Texas High Speed Rail: The End or Not?


In 2012, the new Texas Central Railway announced that it would, in collaboration with the Central Railway of Japan build a high speed rail line from Dallas to Houston. The project was to cost $10 billion, would be built without public subsidies, and be in operation by 2020.

Yet two years after service was supposed to be operating, the groundbreaking has yet to be announced.

Over the last decade Texas Central has encountered considerable opposition from landowners whose property would be required to build the rail line. The principal issue was whether or not Texas Central could use eminent domain to obtain the properties. Finally the Texas Supreme court authorized Texas Central to compel landowners to sell.

Yet three months after the Supreme Court decision, there is little, if any, indication of project activity.

As a result, the landowner plaintiffs, rebuffed at the Texas Supreme Court, now seek clarity on the status of the project. As reported in The Texan, Attorney Patrick McShan of the Beckham Portela (Dallas) law firm, representing the landowners wrote to Robert Neblett of Jackson Walker LLP (representing Texas Central) seeking answers to project related questions.

In the September 29 letter, McShan provides a recapitulation of the Texas Central project, pointing out that Carlos Aguillar resigned as Chief Executive Officer and that the entire Texas Central board of directors has been disbanded. He cites a report that the “project has entered a hibernation phase in search of financing.” At the same time, the railway is reportedly delinquent on property taxes in eight counties. Further, McShan reports that:

“… the toll-free hotline (1-844-TX-TRAIN) formerly reserved for landowner inquiries has been disconnected for months. Texas Central hasn’t answered its main office number for months either. Delinquency notices sent to the address listed for Texas Central in the Secretary of State records are being returned undeliverable. The Dallas office address listed on Texas Central’s website—1400 Botham Jean Blvd—is the address for the Dallas Police Department. Texas Central’s Houston office located at 1021 Main St, Suite 1570 is currently listed for lease. These are not signs of a company moving forward with plans to construct a $30+ billion, 240-mile-long, first-of-its-kind, high-speed rail line.”

McShan contends that: “Texas Central is no longer pursuing construction of the Project” and says that Texas Central will never be able to raise the $30+ billion it needs to construct the Project (emphasis in original).

The letter expresses this fundamental concern: “… our clients and other impacted landowners who might wish to sell or refinance their property must first disclose that their property will be impacted by the Project were it to be built. This stigmatizes and depresses the value of their property. It interferes with landowners’ rights to freely use and enjoy their property. It harms impacted landowners, plain and simple.”

McShan asserts that: To prevent further harm to impacted landowners, Texas Central must publicly state that the Project is over. (emphasis in original). Alternatively, should Texas Central not publicly admit the Project is over, he says that If Texas Central will not declare that it no longer intends to construct the Project, it must answer questions regarding its current plans and intentions.

McShan continued that “If Texas Central is unwilling to publicly state that it no longer intends to construct the Project or, alternatively, provide full and complete answers to the questions above, we intend to file a Rule 202 petition to investigate potential claims against Texas Central.”

According to The Texan a Rule 202 Petition would allow the landowners to depose (under oath) Texas Central to ”investigate a potential claim or suit.”

McShan’s letter also suggests that “Texas does not want to suffer through a repeat of the ongoing high speed rail disaster in California.”

The California’s high speed rail project has escalated in projected costs from $45 billion in 2008, on the eve of a statewide bond vote, to as much as $120 billion in 2022, an increase of nearly 170%. This is well above the 30% inflation over the period. Further, the current estimate does not include the promised extensions to Sacramento and San Diego, which were included in the 2008 projection (Note). A recent Hoover Institution analysis by economist Lee Ohanian found that the project costs are now about $200 million per mile.

Already, the Texas Central Railway also has experienced significant cost escalation, from the original $10 billion to $30 billion in 2020. This 200% cost increase considerably exceedsthe 13% inflation rate over the period.

There is, however, a big difference between California and Texas. In California, much of the escalated high speed rail costs will be the responsibility of state taxpayers. Not so in Texas, where in 2017 the legislature enacted a prohibition on state funding for high speed rail.

The question now, as posed by the landowner plaintiffs, is whether the high speed rail project is proceeding or ever can without some new source of funding outside Texas taxpayers.

Note: Joseph Vranich and I have co-authored public policy reports on the California high speed rail project, such as The California High Speed Rail Proposal: A Due Diligence Report (2008) and California High Speed Rail: An Updated Due Diligence Report (2013).

Wendell Cox is principal of Demographia, an international public policy firm located in the St. Louis metropolitan area. He is a founding senior fellow at the Urban Reform Institute, Houston, a Senior Fellow with the Frontier Centre for Public Policy in Winnipeg and a member of the Advisory Board of the Center for Demographics and Policy at Chapman University in Orange, California. He has served as a visiting professor at the Conservatoire National des Arts et Metiers in Paris. His principal interests are economics, poverty alleviation, demographics, urban policy and transport. He is co-author of the annual Demographia International Housing Affordability Survey and author of Demographia World Urban Areas.

Mayor Tom Bradley appointed him to three terms on the Los Angeles County Transportation Commission (1977-1985) and Speaker of the House Newt Gingrich appointed him to the Amtrak Reform Council, to complete the unexpired term of New Jersey Governor Christine Todd Whitman (1999-2002). He is author of War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life and Toward More Prosperous Cities: A Framing Essay on Urban Areas, Transport, Planning and the Dimensions of Sustainability.

Photo: Texas State Capitol in Austin, Texas. Source: Wikimedia under CC 3.0 License.