It's HSR editorial season, it seems, and the latest entry comes from the Modesto Bee. It's certainly not the sad joke of an editorial the Contra Costa Times put out, but it still demonstrates many of the common flaws the state media uses to assess the project - particularly an inability to examine the project in context. The Modesto Bee at least opens the editorial mentioning $4.50 gas, but unfortunately they don't consistently apply that all-important point in their commentary. A quick examination follows.
the Senate Transportation Committee conducted hearings on the rail concept in December and January, and recently released a report with six recommendations -- none of which are yet addressed in Galgiani's bill. Perhaps the most important is to require the commission to produce a business plan "consistent with a standard financial prospectus." We also agree with the committee that construction needs to take place on regional segments before the long-distance rail is built.
I've consistently been arguing against using that report as a guide for assessing the HSR project - the report is very deeply flawed, especially in its total failure to assess HSR in the context of permanently high fuel costs and the financial risk that poses to the state. I also have argued against lowering the priority of the long-distance segments unless there are ironclad guarantees that those WILL be built after the regional segments. Without such guarantees there is no point to approving the bond.
Quit low-balling. The cost for this all-new railroad has been set at $33 billion, with $7 billion more needed to add service from Merced to Sacramento and from Anaheim to San Diego. These estimates haven't changed in six years -- and no one believes them. A 2005 World Bank policy study shows that major rail projects usually cost 44 percent more than budgeted.
This is not a useful statement. What did the World Bank study point to as the cause for the increased costs? Rail projects in California such as the Metro Gold Line are being delivered on-time and on-budget. Without an understanding of the mechanisms behind those cost increases it is dishonest to use that study to predict the HSR project will go over budget.
Who will pay? Proponents say the federal government will be an important partner, but Wednesday the House of Representatives approved only $1.75 billion -- $350 million a year over five years -- for all the nation's high-speed rail projects. The rest, say backers, will come from private investors. But large banks and hedge-fund investors are reeling from the mortgage crisis. That leaves taxpayers and riders.
This is deeply misleading - and I'm putting that generously. The House bill was an Amtrak bill. The HSR money was gravy, unexpected and unplanned. It was thanks to the work of Jim Costa, Fiona Ma and Nancy Pelosi that the money is there at all - but it is NOT intended to be the final amount of funding Congress will give HSR. In April we reported that Congress is anticipating $60 billion for HSR in the 2009 transportation bill. Barack Obama is a vocal supporter of HSR and would likely support and help pass such an investment. There is NOTHING to suggest $1.75 billion is all Congress will give to HSR. The Modesto Bee surely knows this, or they should have done their research before publishing that part of the editorial.
As to the banks and large investors, the credit crisis won't help. But neither is it crippling. There is a lot of overseas capital looking for long-term stable investments, and CAHSR would be a natural site for them to park their money. And if they don't then we can and should sink more money into it. Of course the Modesto Bee, like every other media outlet that has pontificated on HSR, has refused to ask what the cost of doing nothing is - it is certainly higher than the cost of building HSR.
Get real about ridership. Proponents say that by 2030, they expect to generate $1 billion in profit based on 100 million riders a year. That means every Californian would have to ride the train three times a year. When asked about the validity of such numbers, a person familiar with the details whispered, "crazy." Another called them "black box" figures.
This is more of the anonymous sourcing and vague reporting that the media is way too often passing off as journalism. Who claimed the numbers were "crazy"? How is the public to assess the validity of such a statement? The Modesto Bee is irresponsible in not sourcing or explaining that claim.
Further, who says HSR will only be used by Californians? We do still get a lot of tourists, many of whom will use the system. Business travelers will use it far more often than three times a year.
But the most important aspect of the ridership question is fuel costs. The Modesto Bee led off the editorial mentioning high gas prices - so why ignore it here? Ridership may not hit exactly 100 million by 2030 - though I am certain that it will, as ALL HSR lines around the world have rapidly hit their ridership expectations - but with permanently high fuel prices and the resulting airline crisis it strains credibility to not expect ridership to be sufficient and high.
Be careful where you dig. The commission has hired Parsons Brinkerhoff to manage the program. Earlier this year, the company was forced to pay $458 million for problems with its "Big Dig" project in Massachusetts, whose final cost ($14.6 billion) doubled original estimates.
I was not under the impression Parsons Brinkerhoff had been given any permanent contracts. We plan to watch this aspect of things quite carefully.
The Modesto Bee concludes "High-speed rail is a good idea that should be pursued." We strongly agree. But we wish the Modesto Bee would take a more informed approach to assessing the project - and stop trafficking in unsourced, unverified, specious claims in order to raise doubts about the project.