Archive for the ‘Transportation’ Category

I’ve written several articles over the years critical of California’s high-speed rail debacle. The last one was in November 2017. I suggested that gubernatorial candidate Gavin Newsom might come to his senses and end the project. After all, he was once against it, but flipped lest he alienate his union supporters in the primary.

The election behind him, he did just that.

Sort of.

While effectively cancelling the biggest and most costly segments, he left the 150 mile Bakersfield to Merced connection untouched. Whether there will be enough funding to complete even that remains to be seen given the history of cost overruns and unreliable estimates.

I really do not think he cares. It is just to soften the blow to the project’s misguided fans and political allies who would have benefited from the money pit it was destined to become from the start. Governor Newsom will not be in office when even this segment hits the wall.

But let’s say it is completed.

There is yet another obstacle.

Proposition 1A stipulated that there could be no government operating subsidy- federal, state or local; the train has to run in the black. One has to question whether there is enough of a market in the Central Valley to generate asequate revenue to cover the fixed costs, not to mention the marginal costs. It is not as if fares can be raised willy-nilly to close losses. There is an inverse relationship between ridership and fares.

So what will happen when the train cannot legally operate?

A federal bailout?

Regardless of who controls Congress years from now, the taxpayers in the other 49 states will not be receptive to propping up the product of California’s recklessness. They have their infrastructure priorities, too.

Before Newsom fully commits to the Central Valley line, he should engage reputable analysts free from political influence to fully understand the market there. Up until now, the focus has been on the ridership from each of the end points – The Bay Area and Metro L A.

CAHSR is now a short line with a different set of demographics driving it.

Don’t let politics get in the way.

Read Full Post »

Governor Brown is making an appeal to the Trump administration to transfer oversight of environmental reviews of the high-speed rail project from the federal government to the state.

If this strategy sounds familiar, it is.  The City of Los Angeles allows developers to arrange their own EIRs.

Brown has a vested personal interest in pushing HSR.  It’s his vanity project.  It will probably put the state in a position where it will have to subsidize the system, in direct violation of Proposition 1A, as approved by the voters in 2008.

He and his colleagues, along with other politically connected interest groups who stand to benefit from the most expensive folly in history, are hell-bent to complete the project, regardless of the cost and the diversion of funds from far more critical needs.  Do not think for one moment that the state will take an unbiased approach in evaluating the results of an EIR under its control.

There is no private investor interest in the project.  That is unlikely to change even if an initial segment, constructed over the easiest terrain and serving markets with the least possible need, were to be completed. The risks of tunneling through faults in the San Gabriel Mountains, essential for fulfilling the promise of service between San Francisco and Los Angeles, will be too risky to attract sensible investors unless the state were to offer substantial guarantees and establish reserve funds.  Such a move would put California on the hook for losses. Like a subsidy, that would contradict taxpayer protections in 1A.

CAHSR will collapse under its own weight and from voter frustration with pouring more money in what will be a system which grossly underdelivers for the costs.

There is no scenario where it can be built and operated within the limits of Prop 1A.  The sooner the governor and legislature put aside their personal ambition and admit it will be a fiscal failure, the more likely the state will be able to afford far more pressing capital improvements.

There is much work to do; we do not have endless sources of affordable debt and tax revenue. Choices have to be made, and HSR is near the bottom.

Read Full Post »

Would you agree to guarantee a contractor a virtually unlimited amount of funds to build a house?

If the answer is “yes,” then there are some business people in Nigeria who would like to talk to you.

The MTA board may as well relocate its office to Lagos.

By an 11-2 vote, the board approved a permanent sales tax which is estimated to raise $860 million per year in today’s dollars. Theoretically, forever.

Proponents of the measure argue that the voters can always rescind it down the line if they are not happy with the results.

What would be the odds of success? Average citizens would have to not only organize a grassroots movement, but raise many millions of dollars to fight proponents backed by the deep pockets and logistics of developers.

We do need to raise many billions of dollars for transportation projects, but there must be accountability. An unlimited stream of cash will not incentivize the MTA and its contractors to manage budgets. Only the sobering reality of losing future funding offers a chance of ensuring financial discipline. It’s a fact of life – MTA board members will come and go. They will not have to live up to long-term promises.

The Measure attempts to assuage the concerns of the residents with the formation of oversight committees and independent audits, but there are no legal requirements for the MTA to implement recommendations or fix audit findings.

The only way to control the effective use of funds is by requiring the MTA board to re-approach the voters periodically – say in 20 years initially, then every 5-10 years thereafter, to up the level of funding. If they want to exceed the 40-year horizon of the proposed wave of projects, they must earn our support first by demonstrating cost-effective and timely progress.

Putting the onus on the passengers of a train to prevent a trainwreck, rather than insisting that the engineer apply the brakes before one occurs, is “bass ackwards.”

But that is essentially what Measure M will do by almost certainly assuring unlimited funding.

Read Full Post »

California has got its own version of a Runaway Train, a 1985 Oscar-nominated movie about escaped convicts who steal a train. It does not end well, as the out-of-control consist hurdles towards a violent end, with the lives of the convicts and their hostages at stake.

The California High Speed Rail Commission is run by the equivalent of convicts who are taking the state’s taxpayers on a ride to a disaster of the financial kind.

Proposition 1A, passed in 2008 by a margin of 5 percentage points, stipulated the following:
the train system would have to be financially viable, enable trains to maintain headways of five minutes in each direction, operate without a subsidy, have all construction funds identified for an operating segment before breaking ground and travel between Los Angeles and San Francisco in two hours and 40 minutes.

It has failed on most of these requirements and the others are in doubt.

A blended system, that is HSR would have to share tracks with slower freight and current passenger service, would make it very difficult to reach the promised speeds, times and headways, not to mention that freight traffic is harder on the rails, which translates to higher maintenance. If you have ever ridden on shared tracks used by heavy freight, smooth is not the word to describe the ride; delays are a certainty.

Only half the construction costs for the proposed first segment from San Jose to the Central Valley are available. Funding is also challenged by the reliability of cap and trade funds, an important piece of the already anemic available capital.

Also in doubt is the avoidance of an operating subsidy from the government. Technically, that would be enough to kill the project as it would be in clear violation of the bond covenants. It was hinted by a peer review committee that the state might have to make financial guarantees to investors in order to entice them into buying bonds backed by revenue, but that would amount to a commitment to subsidize an operating deficit.

Although Sacramento Superior Court Judge Michael Kenny dismissed a lawsuit aimed at stopping construction, the reason was because there are “too many unknown variables.” In other words, he is not convinced that the project is viable at this stage. His decision appears to err on the side of due process, giving CAHSR time to back up its optimism.

But time is running short for CAHSR to put its money where its mouth is. The lawsuits will continue, cost overruns will pile up and public pressure to kill the project will grow, especially in Southern California and the Central Valley.

If not stopped soon, the people of California will be left with only part of a system, serving only a minority of the population, at a cost much higher than promised for the entire system, as promised in Proposition 1A. According to CAHASR Chair Dan Richard,this is what passes as “delivering what the public voted for.”

Read Full Post »

There is much to chew on concerning the MTA’s proposed ballot measure to add a half-cent sales tax and extend the current Measure R tax.

I’ll focus on the Valley.

Tunneling through the Sepulveda Pass to allow a rail line is apparently one of the top priority tasks, but it would not be complete until mid-century.

The Orange Line would eventually be converted into light-rail, but that is even further down the timeline. However, in the interim, a reduction in at-grade crossings will allow faster transit times. A light rail route down Van Nuys Blvd to connect the Northeast and Southeast Valley neighborhoods to the Orange Line is another piece of the plan.

As we all know too well, commuting through the pass is a nightmare during drive time (no one says rush hour anymore). But is there an effective alternative to the tunnel? A great opportunity was lost when the car pool lanes were added. They could have been busways. Perhaps they still can, with stations at both ends. No doubt a far less expensive option, but buses can’t carry the volume rail can.

The interim plan for the Orange Line might be the most cost-effective strategy on the menu. Light rail might cause over-crowding at the NoHo Red Line station. It is already a busy place; I can only imagine the mob scene on the platform as light rail discharges throngs of commuters. Ever been on an over-crowded subway platform? I have twice…… and it’s pretty scary as people get antsy waiting for a train to arrive. Several years ago, MTA acted on a recommendation of mine, when circumstances dictated, to stage people at the upper levels until the train-level crowd could be absorbed. That strategy may not be as effective with light-rail feeding the station.

A busway down Van Nuys Blvd would offer most of the benefits of rail without the heavy costs.

Could we trade cost savings from alternatives to expand or improve other transportation modes in the Valley?

All of us need to seriously consider the options and express our opinions to the MTA.

Even if the measure passes, there will still be time to reconsider the plan’s components and insist on the best value for the money.

We don’t want to suffer the fate of poor old Charlie.

Read Full Post »

Apparently the California High Speed Rail Authority does.

Dionne Warwick knows, too, as memorialized by her hit song. But the only music CHSRA chair Dan Richards hears is his own whistling in the dark as he considers the odds against the system’s completion.

The change to give the Northern California terminus priority over Burbank, while designed to deliver an operating segment in a high density corridor sooner than later in hopes of attracting private funding, does not cure the core problem facing the system: very poor prospects for funding the completion of the entire project.

A commuter rail segment serving a specific metro area might make sense from a local transportation planning aspect, but that is not what the voters thought they were approving when they passed Proposition 1A in 2008. They assumed the goal was a complete system serving most of the state.

Former CHSRA Chair and Superior Court Judge Quentin Kopp was quoted in the LA Times:
“This project is nonexistent. There is no private investment. So what they are doing is just whistling Dixie and somehow hoping the public can be fooled. It is over except for the waste of taxpayer money.”

Kopp also emphasized that the project has substantially deteriorated since its passage.

“What they have done in effect is destroy my intentions and those of the voters of California.”

Would you put money down on the construction of a new home if you were uncertain of financing?

You would be throwing your money away.

Likewise, starting construction on any portion of HSR, anywhere – north, south or central – with no external financing in sight beyond the state’s cap and trade funds (which will have to be renewed by the legislature in a political climate that is becoming increasingly skeptical of the deliverables) is reckless at best and likely amounts to misappropriation of taxpayer funds.

The construction plan is counting on at least 50% of its funding from the federal government.

Fat chance. Congress has already stated its opposition to any additional financial assistance beyond the $3.5 billion initial grant, which is also in jeopardy.

There is no interest from the private sector, not that I would expect any at this stage, but making a compelling case for a positive net cash flow from operations for a system that may only be minimally operational by 2025 is a long shot. Confidence in any projection by CHSRA will be suspect in view of the gross understatement of the construction costs used in the promotion of 1A. The Authority made a big deal over revising the estimate down the other day – from $68 billion to $64 billion – but did not frame it in the context of the original projection of $38 billion. A minor oversight.

The provisions of Proposition 1A forbid government operating subsidies in the event of negative cash flows. That will be sure to scare off investors who will depend on a positive margin to assure repayment of the bonds they purchase. It could put the State in a Catch 22. Taxpayers would have to fund the debt service, which would violate the no-subsidy covenant.

Leading European firms with HSR infrastructure development and management experience have expressed strong reservations over the prospects for a positive operating margin. According to a statement made by Spanish company Ferrovial SA, cited by the LA Times:
“We believe it is highly unlikely that the [California system] will turn an operating profit within the first 10 years of operation. More likely, [the system] will require large government subsidies for years to come.”

The CHSRA will continue to ignore common sense, not to mention the stipulations of Proposition 1A itself, and create a modern day version of “The Wreck of the 97” (by the way, this song was the inspiration for the Kingston Trio’s classic hit, the MTA). But it won’t be the poor engineer who suffers. The citizens and stakeholders of California will be stuck with the tab for a fragmented “system” that delivers way less than was promised, at a much higher cost.

Read Full Post »

Farmers and family businesses in the San Joaquin Valley have been fighting the High Speed Rail Authority’s efforts to acquire property through eminent domain.

That battle will continue.

Now, local residents of communities along the foothills of the Angeles National Forest and Monument are opposing all route options for the Palmdale-Burbank leg of the expensive project. They have allies in key elected officials at all levels of government, including Congressman Adam Schiff and State Senator Carol Liu.

It is not that these two representatives are against the project as a whole, but their reticence on HSR’s route through this strategic passage could force planners into studying equally controversial routes, including one through the Tejon Pass following I-5.

The in-fighting between communities will create political havoc for the HSRA. Undoubtedly, courts will become involved.

This is actually good news.

The more obstacles the bloated project faces, the longer the delays and the more likely support and money will dry out before the state blows the full $68-billion that could be applied to far more critical capital improvements. Regardless, $68-billion is probably a lowball estimate with or without the cost of extensive tunneling through the Angeles Mountains.

Already, the prospects of long-term federal financial support are weak. While Congressman Jeff Denham’s amendment that would force the HSRA to prove they have the funds required for federal matching against the current commitment may or may not make it through the US Senate, it is evidence that future federal support will not be forthcoming.

Diversion of cap-and-trade tax revenue – an important piece of the state’s funding plan – will not be enough to complete the train in anyone’s lifetime. The only benefit will be to whisk untold thousands of commuters between the vital Bakersfield to Modesto corridor.

Don’t get me wrong – I like trains. Some of my commutes through the greater LA metro area have relied on MTA, Metrolink and Amtrak.

But as I pointed out in a widely-read article a few years ago, capital investments in intra-regional rail systems will yield a far greater reduction in road congestion and pollution.

HSR is simply Governor Brown’s vanity project, but we are the ones paying for it.

Read Full Post »

Older Posts »