California HSR Authority drops new business plan (and $30 billion from the price tag)

The California High-Speed Rail Authority (CAHSRA) released a revamped business plan today that tackles head-on the criticism that has hit the 220 mph train between Los Angeles and San Francisco.  And with California expected to reach 60 million people by the year 2050, the state’s future mobility could hinge on how this plan is received by the public.

[Read the 2012 Business Plan in its entirety]

“Our revised plan makes high-speed rail better, faster and cheaper,” High-Speed Rail Authority Chairman Dan Richard told a news conference today at the Southern Pacific Building in Fresno. “Drawing on hundreds of public comments as well as the expertise of our technical staff, we were able to refine our thinking and improve the plan enormously. The revised plan will enhance local rail service immediately and, in the long term, cut total project costs by $30 billion.” 

Addressing far and away the biggest complaint, the revised business plan would cost $30 billion less than the last iteration.  The total price to connect Los Angels to San Francisco has dropped to $68.4 billion, almost a third less than November’s estimate of $98.5 billion.

Touting a “building block” implementation in the new plan, CAHSRA is emphasizing that each of the construction phases will have independent utility.  California will be able to reassess the project’s progress at multiple points over the next two decades, while still reaping the benefits of each block.  The business plan provides the following timeline for construction:

Critical Decision Point One: Construction of a 130-mile stretch in the Central Valley for about $6 billion (year of expenditure) with a combination of federal and state funding that has already been identified. 2012 – 2017

Critical Decision Point Two: Extend the initial construction section to create an initial operating section (IOS) either from Merced to the San Fernando Valley or San Jose to Bakersfield. Once either of those sections is completed, true high-speed rail service will be provided to passengers for the first time in the U.S., projected ridership and revenue will be sufficient for the initial system to operate at break even or better, and private investment will initially materialize. Projected cost: IOS from Merced – San Fernando Valley: $27.2 billion; or IOS from San Jose to Bakersfield: $24.7 billion. 2015 – 2021

Critical Decision Point Three, “Bay to Basin:” Build the remaining initial operation section either to the north or south to provide a high-speed rail “Bay to Basin” system connecting the Bay Area and Los Angeles basin population centers and integrating with MetroLink in Southern California and Caltrain in the Bay Area. Projected cost: IOS from San Jose to Bakersfield: $21.1 billion; or IOS from Merced-San Fernando Valley: $24 billion. 2021 – 2026

Critical Decision Point Four: Additional rail-transit improvements in the Los Angeles basin and Bay Area, including electrification of existing rail systems, to create “blended” operations with high-speed rail to provide a “one-seat” ride from San Francisco to Los Angeles and Anaheim. Projected cost: $23.9 billion. 2026 – 2030

Critical Decision Point Five: Start to construct Phase 2 extensions toward Sacramento and San Diego, or continue to complete the full Phase 1 high-speed rail system between downtown San Francisco and Anaheim through Los Angeles. Projected cost for full Phase 1: $19.9 billion: 2026 – 2033+

This approach is clearly directed at critics who derided the decision to break ground in the Central Valley, calling it a “train to nowhere.”

In the short-term, CAHSRA is banking on the job-creating power of infrastructure investment to keep the project going.  Over five years, construction of the initial Central Valley segment is projected to create 100,000 direct and indirect jobs over five years—or 20,000 jobs every year on average. 

In the long-term, Phase 1 (San Francisco to Los Angeles) of the project will create an estimated 1.2 million to 1.4 million direct and indirect jobs over a 20 year span—an average of approximately 65,000 jobs each year of construction. The Phase 1 system will also generate 4,500 permanent operations and maintenance jobs, and somewhere between 100,000 and 450,000 permanent jobs unrelated to high-speed rail across California by 2040. 

Once the train is operating, even cautious ridership models—with conservative assumptions about average train fares (83% of current airfares), fuel prices ($3.80 per gallon), and population growth—predict that the train will not need an operating subsidy.  And at those ridership numbers, the train would eliminate 8 billion vehicle miles traveled on California’s roads, save 146 million hours of travel time, and reduce the emission of harmful pollutants by 3 million tons.