The shifting cost figures on California’s High Speed Rail and what it should teach people about project development
Many, many folks have sent me this press statement from the new California HSR chief, Dan Richards, discussing how a new plan will lower the costs from the estimated $100 billion released last year. Some have sent it to me with a “hah ha you’re wrong! The train is totes affordable” kind of way, while others have sent it in a “This dude is blowing smoke–I can’t wait to see the rationales” kind of way.
The shifting cost estimates. Ho boy. Where to start? There’s every possibility that the train will cost more or less than $100 billion. There’s a reason why, when I had my students estimate the costs in 2008, that their quick estimates ranged from $80 to $110 billion–there are a lot of assumptions that go into any given cost calculation.
I was relieved to see the $100 billion from the CALHSR folks last fall not because I want the project to die, per se, but because I think it’s important for the public to really grapple with the costs, which are going to be significant. It’s a great, big, complicated project with a lot of moving parts. So everybody who does this kind of work in California saw the $32 to $43 billion originally shown to voters–particularly as the proposition these figures accompanied practically promised a full HSR system–as deeply, deeply problematic to the democratic process and the project’s accountability to voters. It’s entirely possible that a project that costs $100 billion has far and away enough benefits to justify the costs. But in my rulebook, you can’t go voters with a ridiculously low cost estimate. Perhaps I am naive, but I think voters would have approved a nickel increase in the gas tax for the HSR, which would have solved a lot of the financial problems plaguing the project—and prevented the cloud that the HSR agency now operates under. Why should anybody believe any of their cost figures given the vast shifts?
Richards sounds like a much better leader for this project than California has ever had before:
“I don’t think we’ll be able to look (the Legislature) or the public in the eye and tell them that we have any greater clarity about the funding today,” Richard said. He did, however, defend estimates that enough passengers will ride the train to turn a profit.
It’s entirely possible for HSR to turn a profit once taxpayers have eaten all the capital costs. He’s right about that. If HSR around the world (and a lot of airports) have proved anything, it’s that.
As it is, Richards could be right: there are two key changes in the plan that could very well shave quite a bit off project cost. The first has been the little-discussed but very important–plan to seek more funding from cities rather than expecting more money from the Feds. By putting localities on the hook for funding, the impulse to demand a station when it makes no sense diminishes, and some of these places that expected to get aboard the Federal gravy train will have to make very hard choices about whether they can pony up funds for stations. That is all to the good for the project, even if the localities themselves stand to lose out. Also, it’s a lot less fun for neighbors to scream for every mitigation under the sun if they know that they are paying for those side-payments, along with their neighbors, rather than Uncle Sam/Sugar Daddy paying for the sprinkle-covered sound walls and underground links.**
The second change concerns the subtle shifts in some of the ground work in southern California–some promised double-tracking for existing services. Doing that could mean pretty big, fast benefits to those regions.
Finally, they could shave a lot of money (yes, billions) off that project cost by simply aiming for getting to the SFO Bart station rather than trying to get into downtown San Francisco. People are going to transfer to BART anyway, and it’s a simple BART trip to downtown from SFO. It’s a worthy amendment even if property owners downtown don’t want it.
**This question about underground links is the biggest wildcard in the cost equation, and anybody who has worked in California for awhile has to know it. I mean, hell, in Los Angeles, we’re grappling with communities that are outright demanding we put FREAKING LIGHT RAIL underground. Do you know how much that costs? And who can blame these communities? Why not demand that? But what that concession does to project costs is substantial.And it’s only a matter of time before the HSR also becomes subject to that demand. And then we’ll see costs absolutely spiral upwards, if we do get there. But I think we will get there if current construction politics are any indicator.
(My apologies for typos, I’m really sleepy today.)