High Speed Rail-Finance

Although granted $10 billion by virtue of a California voter-approved bond initiative, the California High-Speed Rail Authority has made little progress toward identifying or securing the 42 billion dollars required to complete a high-speed rail connection between Sacramento and Southern California, or the total $75-100 billion needed to build the entire 800-mile system envisioned by California’s high-speed rail promoters.  Unable to garner commitment of any private investment in the system, the rail authority will be forced to reevaluate its funding possibilities, as well as, the project’s overall costs, and cost effectiveness of the system’s development and operation.

Sold to California voters as a much needed alternative to air travel, as well as, driving between San Francisco, Sacramento and Los Angeles, the high-speed rail initiative promoted a European style, state of the art, 200 to 300 mile per hour train that, once built and put into service, would attract enough ridership that it would be financially self-sustaining. Estimates of total development costs were, and remain vaguely determined, while projections of ridership and fare levels have been equally difficult to establish or verify.

Assuming the rail authority can develop realistic estimates of project costs, completion schedules, ridership levels, operating income and expenses, the more immediate and crucial accomplishment will be to identify and secure funding sufficient to complete the entire system, and put it into service. The basic nature of the high-speed rail system as an inter-city service, connecting urban areas over 400 miles apart, requires that all parts of the system be completed before any service can be initiated. If any section of the railway is not completed, or basic components of the system or rolling stock are not operational, the system will be unable to transport passengers between San Francisco, Sacramento and Southern California, at any speed. An incomplete high-speed rail system will provide no service or connection between cities, and generate no income, while incomplete funding of the project will prevent its completion, and precipitate its failure.

The High-Speed Rail Authority has yet to identify sources, or receive any commitments of funding beyond the initial $10 billion provided through the high speed rail initiative. California voters and taxpayers are not likely to approve insurance of additional bonds sufficient to complete the project without assurances that the system can be built for significantly less, and operated at some level of profit, or at minimum, a self sustaining level of revenue. And, without potential for profitable operation, private investors will have no incentive to invest or participate in the project beyond its construction phase contracts.

The first 54-mile segment of the high-speed rail project is proposed to run between two central valley agricultural towns, at an average cost of $75,000,000 per mile, to construct the roadbed and rails, with the costs of train rolling stock, electrical power systems and stations yet to be determined. Construction of high-speed rail track systems in any other than such rural locations will require grade separations, sound and turbulence walls and other mitigation measures that will raise the per mile costs to $100,000,000 or greater. This would extrapolate into $60-80 billion to construct the railways alone, with the costs of rolling stock, maintenance facilities, electrical power systems and stations adding billions to the overall costs of implementing the planned 800-mile California High-Speed Rail system.

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