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Posted at 02:26 PM ET, 11/01/2011

Sticker shock in Calif. over new estimate for high-speed rail

SACRAMENTO, Calif. — A business plan being released Tuesday gives the most detailed look to date at California’s ambitious plan to link its major cities by high-speed rail, projecting the cost has ballooned to nearly $100 billion over 20 years, accounting for inflation.

 The daunting figure may cause sticker shock even for the most ardent supporters of the project.

 The business plan comes after Gov. Jerry Brown appointed two new members to California’s high-speed rail commission and asked them to assess the proposal’s viability. They concluded the project is doable, if built in phases, but the cost will be more than double the original projection.

 “The good news is the numbers are more realistic; the bad news is they may well be beyond reach,” said state Sen. Joe Simitian, D-Palo Alto.

 A copy of the report reviewed by The Associated Press shows the estimated cost at $98.5 billion if the route between San Francisco and Anaheim is completed in 2033. The plan assumes private investment will account for roughly 20 percent of the total cost, with much of the rest coming from additional public borrowing.

 “This is not a promotional document. This is not a political document. This is a business plan,” said Dan Richard, one of Brown’s two appointees who spent 12 years on the board of the Bay Area Rapid Transit system.

 The initial estimate to build the system when voters approved bond funding for it in 2008 was $43 billion. In non-adjusted, 2010 dollars that amount is now $65.4 billion.

The plan also says the system would be profitable even at the lowest ridership estimates and would not require public operating subsidies.

The new business plan says the system will be built in sections than can operate independently and make money, even if no more track were ever built, Richard said. Planners hope each new section will generate momentum — and private investment — to complete subsequent sections.

The business plan also says the high-speed rail system will use existing rail lines to carry passengers on the final legs into San Francisco and the Los Angeles basin. Doing so instead of building new high-speed lines not only saves money but makes the project more politically palatable by reducing neighborhood objections.

 The plan is being released at a politically sensitive time for the rail project.

 Governors and lawmakers in several other states have been backing away from costly high-speed rail plans because of ongoing state budget deficits caused by the recession. Florida, Wisconsin and Ohio all pulled back on their rail plans, leading the Obama administration to turn over their share of federal money to other projects, including some in the Northeast Corridor.

 California voters and the Obama administration already have committed nearly $13 billion to the state’s high-speed rail project

Brown said in August that he still supports the plan to link San Francisco with Los Angeles and Anaheim by 2020, but his Department of Finance is expected to review the proposal in detail before he signs off.

The Legislature, which returns in January, must also approve the proposal.

 

By Juliet Williams and Associated Press  |  02:26 PM ET, 11/01/2011

 
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