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silver bullet for high-speed rail measure?

By enelson
Monday, March 24th, 2008 at 7:08 pm in Altamont Commuter Express, Amtrak, Capitol Corridor (Amtrak), Environment, Funding, high-speed rail, rail, Transit vs. driving.

So, while I was blithely blathering Friday about CalPIRG and their campaign to promote California’s high-speed rail plan, the Sacramento Beebullet-train-and-mt-fuji.jpg

was getting the real scoop on the future of our improbable love affair with 200+ mph bullet trains:

Democratic lawmakers have agreed to Gov. Arnold Schwarzenegger’s request to include public-private partnerships for a high-speed train that could travel from either San Francisco or Sacramento to Los Angeles in 2 1/2 hours.

Supporters of the high-speed “bullet” train are hoping the changes will ensure that a $10 billion bond measure doesn’t get delayed a third time – which some fear would jeopardize the entire project.

Under a compromise bill, Assembly Bill 3034 would modify a measure already on the November ballot to encourage private investment, whether through regional transportation authorities, Wall Street investment firms, or a combination of both.

I’m still waiting for the stampede of private investors, who don’t seem so anxious when the High-Speed Rail Authority’s own financial consultants are reporting on them. I’m also awaiting the good word on federal funding, which is clearly there, but not in the quantities the story lays out, which is basically, $10 billion from November’s bond measure, $9 billion from private investors and $9 billion from the feds.

And with the story’s new estimate of $42 million for the cost of the system (sometimes at authority board meetings, I hear $30 billion, other times $40), that would leave some money left to raise.

Nonetheless, it would appear that worries about the budget and the state’s indebtedness have faded enough to let the voters decide. And maybe the governor will even promote the thing and really help its chances

Two Novembers ago, I wrote that the approval of $42 billion worth of new infrastructure bonds that month raised the question of whether voters would want to add another $10 billion to the state’s debt load for more esoteric infrastructure projects.

For those who would suggest that I’m just a pathological bullet train naysayer, I would remind people of where that story took those doubts:

California already carries $45 billion in infrastructure-related bond debt, $37 billion of that in general obligation bonds which must be paid back out of the annual state budget. Even before Election Day, there were another $30 billion in state general obligation and revenue bonds slated for sale.

In the 2005-06 fiscal year, the state’s estimated debt-service payments were $3.9 billion, and were, before the 2006 bond measures were contemplated, projected to rise to a peak of $8.4 billion in fiscal year 2009-10.

Ok, so far so bad. But don’t discount the Golden State’s borrowing capacity:

Even so, California’s large tax base is still capable of supporting the new debt, said Brad Williams, director of budget overview and fiscal forecasting for the state’s nonpartisan Legislative Analyst’s Office.

Budget experts look at debt service as a percentage of personal income as the best measure of how deep a state should go when borrowing money against its annual budget. That debt-service ratio peaked in the mid-1990s between 5 and 6 percent, and has since dropped below 3 percent.

The new bonds would cause that ratio to flirt with 6 percent, but that’s no cause for alarm, Williams said.

“There are other states that have higher debt load than that and have higher bond ratings as well,” Williams said. “High-speed rail would bump it up some more,” but “would probably be hitting the market after our debt service had peaked,” so the effect would be more of an extension of the high ratio rather than an increase.

So there you go. In November 2006, it was perfectly ok to run up such debts. Is that still true in March 2008?

I’m not the Fed chairman, but I’d venture that the answer is still yes. There’s a lot of money out there that needs a home, and housing and the stock market don’t look nearly as good as they once did, so the demand for government bonds will probably be pretty strong.

On the other hand, I still think we could substantially improve regular rail service at a fraction of the price of the high-speed network, and that’s something it would seem California voters could more easily accept.

There is something about those bullet trains, however. I remember how mesmerized I was as a kid going through the train station in Germany, seeing the lovely tablecloths and silver set out in the first-class diner. They make money that helps subsidize regular rail service in France, I’ve been told.

Back then, we didn’t much think about how such services would help curb air pollution, let alone global warming, or worry about there being too many cheap passenger jet flights covering relatively short distances.

But now it’s 2008, and we do worry about our carbon footprints, about $4-a-gallon gasoline in our cars and fuel surcharges on our plane tickets. It’s also just March, and there are eight months for high-speed backers to spread the gospel, for the governor to come around and try to be the new Pat Brown, albeit on a limited budget.

Photo of Japanese Shinkansen bullet train from www.accessjapan.co.uk.

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12 Responses to “silver bullet for high-speed rail measure?”

  1. Robert Says:

    I’ve been giving you a lot of grief in your other post, but this is a much better entry. Still, I think you could do more to research the matter. Lehman Bros has been advising the CHSRA board for some time now and is convinced they can help put together $9 billion in private funding. I’m sure David Crane or some flack from Lehman would be happy to discuss it in more detail.

    The federal contribution may well be higher than $9 billion, especially if a Democrat wins the White House. A Democratic president will be under a great deal of pressure to promote sustainable infrastructure, and “green jobs,” to help with global warming, and releasing billions for high speed rail would be a no-brainer to help burnish the green credentials of a new president.

    Still, I’m not totally convinced you fully understand HSR yet – certainly not if you’re calling it an “esoteric infrastructure project.” That may have been true in the 1970s (atomic train!) but not today. HSR is practical, proven, and one of the top infrastructure, transportation, and economic needs of this state. The 20th century is over. Let’s leave its failed car-centric assumptions behind.

  2. Martin Engel Says:

    Robert, since I’m not an economist or a political pollster, I have to leave that to you and to Erik Nelson.

    However, and to focus on only one issue here, I think it is glib to be so dismissive of the car-centric car culture. A view of California from another planet would reveal how deeply the car is ingrained and embedded into the nature of our society, our culture, our civilization. Until and unless something superior comes along that is congruent with the essential temperament and sense of self of Americans (their individualism, their independence, their worship of autonomy) cars won’t go away. The urban/suburban landscape, the distribution, ebb and flow of populations, especially in California, all based on the car. The vast and complex automobile infrastructure, from day one of manufacture and distribution, to the last day of the crushers in the wrecking yards, the highways and roads, the fuel delivery, maintenance and management; that is, the life of each car, now on a global scale, affirm the centrality of our cars. And, you believe that this (or any other) train will turn this cultural dynamic around? Surely not. Nelson is right; it is esoteric. If ever completed (an open question), the train will be an expensive luxury train, not a universally utilized public mass transit facility.

    If it is to be such a great investment and such a terrific money maker, as Kopp and company keep promising, then let private enterprise build and own it it without state or federal subsidies. Please note, I am not a car-obsessed, free-market Libertarian. However, the irrationality of this high speed train project demands far closer analysis than has been offered by you or anyone else, except for a handful of academics at Berkeley.

  3. Simeon Says:

    Mr Engel,
    I’ve seen in this and other entries on your part that you seem to think that high speed rail would be a “luxury train” that would somehow be very expensive to ride. I was wondering if you had any data to back this up, because from what I’ve seen, Amtrak (even though it takes 10 hours to get to LA), is indeed far more luxurious than flying coach, however it costs about the same as flying, and the people on the train are certainly not all well-to-do. During a couple of rides on the Coast Starlight (Amtrak’s N-S west coast service), I’ve seen people who obviously had very little money riding, but in far greater comfort than they would ever be able to afford on a plane (Business class is very expensive!), or by driving.

    If you look simply at the energy-efficiency of rail in general, especially high-speed rail, I see no reason why it would be expensive to ride, since it is, as I recall, several dozen or hundred percent more energy-efficient than driving or flying. Not to mention the far greater capacity which rail lines have over road or air. Plus the building of HSR would help regional transit as well, for example by helping to fund the electrification of Caltrain, which will reduce local air and noise pollution, as well as speeding up transit times. I’ve also heard rumor that it would provide similar benefits to Metrolink in LA.

    So as I’ve said, I’d be interested in hearing your theories as to why it’d be a “luxury train”, and if you have any economic or engineering data to back this up.
    Cheers,
    -Simeon

  4. murphstahoe Says:

    Martin -

    A view of the United States from another planet in 1800 would have revealed how deeply slavery was embedded in our society. Few would argue that changing that situation was a bad thing. And that change was hardly easy, and cost the country a lot more than building a train.

    Your theory – the car will be here until something superior comes along. The problem – the direction today is not of something else better coming along, the direction is that of the car becoming not all that it was cracked up to be. In 1965, a car was an amazing thing and you really didn’t hear many people complaining about the automobile destroying society.

    Now you have stories on a daily basis about people whining about the cost of gas. Car insurance is up. Car fatalities are up. Traffic is worse. Smog is worse. The car contributes to global warming. We are spending some large amount of money on a war that can be argued has at least something to do with securing oil supplies. Housing in far flung suburbs like Antioch is crashing in part because people can’t afford to live there and drive to work – you don’t note prices plummeting in San Francisco, Marin, San Mateo counties.

    As it stands, the car culture is becoming progressively more problematic, just from a natural progression of oil fields drying up and it being harder to get more oil, from roads hitting capacity and not being expandable without knocking down rows of houses or building extra bridges/tunnels. This does not include more dire situations if there is a major disruption of oil supplies or the whole global warming thing turns out to be not only real but have consequences we might not have seen yet.

    If we do not plan for alternatives, we are screwed. BART has been a boondoggle of monstrous proportions over its lifetime, but I don’t think anyone can debate that without it, the Bay Area would be a much more difficult place. Ditto for Caltrain.
    The Capitol Corridor sucks – yet it is attracting ridership. If we had the will to put the capital into it, and yes HSR, people would take it. I don’t buy the counter argument because I have lived my argument, riding the Caltrain every day and seeing the trains carry more people than ever.

    John Murphy

  5. Robert Says:

    Martin,

    Nobody needs to tell me about CA’s car culture. I’ve lived it. I was born and raised in Orange County’s endless suburban sprawl, where you drove the two blocks to the grocery store. Everything was built around driving. Since then I’ve been trained as a historian, with a specialization in 20th century California, and have come to see how fundamental the car culture is to our state.

    But that doesn’t mean it will always be there. The car culture emerged at a specific point and time in history, and under certain conditions – cheap oil being first among them. Those conditions are now disappearing, and the car culture WILL disappear with it.

    The car culture will die hard, there’s no doubt about it. But it will die, just as the horse and buggy died. A cultural practice that can no longer be sustained by resources or financially supported will die. That is the way of things.

    Already Californians have been buying less gas, and using more trains and buses. Urban infill density, and a walk/bike commuter culture, are spreading. And as oil production peaks and its cost continues to rise, suburban sprawl will become untenable, and people will decide that it’s more important to eat and have a home and have savings than to have a car.

    In such a situation, HSR is vital to this state’s future. Just as the bay bridges were vital to the 20th century, just as the California Aqueduct was vital. Train ridership is rising on every available service in the state. Californians are demanding alternatives to the car. HSR is that alternative.

  6. Capricious Commuter Says:

    Robert, I don’t think our views diverge that much. I knew that when you said “the car culture will die hard.” I, too, see how people are flocking to alternative forms of transportation. The big problem we’re going to be dealing with in the near future is huge demand for public transit and not enough buses, rail cars or ferries. Even with $5-a-gallon gas, I doubt we’ll see half of Bay Area commuters taking transit to work even if the transit capacity existed. Still, plunking down $42 billion on a whole new transportation system is a huge leap and convincing pols and voters to take it will be a challenge.

  7. Mike Says:

    Martin – All of your arguments against HSR apply equally well to air travel – Californians will never abandon the independence and autonomy of their cars to squeeze onto an airplane that is literally no more than one hour faster point-to-point from the SF Bay Area to LA. And yet the airlines currently hold about 50% of the combined air/auto travel on the LA-SF route (9.8 million vs 10.2 million) despite offering a much worse level of service than HSR would provide. How does this square with your notion that Americans will never abandon their cars?

    HSR doesn’t need to “turn around” an entire cultural dynamic to be successful. All it needs to do for corridors on which it is competing is capture a majority of the air travelers (which is basically a given – that has happened with basically every single 300 km/h HSR system ever built on a sub-500 mile corridor), 1 in 4 auto travelers on 4+ hour trips, and 1 in 8 auto travelers on 2+ hour trips. Just doing that would make it one of the top 5 HSR systems worldwide.

    But let’s be honest about what your true concern is: You’re worried that there will be more, faster trains running by your house in Menlo Park. And it’s true – track speeds will increase from 80 mph (currently) to 125 mph, and total train frequency (HSR + Caltrain) would probably double vis a vis 2020 Caltrain frequencies. However, total noise will likely decrease because all trains will be electrified (much quieter than diesel) and the street crossings at Encinal Ave and Watkins Ave will be eliminated (no more blowing horns ever!). And let’s not forget that you’d benefit from the general rise in property values as the rail commute time from Redwood City/Palo Alto to the SF FiDi dropped from 45 minutes to 25 minutes (track speed improvements + moving Caltrain terminus from 4th & King to downtown). HSR wouldn’t be nearly as bad for you as you think it would be.

  8. Capricious Commuter Says:

    Mike, I don’t buy this nonsense about HSR and air travel being equal, time-wise. It’s one thing when you’re going to Manhattan on the Acela, or, for the sake of argument, a real high-speed train. Getting into town from a New York airport is a hassle, to say the least, so flying suffers a great deal in the comparison.

    But we’re talking about Southern California, where the idea that the train is bringing you “downtown” is somewhat laughable. What if your destination is Warner Center? If you’re going to West Los Angeles or Santa Monica, you’ll do much better flying into LAX, even if the plane was as slow as the train.

    As it happens, jet aircraft travel three times the speed of HSR, which wins even on a bad security and/or baggage reclaim day. With either mode, you will probably still need to find your way to and from the airport/train station with a rental car, public transit or cab.

    I do believe you’re right about capturing those ridership markets, however. I think the trains will fill up relatively fast with a lot of help from isolated communities the thing will run through.

  9. Mike Says:

    CC -

    I agree that city center-to-city center is not as relevant for California, but that only *increases* the appeal of rail vis-a-vis air. LGA, DCA, and BOS are, for all of their problems, relatively close to the city centers. LaGuardia is 5 miles from Midtown Manhattan, National is 3 miles from Metro Center (DC), and Logan is 2 miles from Downtown Crossing (Boston). So the “city-center” advantage of Acela is not quite as big as one might first think.

    Now consider the California case. HSR has the advantage that various trains can make various stops, and all stations can receive frequent service (at least as frequent as air service). Take the Bay Area, for example. Because there would be stations at SF, Millbrae, Redwood City, Palo Alto, SJ, Morgan Hill, and Gilroy, anyone between Mill Valley and Salinas will find it substantially quicker to get to an HSR stop than to get to SFO/SJC, save those who live between South SF and Burlingame and those who live in the Santa Clara/SJC area. Ditto for the East Bay (if that spur gets built) – the only ones for whom OAK will look very attractive are those living in Fruitvale/Hayward. It’s more of the same down in LA. Yes, those in Santa Monica, Inglewood, Hawthorne, Torrance, and Long Beach will be closer to LAX or LGB, which is nothing to sneeze at. But pretty much everyone else in the entire Santa Clarita-Irvine-Riverside triangle (including most of the city of Los Angeles) will be significantly closer to an HSR station than they are to a major airport.

    It doesn’t take a lot to make the train more attractive. SFO-LAX is scheduled at 1’30″ average (ignore for the moment the fact that about 1/3rd of flights are late). If you add on 45 min for check-in, security, and boarding, then all you need is an extra 15 min on each side to make an on-time flight take longer than a 2’45″ HSR ride. And that is ignoring the vastly superior reliability and comfort of HSR. Or the fact that you can actually do work on the train, whereas I have yet to figure out how to do any work while checking in, going through security, boarding, taxiing, or landing and taking off.

    I would bet good money that a properly designed HSR system would take a minimum of 70% of the SF-LA air market. We’ve seen it happen time and time again wherever it’s been built.

  10. david vartanoff Says:

    perhaps the French example of TGV from Parius to Lyon, and Marseilles is instructive. On the inaugural run to Marseilles the transport Minister predicted the TGV would ‘cannibalise’ ridership from Air France, and recently Air France reduced service as a result of dwindling ridership. On this side of the Atlantic, Amtrak’s Acela hardly High Speed but the best we have (sigh) has increased market share in the market it serves.

  11. Capricious Commuter Says:

    And I’d be very interested to see what it costs to buy a ticket on TGV, compared to Air France. Right now, you can fly on Southwest to SoCal for much less than you can ride TGV for a similar distance. At least that’s based on the last time I looked up TGV fares.

  12. david vartanoff Says:

    In France w/ both the SNCF and Air France controlled bythe gov’t the fares can be adjusted to reduce use of imported petro fuels in favor of domesticly generated electricity. Scientific socialism! Here we givce way too many freebies to he airlines w/o which they would not be able to offer such low fares. It is a political decision–do we want more aircraft generated pollution/climate degradation???

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