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OK, I Double My Estimate to $200 Billion

November 1, 2011, 2:20 pm

I wrote quite a while ago I wrote that there was no way the estimated $43 billion California high speed rail project would be completed for less than $100 billion.  Well, now the agency itself is estimating it will cost $100 billion (or $98 billion and change, but that is likely a number picked to avoid going to three digits).  So I now officially raise my estimate to $200 billion for the complete line from Anaheim to San Francisco.  Anyone want the under?

 

Category: Rail and Mass Transit
  • Mark

    Ummmm...no.

    Why can't the average person understand that these high speed rail fiascos are just payoffs to cronies and union workers?

    Removing Bacon-Davis needs to be a priority moving forward. WIthout a repeal, there is no way that the government will be able to continue to create public infrastructure.

  • Matt

    No, I think you are still too low.

    I would suggest you raise your estimate to at least one order of magnitude above the "Official" government estimate. Call it $980b.

  • http://thepoodleanddogblog.typepad.com/ Jan

    Knowing how fast the estimates have gone up, and how government projects always seem to work, I'd like overs.

  • http://dullgeek.blogspot.com dullgeek

    This seems like a good intrade question.

  • Russ R.

    Also from the AP news article:

    "The plan, which was shared late Monday with The Associated Press, also shows the system would be profitable even at the lowest ridership estimates and would not require public subsidies to operate."

    I'm willing to bet that the system never achieves an operating profit (under generally accepted accounting principles) and will receive public subsidies in every year of its operation. Any takers?

  • Sean

    Does anyone know the total value of the airline traffic from the LA area (all 5 airports) to destinations in the bay area (like San Jose, San Francisco, Oakland Sacramento)? I would be very surprised if it exceeded $500 million in revenue a year. How in heavens name do you pay off interest for the bonds which are likely to be at least $5 Billion annually to service the debt? Then you have operating expenses. Amtrak's total revenue for FY 2010 was only $2.5 billion and operated at a loss of $1 billion dollars.

  • Jeff

    I see no way to settle the bet.

    It will never be completed, because California and the US are out of money.

  • IGotBupkis, Unicorn Fart Entrepreneur

    >>> Anyone want the under?

    Depends on the odds. Anything less than a million to one, forget it.

    But I'd bet one dollar against a million on your being wrong...

    Hey, it's better than lottery odds.
    :D

  • Ted Rado

    Letting natural economic forces determine what is worth doing seems to have become obsolete. If building high speed trains is a good idea, private enterprise would do it.

    I am having trouble figuring out how ANYBODY can believe that a bunch of politicians can make better decisions than the total of American free enterprise. Are we nuts?

  • Panzersage

    I'm pretty sure that they don't go through the same process as business for their budgets, however this reminds me of the project I am working on.

    We needed about $100,000 for a Capital Expense budget to build a test cell. We asked for $98,000 as anything over $99,000 has to go to the CFO and then through a much longer process to get the money so we would have been looking at a 2 month turn around while it is vetted instead of a couple of weeks.

    I know the difference is 6 zeroes, but the similarity is there.

  • Will

    Ted Rado:
    Slight problem, the government already funds most of the airport capex and operating budgets, and builds and maintains the roads which generally don't have user fees. If you were a venture capitalist, even if it was a good idea how could you possibly justify competing against the government subsidies for the competing modes of transport?

    This doesn't mean I think it's a good idea, but the situation is a bit more complex. Frankly the urban planning of LA makes the idea doomed, even if you could get from downtown SFO to Los Angeles in a decent amount of time, you'll still need a car to get anywhere when you arrive. Unless you want to spend another 2hrs on a bus getting to whatever suburb you actually live in.

  • MJ

    Will,

    Roads are financed with taxes on motor fuel and other complementary goods to road use, which fall directly on users. Airports are funded with ticket taxes, passenger facility charges and various sources of on-site revenues (concessions, parking, etc.).

    The spread-out form of the Los Angeles Basin dates back to the days of the streetcars (as far back as the 19th century), which linked together several formerly freestanding cities -- LA, Long Beach, Fullerton, Santa Ana, etc.

  • MJ

    I read a longer version of this story in a different paper. There was a choice quote from one of the CAHSR board members who said something like "we're laying all our cards on the table", perhaps an indication that they were now levelling with the public about the scope and cost of the project. Which leads me to wonder, why didn't they provide this information to the voters before the referendum on $10 billion in bond funding for the project?

  • marco73

    Defintely go with option #3, this will never happen.
    Oh, they may put in a segment in some congresscritter's district that will be so over budget that all the money in existence could not complete the entire line. Then they will have a tourist attraction to their own vanity.

  • morganovich

    this is the classic waiting in line problem.

    they know damn well right from the start this will cost $500 billion and that no one would ever say yes.

    so they lie and call it 50. it gets approved, they spend it, and now you have sunk costs. it's easier to get good money thrown after bad. it's like a hostess telling you 15 minutes when you ask when your table will be ready every 15 minutes for an hour.

    if she had said "an hour" in the first place, you would have left.

  • Mark 2

    The lost Angeles area has light rail now. It only gets within 1 miles of the airport due to Union complaints (jobs would be lost if the train went to the airport) But you can go from Downtown LB, to Downtown SF. You can Transfer in Compton to go to El Segundo (close to the airport) and you can take it from downtown to Hollywood.

    I lived in Downtown LB and worked close to the airport, and tried taking the light rail to get to work. It took more time than driving the crowded freeways. And in the evening if I had to work a bit late, it went to half service, so instead of taking an hour to get home, it would take two - and it only took 45 minutes by car (in heavy traffic)

    The cost to me was slightly less because my company subsidized half my ticket, but if I was paying full fare, I wouldn't even be saving vs gas costs.

  • Mark 2

    I mean downtown Long Beach to downtown LA in my post up there.

    IF I could get from downtown LB to downtown SF, the problem would already be solved. (Doh!)

  • Doug

    A more expanded version of this story mentions that "to cut costs," these clowns have now decided to use existing rails instead of building their own fancy tracks. Since they're just going to use existing rail lines, how/why do they need $100B to build "fast trains"? What's so special about these fast trains that regular trains can't do the job? Convince me that these existing tracks are banked enough that "a faster train" can take those same curves and grades at 120mph!

    Thankfully, I won't live long enough to have to pay down this massive debt in my Golden State when the bills come due. Good luck, kids!

  • Ted Rado

    Will:

    The government really doesn't fund anything - WE do.
    Anything that can possibly be done by free enterprise should be. An example is the USPS. UPS, FEDEX and others are prospering while the USPS is going broke. The day will come when mail delivery is run by COMPETITIVE free enterprise.

    If all means of transportation carried their fair share of costs, there would be a more rational allocation of capital. Oklahoma has an excellent toll road system. The users pay for it. If the users didn't feel it was worth the cost, OK would stop building toll roads. Every scheme should be evaluated similarly. If it can't stand on its own two feet, it shouldn't be built. All the arguments re social benefits, etc. are nonsense. How is society benefited if we waste money?

  • epobirs

    Mark 2,

    I had a similar experience. I seriously looked at whether the Los Angeles rail system would let me get to some areas without a death march commute. Potentially yes, but only if I traded driving in the sort of traffic that creates serial killers to instead spend far more of my day sitting on a train and/or bus. So big chunks of geography that aren't that far as the crow flies are simply out of the question for long term employment.

    With the exception of occasionally going between Pasadena and Downtown and a contract job I had that was within a short walk of Union Station, the LA Rail system has been pretty much useless for me.

  • Not Sure

    Whatever the number, it's sure to include plenty of money for crap like this:

    Take a honkin' good look at this crosswalk in Reading, Pennsylvania (North 5th Street Highway and South Temple Boulevard). Now just imagine the engineering effort that went into its design, with all the components – the retaining wall, the fence, the berm, the drainage, the street striping, the handicapped grading, the textured paving blocks.... Now imagine the politiical process – the design review, the code enforcement review, the DOT sign-off, the planning and zoning board approval. Okay, now tell me how the f**k could any civilized people arrive at such an outcome, not to mention laying out the money to pay for this exercise in idiocy?

    http://www.kunstler.com/eyesore.html

  • John VI

    I will take the under if the federal government does the "accounting" ;)

  • John VI

    Actually, Goldman sachs can do the accounting too. They can make billions disappear pretty quick too...

  • http://soundsofsolarno.com Jim Furey

    @notsure That looks like the epitome of a 'shovel-ready' project.

  • peter

    Lets see
    Big Dig original estimate $2 Billion final total ~$14 billion (if I remember correctly).

    therefore

    california light rail original estimate $43 Billion Final total should be around $301 Billion.

    Is there a price for coming closest without going under the final total? Kind of the reverse of Price is Right.

  • peter

    meant prize not price in above message

  • John David Galt

    The good news is that, now that CHSRA has admitted it will cost $100B, they won't be allowed to start construction in the foreseeable future. CHSRA's enabling law doesn't allow it until all the necessary funding for an operating system is assured, and the federal funding they got last year (which may be all they'll ever get) doesn't come close.

    All Californians need now is a good class-action lawyer.