High-speed rail price tag drops by $30 billion in new plan

New business plan for controversial system calls for Caltrain improvements, first segment between Central Valley and San Fernando Valley

California's proposed high-speed rail system would extend from the Central Valley to the Los Angeles Basin within the next decade and would cost $30 billion less than previous estimates indicated under a new business plan that the agency charged with building the system released this morning, April 2.

The revised business plan, which the California High-Speed Rail Authority's board of directors expects to discuss and approve on April 12, departs in many key ways from the draft the agency released in November. The new plan commits to building the system through a "blended" design under which high-speed rail and Caltrain would share two tracks on the Peninsula. It also calls for early investment in the northern and southern segments (known as the "bookends") of the San Francisco-to-Los Angeles line, including the long-awaited electrification of Caltrain on the Peninsula.

The revised plan also specifies for the first time that the first usable segment of the rail line would be a 300-mile segment from Central Valley south to the San Fernando Valley. This stretch, the plan states, "will be transformational in creating a passenger rail nexus between one of the fastest growing regions in the state with the state's largest population center."

This "initial operating section" would extend from Merced through Bakersfield and Palmdale to the San Fernando Valley, according to the business plan. The prior plan committed only to an "initial construction segment" -- a set of train-less test tracks between north of Bakersfield and south of Merced (this segment was characterized by many critics as a "train to nowhere").

At a press conference in Fresno Monday morning, the rail authority's board Chair Dan Richard emphasized the significance difference between the agency's previous proposal for the system's initial phase and the one laid out in the new business plan.

"Beginning next year, we will begin construction here in the Valley not of a mere track but a fully operational 300-mile electrified operating segment that will connect the valley to the Los Angeles Basin," Richard said.

"This will bring high-speed rail not only to California -- it will bring high-speed rail to America," he said.

The business plan also offers a firmer commitment from the rail authority to improve Caltrain and to rely on existing tracks on the Peninsula. This marks a dramatic departure from the rail authority's initial vision for the system -- a four-track system along the Peninsula with high-speed rail on the inside tracks and Caltrain on the outside. The four-track design was widely panned, with many Peninsula residents and city officials expressed concerns about the seizure of property and the visual barriers a four-track system would necessitate.

The authority began to back away from the four-track design in its November business plan, which was amenable to the "blended" two-track approach. But the newly revised business plan cements its commitment to the blended design, which was first proposed a year ago by State Sen. Joe Simitian (D-Palo Alto), U.S. Rep. Anna Eshoo (D-Palo Alto) and state Assemblyman Rich Gordon (D-Menlo Park).

"Benefits will be delivered faster through the adoption of the blended approach and through investment in the bookends," the new plan states. "Across the state, transportation systems will be improved and jobs will be created through the implementation of these improvements."

The blended approach, which places a greater emphasis on improving existing infrastructure than the four-track design, is expected shave more than 30 percent off the $98.5 billion price tag cited in the November plan. The new document pegs the cost of the San Francisco-to-Los Angeles system at $68.4 billion. That figure remains significantly higher than the $40 billion price tag presented to state voters in 2008, however.

The main driver behind the major cost spike between 2009 and 2011, according to the revised plan, is a greater reliance on tunnels and elevated structures throughout the system. The plan notes that the possible length of elevated structures went up from 77 miles in 2009 to between 113 and 140 miles under the current plan. The length of tunnels, meanwhile, increased from 32 miles to between 44 and 48 miles.

The proposed $68.4 billion system features new infrastructure between San Jose and Los Angeles, shared electrified tracks on the Peninsula and an upgrades to the Metrolink Corridor between Los Angeles and Anahaim.

"The benefits of investing in high-speed rail will be delivered far cheaper than previously estimated," the revised business plan states. "Through the adoption of a blended approach, the Authority has confidence that the cost of delivering the San Francisco-to-Los Angeles/Anaheim system, in accordance with Proposition 1A performance standards, is reduced by almost $30 billion, now estimated at $68.4 billion."

Even with the lower cost estimate, funding remains a major wildcard. California voters had approved a $9.95 billion bond for the proposed system when they passed Proposition 1A in 2008. The bond measure requires the new system to be capable for whisking passengers between San Francisco and Los Angeles in about two-and-a-half hours.

The rail authority hopes to build the system through a combination of bond funding, federal grants, local contributions and private investments. So far, the system has received about $3 billion in grants from the federal government. At Monday's press conference in Fresno, Karen Hedlund, deputy administrator of the Federal Railroad Administration, praised the plan and said her agency looks forward to "working with the High-Speed Rail Authority to making this plan a reality."

"By listening carefully to everyone involved, the High-Speed Rail Authority has offered a new plan today that lays out a faster, better and more cost-effective path to building a high-speed rail system that is so critical to California's economic future," Hedland said. "The new plan will create hundreds of thousands of jobs and deliver the economic benefits of high-speed rail faster and more affordably."

The new business plan is the latest milestone for a project has been facing intense scrutiny throughout the state and particularly on the Peninsula. The Palo Alto City Council, which initially supported the project, adopted in December as the city's official position a call for the project's termination. Palo Alto had also joined Atherton and Menlo Park in suing the rail authority over its environmental analysis for the project.

Republicans in Sacramento remain vehemently opposed to the project, with one legislator, Assemblywoman Diane Harkey, R-Dana Point, pushing a "lemon law" that would cut off funding for high-speed rail. Their counterparts in Washington, D.C., have been equally adamant about resisting President Barack Obama's proposal to connect 80 percent of the nation through high-speed-rail systems in the next 25 years.

The rail authority's new business plan, by committing to the blended system and to early investments on the Peninsula, aims to win over some of the project's toughest critics. The rail authority's proposal to help electrify Caltrain -- a long-awaited project that has languished under inadequate funding -- was greeted with great enthusiasm last week by the Metropolitan Transportation Commission, which approved an agreement with the rail authority that includes a funding plan for the electrification.

Richard said Monday that upgrades to existing rail services, including Caltrain, "will provide near-term benefits" while also building "a portion of the system that we will ultimately be using."

But the new document is unlikely to assuage all of the Peninsula's concerns. Members of the Palo Alto council remain concerned about the fact that the rail authority's environmental impact report for the system still describes a four-track system. Councilman Pat Burt and others have also raised flags at recent meetings about the prospect of the rail authority seeking exemptions from the California Environmental Quality Act (CEQA) -- exemptions that would allow the agency to expedite its environmental-review process.

Dan Richard cited on Monday recent media reports about the rail authority seeking CEQA exemptions and assured those present that the agency plans to fully comply with environmental law.

"Despite recent reports, we're not looking for CEQA exemptions," Richard said. "We're doing a full environmental-review process."

Richard called the new business plan an "overall approach to building tomorrow's transportation system." He lauded the plan for reducing both the project's price tag and its timeline.

"This plan is about more than just high-speed rail as a standalone system or a 'cool train,' if you will," Richard said. "Our plan sees high-speed rail as a strategic tool in an integrated transportation system to meet California's growing mobility needs."


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Posted by TAK
a resident of Oak Hill
on Apr 4, 2012 at 8:37 am

If they really wanted to address California's mobility needs the rail line would start in the SF & LA areas and end out of the state. That seems to be the travel plan of anyone with good sense and a little money.

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Posted by Bob
a resident of Another Pleasanton neighborhood
on Apr 4, 2012 at 11:07 am

I actually support a high-speed rail system. However, I think the rail authority organization has gotten so far out of hand that it may not be salvageable. The rail authority has taken on a life of its own ambitions and ideals, and no longer represents the views and approval of the voters. If I recall correctly, the voters in mid 2008 approved this project with a $9.9B bond. The project estimated cost was about $20B. The Federal government was going to contribute another $10B for the project. By November 2011, without any rail actually being laid, the rail authority increased the estimated cost to nearly $100B. And now, in April 2012, they announce their greatest achievement, a 30% reduction of projected cost. However, the great achievement appears to have been reached by simply changing their plans and not building the project that the voters originally approved. And on top of that, the new plan is still more than $48B over the original projected cost. I'm sorry but I see this as completely unacceptable. I realize that this project has been dragging along, due in part to multiple objections by multiple groups, thereby increasing project costs by at least the rate of inflation. However, I note to myself that since the economic meltdown at the end of 2008, inflation has played an insignificant part, if any, with increasing across the board costs. There are a couple of exceptions such as gasoline. And if $48B in gasoline is the problem, well, one can easily see the fallacy of that excuse. Therefore one might conclude that the actual cost of the project was either withheld or hidden, or was completely unknown and comes as a surprise. If the former is true, and the real costs were not stated to the voters (perhaps just overlooked or misplaced, or the infamous alternate way of not disclosing the whole truth, "To Be Determined at a Later Date"), then the vote would have been based upon a misrepresentation. Therefore the project must be resubmitted to the voters for their approval with the true projected costs and known issues. If the latter is true, and the cost reality of the project is a surprise, then one would conclude that the project organization and promoters were incompetent or simply incapable of anticipating real world conditions. Here again the real cost of the project was not stated to the voters. And here again the project must be resubmitted for approval. Lastly, with their latest announcement, the rail authority has decided not to implement the high-speed rail project that was approved by the voters. Instead they plan to implement their own plan for a hybrid rail system. If this is their final decision, then I believe their existence and authority to proceed has been revoked. Since the rail authority will not be performing the functions and tasks authorized by the voters, they can not legally function nor spend tax dollars to achieve their own goals.

This project needs to go back to the voters for approval. Leaving this group in place, without seeking voter approval is in essence raising taxes upon the people without their vote. If the rail authority continues to spend California tax collections for a project plan that has not been authorized and whose actual cost has not been approved, then the rail authority has just raised taxes. The rail authority, not our representatives have just raised taxes. Continuing without a vote means the expenses will continue to be paid, either with bond money (paid from taxes upon the people) or from another taxing source within the state, which means that some other department or need of the people will go wanting. I want to reconsider this project, this spending plan.

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Posted by Sam
a resident of Oak Hill
on Apr 4, 2012 at 11:14 am

I don't recall ever seeing any details concerning the type of high-speed rail envisioned here. Are they planning to hire Japanese Shinkansen companies to build a high-speed rail system here? Or is the plan to get a European TGV-type system? Or is the plan to have American companies design and build a high-speed rail system?

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Posted by aResident
a resident of Amador Estates
on Apr 4, 2012 at 9:10 pm

Most likely Chinese companies will bid on and win to build it just like they did for the east span of the Bay Bridge!

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Posted by Some Dude
a resident of Amberwood/Wood Meadows
on Apr 5, 2012 at 5:18 am

Didn't Tim Hunt just post a snarky rant claiming that this project is $23 billion OVER budget, not $30 billion UNDER? That's a Santorum-sized deviation from reality!

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Posted by Kathleen Ruegsegger
a resident of Vintage Hills
on Apr 5, 2012 at 10:43 am

"The blended approach, which places a greater emphasis on improving existing infrastructure than the four-track design, is expected shave more than 30 percent off the $98.5 billion price tag cited in the November plan. The new document pegs the cost of the San Francisco-to-Los Angeles system at $68.4 billion. That figure remains significantly higher than the $40 billion price tag presented to state voters in 2008, however.

"Even with the lower cost estimate, funding remains a major wildcard. California voters had approved a $9.95 billion bond for the proposed system when they passed Proposition 1A in 2008.

"The rail authority hopes to build the system through a combination of bond funding, federal grants, local contributions and private investments. So far, the system has received about $3 billion in grants from the federal government."

Seems $10 billion plus $3 billion leaves you looking for $55 billion in "contributions and private investments."

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Posted by Chuck W.
a resident of Another Pleasanton neighborhood
on Apr 5, 2012 at 5:21 pm

WHY are writers, including Tim Hunt, acting SURPRISED about where we stand on the so-called High-speed rail project? And whether it is $1B over budget, or $30B is almost irrelevant -- it is NOT what the voters of CA voted for way back when. How can we be surprised when we keep doing the same uninformed, sometimes stupid, things, and then expect different results? That's NOT how life works! This is exactly how Democrat politicians (read: Gov. Moonbeam) have been handling the $$$ issues for years! And, of course, 2012 IS an election year, and Jerry is TOTALLY beholden to the unions and the far left of the Dem part in our Legislature. HE may not be up for re-election just yet, but his cronies, backers and IDEAS are!!
We NEED TO STOP ALL PLANNING,STUDIES, JAW-BONING, AND EXPENDITURES ON THIS SUBJECT AND RIGHT NOW!!! #2: Get our books balanced. I.E, SPENDING CANNOT EXCEED INCOME FOR DAILY NEEDS. Then, we can open some dialogue on the subject (if there is still anyone interested...) AND START OVER FROM SCRATCH!!! bUT, AS WE STAND TODAY, THIS IS NOTHING BUT ANOTHER RAT-HOLE FOR OUR MONEY & MUST BE STOPPED! And, I grew up in a "railroad" town, and love trains. But, NOT this mess~~ THIS REALLY HAS NOTHING TO DO WITH "TRAINS"!!

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Posted by Kathy
a resident of Pleasanton Middle School
on Apr 5, 2012 at 10:17 pm

It's cheaper to put truck containers on airplanes.

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Posted by Good Reason to Vote Down New Taxes
a resident of Beratlis Place
on Jul 16, 2012 at 2:31 pm

The best thing about this squandering of taxpayer $$$, is that it might provide the kind of emotional appeal to convince voters to vote down all of the Democrats' taxes on the November ballot. If California can come up with the $$ for HSR, the normal 3x cost overruns, and the ongoing operational subsidies and special expenses, then it should be no problem to dig into the infinitely-deep same source of cash to pay for education (well OK, to pay for staff and schools), keeping our parks open, etc. All we have to do is to restructure all of our schools so that they are considered part of the High Speed rail project. Voila! Problem solved.

Sorry, but further commenting on this topic has been closed.

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