The $9 Billion Dollar Toe

A few weeks ago I was amazed at the story of the city of Chicago spending hundreds of millions of dollars to build the terminal rail station of a rail line that had no plan, no route, no approval, and no money.  Why spend hundreds of millions on a station that could well be orphaned?  The reason, I supposed, was to make a toe in the water investment where the public could later be shamed into voting more funds for building a rail line to actually connect to their fabulous new station.

It appears that California may be doing the same thing. This November, voters in that state will have the chance to approve a $9.95 billion rail bond issue.  $9 billion of this is earmarked for building a high-speed rail line from Anaheim to San Francisco.  But current estimates for this line's cost, which are always way too low, are for $30 billion.  Who in their right mind would proceed with a $30 billion (or likely more) project when only $9 billion of funding has been obtained?  Only scam artists, Ponzi schemes.... and the government.

Update:
  Wow!  Boy, I must be dumb or something.  The website supporting this bond issue says that this project will create 450,000 permanent new jobs.  How can anyone oppose that?  This is really amazing, since the entire US railroad industry currently employs 224,000 people, but this one rail line will create 450,000 jobs! 

Update #2:  I like to make predictions about government rail projects, so here is mine for this one:  I don't know what end they are starting with, but if they start from the south, I will bet that $9 billion does not even get them out of the LA area (say past Santa Clarita or Santa Barbara), much less anywhere close to San Francisco.

  • ElamBend

    From their nifty little video, it looks like they are assuming that each station will spur lots of new development and then laying claim on any job tangentially associated with the train.

  • http://www.humanadvancement.net/blog Kyle Bennett

    30 billion for 450,000 jobs. That's $66K per job. And that doesn't count ongoing operating and maintenance costs. I wonder if you gave people the choice between an unspecified "permanent new job" or $66,000 plus an annual stipend of perhaps several hundred bucks or more (after taxes, to boot), would anybody choose the job? I bet you could get all 450,000 people to take the payout even if it was as low as $20,000, with no stipend. Now there's a way to get this project in under budget.

  • NASCAR Wife

    Not all "toes in the water" are bad. Here in Phoenix, the overpasses for the Loop 101 through Scottsdale were built about 5 years before the road was put it. The bridges were built through some federal-state partnership and had to be constructed within a certain window or the federal money would dry up. So the bridges went up long before the road went down. We laughed and we joked about them, but eventually, as scheduled, the freeway was buit. Of course the great difference between California's rail line and Phoenix's freeways is that ADOT planned the whole system before anything was built and a sales tax was approved by voters before the first shovel of dirt was turned.

  • http://mayor-of-phx.blogspot.com/ John O.

    There's NO infrastructure for this high speed line and their route they have planned is a freight corridor that includes a well known Loop in the line, the route picked is completely useless and would likely cost California $2 trillion for completely knew infrastructure including their "sunken rail" (the Alameda corridor works for freight, why not high speed passenger service) route through LA metro, gotta bulldoze allot of houses and businesses.

    -- John O.

  • http://politicalcalculations.blogspot.com/ Ironman

    By my back of the envelope calculations, 450,000 jobs created would be in the ballpark. With 407.31 land miles separating Anaheim and San Francisco, 5280 feet per mile, and an average usable height of 4 feet 9 inches per individual, 450,000 people could certainly be employed as the high speed rail trackbed for the venture.

  • epobirs

    Since I live in Castaic, at the southern base of the Grapevine, I'd like it just fine if they started here (Santa Clarita) and worked north. Let the stuff further south get added later. We already have a direct line to Union Station, so this area would make a good initial terminus that minimizes the mileage of new track needed at the start.

  • Bob Smith

    Why build a rail line when you have airplanes? Southwest between SF and LA is darn cheap, and it doesn't blot the landscape in between.

  • John Dewey

    "Why build a rail line when you have airplanes? Southwest between SF and LA is darn cheap"

    Because local politicians have little control over passenger airlines? Because the goal of public service proposals is to increase the power of politicians?

  • Sandman

    Wanna know where they get 450,000 jobs? Check out their little 'visualization' of the line. Pay close attention to the Fresno video... all of a sudden, dozens of new building appear from the ground, announcing the birth of Fresno as a major commerce center of the west.

    Fresno? I assure you that it will take a lot more than high speed rail for people to decide to move to Fresno. It's that kind of hocus pocus that gets you to 450,000 jobs.

  • Sandman

    Another thought on the political game here... a sensible approach to this (assuming that the rail line _might_ make sense; I know, just bear with me), would be to build a smaller section between 2 places that have high traffic. So, let's say they built an LA to San Diego line. The problem is, of course, that nobody from the Bay Area would vote to spend 9 billion on a plan that doesn't include them. Thus, you sell it as going all around the state. And what we'll end up with is a piece here, a piece there, and we won't even end up with some small portion of this being effective.

    I've always thought that the most sensible high speed rail line would be from LA to Las Vegas... it almost seems like you could make it profitable since you might be able to get the casinos to chip in. But, alas, that would take business away from the Indian casinos in CA... forget about it.

  • Mike

    Sandman,

    You've figured it out. Rail proposals, particularly high-speed intercity rail, are jobs programs (of the 'make-work variety). If there were a sensible approach to building a new network, it would be to build the first links between the largest and most proximate cities.

    This proposal, on the other hand, is so enormously expensive that it requires the imposition of a statewide tax to build any initial segment. Thus, in order to form a coalition large enough to finance such spending, proponents must "buy off" the support of those in other parts of the state. This is logrolling.

    Oddly enough, someone is trying a more entrepreneurial approach to HSR in the LA-Las Vegas corridor you spoke of (see http://www.desertxpress.com for more). They are looking to finance the upgrades with private capital, and it looks like the extent of public involvement is limited to granting use of the current right-of-way along I-15. The catch is that the southern terminal of the line would be at Victorville, rather than on the L.A. side of the mountains. This is a serious technical consideration, and at least the promoters of this project are honest about it, rather than pushing ahead and burying it in a list of possible sources of cost overruns.

  • Bob Smith

    Instead of HSR LA-Vegas, which I think is a ridiculous idea, how about a high-speed (100+ MPH) toll road? I know, individual transportation is evil, so we shouldn't do it, but it would be a hell of a lot cheaper to build and have almost zero operating cost.

  • tribal elder

    Bob-

    I'm in flyover land.

    I bet the road you want already exists. It's got potholes. Its curves are engineered for 65mph. Its repairs are piecemealed, most often going to the lowest bidder who has the highest campaign contribution history. The road's custodian is the Highway Department, well meaning people who haven't made many changes since they eliminated the horse drawn lane.

    That road could go to a private operator, the users could use transponders, billed to their credit card. The toll rate could be set by vehicle weight-that 'smart car' won't put much wear and tear on the road AND speed.

    Yes, time is money, and for some travelers, 65, rounded up 74 when no one's looking, just isn't an efficient use of their time/money. Let some zoom in the left lane, let grandpas like me stay in the right lane at 65mph.

    I suspect a privatized road with unrestricted speed would have a small number of horrendous accidents, (and lawsuits) but the private road operator could exclude the guy with the dreadful record and or no insurance by not selling him the transponder he needs to enter his road.

    The private road operator really wants to accomodate all his profitable customers, so the potholes will be fixed, the lane closures for repairs well coordinated so the zoom car drivers can achieve their 100+, the big trucks cruise at 80, etc.

    Public roads, public buildings, public bridges are assets to politicians on ribbon cutting day, but a liability thereafter. Nobody gets their name in the paper for voting to fund the painting of the bridges-- it's on to new projects with new ribbons to cut.

  • http://anarchangel.blogspot.com Chris Byrne

    Lets do an even simpler analysis of the numbers shall we?

    There are approximately 37 million residents in California... presuming we pretend that the census has anything to do with reality.

    Now, let's ignore the $16 billion deficit, and $136 billion in debt (as of February 2008).

    Now lets normalize the population of California against the population of taxpayers that cost the state more than they pay in taxes... about 60% at current rates... so about 40% of CA taxpayers have a net positive balance.

    Things are not looking good so far...

    So, JUST FOR THIS RAIL LINE, California taxpayers who actually PAY taxes above the margin line, will have to pay $608 each.

    Funny thing is, this line is a near mirror image of the Amtrak Acela service... except the Acela runs on existing (paid for) lines; and six of the countries top 20 cities are served by it.... of course they will be similar in that Acela loses lots of money.

    What precisely is the projected passenger load of this thing? Let us presume 8 trains running at any given moment (about the best you can do)

    What demographic is this line serving? The only way to make money is to have regular business travel traffic.

    What's the trip time?

    The route they propose is over 450 miles, with multiple stops... which is about the same as the Acela. Acela has a 6hr and 36 minute transit time, for an average speed of 72mph. That is probably a reasonable estimation given the number of stops they would include on the new line in order to get the magic 450,000 job mark.

    Even if you presume the fastest possible average speed of 124mph (for which they'd have to run at over 150mph in between stops, and limit each train to 4-6 stops total... something I don't think they could do) it would still be a 4 hour trip.

    What's the projected ticket cost?

    Let's presume they use the Accella costing model, from the east coast. The average ticket price for the full trip would be around $200, one way business class, or $90 one way coach.

    Given the trip time, and the time and cost of air travel in comparison, will ANY of that demographic actually use it?

    Six and a half hours, plus travel time to and from stations is a full workday. A flight from Orange County to San Jose (the most likely users of the service) is $85 to $170 and takes a little over an hour. Lets say it's a three and a half hour total travel time including airport time (I've done it many times, it doesn't take that long). Oakland and SFO are about the same price, and take about the same amount of time.

    Half days work lost for the same or more cost...

    Somehow I don't think this is going to work out the way they say it will... of course they know that, they just don't care, so long as they get to run their massive state funded union jobs program.

  • http://anarchangel.blogspot.com Chris Byrne

    Oh my, I forgot, the pricing on those airline tickets is round trip. The round trip fair on Acela is $458 dollars, and Acela express is business class only. The 8 hour trip regional train has the $90 (each way) coach seats.

    And yet, liberals wonder why more people don't take the train.

  • Bob Smith

    And yet, liberals wonder why more people don't take the train

    That's why there's gross underbuilding of roads in every major city, and in some cases (Portland OR) increased traffic congestion is an explicit, publicly stated goal of the regional government. If the citizenry prefers individual transportation, keep raising the heat (like proverbial boiling lobsters they won't recognize what's happening to them) until they can be suckered into funding yet another spectacularly expensive collective transportation scheme. You should see the shameless push for light rail systems in Tampa and Fort Lauderdale. They haven't been approved yet, but nobody is publicly pointing out the obvious lies being told in furtherance of these projects. In part, this is why the political left tends to be credentialist and technocratic: opponents are shot down as irrelevant because they aren't "educated experts" who oppose "real solutions" and obstruct "future progress".

  • http://thelibertypapers.org/ Brad Warbiany

    Sandman,

    The LA/San Diego line already exists on Amtrak. It's not a high-speed line, but if you live pretty close to the route, it's mighty convenient. I personally rarely take it (I'm already in south OC, and circumstances always seem to require that I have my own car down there), but it's a decent line.

    Chris,

    Great analysis on the high-speed line. I had almost posted a comment that I'd probably be willing to take the line if it was cost-effective and fast, but it sounds like it might be neither, if the Acela is any indication. But the OC airport is a breeze to get through (security/etc), and if the price was equal to or higher than airfare and the trip slower by 1-2 hours or more, I'd see no point to taking the train. OC/SF isn't a regularly weather-delayed route anyway...