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California High Speed Rail Greatest Infrastructure Failure in US History: Hoover Institution Economist

Wendell Cox — Mon, 13 Mar 2023 20:15:55 -0400

In “California’s High-Speed Rail Was A Fantasy From Its Inception,” economist Lee Ohanion says that: “California’s HSR is perhaps the greatest infrastructure failure in the history of the country. And the reason it failed is because of a gross failure of state governance, one on such a grand scale that it is nothing short of a betrayal of Californians.”

Ohanion notes that the cost of the present Bakersfield to Merced line, for which the California High Speed Rail Authority (CHSRA) does not even have the money, is already more costly that the original projections for the 800-mile system, which was to connect San Diego, Los Angeles, the Bay Area and Sacramento. This 170-mile stub is on the flat land in the middle of the San Joaquin Valley, by far the easiest portion of the system to build. CHSRA hasn’t turned the first shovel on the Pacheco Pass tunnel, the Tehachapi or the San Gabriel Mountains tunnel that would be required just to complete the San Francisco to Los Angeles segment. The San Diego and Sacramento extensions have barely been mentioned for years.

Ohanion concludes:

“There is no path to completion for the fantasy rail system that was falsely sold to voters 15 years ago. Finishing the Bakersfield-Merced route, which will cost in excess of $35 billion, and which won’t be operative for ten years, doesn’t come close to penciling out. The only reasonable decision is to end a project that should never have begun.”

My former colleague on the Amtrak Reform Council, Joseph Vranich and I authored reports on the California High Speed Rail Line, including The California High Speed Rail Proposal: A Due Diligence Report, California High Speed Rail: An Updated Due Diligence Report, and with Adrian Moore California High Speed Rail Project Greenhouse Gas (GHG) Emissions: A Dynamic Impact and Cost Analysis.

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.

California High Speed Rail: More Cost Overruns & Delays? (Los Angeles Times)

Wendell Cox — Mon, 11 Oct 2021 11:21:33 -0400

According to Los Angeles Times reporter Ralph Vartabedian (see: Cost overruns hit California bullet train again amid a new financial crunch, October 8), the troubled California high speed rail system could face additional cost overruns. According to Vartabedian, “The California bullet train is facing at least another billion dollars of proposed cost increases from its contractors, following a history of sharp cost growth on construction work over the last eight years, The Times has learned.”

The already much delayed start of service could be delayed further: “The current plan would start train operations by 2030, but officials working on the project say privately that it appears difficult, if not impossible, to meet that timetable.” At the time of the 2008, when voters approved Proposition 1-A to authorize $10 billion in bonds, the Los Angeles (Anaheim) to San Francisco (Transbay Terminal) line was to have cost $33 billion and entire route was to have opened in 2020. Current cost estimates are in the area of $100 billion, though that is after scaling the project back significantly and sharing conventional commuter rail tracks in the Los Angeles and San Francisco metropolitan areas.

Joseph Vranich and I authored a report on the system in 2008 (see: The California High Speed Rail Project: A Due Diligence Report). In that report we projected cost overruns of 30% to 60% for the entire system, which was to have included spurs to Sacramento and San Diego. Our projections were embarrassingly low, with the much more modest system now likely to cost more than the full promised system with its Sacramento and San Diego branches, little of which appears likely to be opened even 10 years late.

High-speed rail advocates tout a 0.008% reduction in pollution

Todd Myers — Tue, 28 Sep 2021 16:14:20 -0400

A recent op-ed in The Seattle Times written by transit activists claims a high-speed railroad from Portland to Vancouver B.C. would reduce air pollution. Although the piece doesn’t provide a source, it claims the project would “prevent 960 metric tons of harmful pollutants such as particulate matter and carbon monoxide from entering our atmosphere over the first 40 years of operation.”

Although that sounds like a lot, it is an absolutely minuscule amount. It shows how high-speed rail advocates must grasp at arguments to justify the tens of billions of dollars the project would cost to build.

The authors didn’t cite a study, but mentioned two particular pollutants: particulate matter and carbon monoxide (not carbon dioxide which is a greenhouse gas). They claim a reduction of 960 metric tons of pollutants over 40 years, which amounts to 24 metric tons a year.

How much is that? About 0.0008% of the state’s annual particulate matter and carbon monoxide emissions.

Rail-based transit yields infinitesimal environmental benefits despite the massive cost. Advocates throw in the numbers, and multiply them by 40 years, in the hopes that people won’t check to see if they are meaningful.

This is a consistent pattern from transit activists.

In 2015, members of Sound Transit’s board justified spending billions on extending light rail to Lynwood saying it would reduce CO2 emissions. As we noted at the time, the same amount of emissions could be reduced for about $1 million a year - far less than the cost of constructing, let alone operating, the light rail extension.

The following year transit activist Shefali Ranganathan and the Transportation Choices Coalition implied the third phase of Sound Transit (ST3) would reduce 793,000 metric tons of CO2 annually. The real number was much smaller - only about 130,000 MT. After initially denying it, they were forced to add a footnote to an e-mail (an odd way to correct the record) acknowledging they were misleading.

Transit and environmental activists like to claim their projects will help reduce pollution. A look at the data shows that environmental benefits are little more than marketing afterthoughts, rather than sincere efforts at environmental policy.

This piece first appeared at Washington Policy Center.

Todd Myers is the Director of the Center for the Environment at Washington Policy Center. He is one of the nation's leading experts on free-market environmental policy. Todd is the author of the landmark 2011 book Eco-Fads: How the Rise of Trendy Environmentalism Is Harming the Environment and was a Wall Street Journal Expert Panelist for energy and the environment.

Chicago Tribune Joins the Ranks of High-speed Rail Critics

Mon, 01 Oct 2012 00:26:52 -0400

Last year, in congressional testimony before the House Transportation and Infrastructure Committee hearing on high speed rail, we cited the Chicago-to-St.Louis "high-speed rail" project as an example of the Administration's wasteful use of its economic stimulus money. We pointed out that the $1.4 billion program of track upgrades will allow top speed of 110 mph but will raise average speeds of Amtrak trains between Chicago and St. Louis by only 10 miles per hour, from 53 to 63 mph. The four-and-a-half hour trip time will be cut by a mere 48 minutes, to three hours and fourty minutes. In France, TGV trains between Paris and Lyon cover approximately the same ditance (290 miles) in a little under two hours, at an average speed of 150 mph. Yet, federal officials did not hesitate proclaiming the Chicago-St. Louis project as "historic" and hailing it as "one giant step closer to achieving high-speed rail passenger service."

Now, a Chicago Tribune story, linked here and excerpted below, confirms just how "ridiculously expensive" and "uneconomical" this project is turning out to be. As the editorial points out, the project stands to "drain funding from mundane projects that could make a much bigger difference." Something that the California High Speed Rail Authority has belatedly recognized in diverting almost half of the initial $10 billion stage of its bullet train project to upgrading "mundane" commuter rail services in Los Angeles and the Bay Area.

In recent years, under the banner of economic stimulus, the federal government has spent a ton of money getting the tracks ready for those speedy locomotives. In the Chicago-St. Louis corridor, for instance, Uncle Sam has poured at least $1.4 billion into crossing improvements and other upgrades. Between Chicago and Detroit, more than $400 million has been spent.

How would you feel, taxpayer, if we told you that some of the work might need to be torn up and redone?

Angry? You bet.

A debate over just how fast high-speed trains should operate could turn very costly very soon.

The issue comes down to 15 miles per hour.

Texas High Speed Rail: On the Right Track?

Wendell Cox — Thu, 23 Aug 2012 17:09:06 -0400

The Central Japan Railway (Note 1), which operates one of only two high-speed rail segments (Tokyo Station to Osaka Station) in the world that has been fully profitable (including the cost of building), proposes to build a line from Dallas to Houston, with top speeds of 205 miles per hour. This is slightly faster than the fastest speeds now operated. This line is radically different from others proposed around the nation and most that have been proposed around the world. The promoters intend to build and operate the route from commercial revenues.

There is the understandable concern that eventually, the promoters will approach the state or the federal government for support. Not so, say Texas Central High Speed Railway officials. According to President Robert Eckels, not only is there no plan for subsidies, but "investors would likely walk away from a project that couldn’t stand on its own." He also told the Texas Tribune “If we start taking the federal money, it takes twice as long, costs twice as much,” Eckels said. “My guess is we’d end up pulling the plug on it.”

Eckels is a former Harris County Judge (Houston), a position the equivalent of a county commission or county board of supervisors chair in other parts of the nation. Eckels developed a reputation for fiscal responsibility during his tenure at the county courthouse.

The Texas project is in considerable contrast the California High Speed Rail project, which if built, is likely to require a 100 percent capital subsidy and perhaps subsidies for operations. It is also different from the Tampa to Orlando high speed rail project, which would have required a 100 percent capital subsidy and was cancelled by Florida Governor Rick Scott. The Texas project can also be contrasted with the Vegas to Victorville, California XpressWest high speed rail line that would require at least a $5.5 billion federal loan and a subsidized interest rate. Our recent Reason Foundation report predicted that XpressWest would not be able to repay its federal loan from commercial revenues and could impose a loss on federal taxpayers of up to 10 times the Solyndra loan guarantee loss (see The Washington Post, "Solyndra Scandal Timeline").

From the horrific record of private investment in startup high speed rail lines and the huge losses that have been typical, I am certainly skeptical. The Taiwan high speed rail private investors have lost two-thirds of their capital investment and debts are guaranteed by the government. The Channel Tunnel rail line to St. Pancras station has been bailed out by British taxpayers. However, if any company can make money at high speed rail in the United States, it would be the Central Japan Railway.

So far the Texas Central High Speed Railway seems to be doing it right. Like the other intercity modes, the airlines system and the intercity highway system (Note 2), this project would be paid for by people who use it.

Without government subsidies or loans, the Texas Central High Speed Railway will certainly have an incentive to get the sums right. If they are not, it sounds like the plug will be pulled. If they are, high speed rail could be on the right track in the United States for the first time. More power to them.

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Note 1: Central Japan Railway, and other companies purchased the assets of the Japanese National Railway in the late 1980s. The nationalized railway had run up a debt of nearly $300 billion, which was eventually transferred to taxpayers.

Note 2: There is a small subsidy to the airline system from the Federal Aviation Administration. Intercity highways have been financed by users until contributions from the federal general fund in recent years. However these contributions have been far less than diversions over the past 30 years from highway user fees, principally to mass transit a major transfer of highway trust fund interest to the general fund and now ongoing interest transfers.

Photograph: Central Japan Railway corporate headquarters at Nagoya Station (by author)

Could a Las Vegas Train Produce Losses 10 Times More Than Solyndra? (Report Announcement)

Wendell Cox — Thu, 16 Aug 2012 10:38:25 -0400

The Reason Foundation has released our "Xpress West" (formerly "DesertXpress") analysis. This high speed rail train would run from Victorville (90 miles from downtown Los Angeles) to Las Vegas. Promoters predict high ridership and profits. They are seeking a subsidized federal loan of more than $5.5 billion, which is within the discretionary authority of the US Department of Transportation to fund.

Our analysis concludes the following:

1. There is serious question whether there is a market for Las Vegas travel that would require driving one-third of the way and transferring to the train. If there is no such market, as seems likely from the international experience, ridership could be as low as 97 percent below projections. The reality can be known only after the line is running.

The balance of the report is based upon the assumption that there is a market for driving to Victorville and boarding a train to Las Vegas.

2. The ridership and revenue projections (by URS Corporation) are based upon data that is more than 7 years old and predates the Great Financial Crisis. There have been significant downward demand trends in the travel market and Las Vegas tourist market since that time, especially in the share of the market from the Los Angeles Basin. It is inappropriate to use such old data in projecting system performance (Certainly no private company would rely on such old data in a due diligence analysis).

3. Even after adjusting the obsolete data (which our report does), the ridership projections are implausibly high --- at four times the Amtrak Acela ridership between Washington, Baltimore, Philadelphia and New York.

4. Over 24 years (the forecast period in the project document), we project that expenditures will exceed revenues by between $4 billion and $10 billion. This would mean that there would be insufficient revenues to pay the federal loan. This could result in a taxpayer loss approximately 10 times that of the Solyndra federal loan guarantee.

5. The free use by the private Xpress West project of the Interstate 15 median could preclude cost effective expansion of this roadway. Even assuming the implausible Xpress West assumptions about the diversion of drivers to the train, the overwhelming majority of growth in the corridor would be on the highway, not on the train. This includes not only the heavy truck traffic, but also car traffic.

Related: The Las Vegas Monorail

Wendell Cox was also author of "Analysis of the Proposed Las Vegas LLC Monorail," which indicated that ridership and revenue projections were extremely optimistic and that the project was likely to fail financially. Subsequently the project filed bankruptcy and defaulted on bonds. The actual ridership on the Monorail was within the range predicted in "Analysis of the proposed Las Vegas LLC Monorail," and far below the level forecast by project consultant URS Greiner Woodward Clyde.

Also see this letter from other consultants reviewing the project (Thomas A. Rubin, Jon Twichell Associates, Professor Bernard Malamud and Wendell Cox).

The Las Vegas Monorail case is described in the Reason Foundation report.

More Unwelcome News for the California High Speed Rail Project

Fri, 15 Jun 2012 00:15:39 -0400

Decidedly, early June has not been the best of times for the California high-speed rail project.

On June 2, came a new poll showing that fifty-nine percent of voters would now oppose building high-speed rail if the measure were placed on the ballot again. Sixty-nine percent said that they would "never or hardly ever" ride the bullet train if it were built. (USC Dornsife/LA Times survey). The poll made news throughout the state, and indeed nationally. The public was treated to headlines such as "Voters have turned against California bullet train" (LA Times); "California high speed rail losing support" (Bloomberg); "California high speed rail doesn’t have the support of majority of Californians" (Huffington Post); "Voters don’t trust state to build high speed rail" (CalWatchdog) and "Poll finds California voters are experiencing buyers' remorse" (Associated Press).

Then, on the heels of the poll, came news that Central Valley farm groups have filed a major environmental lawsuit asking for preliminary injunction to block rail construction slated to begin later this year. Plaintiffs include the Madera and Merced county farm bureaus and Madera County. Still more agricultural interests in the Central Valley are reportedly threatening to sue.

The Sierra Club, traditionally a loyal supporter of Gov. Brown, announced it was "strongly opposed" to Brown’s proposal to eliminate California environmental (CEQA) requirements for the high speed rail program and its Central Valley construction project. The Brown administration has made its proposal despite a solemn promise to the legislature by the Authority’s Chairman, Dan Richard, that they would never try to bypass CEQA ("We have never and we will never come to you and ask you to mess with the CEQA requirements for the project level").

The multi-billion dollar HSR program is exactly the sort of large scale public works project that CEQA was designed to address, wrote Kathryn Phillips, Sierra Club’s Director in a June 5 letter to the Governor. "By removing a large-scale project such as high-speed rail from full CEQA coverage, the proposal grants the state a status that suggests it does not have to fully and seriously consider and mitigate environmental impacts. ... In the interests of the environment and in the interest of rebuilding public support for rail in this state, we urge you in the strongest possible terms to abandon the proposal to weaken environmental review for the high-speed rail system," the letter concludes.

Nor was this the end to unwelcome news for the Brown administration. A series of editorials and opinion pieces by some of California’s most influential columnists has reinforced the public’s growing disenchantment with the bullet train project and with the Governor’s stubborn determination to defy public opinion.

In a June 3 commentary, the Sacramento Bee columnist Dan Walters, a longtime observer of the legislative scene, refuted the Governor’s attempt to compare the high speed rail project with the iconic Golden Gate Bridge. Both projects, the Governor had said in a ceremony marking the 75th anniversary of the bridge, took much political courage and foresight, and both will go down in history as remarkable gifts to posterity.

"Nice try, Governor," wrote Walters, but the comparison is misleading. The need for the Golden Gate crossing was clearly demonstrable and the bridge used revenue bonds to be repaid with bridge tolls. The need for a bullet train, on the other hand, "exists only in the minds of its ardent backers" and the Governor assumes that the federal government will finance nearly two-thirds of the project’s cost—an assumption that is nothing more than wishful thinking. Asked Walters, if the train is as financially viable as Brown and the Authority insist it is, why wouldn’t they do what the bridge builders did — float revenue bonds to be repaid from the train’s supposed operating profits. "Public works projects make sense when they fit well-documented needs. When they don’t, they are just political ego trips," Walters concluded.

Daniel Borenstein, columnist and editorial writer for the Contra Costa Times, came to a similar conclusion. In pushing for the bullet train, he wrote, Gov. Brown is motivated by a quest for a legacy. But, the columnist warned, while the Governor strives to be remembered like his late father for the capital projects he leaves behind, he could derail the November tax measure by his "reckless exuberance for spending billions on high speed rail." "Does he really want to anger [the voters] when he needs them the most?" Borenstein asked.

Perhaps the most devastating criticism of the Governor’s high speed rail initiative came in a June 8 editorial in the San Jose Mercury News, one of the Bay Area’s most influential newspapers. Entitled "High Speed Rail Plan is Delusional" the editorial has been syndicated in a number of Bay Area and Los Angeles Sunday papers. Follow this link to read it at the Mercury News website.

Thoughts on High-speed Rail and Buses

Tory Gattis — Thu, 31 May 2012 22:58:09 -0400

I’m back from a California trip – beautiful state, beautiful weather, completely dysfunctional government. For example, even with massive fiscal problems it’s still trying to build a vastly expensive high-speed rail line from San Francisco to San Diego. On a related note, a private group is exploring building a Houston-Dallas HSR line with no subsidies of any kind. I’m totally okay with private efforts. I’m probably even okay with a little eminent domain to get the right of way at a fair price. I hope they can make it work.

Here’s a great alternate perspective on HSR: a TED talk on the value of perception and psychology vs. economics and technology. Go to the 6:12 point to see a great example of the Eurostar train, where they spend a vast amount of money to reduce travel times by 40 mins, when for 90% or 99% less money they could have improved the experience instead and actually gotten higher rider satisfaction. I believe the absolute same principle applies to bus vs. rail, whether intra- or inter-city: spend 1% or 10% of the same money improving the bus service and get higher customer satisfaction than the rail line would generate. (hat tip to Karl)

And Greyhound is doing just that, learning from Megabus and upgrading their service with wifi, power plugs, and nicer seats with more leg room. With that kind of service option available at say $30 one-way within the Texas Triangle, how many people do you think would pay $150+ to go on HSR? On second thought, maybe nobody should mention this possibility to the Texas HSR group… ;-)

"Jaw-Droppingly Shameless:" Mother Jones on California High Speed Rail Projection

Wendell Cox — Mon, 23 Jan 2012 10:57:42 -0500

Kevin Drum of Mother Jones reports on the highly questionable "cost of alternatives" that has been routinely repeated by proponents of the California high speed rail project, in an article entitled "California High Speed Rail Even More Ridiculous than Before."

The mantra goes something like, "yes high speed rail is expensive, but it would cost even more to not build it." Yes, indeed, it is expensive, starting at the low estimate of $98.5 billion the press and proponents usually cite to the nearly $118 billion that the California High Speed Rail Authority itself indicates. Advocates then cite a $171 billion figure as what Californian's would have to pay if they didn't build the line.

Joseph Vranich and I detailed the flaws in this "alternatives estimate" in a Wall Street Journal commentary on January 10 ("California's High Speed Rail Fibs"). We noted that the claim "sets a new low for planning projections in a field that has been rife with abuse." This was a reference to "strategic misrepresentation” ("lying") that has characterized rail project forecasts, according to top European academics.

Drum goes further, calling the claim "jaw-droppingly shameless," an appropriate characterization based upon the method and documentation. He goes on to suggest that "A high school sophomore who turned in work like this would get an F."

Regardless of the views that officials or the public may have on high speed rail, they are entitled to a standard of professional (and taxpayer financed) analysis above "jaw-droppingly shameless."

The Economist: The Great High Speed Train Robbery

Wendell Cox — Mon, 05 Sep 2011 14:57:33 -0400

The Economist magazine has called on the British government to c ancel plans for the HS-2 high-speed rail line that would run from London to Birmingham and Manchester. The Economist said:

...these days politicians across the developed world hope new rapid trains, which barrel along at over 250mph (400kph), can do the same. But high-speed rail rarely delivers the widespread economic benefits its boosters predict. The British government—the latest to be beguiled by this vision of modernity—should think again

The government claims the line will cost £32 billion line, however the international experiences suggests a figure more on the order of £32 and the experience in this corridor itself suggests costs could rise even more (see The High Speed Rail Battle of Britain).

A principal purpose for the line is to bridge the economic gap between the economic dynamo of Southeast England (including London) and the Midlands and North of the country. This does not convince The Economist:

China suspended new projects after a fatal collision of two high-speed trains in July; Brazil delayed plans for a rapid Rio de Janeiro-São Paulo link, after lack of interest from construction firms. Yet governments remain susceptible to the idea that such projects can help to diminish regional inequalities and promote growth.

The Economist doubts this will happen:

In fact, in most developed economies high-speed railways fail to bridge regional divides and sometimes exacerbate them. Better connections strengthen the advantages of a rich city at the network’s hub: firms in wealthy regions can reach a bigger area, harming the prospects of poorer places. Even in Japan, home to the most commercially successful line, Tokyo continues to grow faster than Osaka. New Spanish rail lines have swelled Madrid’s business population to Seville’s loss. The trend in France has been for headquarters to move up the line to Paris and for fewer overnight stays elsewhere.

The Economist reminds the government that:

Britain still has time to ditch this grand infrastructure project—and should. Other countries should also reconsider plans to expand or introduce such lines. A good infrastructure scheme has a long life. But a bad one can derail both the public finances and a country’s development ambitions.

Finally, The Economist says that there is better use for the money.

The £32 billion at its disposal might well yield a higher return if it were spent on less glitzy schemes, such as road improvements and intra-city transport initiatives. If the aim is to regenerate “the north”, the current plan might prove a high-speed route in the wrong direction.