Rising costs snarl bullet train plan
California faces $4.6B overrun for leg of 550-mile system
Only two years ago, the California rail authority unveiled an ambitious plan to begin operating a segment of bullet train service between San Jose and the Central Valley by 2025. It would take nearly every penny in its checkbook, but the rail authority assured the public it would work.
But that plan has been crushed by the acknowledgment last week that the cost of building just 119 miles of rail between the farm towns of Madera and Wasco has soared from about $6 billion to $10.6 billion, siphoning off money that the authority had planned to allocate to the ultimate goal of connecting Los Angeles and San Francisco.
It has left the broader high-speed rail project, a lofty objective that Gov. Jerry Brown has pursued since the 1980s, in an existential crisis.
Over the next year, Brown, the Legislature and the next governor will have to decide whether to create new revenue sources, dramatically delay its construction or scale it far back from a complete 550-mile system, among other possibilities.
“The financial demand for this is so enormous,” said Martin Wachs, a University of California, Los Angeles transportation expert and a member of a peer review panel that oversees the project. “We should have been more ready for this. The costs always rise and the schedule always slips, but that doesn’t mean the project isn’t justified.”
The rail authority last
week named a new chief, longtime government executive and political insider Brian Kelly, who faces a big task to shore up the rail authority, restore the confidence of skeptical officials and fix a broad range of management, financial and political problems facing the authority across the state.
When he begins the job Feb. 1, Kelly said he wants to conduct his own fresh assessment to determine how he can stabilize costs, reduce future expenses, ensure past mistakes are not repeated and guarantee that the 2018 business plan, due next month,
will be viable.
“I don’t think the public expects this program to be challenge-free,” Kelly said in a recent interview. “We have to say what we are going to do about them.”
The disclosure of higher costs by the state’s leading consultant, WSP, marked the first time that the rail authority publicly discussed the magnitude of its financial problems.
Until now, rail authority Chairman Dan Richard has repeatedly disputed assessments that its cost estimates were too low, including a confidential analysis by the Federal Railroad Administration in late 2016 that projected rising costs in the Central Valley and a projectwide cost estimate in 2013 by WSP.
The authority has asserted that it could build world-class tunnels through California’s geologically complex mountains much faster and for far less than the nation’s top tunnel engineers believed.
It gambled that it could issue construction contracts without the necessary land and then buy up the required parcels in a matter of months.
It counted on private investors to underwrite a big chunk of the project without giving them a financial guarantee that they would not lose money.
And it figured the easiest part of the system to build would be in the Central Valley, where farmland was cheap and there were no mountains to cross, allowing
it to quickly construct a functional part of the system as it proposed two years ago.
Those and many other bets failed, leaving the project in jeopardy.
The problems have not dashed the hopes of many proponents, however. Robbie Hunter, president of the state building and construction trades council, said the current 1,500 construction workers on the job in the Central Valley are not the main reason for his support.
“Our airports are crowded and the freeways are jammed, so we need this third mode of fast and clean transportation that people can afford,” Hunter, an ironworker, said. “The alternative will not be cheap either.”