High Speed Rail is Good—But Not This One

David Schonbrunn
President of Transportation Solutions Defense and Education Fund

TRANSDEF.org, the Transportation Solutions Defense and Education Fund, is a small transit advocacy non-profit. We have long been supporters of high-speed rail (HSR) as the low-pollution way to connect the regions of our large state. The private sector has wanted to invest in passenger rail in California, but has been blocked by politicians promoting California’s HSR project. The design of the HSR project is so politically compromised that there is no possibility of running the system at a profit. We have been in litigation with the California High-Speed Rail Authority (CHSRA) since 2008, attempting to stop the waste of public funds and HSR’s corrosive impact on public support for transit projects.

TRANSDEF believes the time has come to put this project to sleep. It serves no valid public purpose, other than repeating the painful lesson of the sunk cost fallacy. Now that $5 billion has been spent with nothing to show for it, it is foolish to spend more money to make the initial decision to spend look reasonable.

CHSRA just released its 2019 Project Update Report. This $20 billion plan would provide HSR service between Bakersfield and Merced. That’s $15 billion more than the $5 billion that have already been spent. TRANSDEF does not consider the Project Update Report to be a credible transportation plan. No rail professional in Europe or Asia would ever present a proposal so over the top. Here are TRANSDEF’s observations after a quick read of the Update:

  • The plan rests on the fundamental premise that this service will serve as “a building block” for a statewide HSR system. In fact, CHSRA has never had a realistic plan to fund the building of a statewide HSR system. As a result, there simply won’t be a statewide system, despite the intense flurry of consultant work to put together plans for one.
  • CHSRA was once offered a funded plan, but rejected it. The French National Railways proposed to build an HSR line from Los Angeles to San Francisco, with funding from an investment bank. By keeping the offer secret, CHSRA indicated that it had something to hide. CHSRA rejected the offer and instead launched construction with the State taking on 100% of the risk.
  • In the absence of a realistic funding plan involving the private sector, the HSR project is only a standalone Bakersfield-to-Merced line.
  • No one outside of California would seriously propose to commit $20 billion to a standalone project like this. That amount of money for this project is ridiculous, when its benefits are so modest. For less than 5% of that amount, Central Valley rail service could be made much faster.
  • Transportation projects are judged on their cost/benefit ratio. Because the new plan flunks that test, it is shocking the amount of professional resources that went into proposing it. There is no common sense at CHSRA. They have no commitment to deliver value for the vast amounts of public money they expend.
  • It’s unclear whether the primary purpose of the Project Update is to keep the consultant gravy train in motion, or to avoid having to give back billions of dollars to the feds. What isclear is that this is not a project being proposed on the basis of its merits.
  • Brian Kelly, CEO of CHSRA, stated that, “Once [the project’s] done,” he said, “it will unlock financing to tunnel beneath Pacheco Pass to reach San Jose’s Diridon Station…” Kelly’s assertion that a money-losing service will attract the $14+ billion in private investment needed to connect the Central Valley to San Jose is unsupportable.
  • There is no assurance that the private sector would have any interest in investing in California HSR, if this project were ever completed. Before spending another $15 billion on this Central Valley project, it would be prudent to invite the private sector to indicate what it would be interested in investing in.
  • The Project Update acknowledges that the HSR service will not earn its operating costs. That violates an explicit provision of the 2008 HSR Bond measure, which promised voters that no bond funds could be used to build HSR tracks whose operations would require subsidies.
  • Ridership for the Valley HSR line is based on Amtrak-level fares. Every other HSR system in the world charges premium fares. The obvious implication of this assumption is that the ridership was tested using the fares proposed in the CHSRA 2018 Business Plan. Those ridership projections must have been so dismal that they were unusable. Using Amtrak fares for Valley HSR is a tacit admission that the ability to travel at high speeds is not valued by the Central Valley travel market.

In short, there is no credible rationale for this $20 billion boondoggle. It would be far better to cut California’s losses now, when it is obvious there is no upside. Let’s not throw good money after bad.

As an absolute minimum, the public deserves a “mistakes were made” acknowledgement by someone responsible. In a just society, such people would be held accountable for their actions.

David Schonbrunn is president of TRANSDEF 




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