Our today’s topic has for a long time been on our list. The reason why the preparation of this article took so long is that the infrastructure project that we are going to discuss has been happening over a long period of time, with a lot of twists and changes, but also controversy.
California High-Speed Rail Project
Therefore, it was necessary to check all these details and then to find a way to sum them up into one comprehensive article.
In this civil experience article, we’ll talk about the construction of a famous high-speed railway line in California.
How High-Speed Rail Project Started?
California has been evaluating the potential of constructing a high-speed rail line for almost four decades.
The state first pursued the idea of a Shinkansen-style Southern California high-speed railway line which was initiated by private firm American High-Speed Rail Corporation.
In 1981, this company started negotiations with relevant authorities and even launched activities related to obtaining required documentation. However, by 1984, it was all stopped, officially due to lack of financial resources. Then, in the mid-90s, the idea of Californian high-speed railway line was revived once again, as the growing population in this American state became an increasing strain on its highways, airports and conventional railway lines.
At the federal level, as part of the High-Speed Rail Development Act from 1994, the Californian high-speed railway line was identified as one of five priority corridors within the US high-speed rail planning.
This time, the planned route linked the major metropolitan areas of San Diego, Los Angeles, San Francisco Bay and Sacramento via San Joaquin Valley.
A year before, the California Legislature created the Intercity High-Speed Rail Commission, which was charged with determining the feasibility of construction of such corridor and, in 1996, the Commission issued a report that concluded that such project was feasible.
Also, in 1996 the California High-Speed Rail Authority or let s just use the term Rail Authority, was established, in order to begin formal planning and preparation of a ballot measure.
A ballot measure in the United States is some form of a referendum, where a piece of the proposed legislation is put on a public vote, in order to get either approval or rejection by the public.
In the year 2000, a detailed study was conducted, and the project proposal was finally shaped, in the form as we know it today. The ballot measure was scheduled for 2004 general elections, but the State Legislature voted its withdrawal. Finally, after more than a decade since the initial proposal, the project received voters approved in November 2008.
On a ballot measure, in what was called Proposition 1A, with the support of 53%, the public approved issuing 9.95 billion USD for the future high-speed rail line.
This act also included the funds in the amount of $950m dedicated for financing the capital improvements of commuter, intercity and local transit lines, which are supposed to complement the future high-speed railway line.
Of course, Proposition 1A and legislation that followed also set some standards and performance levels that the future project should meet.
The most important three were the following
Where conditions allow, a minimum speed of the service should be 200 mph (320 km/h) Maximum travel time between San Francisco and Los Angeles should not exceed 2 hr 40 min, and The high-speed rail should be financially self-sustaining, which means that the operation and maintenance costs should be fully covered by the revenue.
The decision to finally start the project was made in 2011 after the detailed environmental studies have been carried out and the procedure of public opinion gathering has been completed. Ok, after this brief timeline, we must say a few words about what exactly Californians have voted for.
The Scope of The Project
The project of construction of Californian high-speed rail is actually divided into 2 phases.
which refers to the 520 miles (837 km) long section of San Francisco – Merced – Los Angeles-Anaheim, which is the section that was approved by Californians as part of Proposition 1A.
But, we also have Phase 2, which refers to the future line extensions from Merced to Sacramento and from Los Angeles to San Diego, with a total length of 280 miles (450 km).
In that way, the whole project actually covers 800 miles (1287 km), including up to 24 stations, with design speeds of up to 220 mph (354 Km/h).
Rail Authority decided to begin construction in the Central Valley, on the first section from Merced to Bakersfield in the length of 174 miles (280 km) And that’s one the most controversial parts, in addition to skyrocketing project costs.
However, before we jump to controversies, let s first discuss whether California should have a high-speed rail in the first place.
IS CALIFORNIA SUITABLE FOR HSR SYSTEM?
Successful introduction of high-speed rail services requires satisfying a certain set of preconditions. Among most important is the one which says that high-speed corridors should be located between large urban areas, with strong traffic flows, spaced ideally between 100 and 500 miles.
Distances below 100 miles are best covered by car or conventional rail, while distances above 500 miles are best covered by the aeroplane. Given the fact the distance between San Francisco and Los Angeles is about 450 miles, California high-speed rail easily meets this norm.
In terms of the size of the cities that this line would serve, Greater Los Angeles Area and the San Francisco Bay have a combined population of about 28 million people.
Travelling from San Francisco to Los Angeles by plane usually takes less than an hour, but if you take into account door-to-door travel times, which include travel times to and from the airport, check-in and security procedures, the travel time between these cities becomes more like five hours.
In spite of all inconveniences, the Los Angeles San Francisco corridor is one of the busiest short-haul flight corridors on the planet, and by far the busiest in the United States.
Regarding the ground transportation, travel times that you are seeing on the screen may be the best shows the time savings the travellers might realize in case California becomes high-speed.
The high-speed train, between all the pairs of the cities that are seeing, at least for a double cuts the time you would otherwise spend in a car.
Not to mention conventional railway. But, of course, the medal always has two sides. Some argue that California lacks geography, demographics and even cultural tradition, which all played a significant role in countries like France, Germany and Japan which, to a certain degree, made their high-speed trains economically viable.
As we already indicated, some serious criticism is related to the decision to construct a first segment of the line in California s Central Valley.
The reason for this is the fact that the cities along this segment are relatively small and unlikely to generate any significant amounts of traffic.
This is even more problematic if you take into account that the financial arrangement which would ensure financing of the complete project, simply does not exist.
Even the selected route to connect LA and SF is sort of debatable. Some argue that politicians, in order to fulfil campaign promises and enable access to high-speed rail to certain cities, influenced the route to change its most reasonable course.
Also, the lack of political support is obvious, public opinion is divided, and private investors lost their interest, which is all essential for any project of this calibre.
At the end, maybe the most significant argument against this project is related to the project costs, which are, according to some, simply too expensive. And furthermore, the prospects of finding money which would cover complete project, are not that good. But, before you draw a conclusion, let s first take a deeper dive.
Controversy Around Investment Costs And Financing
We said earlier that, on a ballot measure, voters approved this project and approved the issuing of 9.95 billion USD in bonds to commence with the construction.
The Federal government also joined the club, but only with a symbolic 3.5 billion USD.
It was planned that this sum will be enough to cover the app. 20% of total needed investment, which is projected at 45 billion dollars during 2008.
The problem was, after the construction started, due to issues with the acquisition of land, environmental requirements, consultants etc, the projected costs of the project skyrocketed all the way to 98 billion dollars.
However, if we stick to the official data, according to the Business plan of Rail Authority for 2020, the cost estimation of Phase 1 is 72 billion USD, including the savings which arose due to the decision to share the part of the route with the existing commuter rail.
This, of course, will have an impact on maximum speed on certain segments, and, in that way, on total travel times.
In addition, besides state and federal government, the Rail Authority secured certain amounts of money from the so-called Cap-and-Trade funds.
The Cap-and-Trade Program is basically a program that creates a powerful economic incentive for significant investment in cleaner, more efficient technologies.
25 per cent of annual Cap-and-Trade funds went for the purpose of this high-speed project, and, in that way, as of December 2019, the Authority received $3.2 billion.
In addition, Rail Authority assumes that the Cap-and-Trade fund will in future provide between $500 and 750 million USD every single year.
Now, if you put all we said onto a pile, between now and 2030, the Rail Authority can count on a budget between 20.6 and 23.4 billion USD.
While this amount of funding is considerable, it is still far from enough to complete Phase 1 of the project.
Where Are We Now And What Are The Plans?
As we said, the section from Merced to Bakersfield was selected to be the section where the works will start.
In fact, they started 5 years ago, and today we have app. 30 active construction sites, spanning 119 miles from Fresno to Bakersfield.
These works are divided into five construction packages (CP), and, now, we will try to say a few words about each.
For CP1, a design-build contract valued at approximately $985 million, was awarded in August 2013 and it covers the initial segment from Madera to Fresno.
Construction was originally expected to begin in 2013, but it has been delayed due to the slow pace of property acquisition, until 2015.
A groundbreaking ceremony was finally held in Fresno, on January 6th, 2015, which marked the official beginning of sustained construction activities on this project.
For CP2 and CP3, the design-build contract was awarded on December 11th, 2014, in the amount of $1,2 billion, and is related to the design and construction of a 65-mile (105 km) stretch from the south end of Fresno to near the Tulare-Kings county line.
CP4, in the amount of $347.5 million, is related to the 22-miles (35.4 km) long segment from Tulare-Kings county line to the city of Shafter.
Originally, the CP4 was supposed to cover 30 miles all the way to Bakersfield, but it had to be shortened, due to disputes with the cities of Bakersfield and Shafter.
The dispute is related to the need to renegotiate the routes through these two cities. In addition to these 4, we have the CP5, which is yet to be defined and developed.
In any case, if you want to find out more about the scope of each of these CPs, you can check out the link in the description.
Just to help you understand the scale of this project, we will mention some activities besides these packages. For example, in the Bay Area, Caltrain is electrifying the 51-mile commuter rail corridor between San Francisco and San Jos. Rail Authority contributed $714 million to help convert this heavily used rail line from diesel to clean, electric service and to lay the foundation for a high-speed rail shared-use corridor.
In the Los Angeles Basin, Rail Authority is helping the LA Metro, with $442 million for the Phase A of the Link Union Station project, in the effort to transform Los Angeles Union Station into a world-class transit and mobility hub which includes high-speed rails.
We are not going to discuss the current progress of works, bearing in mind that construction sites are not continuous and they span over, as we said 30 different places. If you still want to know more, Rail Authority has a fantastic site where you can find all the details that you might need.
For today s article, let’s just have a look into the deadlines from Rail Authority s bi-annual reports, which are on regular basis submitted to the California State Legislature.
The Business plan for 2012, predicted 2028 as the deadline for completion of Phase 1. Of course, as time passed, the deadline was delayed.
The new deadline for Phase 1, According to the Business plan for 2018, was set to be 2033 and for the Merced – Bakersfield segment, the deadline was postponed from 2026 to 2029. But, as would some say, Rail Authority never fails to disappoint.
In the Business plan for 2020, they set a new deadline for Merced – Bakersfield as 2031, which let us assume that the whole Phase 1, in the best-case scenario, cannot be completed before 2035.
That’s of course the case if Rail Authority manages to find sufficient funding, which, at this moment, sounds like a dream.
Profitability: Expectations vs Reality
Now, before we come to a conclusion, let’s at least try to give you an insight into the million-dollar question: will California’s high-speed line ever be profitable?
Well, short answer: most likely, no. According to the strict definition of profitability, this project will hardly ever pay off. Just like in the case of most high-speed projects anywhere else on the planet.
If that answer works for you, you can stop the video here. If you want to hear the but part, you are on the right track.
In search of the answer, we again reached out to Authority s Business Plan for 2020. It gives some data about ridership and forecasted revenue for each year from 2033 to 2060. The applied model has three scenarios, or, simply put, it gives data for high, medium and low ridership and revenue. We decided to stick with the data for the medium scenario. So, for the first year of operation of Phase 1, it is expected to have about 12.1 million transported passenger and revenue of 1,2 billion USD.
After 12 years, for example, the model forecasted ridership of 40,5 million passengers and revenue of 5,3 billion USD. On the other side, estimated costs of Operation and Maintenance for the first year of operation are expected to be 770 million USD.
After 12 years, those costs are expected to reach 2,4 billion. When comparing data for the whole period from 2033 to 2060, it is safe to say that this high-speed line is expected to cover its operation and maintenance costs.
Not only this but also predicted revenue will in addition generate more than 70 billion USD by the year 2060. That might be enough to cover even the investment costs of the project, of course, in case they remain on this level.
Also, besides these costs that we mentioned, there are other costs that were put out of the equation, such as depreciation and general costs including overheads and fees. In order to determine the exact level of coverage of total costs of the project and operation, we would have to analyze more documents including the Feasibility study.
In any case, we might leave that for another video, because, as we already mentioned in some of our previous works, the vast majority of high-speed railways are not even being built to make profits. As an old proverb says, the rabbit sleeps in another bush.
At the end of this video, we could talk about the requirements and issues related to environmental protection, land acquisition and property rights.
We could also discuss poor management, endless lawsuits, profitability issues and many other things. But, we won’t. It’s all already well known. Actually, we are thinking to draw attention to something other. We said that currently projected funds for this project are somewhere between 20.6 to 23.4 billion $. And yes, we all know this is far from enough.
The State of California provided all but 3.5 billion which were obtained from the Federal government. This is only 15% of these projected funds and only 5% of the total value of Phase 1. If America wants this project completed, this seems to be quite unacceptable.
We will remind you that the Federal government built the nation’s Interstate Highway System by securing grants to the states that covered most of the construction costs. We all know what the impact of this investment was on the nation’s economy and what it meant for the mobility of American freight and citizens. But also, we all know that this system is not profitable. With high-speed railways, we are talking about something which represents a commitment to cleaner and more sustainable transportation.
We are also talking about something that moves people away from roads and airlines. We are talking about something which will reduce congestion and boost productivity and we are talking about something which might reduce US dependence on foreign oil, increase economic activity and, in the end, create additional jobs.
In any case, if America wants to prove it is able to complete this project, and finally, start developing its high-speed rail network, we think it is necessary for the Federal government to show additional commitment for this project and help out the state of California.
Also, the benefits of high-speed rail must be assessed at a larger scale, and in that way presented to the public.
The words high-speed railways and direct profitability in the majority of cases, should not be even put into the same sentence.
The benefits of high-speed rail should be evaluated through global impact on the economy and the citizens. Without going into many details, we will only give you a few hints: mobility of people, availability and affordability of transport, better flows of the workforce, relief of urban areas, opportunity to live in cheaper neighbourhoods, impact on the environment and many, many other.
Finally, we do believe that this project might be quite beneficial for American society and that the US have the capacity to complete it. But not before it is set as a priority, by both, the officials and the public.