California high speed rail is doomed and ultimately will cost $19.5 billion to repay in bonds including interest

by

The cost of the 119 mile Central Valley section has now officially gone up to $10.6 billion. California does not have budgeted money to finish. California has to find extra money for that section.

California High Speed Rail Authority will have to go to the state Legislature for a supplemental appropriation from the bonds that voters approved in 2008. The remaining bonds probably would cover the cost increases, but deplete funds for further construction beyond the Central Valley. The 119-mile section is useless. They need $20-40 billion to build the 300 miles needed for a minimum LA to San Jose system.

Assuming they do not try to dump good money after bad, it willcost $19.5 billion to repay the bonds with interest. California could have built some overpriced highways and BART extensions with that money.

The new estimate was presented Tuesday by Roy Hill, who leads the main consulting firm on the project, WSP (formerly Parson Brinckerhoff). Hill said the cost increases were mainly driven by problems including higher costs for land acquisition, issues in relocating utility systems, the need for safety barriers where the bullet trains would operate near freight lines and demands by stakeholders for the mitigation of myriad issues.

As of April 2017, the project had $3.5 billion in federal grants and $1.2 billion in state greenhouse gas fees. That would give the rail authority a budget of roughly $9.4 billion for the Central Valley work and commitments made to do early work on the Southern California and Bay Area segments.

In December 2016, an internal-use-only draft risk assessment produced by the Federal Railroad Administration was delivered to the California Rail Authority which warned that the ICS (Merced-Bakersfield) segment could cost as much as $9.5 billion instead of the $6.4 billion originally budgeted. As costs continue to rise it seems impossible that the Merced-Bakersfield will be completed for the $12.2 billion that has been raised. Some of the $12.2 billion is going to terminals in the SF bay area and Los Angeles.

The Transbay Transit Center, a 1 million-square-foot South of Market regional transportation hub is slated for completion by late 2017, but critics have said it will be a billion-dollar bus terminal if the extension to Caltrain and the bullet train doesn’t get built. The $1.5 billion shortfall could further imperil the extension. The city’s Transbay Transit Center’s funding from the High-Speed Rail Authority “will be reduced by $1.5 billion to $550 million,” citing the authority’s recently revised draft 2016 business plan.

In 2009, the Authority projected that construction of the system will create 450,000 permanent jobs through the new commuters that will use the system and that the Los Angeles-San Francisco route will generate a net operating revenue of $2.23 billion by 2023, consistent with the experience of other high-speed intercity operations around the world.

The Authority’s ridership estimates initially were unrealistically high, and have been revised several times using progressively better estimating models, including risk analysis and confidence levels. The 2014 study (at a 50% confidence level) estimated the following ridership/revenue figures:

2022 (IOS): 11.3 million riders / $625 million [will not happen, no segment completed until 2024 and not between LA and SF]
2027 (Bay to Basin): 19.1 million riders / $1055.6 million
2029 (Phase 1 initial): 28.4 million riders / $1350.4 million
2040 (Phase 1 mature): 33.1 million riders / $1559.4 million

Merced to San Fernando Valley is the initial operating section which is 300 miles long. Without at least an additional $10 billion and more likely an addition $20-40 billion, this will not be completed.