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California high-speed rail cost may approach $100 billion

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New business plan shows how project was railroaded into higher costs

State Environmental Laws Threaten To Slow CA High Speed Rail Project
Construction of the Cedar Viaduct seen from the Golden State Boulevard to west of State Route 99 on July 13, 2017 in Fresno, California.
Photo by California High-Speed Rail Authority via Getty Images

Billions of dollars over budget and beset by criticism, the California high-speed rail continues on its fitful way with a new draft business plan released Friday laying out how the California High Speed Rail Authority [CHSRA] plans to continue making ends meet.

California voters approved the high-speed rail (which will someday connect San Francisco’s Transbay Transit Terminal to LA’s Union Station via bullet train) in 2008 with 52.7 percent of the vote. At the time, the projected budget was a mere $40 billion.

Now, the new draft plan estimates a cost of more than $77 billion (up from the previous overrun estimate of $64 billion) and cautions that the whole thing could get even pricier down the line.

Here are some of the highlights from the ambitious but grim latest assessment:

  • Costs are uncertain and construction could end up either cheaper or more costly than expected, but more costly is likely: The plan sticks to the previously reported low-end estimate of $63.2 billion for the LA-SF corridor but also provides a high-end projection of $98 billion. $77.3 billion is the present “base” estimate. “These cost ranges, which are detailed further in this chapter, are based on assumptions, preliminary design information and on our current assessment of the risks and uncertainty for each project section.”
  • CHSRA says it’s now focused on getting to San Francisco sooner, rather than previous plans that stopped at San Jose: “We now define the Silicon Valley to Central Valley Line as service between San Francisco and Bakersfield. This line has stronger ridership potential and higher commercial value than the shorter line between San José and Poplar Avenue (north of Bakersfield) laid out in the 2016 Business Plan.”
State Environmental Laws Threaten To Slow CA High Speed Rail Project Photo by California High-Speed Rail Authority via Getty Images
  • Some trains might run as early as 2027, but not very far: “The strategy for incrementally delivering the Silicon Valley to Central Valley Line would create approximately 224 miles of high-speed-rail-ready infrastructure on two different lines, one in the Central Valley and one connecting San Francisco to Gilroy. Both lines could be ready for service as early as 2027.”
  • CHSRA is counting on ridership of the first few connections to help fund future construction—assuming it performs as predicted: “Once the Silicon Valley to Central Valley Line is constructed and demonstrates operational viability, the incremental revenue and positive net cash flow can be monetized. This longer line, which will connect San Francisco to Bakersfield, provides greater monetized proceeds through higher revenue and ridership than the line described in the 2016 Business.”
  • The draft claims that the much criticized cost overruns in Central Valley were anticipated two years ago and says it happened because of hastiness to meet deadlines: “The current cost estimate for the Central Valley segment, $10.6 billion, reflects the realization of risks, identified in the 2016 Business Plan. [...] There were many unknowns remaining, and setting fast-track schedules to meet the American Recovery and Reinvestment Act (ARRA) spending deadline increased risk.”
  • The project will have to secure more robust and reliable funding. Soon: “The Authority is currently operating on a pay-as-you-go approach. [...However,] this approach indefinitely will not support our delivery schedule. This is because the large contracts needed for the Silicon Valley to Central Valley Line [...] are greater than the funds that the Authority anticipates having at the time those contracts need to be executed to meet the 2029 completion schedule.”
  • The new draft also promises electrified rail along a longer portion of the corridor, although that’s still tentative at best: “The Authority continues to be in discussions with Caltrain, Caltrans, the City of San José, Santa Clara County, Union Pacific Railroad and other partners about right of way and operational options between Santa Clara and Gilroy. [...This may eliminate] the need to use passenger diesel trains in the corridor and potentially allow the line to be used for express high-speed rail operations between San Francisco and Gilroy.”

For more of the gritty details you read the full 114-page draft business plan here.