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Funding challenges cloud high-speed rail's future

Original post made on Nov 12, 2013

With California's high-speed rail system preparing for a groundbreaking in Central Valley, the fate of the $68-billion project remains clouded by allegations that the agency charged with building it has violated state law -- an argument that was at the heart of a Friday court hearing in Sacramento.

Read the full story here Web Link posted Tuesday, November 12, 2013, 9:50 AM

Comments (9)

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Posted by resident
a resident of Charleston Meadows
on Nov 12, 2013 at 12:29 pm

IAW the SF Chronicle 11.12.13 "Land Acquisition for bullet train low speed so far" the eminent domain acquisitions for land are focusing on the Merced to Fresno segment. Assume the next segment would be Fresno to Bakersfield which is the busiest transition point for rail systems in the valley corridor. The acquisition of land via eminent domain and lease back is the mechanism for providing the funding. They cannot project when they will break ground.

This same funding mechanism was projected for the Maybell project - build 12 homes at market price to fund the senior housing. This is the same funding mechanism or the SF Warriors stadium - they need to build the two condominium towers to fund the cost of the stadium. How that funding mechanism plays in the peninsula corridor appears to focus on the San Antonio to Oregon Expressway portion - the CC's preference.
San Mateo currently has a large housing project that was previously the race track that is next to the Caltran tracks - the train featured in their ads. San Carlos is currently attempting to approve a massive housing project - 8 city blocks along the Caltran corridor. Assume that eminent domain will not be exercised where there are currently large projects being built on the peninsula corridor. These new developments define the ability to install HSR on the peninsula corridor. Mountain View has the Lite Rail at the Caltran station so the lower end of the valley is defined by the existing transportation systems.
The heavy development on the corridor suggests that HSR will not use the corridor if it cannot fund via eminent domain.
Suggest that the city not overreach for expensive consulting fees as it could be a waste of money. We are not defining the HSR corridor - the other cites with large developments are defining the limitations of HSR within the corridor end to end. San Francisco and the Transportation Center will also define the HSR route.


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Posted by Norman
a resident of Menlo Park
on Nov 12, 2013 at 1:17 pm

The $68 billion price tag does not include the interest payments on the debt during the 20 year buildout (this has been verified by the California Legislative Analyst's Office). I estimate that the interest payments will add about 40% to the cost and that's not the inevitable cost overruns. I say let us just run a Maxibus operation up and down the state and save $100 billion.


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Posted by YR
a resident of another community
on Nov 13, 2013 at 7:23 am

The shallow, parochial Nimby's in Palo Alto are an embarrassment to California. If these nitwits had ever traveled outside their suburban wasteland, they would know high speed rail is highly successful in Europe and Asia. Most of the world's top 20 industrialized nations are building high speed rail. Even Saudi Arabia, the world's leading oil exporter, is building high speed rail. The airline lobby in California is fighting high speed rail tooth and nail, since the airline lobby knows how successful high speed rail has been in Europe, killing short-haul airline routes. Now everyone takes the Chunnel from London to Paris.


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Posted by resident
a resident of Charleston Meadows
on Nov 13, 2013 at 8:36 am

YR - where do you live? Why are you focusing on PA relative to HSR? The definition of HSR is San Diego / LA to San Francisco / Sacramento. PA is only a dot on the map within the whole landscape of this project - and it does not even rate as a stopping point. San Jose is a bigger dot since it has multiple transportation projects in place - including the ACE system. The passage corridor in question is under the management of Caltrans which is the lead on this project. They take direction from Sacramento. HSR going through the corridor is questionable since the logistical considerations and funding required is not there. Any financial considerations are pointing to existing right of ways - they have already changed the projection in the Central Valley. California politics in this matter include the Central Valley and LA who have more at stake here. They are the big dogs. The actions in the project are well documented and continually supported in the large, major newspapers. PA is not mentioned in the major papers specific to HSR. No one is disputing the need for HSR and everyone is interested in the progression of events. It is Jerry Brown's job to compete with Europe and Saudi Arabia. He is calling the shots.


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Posted by Crescent Park Dad
a resident of Crescent Park
on Nov 13, 2013 at 10:49 am

Kind of a blunt and simple question: if HSR is such a good deal, why hasn't any of the expected/hoped for private investors stepped up to the plate? Better yet, if HSR is such a good deal, why hasn't any of the for profit transportation companies decided to do this project themselves?

Simple answer: it is going to bleed money. Which is why this particular version of HSR has to stop before we waste any more tax dollars.


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Posted by Duh
a resident of Fairmeadow
on Nov 13, 2013 at 11:22 am

Actually, the expected/hoped for private investors are SUING to get this project stopped. The reasons: it simply is not a good investment; the cost has been dangerously underestimated; the ridership has been dangerously overestimated; the state cannot afford to pay fair market value for the land and private properties it must purchase. This kind of thing will bankrupt California once and for all, and there will never be a profit, not even a break-even. Historically, the only HSR to make a profit has been the Shinkansen in Japan. Most of the others, such as the TGVIJTRZN in France, are underwater in debt, their governments thinking of mercifully ending them.


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Posted by Robert
a resident of another community
on Nov 13, 2013 at 11:33 am

>Better yet, if HSR is such a good deal, why hasn't any of the for profit transportation companies decided to do this project themselves?

Simple answer, transportation in this country isn't really based on a "profit" model. I don't think we had investors lining up to finance the widening of the 101 either...


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Posted by resident
a resident of Charleston Meadows
on Nov 13, 2013 at 12:15 pm

DUH - IAW the article dated 11.12.13 in the SF Chronicle when "eminent domain" is used for a state project there is a mathematical application concerning the price for the land which is not tied to market value. It is based on assessed value for tax purposes with other mitigating situations. There is actually an eminent domain lawyer in Walnut Creek mentioned in the article. So the state is paying people for their land/facilities below market value. People in Fresno now have to confront this situation. Translate that situation to California end to end and you have a fairly ugly situation. Assume that now the state is leasing back the land at market value and the differential then funds the project. Since the project has not broken ground yet assume that is planning to work off the differential in payment for land vs lease income.


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Posted by Julian
a resident of Palo Verde
on Nov 13, 2013 at 7:33 pm

HSR: a badly designed project, and a badly designed project with good buzzwords is still a badly designed project.


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