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Secret High Speed Rail Funders Revealed

The business plan always assumed private investors will provide $10 billion or more to build the system, but finding investors was unsucessful. Finally, several willing investors seem to have been found.

 

The March 13 High Speed Rail (HSR) meeting organized by Senator Simitian examined many critical issues related to the project and revealed improved schedules, as well as the identity of two investors willing to pay for rail upgrades on the Peninsula.

HSR Authority (HSRA) Chair Dan Richard and board member Jim Hartnett proposed improving existing rail service by upgrading and electrifying tracks between San Jose and San Francisco, and in the Los Angeles area shortly after work is begun in the Central Valley. A new business plan will be issued soon showing faster completion and lower cost.  Richard acknowledged that HSR still hasn’t identified the essential private investors needed to complete the project.

Thursday, sources were identified to provide $1.456 billion to electrify and upgrade Caltrain along the peninsula, with $1.206 billion from HSR bonds and Federal grants.  Another $250 million would come from local sales taxes, bridge tolls, and state grants.  That still leaves the total project short by about  $10 billion.

I have contacts with informed sources that believe investors have been found and billions will be committed soon.   Goldman Sachs was hired to secure investors.  They will be paid to find suckers willing to invest $10 billion or more. Since the fee will be taxpayer money Goldman Sachs assured the HSRA that they will minimize charges and expect it to be under $200 million.

One investor that seems convinced HSR is a wonderful opportunity expects to invest $5 billion in the next year. He is very busy now, but should have resources available this summer. Goldman Sachs assured the HSRA that the Easter Bunny is totally on board and will invest billions.  

There are several potential sources of the other $5 billion in 2013. Right now the best bet seems to be Santa Claus, who also is eager to invest in such a high-return project as HSR.  Most of the elves also are fully committed to invest.  Dopey signed on at once and brought most of the other elves along, but Grumpy has been resisting and hasn’t agreed to participate yet. The reindeer have been holding out. Donner and Blitzen  raised many concerns about the HSR business plan.  They pointed out that they have been providing transportation for centuries and really understand the operations and business issues, and they have very little faith in the HSR business plan. Santa Claus thinks he can win them over in a few months, but if not his investment will be less than $5 billion.

Goldman Sachs apparently doubts the HSR business plan.  If Santa Claus does make a significant investment, Goldman Sachs will invest heavily in coal futures, expecting that with little if any return on his investment, Santa Claus won’t have the resources to stuff stockings with his normal gifts, and will have to substitute coal lumps.

Considering the lack of agreement and commitment by the Santa Claus organization, Goldman Sachs has lined up an alternate investor who appears ready to invest at least $2 billion, and maybe as much as $3 billion. The Tooth Fairy will invest if Santa Claus provides less than $5 billion. HSRA expects to soon be funded fully by these investors.

Michael March 30, 2012 at 10:06 PM
Ted, you should note that your quotes are from the Heritage foundation, not Amtrak. Hardly unbiased sources. While they did invent the free market health insurance mandate in Romney/Obamacare, they aren't the most neutral of sources. The most alarming of your statements is that the majority of US transportation funding is generated from user fees. Unless you live on an interstate freeway, and can ignore all the other street infrastructure for driving, this is just wrong. Also, you need to consider Amtrak as two separate entities. The first is a profitable passenger railway that operates regularly scheduled trains on multiple tracks (lanes) in the northeast corridor. This system dominates transit between cities in its service with over 50% of the riders between NYC, Philly, Boston and DC.
Michael March 30, 2012 at 10:07 PM
Cont. The second amtrak is not a competitive transportation system. It is a series of leisure trains that operate over freight railways in the US. Since amtrak has no control over the private railway construction or scheduling. These trains do not provide frequent, reliable service between their cities. These are unprofitable for many reasons, including their very slow speed limited by poorly maintained one track freight lines. These trains must pull over and stop every time a train wants to go by in the opposite direction. While this may be ok for freight, It does not work for passenger travel. Imagine if the interstates operated with one lane to be shared in both directions, where all the cars going north had to pull over to let cars go south. That wouldn't work well either. HSR will never suffer the issues of Amtrak outside the North East corridor. With dedicated tracks that allow trains to pass in opposite directions without stopping, HSR will provide frequent, reliable and cost effective service.
Ted Crocker March 31, 2012 at 05:04 AM
I do think HSR makes sense on the NE corridor (Acela) as only there do we have the population density to support it. We're going to continue to disagree on the viability of HSR within CA, especially so long as the HSRA continues to ignore the advice of organizations like the California Rail Foundation and people like Bent Flyvberg, and instead listen to the politicians. http://www.calrailfoundation.org/HSR.html
Michael March 31, 2012 at 03:31 PM
That's interesting. Contrary to popular belief, Los Angeles is actually the densest urban region in the US. Other california cities follow. While Manhattan may be a denser city core, the NYC region and suburbs are actually less dense than most CA metropolitan areas. http://www.governing.com/blogs/by-the-numbers/california-cenus-population-density-urbanized-areas-cities.html So if density is the issue, california leads the nation in urban density. Also, after the North East Corridor where you believe HSR makes sense, California is home to amtraks next two highest ridership routes, the Pacific Surfliner (LA-SD) and the Capitol Corridor (SJ to SAC). The san Joaquin between oakland and bakersfield has the 6th highest ridership even though it doesn't even reach LA. http://en.wikipedia.org/wiki/List_of_Amtrak_routes#Current_routes
Michael March 31, 2012 at 03:31 PM
Imagine how much better these lines would perform under HSR, that would unify the current fractured system, close the gaps, provide dedicated tracks and eliminate the single track delays and provide a line between LA and SF. For all the parameters that determine if HSR will be successful, California exceeds all other successful markets. SFO to LA populations and urban densities down the route through the valley exceed that of Paris-Lyon, making it an even larger market than the most profitable HSR line. Existing rail ridership on the 3 California funded rail lines (without SF-LA) are among the top 6 US Intercity rail lines. Also, The california rail foundation, beyond its convenient name has always been against HSR in California. They are one of the major opponents of Prop 1A. http://ballotpedia.org/wiki/index.php/California_Proposition_1A,_High-Speed_Rail_Act_(2008)

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