(Sacramento, California) – Within days of the California Legislature voting to authorize the sale of $4.6 billion in general obligation bonds to build the initial 130-mile (Central Valley) stretch of the state’s high speed rail projects, three startling developments occurred. First, Moody’s Investor Services tripled its estimate of California’s unfunded public pension liability (from $38.5 billion to $109.1 billion), calling into question whether the bonds can get an investment-grade rating. Second, a UCLA economic analysis of Japan’s HSR system concluded that the introduction of HSR service had no discernable effect on economic growth in Japan over a 30-year period. The alleged economic benefit of HSR is one of proponents’ main arguments for the California project.
But to me the most shocking development-also coming to light after the Legislature’s vote-was the hitherto suppressed information that French railway operator SNCF in 2010 had approached California officials with an offer to build an HSR line between Los Angeles and San Francisco. Because SNCF had private investors lined up, it had no intention of building the very costly, circuitous route planned by the California High Speed Rail Authority, with stations in every town up and down the Central Valley. Instead, SNCF proposed a direct route along I-5, with possible spurs to some of the various Valley downtowns. According to follow-up news reports, CHSRA was so dismissive of the idea that SNCF never followed up with a formal proposal.
It’s not clear to what extent SNCF’s formal proposal would have required state and federal funding in addition to the private funding the company implied it had commitments for. Even with the proposed route along state-owned I-5 right of way, the connections into the San Francisco Bay Area on the north and the Los Angeles area on the south would still be enormously expensive. And SNCF’s one French PPP rail project, from Tours to Bordeaux, involves government grants for 50% of the capital cost, with the balance financed by debt and equity. Still, since SNCF’s California project would have been driven far more by economic than political considerations, its capital cost I’m sure would have been far less than CHSRA’s current $68 billion for the Los Angeles-San Francisco Phase 1.
Could a less ambitious project ever be self-supporting? Only two HSR projects worldwide claim to be so, the first Shinkansen line between Tokyo and Osaka and the first TGV line between Paris and Lyons. But a proposal in Florida is claiming it will be the first such project in the United States. Unveiled last year by investor-owned Florida East Coast Railway, the “All Aboard Florida” project would use 200 miles of existing FEC right of way from Miami to the Cape Canaveral area plus 30 miles of newly acquired right of way from there to Orlando. In a presentation last week at the Floridians for Better Transportation’s annual conference, FEC’s Husein Cumber gave an update on the project.
In his presentation, Cumber reported that the traffic and revenue study has been completed, and based on its results, FEC is moving forward to develop the project, targeted to open by the end of 2014. Current plans call for hourly service between Miami and Orlando, between 6 AM and 9 PM, in three hours or less. Intermediate stops would be just two: Fort Lauderdale and West Palm Beach. Speeds would be “up to 110 mph, maybe 125 mph.” FEC is far enough along that it plans to order 10 trainsets this summer, and to be under way with construction (including some double-tracking) by the first half of next year. Total capital cost is estimated at $1 billion, all apparently to come from FEC itself.
This is not “high-speed rail” as the term is used internationally. However, it is faster than most of the Amtrak upgrades being funded by the Administration over the last three years under the rubric of HSR. As a professional skeptic about passenger rail in the United States, I’m not persuaded that there will be enough demand for this service to make it self-supporting. But as a life-long railfan, I hasten to add that I will be happy to be proven wrong.