The California High-Speed Rail Authority’s revelation this week that its expected construction costs in the Central Valley are going up by more than one-third since 2016 is likely to spark questions about what may become of the convoluted and controversial project.
Beset by litigation, delays, cost increases, consistent Republican political opposition, leadership turnover and no small degree of public skepticism, the agency acknowledged the upward lurch in the predicted cost to build 119 miles bullet-train line from Madera to Bakersfield – from $7.8 billion in 2016 to $10.6 billion now – will only further stoke concerns over whether the ambitious plan to develop and build a system of electric trains connecting San Francisco and Los Angeles/Anaheim by way of the Valley will ever reach fruition.
With that in mind, here’s an examination of several issues that will likely confront the rail authority and the future of the project itself in what could be a pivotal year.
What’s up with the cost?
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Price has been an ever-changing thing for the rail project’s leaders since California voters in 2008 approved Proposition 1A, a $9.9 billion high-speed rail bond. At that time, the price tag for Phase 1, 520 miles of tracks and infrastructure from San Francisco to Los Angeles, was forecast at $33 billion.
Since then, the estimates have fluctuated, sometimes wildly: to $42.6 billion in 2009, taking inflation into account during development and construction; to $98.1 billion in late 2011; to $68.4 billion in 2012 after a major retooling of the construction plans in the San Francisco Bay Area.
For the last few years, the estimates have hovered in the mid-$60 billion range, even as factors conspire to boost the price of the state’s first construction contracts in the San Joaquin Valley. For example, an array of delays and change orders have tacked nearly a half-billion dollars onto the contract for the first 32-mile segment now under construction in Fresno and Madera counties.
Tuesday’s report to the rail authority board by Roy Hill, a consultant serving as the agency’s chief program officer, covered only the anticipated cost increases in the Valley. If costs can rise by almost 36 percent over two years in the Valley – a relatively flat and inexpensive-to-build area of California – what will that mean when the authority issues its 2018 business plan and statewide cost estimate later this spring?
Updating the 2018 business plan
High-speed rail critics and supporters alike will be awaiting the new business plan, a draft of which will likely emerge in March and must be submitted to the state Legislature by May 1. The every-other-year plan is when the rail authority provides not only updated cost projections, but also changes in strategy – as happened in 2016 when the agency pivoted from Merced-Los Angeles as its initial operating segment to Bakersfield-San Francisco.
The formula for the major revisions in cost estimates unveiled Tuesday by Hill for the Valley will probably be applied to the statewide project based on the travails the authority has experienced in Fresno, Madera, Kings and Tulare counties.
Those problems have included:
- The slow pace of buying right-of-way needed for construction and associated delays
- An abundance of lawsuits over issues ranging from the use of state funds to the adequacy of environmental reports
- Change orders to contractors that tack on a few million dollars here and a few million dollars there
The logistic, legal and technical challenges confronting the rail authority in the Valley will almost certainly be magnified in other parts of the state.
Continuing schedule delays
Delays in acquiring right of way in the Valley are only part of the authority’s problems in keeping high-speed rail development on any kind of schedule. While construction is moving forward where the agency has the property it needs to build, the authority has yet to complete its complex environmental assessments in other parts of the state south of Bakersfield and west of Chowchilla. Before the state can begin to make offers for the property it needs to build any portion of the rail line, it must first certify environmental reports in each segment.
As recently as 2016, the authority predicted optimistically it could complete the environmental work from San Francisco to Los Angeles by the end of last year. Now the expectations for environmental certification and final route selection of different segments range from October 2018 to January 2020.
In the Valley, federal grant agreements in 2010 called for construction of the Madera-Bakersfield section to be largely completed by last fall. Now the earliest any of the first three contracts from Madera to Shafter is contemplated for completion is mid-2019.
The 2018 business plan will likely provide revised – and perhaps delayed – targets for completion of construction and start of operations for the train system – once forecast as 2025 for a Bakersfield-San Jose segment and 2028 for San Francisco-Los Angeles.
How about the money?
The original 2008 pitch for Proposition 1A anticipated about one-third of the money to build California’s bullet-train system would come from the state bond, about one-third from the federal government, and about one-third from private investment.
But a Republican-controlled Congress has refused to consider providing more federal money beyond about $3.3 billion in stimulus and railroad funds from the Obama administration. And while the rail authority has solicited potential interest from international infrastructure, there have been no firm commitments from anyone to pony up money.
The state is currently meeting its obligation to match the federal funds using a combination of the Proposition 1A bonds and cap-and-trade money from California’s greenhouse gas-reduction program. Absent more federal money or private funds, cap-and-trade – identified in 2012 as a Plan B funding option – remains the only perpetual source of money to keep the construction going in the Valley.
High-speed rail’s biggest cheerleader in California, Gov. Jerry Brown, is termed out of office and is serving his final year, casting a shadow over the prospects for continued support for the project in Sacramento. Legislative Republicans have largely opposed the project, while Democrats, under Brown’s influence, have backed funding for the effort.
Support for high-speed rail from various candidates to replace Brown range from steadfast to lukewarm to vehement opposition, so the future of continued funding could well depend on who is elected in November.
What if … ?
One nagging question is the big “what if” – what if legislators turn off the tap on cap-and-trade money? What if Congress never throws another dime California’s way for the project? What if there’s no money to build out the entire statewide plan? What will become of the overpasses, viaducts and other infrastructure now under construction contracts in Fresno, Madera, Kings, Tulare and Kern counties?
The answer lies in the original grant agreement between the Federal Railroad Administration and the state for stimulus and railroad money. If cap-and-trade was Plan B for funding, then Plan C – or even Plan D, F or G – is a clause in the contracts requiring “independent utility” for the stretch of the rail line being built in the Valley.
What that means is if no tracks are ever laid for the project beyond Madera to the north or Bakersfield to the south, the tracks could be used by Amtrak’s San Joaquin trains that currently share the BNSF Railway freight tracks between Madera and Bakersfield.
The result: almost 120 miles of tracks with no at-grade traffic crossings and on which Amtrak trains need not stop for passing freight trains. Amtrak could operate at faster speeds – potentially as fast as 125 mph, compared to the current top speed of 79 mph and average speed of 53 mph for the San Joaquin trains.