Aaron Fukuda, Citizens for HSR Accountability
These are huge dollars, but these are not their huge dollars, these are our huge dollars. I think we need that extra year to make this decision. California is facing a credit downgrade and a budget shortfall.
In 1880 Union Pacific bosses used Colts and Winchesters to confiscate farm property with the support of Governor Leland Stanford, then head of Union Pacific. Today the HSRA is using lawyers and eminent domain to do the same.
Agriculture was a $1.7 billion industry in Kings County last year. The most prolific milk-producing cow in the world lives in Kings County.
Authority is ignoring economic devastation resultant from dairies going offline. UC Davis Agriculture has studied this.
We strongly recommend you not give the Authority the money from prop 1A.
Elizabeth Alexis – CARRD
First asked for an honest assessment of the cost of this project, we are very happy to see one. Members of the assembly will have a very difficult decision ahead of them. Do we fund a project that is not yet ready, or do we wait another year? You are being asked to fund a project where you will have either committed to a $6 billion incredibly visible white elephant or committed to 20 years of begging in Washington. Is there validity to the criticism that this could be done for cheaper? The old ridership model is still being used to create these estimates.
You need another year to gather data. You need a new ridership model. You need a real cost of not doing this project. You need to know, alternately, exactly what the alternative transportation plans are, so you know what kind of growth to expect throughout the state in terms of infrastructure spending.
You still do not have an independent model and you absolutely need that. This is the first time in over two years that the Authority wants to sit down at the table with us.
I urge you to figure out a way to get another year on this.
William Grindley – Community Coaltion on HSR
Two fundamental variable to decide on financial viability: ridership and profitability
No system is profitiable. Exhibit 1 is the official position of international union of railways. Says that all international railroads are there to serve the public good. The biggest national railroads take 2-3 billion annually. They’re not profitable.
Daniel Krause – Californians for High Speed Rail
We overall applaud the professionalism and level of detail and honest assessment of the challenges.
Appreciate the very conservative assumptions in the plan, but would like to also see a more optimistic forecast for completion date and profitability. It makes sense to also plan for to a changing economic forecast. There is a turning of the tide in Washington and the atmosphere is beginning to favor infrastructure spending.
Jim Wunderman –President & CEO, Bay Area Council:
Some might characterize HSR as something of a dream. I disagree with that. I believe that high-speed rail is an absolutely necessity for the state of California. For years we have failed to invest billions of dollar in infrastructure. We haven’t prepared for transportation challenges and climate change.
We should remember the 100,000 jobs that HSR will bring to the Bay Area.
The updated business plan doesn’t answer all the questions we have. It is not a static document, though. It changes as the dynamics of the situation change.
Cesar Diaz, Legislative Director, State Building and Construction Trades:
We are on the cusp of building HSR, making that project a reality. We are about to embark on the largest public works project in the U.S. Construction industry has suffered the brunt of the economic recession. Central Valley has 40-50% unemployment in some areas. Building trades are seeing 30-35% unemployment. Our transportation system is overtaxed. In 20 years are population will double. There’s no way that our economy can sustain that. We can’t just rely on expanding highways and airports and adds to our dependence on foreign oil.
Some critics will say it’s too expensive to build, that we should just expanding our highways and airports. That’s a $170 billion alternative.
Farra Bracht - Managing Principal Analyst, Legislative Analyst's Office
Initial Review of new business plan have identified several issues that merit legislative consideration.
- Funding – only enough funding now for the initial segment. Concerned about where HSRA will get the rest of the funding.
- Economic forecasts – too rosy, creates a positive spin, doesn’t necessarily account for jobs lost.
- Not enough details provided about the initial construction segment. Would have been important to provide capital costs, operating costs, the cost of connecting to Amtrak, and the economic benefit of this segment if it were to end up operating alone.
- Does the plan meet the requirement of Prop 1A? Will the trains be fast enough?
Will Kempton- Chair, Peer Review Group
Still reviewing the document. “The plan is a substantial improvement over previous plans. One of the things that is most heartening: the blended approach is something that is welcome news. We have long sought that approach and think it is a reasonable approach."
Rich Gordon: if we make the investment in the ICS, it parallels an existing Amtrak line in the central valley. How many stations would be removed? Would there be an impact on service in the Central Valley if the ICS is built and essentially replaces the existing survive? Mr. Van Ark, you said the initial segment would be tested as high-speed rail. Does that mean the initial segment would be electric, not diesel?
David G. Valadao (Assemblyman, Committee Member, Budget Subcommittee #3): Where do you expect to get the votes for $55 bilion more, even if Obama gets a second term. Do you really expect us to believe we’re going to get $55 billion for this project?
David Richard: our focus is on the IOS - $30 billion. We donm’t need to expect $55 billion from the feds.
David V: They’re looking for almost a trillion dollars in cuts.
David R: if we don’t do this, which is a policy choice we can make, we will have to spend more than twice those dollars for equivalent transportation.
If we get to the IOS it changes the dynamic, it brings in private dollars.
David V: I remember Mr. Van Ark coming into my office saying private money was lined up. I was told in my office that we expected to have private financing for this project.
Jerry Hill: Is it possible to have any private funding before we finance that IOS?
David R: it would be highly unrealistic to suggest that the capital markets would make any kind of commimtment to a capital-intenseive infrastructure project. We’re looking at future sales.
HSR Board Member Michael Rossi:
Ridership model: I’ve spoken to the reps of CARRD, and spoke to Prof Madanat of ITS. He and I have spoke and agreed… it is our belief that the ridership numbers will not dramatically change with a revised theory. We will nonetheless be modifying the ridership theory in the next revision.
The model would have to be off 83% for us not to make our numbers.
One voice that has been critical of our plans in the past has been from the Legislature’s peer review committee. They’ve been critical of a lack of business plan.
Moving forward with a publicly financed project, we will be sensitive of those concerns. We also talk in the report of the alternative costs. HSR has been framed as a “luxury decision”—wouldn’t it be cool to have these cool fast trains.
Our state is going to be growing. The central valley of California has 4.2 million living there. Serving that population serves more people than half the states in the U.S. I came on as a skeptic about starting in the Central Valley. We get more track per dollar there than any other place that we would build. Secondly, it’s the one area of the state that we really don’t have an existing rail system that we can build on. Acquiring that right-of-way is therefore crucial.
HSRA Board Member Dan Richard:
This plan represents a significant for the HSRA in several significant ways.
1. Fundamental philosophical shift from being a separate standalone system without any regard for other systems in the state.
This business plan builds on a philosophy that this HSR must be integrated with existing rail systems.
2. We are committed to providing you real numbers about capital costs, operating costs and ridership numbers. Part of that, to our detriment in the public relations sphere, is that we present it to you in 2010 dollars but also what the true cost is going to be using inflated dollars, and that’s where the very high dollars come from. That’s at a 3% inflation rate, which is higher than what it has been in recent years. If the next three years stay the same as the last three, you can shave $5 billion off the cost.
Met with Japan Rail and the Japanese government. They opened their first bullet train in 1964 and haven’t stopped building. They keep opening trunk and regional lines. That’s the path that we would go down here.
We have the ICS, and that would build up to 130 miles of this track in the Central Valley. That becomes the spine. After that is the one we really ask you to focus on as a crucial step. That’s when we put the Initial Operating Segment into being. Either we build it south to the San Fernando Valley, or north to San Jose.
That IOS would be in service by 2021 and have a cost of $30 billion, but it would bring HSR to California, and to America, and it would serve millions and millions of people, and it would have a net operating profit. It would establish ridership and attract private investment.
The Central Valley is the only place in the alignment that allows for testing of trains at 250 m.p.h.
I can tell you from the projects I ‘ve worked on around the world, that PPPs—public/private partnerships—all started with public investments, and then go to a revenue-generating stream. That is when you bring on the private sector.
There is, for a system as huge as the Cal. HSR system, and this being the largest in the country, no shortcut for this project.
Roloef Van Ark wants to "clear up some misinformation":
1. “All HSR systems in the world operate at a profit”—let us not continue to argue this issue. Many operators of HSR in the world are private companies, or even listed companies, and they make profits. As operators of either the rolling stock or the infrastructure, HSR is a very interesting investment possibility around the world, clearly needing public investment to start them and to pay for the infrastructure.
2. Don’t compare California HSR to Northeast Acella Amtrak system. It serves the nation’s most congested corridor. Operates at an average of 70MPG. Our trains will travel more than twice as fast. They also only run 20 trains at a time. Even then, however, Amtrak operates at a profit. Acella made 42% more revenue than their costs last year. Even more so this year. They subsidize other loss-making sections of Amtrak.
3. There are some statements being made about ridership and the possibility of having ridership numbers that don’t match with population numbers. Mike Rossi will talk about that.
4. Phased Implementation: this is the way to go, along with blended systems that ‘bookend’ each end of the system.
Roloef Van Ark, CEO of California High Speed Rail Authority:
Will talk about how they put the plan together, and to bring some clarity over some areas of miscommunication.
Worked about six or seven months on the new business plan.
"You requested transparency, you requested the truth, I believe that this business plan is based on fairly conservative figures."
"We in the U.S. do not have a lot of experts in high-speed rail. That expertise if very, very limited. Many are quick to comment about a lack of understanding about how HSR works. How it works, how it should be built, and how it should be funded. We’ve used experts throughout this plan… the best in the U.S. Our experts have been involved in Holland, UK, Spain, Taiwan, China.
“These people really understand what high-speed rail is about.”
Rich Gordon's opening remarks:
"Today we take an important first step in what will inevitably lead to some key decisions.
"There will be a process over the next several months as the California Legislature working with the High Speed Rail Authority and the [Obama] Administration. Begins to determine what course we will take as we move forward.
"Today is an opportunity for the authority to present issues related to the business plan, for key members of the public to respond.
"Today is the start of a process of providing information, gathering information, and gaining levels of understanding.
"That process is necessary if we are to make good decisions for the state of cal.
"Decisions nneed to be carefully considered, and carefully weighed."
Assemblyman Rich Gordon (D-Menlo Park) greets panelists, attendees at Palo Alto City Hall.