The California High-Speed Rail Project
– To Have The Train OR To Obey The Law: That Is The Question –
We have posted 42 reports, totaling more than 1,200 pages of financial and policy analysis over the past 47 months. Each has been given to the Governor(s), the California High Speed Rail Authority (CHSRA), the Treasurer’s office, the 53 key members of the Legislature (and their staffs) in >50 trips to Sacramento and much of it to key Members of the US Senate and House of RepresentaSves in 7 trips to Washington DC. It can all be found at www.sites.google.com/site/hsrcaliffr
22 April 2014 – Senate Transporta4on & Housing Commi;ee – Mark DeSaulnier, Chairman Presenta4on in support of Bills introduced by Senator Andy Vidak – 16th Senate District
The Governor
The Public
The Authority
Before You Are Three Documents They are the basis of my thesis that the choice before the Legislature is either to have a high-‐speed rail project that violates the law, or a State Government that obeys its laws
The first document, PLUS ÇA CHANGE, PLUS C'EST LA MÊME CHOSE, shows that among its misstatements and misrepresenta4ons, the DraY 2014 Business Plan con4nues to ignore key aspects of AB3034
The second document, IF YOU BUILD IT THEY WILL NOT COME, shows that for at least the first five years of opera4ng the IOS, travelers using the high-‐speed rail system will gain no cost or travel 4me advantages
The third document, WHY CAP & TRADE FUNDS CANNOT BE USED TO FINANCE HIGH-‐SPEED RAIL IN CALIFORNIA, is a compendium of four papers on the legal and financial folly of trying to subs4tute Cap & Trade Funds for Prop 1A bonds to match federal funds
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Three Examples Of Where The Authority’s DraY 2014 Plan Ignores The Law
From PLUS ÇA CHANGE, PLUS C'EST LA MÊME CHOSE
In Exhibit 6.3 [page 52] the Authority admits it will ini4ally need an opera4ng subsidy, viola4ng not just the worldwide reality of high-‐speed rail opera4ons and promises to voters, but most importantly AB3034. There is no provision in the law for needing ‘only’ a $50 million subsidy.
Despite Sec4on 8 (f) of AB3034 saying ““the en&re high-‐speed train system shall be . . completed no later than 2020 . . .” the Authority admits that not even the 300-‐mile Ini4al Opera4ng Segment (IOS) will be completed by 2020. In their Plan, IOS opens in 2022 and Bay-‐to-‐Basin in 2027
AB3034, Sec4on 2704.08 (K)(f)(2 demands the proposed high-‐speed rail (HSR) system have “trains opera&ng at speeds of 220 miles per hour . .” Now the 2014 Plan says, “ . . at speeds capable of exceeding 200 miles per hour.”
The Legislature and Administra4on are charged with not only passing laws, but also assuring government agencies adhere to them
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During The Five Years Of The IOS, The Authority Offers The Traveling Public An Inferior Service To Driving Or Flying
From IF YOU BUILD IT THEY WILL NOT COME
Drivers get between the metropolises’ suburbs at least 45 minutes quicker
Even using the Authority’s unbelievable $86 LA-‐SF fare, the costs of driving are s4ll cheaper
Flying takes lets than half the door to door 4me – a huge advantage for the HSR’s primary
demographic – the business traveller
Driving is cheaper and flying is more expensive between LA and SF when the Authority’s fares
are taken at face value
I know no be;er way to destroy the high-‐speed rail brand than providing inferior services Page 4
A Compendium Of Four Papers Details WHY CAP & TRADE FUNDS CANNOT BE USED TO FINANCE HIGH-‐SPEED RAIL IN CALIFORNIA
The Authority says the 300-‐mile Ini4al Opera4ng Segment (IOS) is not finished un4l 2022, which makes the proposed use of Cap & Trade funds illegal since construc4on pollu4on will not help achieve CA Air Resources Board’s interim carbon footprint reduc4ons for 2020 • The first paper shows the Authority’s flawed jus4fica4on for using using Cap & Trade funds rests on self-‐serving assump4ons. • The second shows that to advance the goals of AB32’s goals, auc4on proceeds must be used “to facilitate the achievement of reduc&ons of greenhouse gas emissions in [California] consistent with” AB32, which the project doesn’t. • The third points out how incompetent the Authority’s Green House Gas analysis is when only based on construc4on of the first 29 miles, while illegally promising “. . direct GHG emissions calcula&ons will be carried out for each subsequent construc&on package.” • The fourth paper details the history of trying to fund the HSR, ul4mately resor4ng to ‘finance by stealth’ and how li;le Cap & Trade funds will bring.
If Cap & Trade auc4ons achieve $1B/yr. – then assuming present-‐day total per mile costs, $200 million (20% of $1B) would help complete less than three miles per year
– WHICH MEANS TO BUILD ONLY THE IOS WILL TAKE ANOTHER 80 YEARS –
Among other lawsuits, AB32’s (Cap & Trade) very existence is being challenged since it passed the Legislature by a simple majority, while Plain4ffs argue that it is a tax and required a two-‐thirds majority
Page 5
The Authority has produced nothing more than asser4ons cloaked in secrecy, unpaid bills and broken promises, while pretending that poli4cal announcements are reality
¿ How Did California Squander Hundreds Of Millions ? Prop1A – the 2008 ballot measure that allows the State to match up to $9Billion with Federal or Private funds to build Phase 1 (SF-‐to-‐LA centers on high-‐speed rail) passed by 52.7%.
What did HSR proponents promise ? – HSR train would operate at 220mph – A one-‐way SF-‐LA 4cket for $50 – A LA to SF 2hour 40minute ride – 90 -‐ 117million annual riders – Phase 1 construc4on cost of $33Billion
– Phase 1 (LA-‐SF via HSR) opera4onal by 2020 – Savings of greenhouse gases
– No opera4ng subsidy
What are today’s CA HSR reali4es ? – no HSR train operates at 220mph – most operate <185mph. Now CHSRA speaks of 200mph ‘capabiliSes’
– A $55 fare went to $105. At $86 now. That’s 60% more; and sSll not based on 50 years of comparaSve fares.
– In 2013, CHSRA admi;ed there was no evidence to back the 2008 claim. Minimum is 3 hrs. and only if it crosses the Tehachapi mountains at +200 mph
– Now less than 40 million annual riders
– In 2011 CHSRA admi;ed costs were $117B. First 130 miles (the IniSal ConstrucSon SecSon) costs have risen 50%; so a $150 Billion Phase 1 is feasible
– The IOS is now promised for 2022 – Phase 1 is now promised for 2030. ConstrucSon start is already 20 months late
– ITS Berkeley says the project will be carbon neutral in 70 years – How can fares be a quarter to half or less of worldwide fares and OpEx be half or less than the worldwide HSR experience ?
This has been my colleagues and my focus for nearly four years
Do you
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Iñaki Barron de AngoiS, Director of High Speed Rail at the InternaSonal Union of Railways/UIC, presented this chart to the US Congress On April 19th 2007
At about 2.5 hours – 270 to 350 miles – all HSR system’s share of riders drops precipitously. CHSRA’s SF-‐to-‐LA downtown to downtown route is approximately 485 miles
The Travel Time Promise (2:40) Is Not Supported By Facts
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In February 2011 the IUR told the Authority "Generally speaking Opera&ng Costs can be covered by farebox revenues." Interna4onal HSR Revenues and OpEx reflect ±40¢ per passenger mile (PPM); yet the Authority plans its revenues at about 23¢ PPM.
!
CHSRA Proposes Its Fares Will Be Half Of Reality And Will Operate At A Quarter Of +Thirty Years Of Worldwide High-‐Speed Rail Opera4ng Experience
Avg. SF-‐LA airline fares = 29 ¢ PPM
We presented an earlier version of this graphic to Messrs. Richard, Morales and Rossi on 17 November 2011. They said: “We’ll get back to you on that.”
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AB3034 §2704.08 (j) Says CHSRA’s Train Cannot Have An Opera4ng Subsidy
Despite claims of ‘transparency’ and laws that are supposed to give the public access to the workings of government agencies, we found that ‘outsiders’ have no access to the soYware and algorithms that CHSRA’s contractors use to compute and promulgate statements on Opera4ng Expenses (OpEx) and profits. ‘Outsiders’ include the US Government Accountability Office (GAO) that noted the inadequacy of OpEx data
We showed that on a per passenger mile basis CHSRA’s fares are a frac4on of worldwide HSR fares
To compute profitability, we made a Public Records’ Request for the data and soYware used to calculate Opera4ng and Maintenance Expenses (OpEx)
The key phrase is “This is trade secret informa&on pursuant to Evidence Code sec&on 1060 , incorporated into the California Public Records Act through Government Code sec&on 6254 (k), and therefore, will not be provided”
NOW THE AUTHORITY’S BUSINESS PLAN ADMITS THE PROJECT WILL NEED A SUBSIDY DURING THE INITIAL OPERATING SEGMENT’S OPERATIONS
(California High-‐Speed Rail Drak 2014 Business Plan, Exhibit 6.3, page 52)
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? How Can CHSRA’s Chairman Claim HSR Systems Are Profitable ?
Revenues
Account #1 Expenses to operate
rolling stock
Account #2 Expenses to maintain rails, rail beds and electrical distribu4on systems
Account #3 Na4onal Health
Care and Pension Systems
To integrate Europe’s 27 government-‐owned and operated rail systems, EU Direc4ve 91/440 demanded separa4on of rolling stock organiza4ons and accounts from fixed infrastructure organiza4ons and accounts
Taken care of in naSonal health and pension programs
Account #1 is shown publically
“The public authori&es/society generally bear the costs of inves&ng in new infrastructure, construc&ng and maintaining the infrastructure and related equipment . . . Economic calcula&ons for infrastructure projects in Europe include all the socioeconomic benefits of future rail infrastructure and its contribu&on to society . .“ Lemer and policy statement from the Director General of the InternaSonal Union of Railways to Roelof van Ark, 8 February 2011.
As a privately-‐operated HSR system, CA’s train must obey US accoun4ng systems that are based on GAAP, a SINGLE, unified accoun4ng system
USA -‐ One account -‐
European Union -‐ Three or more, accounts -‐
Government infrastructure owners (e.g. RRF, ADIF) oken contract with operators for the maintenance
Health Care, Pension Systems and Liabili4es
Expenses to maintain rails, rail beds and electrical distribu4on systems
Expenses to operate rolling stock
Revenues
State, federal and local taxes
No men)on of taxes because they don’t pay taxes
Page 10
" News that the Transbay Terminal is something like $300 million over budget should not come as a shock to anyone. We always knew the ini&al construc&on es&mate was way under the real cost. Just like we never had the real cost for the Central Subway or the Bay Bridge or any other massive construc&on project. So get off it. In the world of civic projects, the first budget is really just a down payment. If people knew the real cost from the start, nothing would ever get approved. The idea is to get going. Start digging a hole and make it so big, there is no alterna&ve to coming up with the money to fill it in." (Former Speaker Willie Brown’s July 28th 2013 column on TransBay Center in the SF Chronicle )
A Former Member Of This “August Body” Spoke The Truth About The High-‐Speed Rail Authority’s Strategy
Willie Brown ‘Told It Like It Was’ – Lie To The Public, But Push Ahead – ! And Instead of Going To Jail, Willie Got The Bridge Named AYer Him !
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Is The High-‐Speed Train Just Another Case Of The Way It S4ll Is ?