High-speed rail price tag rises again

New reports show spiking cost of two Central Valley segments of proposed rail line

California's planned high-speed rail line could cost billions more than the state's initial projections indicated, according to newly released documents from the agency spearheading the project.

The California High-Speed Rail Authority released Environmental Impact Reports for two Central Valley segments of the proposed line, which is slated to stretch from San Francisco to Los Angeles and reach speeds of 220 mph as it passes through the middle of the state. The two reports -- covering the Fresno-to-Merced and Merced-to-Bakersfield segments, respectively -- indicate that the combined cost for the Central Valley section would be at least $10 billion and could be higher than $13 billion.

Previous estimates had the price tag for this section of the line at about $7 billion.

The revisions should come as no surprise to legislators and critics of the controversial project, for which voters approved a $9 billion bond in 2008. At the time, the project carried an estimated price tag of $33.6 billion. The rail authority in 2009 revised the projected price tag to $42.6 billion -- a figure that local watchdogs and state analysts claimed was still too low.

The Palo Alto-based group Californians Advocating Responsible Rail Design (CARRD) released its own projections in February, estimating the price tag at about $65 billion. The group used details from the rail authority's own plans to come up with the estimate. In May, the state's nonpartisan Legislative Analyst's Office issued its own report largely confirming CARRD's estimate and projecting the cost of the project at about $67 billion.

"We knew the costs were in a different ballpark," said Elizabeth Alexis, co-founder of CARRD. "We wanted the authority to start talking about that ballpark sooner or later.

"A project of this size is not in the realm of financial possibilities," she added. "So you either just say no to the project or you make some changes."

Legislators have also been consistently skeptical about the rail authority's financial projections and its business plan. Sens. Joe Simitian and Alan Lowenthal have grilled rail authority officials at numerous committee meetings over the past two years and tried to get the authority to release a more realistic business plan before it could receive state funding. Simitian's provision tying state funds to a new business plan died last year when then-Gov. Arnold Schwarzenegger struck it down with a line-item veto.

Rachel Wall, spokesperson for the rail authority, attributed the increase in the cost projection to the additional engineering work that has been performed since the original estimate was released. She said the agency has always assumed the cost estimates of a major infrastructure project such as high-speed rail would be dynamic.

"As we've done further engineering and worked further with communities to address their designs and concerns, the estimated costs have changed," Wall told the Weekly.

She said the rail authority plans to release an updated business plan in October with a revised cost estimate for the entire system. She said the authority expects the new estimate to be higher than its current $43 billion price tag.

The new concerns about high-speed rail's final price tag have not deterred state and federal officials from proceeding with the design of the new train system. This week, in fact, U.S. Transportation Secretary Ray LaHood authorized a $179 million grant to California for various rail-related improvements. The grant includes $86 million to the rail authority for construction of the Central Valley segment.

The rail authority will be accepting public comments on the newly released EIR between Aug. 15 and Sept. 28. The documents are available at the rail authority's website,

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Like this comment
Posted by Realistic
a resident of Crescent Park
on Aug 10, 2011 at 10:11 am

I think the big HSR fear and debate has died down (on these Town Hall forum boards and elsewhere) because people are starting to realize that HSR will never come to pass, given its huge bill and the fact that the State and the Feds are under tremendous financial pressure.

It's starting to feel like tilting at windmills. I wonder if others feel the same way.

Like this comment
Posted by Robert
a resident of Stanford
on Aug 10, 2011 at 10:53 am

It's too soon to relax. There is still a potent web of special interests pushing this fiasco: construction companies, labor unions, Gov. Jerry Brown (who's indebted to the unions for his election), consultants, CHSRA and its executives, and many politicians. Brown asserted just the other day that he still supports HSR. Given the economic fragility of the day, it might seem improbable that this project will be built. But the crafty strategy that will probably be followed is to get it started in one place -- even in the Central Valley ["train to nowhere"] -- spend the few billion they have to build that segment and then make the argument that " we have to finish it so that the money we've already spent won't be spent in vain." (This is "the sacrifice trap argument." It's also used in persisting with unpopular wars: "We can't abandon the war effort otherwise the already dead will have died in vain.") So, we have to remain vigilant to prevent another $100 billion from being added to California's debt, and that doesn't reflect the fact that HSR would likely run at an annual deficit thereby requiring even more subsidies from taxpayers.

Like this comment
Posted by Ridewaves
a resident of Los Altos
on Aug 10, 2011 at 11:01 am

I don't think there is anyone in politics willing to step up to the plate and stop this project no matter what financial hole it puts the state into.

Like this comment
Posted by Garden Gnome
a resident of Crescent Park
on Aug 10, 2011 at 11:11 am

This is all the fault of those nefarious terrorist tea party extremists.

Or somebody. Or reality.

Like this comment
Posted by Bill
a resident of Barron Park
on Aug 10, 2011 at 11:44 am

It's always interesting to me that those who want the HSR refuse to answer the objections to it, e.g. upward spiraling cost, poor business plan, too high ridership estimates, disruption of communities, no private companies willing to invest, State budget realities, etc. etc.

Stop pouring taxpayer money into a black hole.

Like this comment
Posted by Frank
a resident of Ventura
on Aug 10, 2011 at 11:52 am

The issue is why do these government projects always cost way more than the estimate?

This is not specific to HSR - look at the bay bridge or almost any major project.

I'd like to know what particularly they got wrong here (this article doesn't go into that). But for the Bay Bridge - the original estimate was for a Dunbarton or San Mateo style bridge (400 million comes to mind) but the east bay folks (Jerry Brown among them) said we need a statement and now we've got one for a few billion.

Likewise for HSR around here the issue is we could (maybe) build it within budget but the cities are asking to burry it which is much more expensive.

HRS could indeed use existing rails with minimal improvements up the peninsula at a fast but somewhat lower speed - but I think they resist that because they fear never being able to complete the project and bring it up to what they expect.

I would like to see us complete some sort of HSR project. I fear the cost of the "perfect" system.

Like this comment
Posted by Anony Mouse
a resident of Midtown
on Aug 10, 2011 at 12:01 pm

Anony Mouse is a registered user.

It's always interesting to me how the opponents of HSR have presented no vision for how to meet our transport needs in the coming 50 years. Rail needs to be part of a comprehensive plan. Do nothing is not a plan. In the next 50 years, the personal car will be under extreme pressure due to oil scarcity and higher prices due to more cars on the road in India and China. Air travel will face those same challenges. There is no appetite for building new runways anywhere in the United States, so air capacity is rapidly reaching capacity.

One of the things that makes the United States "exceptional" is infrastructure. This was all built with public investment. Interstate highways? Yep. Transcontinental railroads? Big time. Airports and Air Traffic Control? For sure.

Those who argue that the private sector should foot the bill for this will not be able to cite a single infrastructure project in the US that was not built without major public investment. (Southern California private toll lanes? They piggyback on existing publicly finanaced infrastructure.)

We must prepare for the future. It's not hard to see that California's infrastructure will not be able to handle the increased population in the coming 50 years.

Do nothing is not a plan.

Like this comment
Posted by Robert
a resident of Stanford
on Aug 10, 2011 at 12:29 pm

@ Frank You wrote this: "I'd like to know what particularly they got wrong here (this article doesn't go into that)."

Frank, they didn't 'get anything wrong.' These are smart people. They simply lie; they start off with a low-ball estimate so that the deceived voting public will think, 'hey, that's not too bad, we can afford that.' Then the duped public, with zero knowledge of the route that had already been chosen, voted barely (52.3%) to pass Prop. 1A. Then the project advocates gradually raise the price tag over and over again, giving vague reasons why they missed it the first time: "engineering costs" and "land-acquisition costs", as if they couldn't have anticipated those and built them into the original cost estimates! If this fiasco./boondoggle/white elephant is ever built, we'll see that the actual price tag is MUCH higher than their most "realistic" and most recent estimate. The public will have been fleeced, our kids will be paying higher taxes for decades to pay off the debt and subsidize the annual budget deficit, and the construction companies and consultants and CHSRA execs will laugh all the way to the bank.

It's a classic pattern.

Like this comment
Posted by Douglas Moran
a resident of Barron Park
on Aug 10, 2011 at 1:15 pm

Douglas Moran is a registered user.

Elaborating on "Robert":

The practice of lowballing costs for public construction projects is so routine that they have a name for it: getting "a stake in the ground". In other fields, the standard name from economics - "sunk costs" - is used to help remind you to keep from throwing good money after bad. "Stake in the ground" exists to obscure that you might be making a bad decision.

Like this comment
Posted by Transport needs
a resident of Esther Clark Park
on Aug 10, 2011 at 2:36 pm

HSR was designed to assist with future transportation needs. Or more precisely to assist other things (such as a planned living environment for a desired demographic outcome) via transportation infrastructure. It never really was designed for transport needs.

The vision for transportation is to fully leverage the internet, fully leverage our existing population centers by greatly improving local mass transit, and incrementally improve our existing airports, roads, cars, and rail as we see what we need. Things like self driving cars, multi-owner cars, etc. might change the landscape significantly.

Asking another countries' companies to build us an HSR because some countries have them is just silly. Even if that country lends us the money to do it.

If we do HSR, we should insist that we end up with the business, technology, and spin-off. And start off with our own financing. And it should be done after we have effective local mass transit.

Like this comment
Posted by Morris Brown
a resident of Menlo Park
on Aug 10, 2011 at 4:33 pm

A comment like the one above, stating that debate has died down because HSR will never happen is without substance.

1.) Debate has not died down; read the papers or the blogs. It is more active than ever.

2.) The Authority has over $6 billion to spend in the Central Valley. Over $3 billion of these funds came from the Federal Government. The State legislature will fight to the end to not lose these funds, regards of how useless what they presently plan to build will be the result.

This is a high priority of the Democratic party caucus in Sacramento.

So it should be stopped and should have been stopped long ago. Right now they are spending over $700,000 each day doing studies etc. The waste is un-believable as the Authority is rushing to meet a Sept 2012 deadline to start construction, or else they will lose the Federal dollars.

The State LAO office issued a devastating report some months ago, which wanted at least to halt the present spending. Yet the legislature ignored their recommendations and has continued to fund the project.

Today the State controller came out and stated that revenues were already over $500 million short of their rosy predictions. As this trend continues, shortly triggers in the just passed State budget will start to cut away at valuable programs the State needs much more than this train.

It is more than time to get legislators like Simitian off of his stump speech of "I'm in favor of HSR being done right" and get him to vote no more funds because this project can't possible be done right.

Like this comment
Posted by resident
a resident of Charleston Gardens
on Aug 10, 2011 at 9:27 pm

The debate has died down on the Peninsula, because thats precisely what the CSHRA and their union and developer buddies WANTED to happen - they specifically said - we're starting with the central valley because it will face less opposition, and once the 'stake is in the ground' it will be beyond too late for the opposition in the Peninsula to stop it. Thats exactly what Lahood and Mica stated when they decided to make the federal stimulus funding specifically contingent on starting in the CV.

So take heed of the THOUSANDS of homes and businesses and city resources that they'll be taking by eminent domain in the "easy" central valley segments in the just released EIR.

I wouldn't recommend thinking you're off the hook Palo Alto. If you rest now, kiss your assets good bye.

Like this comment
Posted by Wayne Martin
a resident of Another Palo Alto neighborhood
on Aug 11, 2011 at 8:36 am

> The issue is why do these government projects always cost
> way more than the estimate?

The answer to this question is not easy, because there are many aspects to the matter. However, there is a common element in all of the problems in large projects: "Project Management". Bottom line--it's very hard to find good project managers. And .. projects without good project managers are in trouble .. starting from Day 1.

California has a very bad track record with "big ticket" projects. I went through some on-line news archives, and put together a file of articles on projects that have been authorized by various elements of government, over the years, that have failed--

CA Large Project Failures
Web Link

Government does not see failure in the same way that the private sector does. Companies that fail go out of business, or the divisions that fail are terminated. Individuals involved with failing projects often are fired. But in the Public Sector, it takes a long time to cancel projects (if in fact they are actually cancelled), and project members rarely lose their jobs if the projects are cancelled.

There is very little in the way of on-going auditing of costs in Public Sector projects. (One possible exception is the construction of public schools, which are under the authority of the Office of the State Architect.)

An example of a publicly-funded project that is out-of-control is the so-called Stem Cell Research project, that was funded with $3+B in public money. We are beginning to see articles in the papers from the "managers" of this program that they need billions more, and that they will not be able to provide any promises of specific results from the expenditures of the current, or future, money.

If the HSR were to begin construction, fraud and theft, would be massive--since there would be no oversight, or auditing, that would have the power to refer cases to the State Attorney General's Office for prosecution.

Other than Caltrans, California has developed no ability to effectively manage "big ticket" projects successfully. The HSR project promises to be one of the costliest, and largest, failures to date.

Like this comment
Posted by Richard Peterson
a resident of another community
on Aug 11, 2011 at 4:26 pm

lets just go with the blended rail system or have the HSR end at San Jose and high speed rail passenger would have to make connection with Caltrain. San Fransisco and San Jose are only 45 Miles appart there no reason to have a train exceed 80 MPH between San Fransisco and San Jose

bypass Palmdale and have the high speed rail go through grapevine,

Like this comment
Posted by ODB
a resident of Old Palo Alto
on Aug 12, 2011 at 12:28 am

The grades through the Grapevine are too steep for rail. That's why the existing rail lines go around those mountains. At the foot of the Grapevine the train would still have to jog east to pass through Bakersfield.

Like this comment
Posted by Nayeli
a resident of Midtown
on Aug 12, 2011 at 4:42 pm

Who did NOT see this coming? Two years ago, I mentioned that this would probably cost $2-5 Billion MORE than estimates. After all, this is California...and such gross underestimates are common.

Sorry, but further commenting on this topic has been closed.

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