Finally, we note that one of the promising U.S. opportunities for private participation in high speed rail development was in Florida, where a number of infrastructure companies were expressing interest in the Florida program on the very day when the Governor of that state announced he was returning federal funding. The resulting loss of confidence from the private sector was striking. The Committee’s report, if embraced by the Legislature, will similarly dampen enthusiasm of private investors to look to California.

In short, the Peer Review Report’s assessment of the role of private investment is deeply, fundamentally flawed and lacks basic knowledge of the California situation and comparable HSR systems. That’s unforgivable for a group that is intended to bring expertise to the subject.

In fact, the Peer Review Report’s criticisms most closely resemble the deeply uninformed and flawed criticisms that came from the Legislative Analyst’s Office. It’s almost as if someone in Sacramento was shopping around bad analysis, in an attempt to destroy the HSR project, and getting people like the State Auditor, the LAO, and now the Peer Review Committee to bite. But surely those independent bodies would never fall for analysis so deeply flawed. And surely nobody would ever actually try that strategy. Isn’t that right, Alan Lowenthal?

The Peer Review Report generated a lot of media coverage indicating that the HSR project’s financing was in trouble. Will the Authority’s convincing and thorough demolition of that report get the same coverage?

Hah, of course it won’t. That’s because most media outlets aren’t really interested in reporting the facts. They’re interested in going after things that fit their preconceived narratives. In this case, the narrative is that nobody rides trains, trains are expensive, government isn’t honest, and the public is getting fed up. So the Peer Review Report fits the narrative and gets a lot of coverage. The Authority’s response doesn’t fit the narrative and will get hardly any coverage, especially since the media is not willing to treat the Authority as a credible voice. They’re the ones on the witness stand, so to speak, so nothing they say can really be trusted – according to most reporters.

And so it goes. Once again, the facts are on our side. But we also know that’s not sufficient. The public needs to be engaged on the values of the project. Californians want trains. As we saw in Santa Clara County, that desire can easily trump the naysayers. And it can do so statewide and in the state legislature. Let’s hope it does.

This took place against a backdrop of an ongoing battle – maybe even a war – over the future of California and the United States as a whole. American politics today is defined not by right versus left, not by Democrats versus Republicans, but by those who want to preserve the 20th century at all costs and those who want to build a better, more sustainable 21st century future.

Those who want a better future won a major victory in November 2008, electing Barack Obama and passing Proposition 1A in California, approving the high speed rail project and $10 billion in funds to start building it. And at the time they believed little stood in the way of achieving the better 21st century future. But they underestimated the numbers and power of those who were dead set against change and improvements. Those opponents might be classified as NIMBYs, as Tea Partiers, as supporters of austerity, but they all shared the same root belief that the changes they were beginning to see unfold were bad and had to be stopped – even if the cost of doing so was prolonging the worst economic crisis in 60 years.

By 2009 the defenders of the failed 20th century status quo had begun to limit what President Obama could accomplish in DC, and in 2010 they won electoral victories across America – though notably, NOT in California, where a forward-looking Democratic Party swept all statewide races and did not lose a single seat in Congress or the legislature.

Still, the opponents of change in California had new allies in Congress, where control of the House had flipped to what is undoubtedly the most radical and extreme group of people to ever hold a majority in that body in its entire history. House Republicans began waging war on 21st century America in all its forms – as well as going hard after much of the 20th century too, in ways that both surprised and alienated many of their 2010 voters. High speed rail was just one casualty of this insane attack on American civilization. House Republicans nearly defaulted on American debt, brought the federal government close to shutdown on numerous occasions, rolled back decades’ worth of women’s rights, and demanded and won pledges from Democrats and President Obama for massive austerity that will cripple any future economic recovery.

As House Republicans succeeded in killing further funding for high speed rail in 2011 and 2012, this allowed critics here in California to use that to call into question the project’s viability. Never mind the polling data suggesting Republican rule in the House is unlikely to last beyond 2012 – HSR opponents and their media allies, both of whom are inherently small-c conservative and oppose change, nevertheless assumed these cuts were permanent, that they would last forever, and that no future Congress would ever reverse them.

In that context, the California High Speed Rail Authority’s excellent work in 2011 – a year that represented a major turnaround for the organization – was ignored in favor of story after story, always rooted in flawed or even false evidence, that suggested something was wrong with the project. Those stories weren’t new, but without promises of federal funding, the project’s problems seemed more significant and harder to resolve.

Yet the CHSRA had done good work to resolve them. A new board with new leadership began finding ways to cut costs, saving $500 million so far in the Valley. But that has been largely ignored by a media that has become shockingly biased in its reporting against the project. Reporters for the LA Times and the San Jose Mercury News provided the most egregious examples of outright misleading and dishonest reporting about the project, with the Mercury News even going so far as to say that a project that could create tens of thousands of jobs each year for 20 years was somehow a bad thing for California. Apparently the Mercury News likes an unemployment rate of 11% and thinks a prolonged recession for California is a positive thing to embrace.

With a few notable exceptions like the Sacramento and Fresno Bee and the editorial pages of the LA Times, the media has made its choice – to defend the failed status quo and to fight change with everything they’ve got. This is in part a consequence of their strange decision to target a demographic of people between ages 45 and 70. By writing off young people, providing articles biased against their interests, these newspapers have doomed themselves to eventual extinction. That’s their choice, but the effect on politics is that many in the media are now against us too, and are willing to ignore facts and evidence in pursuit of their political goals.

But it should also be clear that 2011 was not all bad news for California high speed rail. Governor Jerry Brown mounted a strong and strident defense of the HSR project, indicating that California critics have a big hurdle to jump in their efforts to kill it in the legislature in 2012. He is a crucial ally to have, and HSR advocates should neither underestimate him nor take his support for granted.

For HSR advocates, the lesson of 2011 is clear: the project will rise or fall not on merits and not on facts, but on politics. Many HSR advocates come from an engineering or planning background. Understandably, they want to win arguments on the basis of facts and evidence. But the bitter truth is that those things no longer count in either American politics or even the pages of newspapers in Los Angeles and San José. Instead, it’s all about underlying values, beliefs, and ideologies.

We know from 2008 – and again from 2010 – that Californians do not want to remain stuck in a flawed and failed status quo, and that they will continue to choose a better future instead. The problem is that many HSR advocates have been beaten down by the relentless drumbeat of criticism. And that’s precisely how such criticism is intended to work. A Fear, Uncertainty, and Doubt campaign is targeted not only at moderates, but is also designed to undermine the will of advocates to continue supporting the target of the criticism.

HSR advocates remain in a strong position. The public still likes the project, a limited Field Poll question notwithstanding. The public sees the underlying reasons for the project and knows those reasons aren’t going away. Gas prices are still near $4 per gallon. The climate is still getting hotter. The state is still in recession. And desire for passenger rail is still strong.

Advocates are facing a tough situation. But they should not underestimate the support they still have, or the ability to mobilize it to defend the project in 2012. To retreat into a bunker mentality or to give up entirely would be to quit prematurely even when they are in the stronger position.

They should take a lesson from Europe in 1939. After World War II was declared, the French army had a significant numerical advantage over the German army on the western front. French forces even began moving into the Saarland in September 1939, meeting little opposition along the way. German forces were not in a good position to resist and with their best troops engaged in the invasion of Poland, they would have had a hard time fighting and winning a two-front war.

But the French did not press their advantage. They had begun to believe the criticisms leveled at their fighting capabilities. French generals did not believe a conscript army could break the German defenses, even though the French had much greater numbers. Their military doctrines at the time held that defense was the only sensible posture to take against the Germans, and that the Maginot Line would provide all the protection they needed.

As it turned out, the French attitude was not defensive but weak. By hiding in their bunkers they were helpless as the German blitzkrieg went around them in May 1940, collapsing the French position and forcing France into a humiliating surrender and four years of brutal occupation. Had they attacked in the fall of 1939, they might well have forced an end to the war six years early, and saved millions of lives in the process.

The point is that they had an advantage but had begun to doubt their ability to use it effectively, sowing the seeds of ruin. This is a classic political lesson and one that HSR advocates would do well to consider.

We still have supporters in Sacramento and DC. Governor Brown and President Obama are two of the most important. But even they will be reluctant to fight on our behalf if we give in to fear, uncertainty, and doubt.

High speed rail will be built in California. The only question is when. The underlying reasons of a growing population, inability to afford costly oil prices, a need for energy independence, and fast growing demand for passenger rail make high speed rail inevitable. But that could be delayed by 5, 10, even 20 years. California literally cannot afford to wait. We know the cost of doing nothing is not zero.

Now is the time for HSR advocates to rally to the project’s defense. If this project dies, it won’t come back anytime in the near future. When it does, it will be even more costly than it is today. And California will have suffered greatly in its absence.

More importantly, if HSR were to be killed or even delayed, it would open the floodgates to further attacks on other important elements of building a better future. The people who oppose HSR are not simply going to go away if they win this battle. They will turn their guns on other mass transit projects, on green energy and green jobs, on efforts to improve our schools and health care, and on efforts to solve the state’s budget and economic crisis. These opponents are not motivated by factual concerns with the project, but by a visceral hatred of anything that is different from the 20th century way of life they were taught as kids was the Greatest Thing Ever. Giving them a victory on HSR will simply embolden them to demand more victories at greater cost.

HSR is a microcosm of the battle for California’s future. It is a battle we cannot afford to lose.

Tomorrow: A look ahead at HSR in 2012.

Today’s article from Vartabedian is perhaps the worst yet. In it, he actually argues that the requirement that trains connect San Francisco to Los Angeles in 2 hours and 40 minutes was somehow a shocking thing sneaked into the Prop 1A legislation without anybody realizing its intent.

I’m serious. That’s actually the story he filed. Vartabedian basically thinks it’s somehow a major news story that a high speed train is intended to achieve high speeds:

California’s proposed bullet train will need to soar over small towns on towering viaducts, split rich farm fields diagonally and burrow for miles under mountains for a simple reason: It has no time to spare.

In the fine print of a 2008 voter-approved measure funding the project was a little-noticed requirement that trains be able to rocket from Union Station in downtown Los Angeles to San Francisco in no more than two hours and 40 minutes.

It was an aggressive goal, requiring cutting-edge technology, and was originally intended to protect the sanctity of the bullet train concept from political compromise. Whether the California High Speed Rail Authority can meet such a schedule is far from certain. Even some backers of the project now say it was a mistake to lock in the strict requirement.

Huh? It wasn’t “fine print” – HSR supporters like me shouted from the rooftops that the trains would connect SF to LA in just over two and a half hours. It was compelling. It was sensible. It was one of the things that generated public support for the project. We put together postcards that fall with the following image on one side and handed them out at train stations across the state, such as Union Station, loudly trumpeting the travel time:

After all, people understood that they were voting for high speed rail. They were voting for short travel times. That’s the entire point of high speed rail – to be something other than Amtrak, to provide fast and reliable transportation between California’s metro areas.

For Vartabedian to treat this as something of a surprise just shows how disreputable a journalist he really is. That travel time is comparable to other successful HSR routes around the world. Spain’s AVE train connects Madrid and Barcelona in 2 hours, 38 minutes. France’s LGV Est operates trains at speeds of 200 mph. Given technological improvements, 220 mph by 2020 is a reasonable expectation.

Instead Vartabedian makes this sound like some hidden trick, and quotes high speed rail opponent Alan Lowenthal to supposedly make his case:

Some state legislative leaders and rail authority officials say the time requirement never should have been put into the law. “It was a mistake,” said Sen. Alan Lowenthal (D-Long Beach), a key supporter of the project who has asked increasingly tough questions about the cost.

In fact, Lowenthal has always opposed high speed rail, wanting to steal the $10 billion in voter approved funding for slower-speed trains. So it is in his interest to argue that high speeds are not desirable and are some sort of trick.

I don’t understand why the LA Times continues to pay Ralph Vartabedian to mislead their readers about this project. He is a dishonest reporter who is writing hit pieces rather than objective journalism. A reputable newspaper would not continue to have him on their staff.

California voters knew what they were doing when they voted for Prop 1A. They knew it would provide fast train service between SF and LA. That’s the entire point. And it’s the right goal to pursue, even if HSR opponents like Vartabedian want to mislead the public about what they actually voted for in 2008.

Field is the gold standard of public opinion research in California, and their numbers usually turn out right. (Unless you’re Tom Bradley in 1982.) They tend to do their polling in batches, asking several questions at once, and then releasing the results over the course of several days, grouped by campaign/politician or by issue. For example, in recent days Field has released polling on approval ratings for Governor Jerry Brown and Congress, a horse race poll on the Republican presidential field, and even a poll on public attitudes toward the Occupy movement.

What this means is that Field doesn’t necessarily go out and do a series of calls to voters on just one of those issues. They ask about a range of issues all at once, although not everyone gets asked about everything, as Field explains:

The findings in this report are based on a Field Poll survey completed November 15-27, 2011 among a random sample of 1,000 registered voters in California. In order to cover a broad range of issues and still minimize respondent fatigue, the questions in this release were asked of a random subsample of 515 voters.

So they didn’t just do a poll exclusively on high speed rail. It was part of a bigger poll. That’s important, because it means they didn’t ask a wide range of questions on the project. And as we’ll see, that explains the numbers they found.

What did Field ask about HSR?

Have you seen, read or heard anything about California’s High Speed Rail project, a proposed passenger train service that when completed would link Southern California, the Central Valley and the San Francisco Bay Area?

(IF VOTED IN NOVEMBER 2008 ELECTION) In the November 2008 statewide election, Californians voted on a bond measure, Proposition 1A, to establish the High Speed Rail project. Thinking back to that election, do you recall having voted YES to approve or NO to reject the High Speed Rail Bond measure?

Nine billion dollars in state bonds were approved by California voters for the High Speed Rail project in the November 2008 election. At the time, the project’s estimated cost was 43 billion dollars and its targeted completion date was 2020. More current estimates now put its cost at 98 billion dollars and its completion date as 2033. Some think that the state legislature should resubmit the bond package to voters for another public vote next year. Regardless of how you feel about the project, do you favor or oppose the legislature putting the 9 billion dollar state bond package to another public vote in next year’s statewide elections?

Suppose that 9 billion dollars in state bonds for the California High Speed Rail project were put before voters again in a statewide election ballot. If the election were being held today, would you vote YES to approve or NO to reject this bond package?

Field is not asking a neutral question about the HSR project. By framing the project as one beset by cost overruns, without listing any of the other project benefits or the costs of not building HSR, it should be no surprise that they got results like this:

Favor another vote on HSR?
Yes: 64%
No: 30%
No opinion: 6%

Would you vote to approve $9 billion in bonds if re-voted?
Yes: 31%
No: 59%
Undecided: 10%

The above question asked of those who voted Yes on Prop 1A:
Yes: 53%
No: 37%
Undecided: 10%

The way one asks poll questions is significant. If all the person on the line hears is “this project has huge cost overruns, so do you still support it?” the answer in 6 out of 10 cases is likely to be “no.” I would be shocked if the outcome was any better for the HSR project given the way the question was asked.

But what if the question were asked differently? We know that the cost questions are not the only issue associated with the project. Gas prices are rising, airfares are rising, flying is inconvenient, people prefer high speed trains to planes when given the choice, we need to reduce carbon emissions to reduce global warming, the cost of alternative transportation to carry the same amount of people is $170 billion, HSR brings tens of thousands of desperately needed jobs.

How would voters respond if the question were framed in that way? The outcome could be very different.

And if a re-vote were indeed held, voters would be given all of those messages – the cost issues, as well as the benefits. A good guide to public opinion on the HSR project would therefore poll with questions asked with all of those frames, positive and negative.

What would the results then show? Who knows. There’s been a lot of polling over the last 3 years showing support for the project. A February 2011 Harris Poll found 70% of voters supported funding the HSR project. That support didn’t collapse between then and now. It’s all about how the question is asked.

Already the media is trying to spin this new Field Poll as “omg voters are turning against the HSR project!!!” In fact, all the polls says is “if people are told only that the project’s costs have risen, then they become less willing to support it.” It doesn’t actually indicate what voters would do if a re-vote were held because it did not test all messages and frames.

I would caution readers, commenters, and media outlets from reading too much into this Field Poll given its limitations. But I’m guessing people have already made up their minds about what it means, good or bad. I’m not happy to see these numbers, but neither am I surprised and I am certainly not concerned or worried about the project’s future.

That would change if I saw numbers that showed, even after positive and negative messages were tested, that poll respondents did not support the project any longer. But no poll has yet shown that – at least none that I have seen.

Ultimately this makes it all the more important to get construction started, and to get more federal funding to help ease voter concerns about the cost issue.

Kings County filed a lawsuit Monday against the California High Speed Rail Authority that calls for a permanent injunction against distributing funds from Prop 1A to the construction of the first segment of a statewide high-speed rail system in California.

The suit claims the plan to spend bond money from Prop 1A on the segment that would run from Fresno to Bakersfield does not fulfill the intent of the original proposition that approved the issuance of $9 billion in state bonds.

How exactly would it not fulfill that intent?

Voters never intended Prop 1A bond funds to be used “’preliminarily’ to build a non-electrified, substantially ‘conventional’ rail system, with an electrified HSR system to be constructed at a later period,” according to the text of the suit.

“No such allowance or permission for such a so-called phased system is contained in Prop 1A,” the suit states.

The suit also says the use of bond money for the construction of a rail system that is not electrified, violates the concept of a “true” high-speed rail system and “violates” Prop 1A.

The ballot label of the Safe, Reliable High-Speed Passenger Train Bond Act dated Sept. 2, 2008, does not mention electrification, or any other specific method of fueling the train system. The relevant portion of the text describes improving California’s economy “while reducing air pollution, global warming greenhouse gases, and our dependence on foreign oil, shall $6.95 billion in bonds be issued to establish a clean, efficient high-speed train service,” according to the California’s Secretary of State Office’s website.

At least the Patch reporter, Vanessa Castañeda, included the text from Prop 1A that shows how absurd this suit is. It’s as if the lawyers think they can find a judge that has never heard of the concept of “phasing.” Interstate 5, like almost every other freeway in California, was opened in pieces and completed over the course of many years (decades, in the case of I-5). The funding was for an Interstate Highway System, and a system isn’t built immediately or overnight.

Besides, as the 2012 Business Plan makes clear, a high speed train system that connects SF to LA is exactly the intent, and the Initial Construction Segment from Fresno to Bakersfield is part of how that system gets built.

The Peninsula lawyer who filed the suit for Kings County repeated the usual anti-rail talking points:

Michael J. Brady, a lawyer based in Redwood City who is representing Kings County, says the future of the entire plan is grim. Depletion of $9 billion in funds before completion of the corridor is completed is likely, he said, noting that additional subsidies would be required to complete the segments of the corridors that would end in the Bay Area, and it is not likely that people will want to invest in the plan.

“I don’t think private investors are going to be interested at all,” Brady said. “Practically no high-speed rail system in the world earns a profit. The framework in California is much worse than those of the rest of the world and it’s likely that they would have a huge loss every year.”

This is absurd. It is quite likely that the private sector will want to invest in the plan, just as they have shown interest in other HSR systems around the country and around the globe. The private sector has been consistent that they need to see more federal funding first.

It’s also interesting to see the “no HSR system in the world earns a profit” talking point spread. This is an outright lie. Systems all over the world earn a profit, from Taiwan to Russia to the Amtrak Acela, just to name a few, all turn a profit. I’m tired of that lie going unchallenged by the media when they see it.

The California high speed rail project has done well when facing these ridiculous court challenges. I fully expect a CEQA suit from Kings County as well at some point, but for now I think it is safe to say that this particular frivolous lawsuit is not going to cause any problems for the project.

So the Business Plan presentation at last week’s California High Speed Rail Authority board meeting takes on particular significance.

The presentation indicates that an “Enhanced Economic Benefit Assessment” will be part of the plan:

• The most comprehensive and well vetted economic benefit analysis to-date of California’s HSR system being developed

• Results will reflect peer reviewed and approved travel demand model, updated inputs, and best practices from federal and state review agencies

• Statewide workshops were conducted in Bay Area, Central Valley, and Bay Area with leading academics, representatives of MPOs, COGs, economic development agencies, and other policy and planning groups, to present our economic impact methodologies and receive feedback

• Benefit-cost ratio. Discounted public benefits over the extended life of the investment are expected to be well above the discounted costs

• Public benefits include travel time and reliability savings both for train users and highway and air travelers; also includes environmental and safety benefits, energy savings, and other factors

• Full costs include both initial capital construction, yearly operations and maintenance and periodic rehabilitation and replacement of equipment and systems.

This is really good stuff, implying that the Authority fully understands what HSR critics vehemently refuse to acknowledge: that any Business Plan, any cost assessment, has to include the entire picture, including the enormous economic benefits of the system and the costs of doing nothing.

But the meat of the Business Plan will involve how the system is to be funded, constructed, and operated. In November 2010 the Peer Review Group said that one of the most important things the Authority needed was to determine its business model. Last week’s update suggests there has been progress down this path:

Under all business model options government plays lead organizational role

Options for private involvement to meet two objectives
• Contain costs and mitigate risk
• Generate more funds

Private investment opportunity driven by HSR ridership
• Early phases require public investments to construct
• Later phases can leverage ridership revenues and public investment to attract private investment

This is sensible. The private sector won’t just build tracks, they are interested in profiting off of ridership. And let’s be clear, most private investors are not worried about the lack of riders. Private sector interest in HSR is strong, and they offered to pay cost overruns in Florida because they knew the system would have generated surpluses. A UBS study in 2010 found that the main risks to HSR investment were political, and not that there was a risk of low ridership.

On the other hand, we need to be wary of private investment in the high speed rail system. Yonah Freemark at The Transport Politic has been raising that concern for several years now, and his recent post Doing Right by the Public: PPPs in High-Speed Rail is worth considering here:

With a promise to the state’s citizens that another demand for California-wide funds will be avoided, few local dollars to contribute, and an utter inability to rely on Washington for practically anything, that means the system will have to find private investors to join in. Whatever the relative merits of allowing private companies to invest in what is fundamentally public infrastructure, California has no other place to turn for the successful completion of its system.

Hard to argue with this statement. Freemark then takes a look at two French HSR PPP models and a recent USDOT report to draw some important conclusions about the impact of PPP on HSR:

It would be a mistake to conclude from these examples that private-sector involvement will save any significant money over the long-term. Fundamentally, the creation of PPPs to fund projects such as California High-Speed Rail does not mean that the public at large will end up being responsible for a smaller percentage of overall costs. Indeed, the U.S. Department of Transportation’s Office of Inspector General released an under-recognized report last month that expounded on this fact significantly.

By considering a series of PPP highway projects in the U.S. and abroad, the study noted that they “have a higher cost of capital than traditional public financing… [and] involve equity investors who own stakes in the projects, share in the profits, and expect to earn higher rates of return for the risk they undertake,” in addition to having to pay taxes public projects do not have to pay. Even if PPPs have lower design and construction costs, may be able to more effectively increase tolls, decrease percentage of evading users, and take more advantage of concessions*, they are usually not able to offset the higher costs resulting from the formerly noted issues….

In other words, while the taxpayer may appear to be getting a discount now by having a business group pay for infrastructure, users of that same infrastructure will inevitably have to face the costs of future tolls. In the case of high-speed rail, replacing public sector investment during the construction phase with privately financiers using loans means higher ticket prices in the future to pay back a portion of the costs of construction. There is no free lunch.

Freemark is pointing out that if California has to turn to a larger portion of private financing in order to get HSR up and running, it will likely require higher fares once the system is open. That won’t mean nobody will ride the trains, but it may mean that not as many people will be able to ride as there ought to be.

He goes on to lay out the two sides of the case for and against funding HSR out of user fees:

The question is whether benefits of a transportation investment advantage the entire public or whether they are reserved to the specific people who take direct use of it. Transportation economists are convinced of the value of user fees, which assume that it is inefficient to carry out redistribution through indirect means, and for them, it makes perfect sense to charge users the full cost of not only the operation but also the construction of the infrastructure they are using. (Many economists would also argue that high-speed rail projects have significant positive externalities like pollution reduction and land use prioritization attached to them that demand direct grants from the government to cover some costs.) This user-fee approach is the method being used in the financing systems of the PPPs discussed here.

Others, however, would argue that the benefits of infrastructure like high-speed rail are economy-wide and that they should be paid for not only by users but by all members of the population through taxes. If we take this side of the argument, it becomes less clear that the best value for the society is to divert most costs to users. A grant-based system assumes that benefits of a transportation investment are felt by people throughout a country (such as through economic growth) and therefore just charging the riders for the costs of capital investments would be inappropriate.

Aside from being a good explanation of why I am deeply skeptical of “transportation economists,” Freemark does a good job here of explaining the stakes. HSR’s benefits are indeed economy-wide, and it makes the most sense for everyone to help build it. After the experience with the transcontinental railroads, where farmers, industries, and even entire political systems were held in thrall by the railroad barons, American politicians in the 1950s insisted that the Interstate Highway System be funded by everyone through gas taxes, whether or not a purchaser of gas ever drove on an interstate freeway. Californians subsidized the construction and operation interstates in the middle of North Dakota and vice-versa, and the American economy grew as a result. Any “transportation economist” who discounts these benefits is no “economist” but just a shill for right-wing ideology.

HSR would be best off if it followed the model used by France in the 1970s to build the TGV, as explained by DoDo in his Puente AVE article from 2009. The French government prioritized ridership, and generated a lot of it by subsidizing ticket prices:

This commitment to “democratizing” high speed rail was reinforced by the Socialist government of the early 1980s. Indeed, under the Mitterrand presidency, the SNCF introduced a remarkable publicity slogan to promote the TGV: “Progress means nothing unless it is shared by all” (Le progrès ne vaut que s’il est partagé par tous”).

Unfortunately, California HSR is stuck with a provision forbidding subsidization of operations. This was inserted by right-wing State Senator Roy Ashburn as a price of support for putting Prop 1A on the ballot in 2008. It’s a stupid and pointless provision – every other form of transportation in the state is subsidized, and there’s nothing wrong with that. HSR can operate without subsidies, but it will happen at the cost of ensuring that, paraphrasing Mitterrand, progress won’t be shared by all.

In any event, the CHSRA’s Business Plan preview makes clear that private funding “will require ridership from Central Valley connection to Northern and/or Southern California,” which should be good news for those who are still convinced that the Central Valley segment is a “train to nowhere.” What this means is that private funding might well materialize to link the Central Valley segment to San José, or to fulfill Paul Dyson’s dream of finally closing the missing link from Bakersfield to LA.

The preview also indicates that the project will “Need approx. $3-$4 billion/year for 15+ years” to get built. Where will that come from? That’s the all-important question:

State:
• G.O. Bonds ($9 B total capacity; $2.8 B to be allocated for ICS)
• Other potential new state revenues to “leverage” for financing (e.g., GHG reduction credits, etc.)

Federal:
• Initial $3.3 B secured
• Existing appropriation and grant programs – can leverage but are not enough
• Need new committed programs within approx. 4 years that could support full funding grant agreement (e.g., trust fund/reauthorization); tax credit bonds (leveraging state bonds); commuter rail programs in urban corridors)

Local:
• Locally funded station development (e.g., SF, Anaheim, LA)
• Transit‐oriented development and station‐area retail has minor role
• Locally approved sales tax for matching funds could be explored for later phases

Private:
• Limited appetite for “greenfield” ridership risk transfer
• Revenue‐backed financing
• Other project‐generated revenues (e.g., advertising etc.)

Of these, the most important are probably the “new committed programs” that will be needed from the federal government within 4 years, and the “revenue-backed financing” from the private sector. Some may point out that Congress is currently in no mood to provide those programs, to which I would point out the polls that show Republican control of Congress may end in January 2013.

Ultimately, this isn’t a technical question or a financial question, but a political question. If the political will to help lead California into the 21st century and deal with our economy, energy and environmental crises is there, then we will find a way to pay for high speed rail. It’s cheaper than the alternatives, and in a state and country as wealthy as California and the United States, getting the money is easy so long as the desire is there to do it.

If the political will isn’t there, then HSR won’t be built in the near future. That’s no surprise and no different from anything this blog has been saying since it launched in March 2008. We know that the public has the political will. We know that Governor Brown and the Assembly have the political will. We know that President Obama and the US Senate have the political will.

At this point I’d say the crucial institution is the California State Senate. If they too are willing to help build a better future for California, then we will figure out how to make HSR work. But if they’d rather follow Senator Alan Lowenthal and refuse to build for the future, preferring to let a failed status quo continue, then we will have to wait a while for HSR to get under way.