Another Day, Another HSR Business Plan: First Impressions

Another Day, Another HSR
Business Plan: First Impressions

04/02/12 Filed in:

Yes, the High-Speed
Rail Authority
did listen to comments on the last
Plan, and yes, they actually
did add several desirable elements to
the Plan, but in the end, it is still a bad joke:
“The key initial operating segment from the Central
Valley to the Los Angeles Basis is fully funded.” (p.
7-25) This seemingly good news
is new since the last Business Plan.
But the punchline is that the newly identified fund
source is $20.2 billion from the feds! How fully
funded is that, given the current Congress? The
Governor claims he can use cap and trade revenues as
a backstop, when the hoped-for funds don’t arrive.
Good luck fighting off all the other interest groups
trying to keep their programs alive in this time of
budget austerity! Doesn’t sound to me like the IOS is

A nastier joke is the commitment to using blended
systems–sharing tracks with commuter railroads in
the Los Angeles area and the Bay Area. This is
commonsense policy–one which TRANSDEF fully
supports, once the Authority has demonstrated that a
train can travel from Los Angeles to San Francisco
within the statutory 2 hours 40 minutes with a
blended system. Perhaps this is a formality, but the
validity of the Business Plan rests on it.

The major problem with the blended approach is that
the ridership estimate assumes 9 trains per peak hour
(p. ES-13) or the internally inconsistent 6 trains
per peak hour (p. 5-12). The 9 trains/hour greatly
exceeds the HSR capacity of Caltrain in blended mode
and may be a typo, while Metrolink’s HSR capacity in
blended mode is unknown. In other words, ridership
and revenue, which are the foundation of a viable
Business Plan, may be overstated, casting doubt on
the claim that all ridership scenarios result in a
positive cash flow (p. 7-5), so that no ridership
subsidy is needed. Compare this to the
analysis by financial professionals
associated with CC-HSR.

One of the more irritating parts of the Business Plan
is the insistence that building a track in the
Central Valley will provide a public benefit by
offering a faster route for the one million
passengers per year on the San Joaquin train, which
is operated by Amtrak. Amongst the problems with this
lame justification for the project, Amtrak will lose
a large number of passengers by bypassing the
stations of Madera, Hanford, Corcoran and Wasco:
“We’re improving service by cutting service to
communities that really use it.” How much extra will
this temporary dubious “benefit” add to construction
costs? It is at least four times more expensive to
build viaducts strong enough to support an Amtrak
locomotive, because they weigh so much more than a
high-speed train. The only possible purpose for
spending that money would be to make the Central
Valley project seem like a useful project in the near

Perhaps the greatest irony of all is the statement
that “disciplined management through a private-sector
operator leads to stronger financial performance,
even in the face of changing circumstances.” (p.
ES-15.) The Authority’s problems all result from the
lack of both disciplined management and a
private-sector operator. Politics has driven the
Authority to select a route that is such a
money-loser that no private operator would ever
choose it, resulting in the private sector’s refusal
to undertake the project without State ridership
guarantees. That, of course, is impermissible under
Proposition 1A, the Bond Act.

So the Business Plan proposes that the State
undertake all the risk of building the Initial
Operating Section, and hope that it generates enough
of an operating profit to entice $10.1 billion of
private investment. (p. 7-18.) This irresponsibility
to the State’s finances is fundamentally
unacceptable. TRANSDEF is convinced that private
operators would bid on investing in the initial
operating segment if they were allowed to select a
profitable route. What does it say that they were
never publicly asked, through a Request for

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