After decades of debate, California is finally getting closer to entering the high-speed race. In August 2008, Governor Arnold Schwarzenegger signed a bill that puts high-speed on the coming election agenda. The timing couldn’t be better. With concern rising about global warming and rising fuel costs, the spread-out state has public transport on its mind. The California Senate has also signed a bill that aims to reduce its sprawling suburbs and reduce commutes for the 38 million people that live there.
The debate about high-speed rail is nothing new. Like all large engineering projects decades of planning have gone behind the proposal for California high-speed rail.
Travelling at speeds up to 220 miles per hour, the system will span more than 800 miles, connecting all major cities in California. It will link central downtown stations in San Diego, Los Angeles, San Francisco and Sacramento with major cities in Orange County, the Inland Empire, the Central Valley and the South Bay as well as San Francisco – a journey from LA to San Fransisco will be 2.5 hours long.
On top of all this, existing rail networks will need to be upgraded and station infrastructure will also be required to account for the new high-speed line. So it comes as little surprise that financing such a large project has always been issue number one.
A historical decision
The California High-Speed Rail Authority has made tremendous progress since its inception in 1996. In a decade it has taken a project from an abstract idea to the point where sufficient funding is the only barrier, to entering detailed engineering for a design-build contract.
The state has traditionally used bonds to finance major capital outlay projects such as roads, educational facilities, prisons, parks and water projects and the proposed high-speed train system is no different. But Californian voters have not wanted to part with the money.
Educating the state’s residents on the benefits of rail has not been easy, and has been a large part of the high-speed task. Choosing a route has been no easier. Now, with the high-speed system clearly on Schwarzenegger’s bill, and with an election coming up in November, voters will have the final say on whether it goes ahead at all.
California High-Speed Rail Authority executive director Mehdi Morshed says: “There is a general consensus in California that our transportation system is broken and with skyrocketing automobile fuel costs, declining airline service (especially for the state’s medium-sized cities in the Central Valley), little room for additional freeway lanes and virtually no room at major airports for new runways, California is ready for a state-of-the-art transportation system that will meet the demands of a growing state and economy. Much of the debate during the past several years of completing the environmental analysis has been not about whether California needs a high-speed train but where best to put the route.”
According to Morshed, California would need to build nearly 3,000 miles of new freeway plus five airport runways and 90 departure gates in the next two decades to serve the number of constituents a high-speed rail line would. “With a price tag of $82bn, such levels of construction are barely plausible,” he says.
“What’s more, the proposed high-speed train system will provide lower passenger costs than travel by automobile or air for the same city-to-city markets. By linking all major cities in California with a state-of-the-art new transportation option, high-speed trains will move people and products across our state like never before. California’s planned 220mph high-speed train system will increase mobility while cutting air pollution and reducing the greenhouse gas emissions that cause global warming.”
Morshed also says that the system will inject new vitality into California’s economy, creating nearly 160,000 construction-related jobs and 450,000 permanent jobs in related industries like tourism – jobs that cannot be outsourced overseas.
High-speed rail has had its arguments in California long before the climate change debate came to the fore. High-speed rail supporters, such as Governor Schwarzenegger, have indicated that the state’s economic power is derived by how fast it can move people, goods and services around within it. Private industry has already seen the benefit in this, and committed funding along with the state and federal governments.
California in the way
A major hurdle for California’s high-speed rail has been the state itself. State funding is required before any federal or private commitment can be garnered. The rail authority’s financial plan contemplates a public-private partnership with one third private, one third federal and one third state investment.
The state share is included in the $9.95bn state bond that is scheduled to go before the voters in November 2008. It will allow construction to begin in 2010. The federal funding mechanism is also moving into place. In October of 2007 the US Senate passed a first-ever direct federal programme for funding high-speed trains.
This year, the Passenger Rail Investment and Improvement Act of 2008 (HR 6003) is pending in the House and would provide $14.4bn over five years to match state costs for high-speed systems. The match would be 80% of state investments, the same as federal highway funds.
According to Morshed, private investment will provide the rest of the financing. “Financial experts who promulgated the funding plan – an outstanding and highly-regarded team led by Lehman Bros – anticipate significant private investment opportunities, including project debt financing, vendor financing, system operations and private ownership,” he says. “They agree, however, that private capital won’t be invested without a financial commitment by the owner of the system, the
people of California.”
Even with the costs of this project, the ballot measure authorising the bond financing of the train system – Proposition 1 – is currently leading in the polls, though a large margin of voters are undecided. Overall, the project may be well received by the public but there are still those out there with concerns, mostly about the commitment of government funds to the cause.