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Old 07-07-2012, 12:09 PM   #21
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But seriously, I would doubt ridership would be there to sustain such a system. If there are actually that many folks who wish to travel to/from these points, I think they will STILL use their cars. By the time one drives to the train station, parks for (what? $10/day) and then pays for a ticket ($$) they still have to rent a car at their destinations in most cases ($60/day??). I don't see an economic or probably even a time savings, though I've only driven in CA a few times.

The idea of mass transit, high-speed rail, etc. sound great on paper. But it will be difficult to beat the convenience (maybe even the cost) of personal car for most trips IMO. Obviously, YMMV.
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Old 07-07-2012, 12:15 PM   #22
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I'm all for public transportation. Californians really need more than we have at the moment. The politicians are trying to change that. But already there's possibly yet another proposition against the train. Europe has great mass transit and the East coast has a lot. Here if a person can't drive then it's harder to get around. As for buying the bonds well that issue might be mute come the next election cycle.
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Old 07-07-2012, 12:19 PM   #23
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California has approved the initial sale of bonds in the amount of $4.5B to start a high speed rail project. They now will get another $3.2B from the fed for this project. It will build the first segment from Madera to Bakersfield and will end with the total rail line from L.A. to Sacremento. Total cost $68B. Would you buy these bonds?
This is one of those long term projects with lots of opponents to it. The talk is all about the "railroad to nowhere" between Madera and Bakersfield, but there are a number of other parts, including electrification and roadbed upgrades of the Caltrain line in northern California that will eventually b part of the high speed lines route, and a couple of feeder lines. The Bakersfield-Madera section happens to be the part the farthest along in the design, preliminary engineering, and clearances work, to the point where it qualifies for matching federal funds if the state funds it this fiscal year. If they're going to build it, they have to start somewhere, right?

Theres a lot of moving parts to this sort of project. I can recall when the Bay Area Rapid Transit system was being funded and built. The system, when it finally opened, carried passengers on a short line between Fremont and Oakland. This resulted in the usual editorials about a train to nowhere. Service to the regional employment center in San Francisco didn't open for two more years, and service between the north bay area and the San Francisco didn't open for a couple years after that.
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Old 07-07-2012, 12:21 PM   #24
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The reason I started this thread in the first place was to see how many people would perk up at the thought of buying bonds (see Bestwifeever) on anything like high speed rail. And, in California where cities are going under (Stockton) and high speed rail is not a particularily great money saving idea. Secondly, this is probably the same money initially targeted for my state of Florida two years ago. Our then new governor Rick Scott turned it down as too costly for our state as he was convinced it was just a money pit. Some people here were really upset about him turning down that money and all the jobs that go with it, but he could only see it costing the state in the long run. Time will tell.
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Old 07-07-2012, 01:47 PM   #25
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Originally Posted by JOHNNIE36 View Post
California has approved the initial sale of bonds in the amount of $4.5B to start a high speed rail project. They now will get another $3.2B from the fed for this project. It will build the first segment from Madera to Bakersfield and will end with the total rail line from L.A. to Sacremento. Total cost $68B. Would you buy these bonds?
A quick back-of-the-envelope estimates, using simple interest:

Financing costs: $68B
Muni interest rate: 3%
Average annual simple interest: $1B (starting at year 0 with $68B balance, ending year 30 paying it all off - average annual balance $34B)
Annual debt paydown: $2B/year (30 year amortization for $68B)

And that doesn't include any depreciation for the rail system.

So, for simple math, you have roughly $1B/year in interest payments and $2B/year in debt paydown. You have to have enough revenue just to cover these costs, let alone (gasp!) any economic profit. And I don't know if the $68B that was cited was pure initial construction costs, or included any average annual operating costs.

Even so, $3B in costs per year (interest and debt service) - how much would people pay for this service? How many riders could they get per day?

This news story references up to 100,000,000 passengers per year (I'm assuming round-trips) by 2030. For comparison, currently, Chicago's El transports about 700,000/day during the week, about 350,000/day on weekends - or, about 211,000,000 per year.

Comparing the El to a high-speed train connecting 5 CA cities...while there is a large pop in CA, I just don't know if (in 18 years) they'd be transporting half as many people as use the El on a daily basis. Even at 200mph, it's a 2 hr train ride between San Fran and Los Angeles, with no stops.


Competing transportation costs:
GoToBus bus ticket from LA to SanFran is about $80-$100 roundtrip, last minute.
Flight on Orbitz, 3 weeks out, from LAX to SFO is under $160 roundtrip.

I found this new story, which uses an example of a similar distance, high-speed train ride in France, roughly equal to distance from LAX to SFO, at about $80 one way/$160/round trip. In that story, they quote a gov't group which said they would need roughly $.10/mile for operating costs - which would yield roughly a $40 gross profit on an $80 one-way ticket from LAX to SFO.

So if that is the standard ticket for comparison, you would have an $80 gross profit for a round-trip ticket (EBITDA).

To cover our $3B annual interest/debt paydown costs I referenced earlier, at $80/gross ticket, you would need 38 million riders per year - on average, about 100,000 per day.

Using the El for reference (just because I've spent several months in Chicago for work and I'm a little familiar w/ it), would that many people ride it every day, given the commute times?

Granted, people DO take trains for a 60 min ride around major cities like Philadelphia, NY, Washington, DC....but to then have to take additional public transportation once you get to the train station in LAX/SFO/other cities? How high up in the upper middle class do you have to be to afford daily $160 commuting fees (plus a local bus/train pass in LAX/SFO), plus endure a 2.5hr-3hr commute ONE WAY to get to work (by the time you add in other public buses, plus that 'extra' time to get to the train station early, because you're SOL if you miss that train and have to wait for the next one, just like a flight)


But let's say they stage the expansion, so they don't have $68B in debt all at once, but only $20B outstanding...that still requires 1/3 as many riders (33,000 per day), when the cities it will connect in the beginning aren't even that populated! How many upper-middle/uppper class workers will pay that to travel every day between the smaller cities?

To answer the OP's question: if there were a tax in place to 'guarantee' at least partial payment of the debt service (interest + principal), depending on more specific details, I might consider it if it were linking major population centers - but from what little details I know now, my above quick and dirty analysis makes me think I'd probably stick with a diversified CA muni fund over this individual bond.
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Old 07-07-2012, 02:33 PM   #26
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Based on other large government projects I am confident that, even if this project is ever begun, the final costs would be many multiples of the projected amount.

I remind all of the Big Dig in Boston. It was projected to cost 2.8 billion dollars. Final bill has yet to come in, but it's over $14 billion dollars as of today.

I don't know what the impetus for this project is, but am sure that some folks stand to do very well as it moves along (no puns intended).

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Old 07-07-2012, 02:36 PM   #27
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Wow MooreBonds, that's pretty well thought out and I won't even go to the trouble of messing with your figures. I think a question to be answered is this; is it just a money problem (justification) or is it a mindset? I can't believe this country intends to just keep plodding along with our cars as the regular/normal mode of transportation. Europe is much more advanced with the trains but they've been at it for years out of necessity. They're been living with high fuel costs for decades and mass transportation is a necessity. Not here yet. I say that if gas was $5-6/gal (as in Europe) there would be the wailing and gnashing of teeth and we'd all be hollering for high speed rail. I remember hearing some years ago that Americans are in love with their cars and they would rather sit in traffic for hours than get on a train. What say you?
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Old 07-07-2012, 03:22 PM   #28
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Are the bonds general obligations of California? Or backed only by revenues from the rail service?
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Old 07-07-2012, 03:24 PM   #29
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I wanted to find out more about the Chunnel.... but I could not quickly find anything on the total loss of investors.... it does seem like they restructured their debt at least once....


Eurotunnel - Wikipedia, the free encyclopedia


So, no, I would not buy these bonds....


Edit to add... and OLD story on it...

http://www.businessweek.com/1997/51/b3558053.htm


And a newer one on an extension....

http://m.dailymail.co.uk/mobile/news...icleID=2169599

"Total taxpayer support for the 68-mile HS1 over the period to 2070 is likely to be 10.2billion, the report from the House of Commons Public Accounts Committee added.
International passenger numbers on HS1 are only a third of the 1995 original forecast and two-thirds of the level the Department for Transport (DfT) forecast in 1998, said the committee.
It went on: 'Over-optimistic and unrealised forecasts for passenger demand on HS1 left the taxpayer saddled with 4.8'billion of debt.'"
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Old 07-07-2012, 03:28 PM   #30
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is it just a money problem (justification) or is it a mindset? I can't believe this country intends to just keep plodding along with our cars as the regular/normal mode of transportation. Europe is much more advanced with the trains but they've been at it for years out of necessity. They're been living with high fuel costs for decades and mass transportation is a necessity. Not here yet. I say that if gas was $5-6/gal (as in Europe) there would be the wailing and gnashing of teeth and we'd all be hollering for high speed rail. I remember hearing some years ago that Americans are in love with their cars and they would rather sit in traffic for hours than get on a train. What say you?
Answer: It's all in the numbers.

Using some Wikipedia numbers, the population density of most large Western European countries was around 200+ people/km^2 (France was the outlier at just 115/km^2).

Compare that to the Continential US: 37 people/km^2.

Western Europe is mostly 6 times (or more) densely populated as the US is. That simple fact alone should tell us something about the economics of some transportation methods.

And then consider the politics/economics of having enough highway networks when you have 20 different countries, all with different politicians, different tax bases, different trade networks. Imagine if the US Interstate system were funded by the states, and not the federal government - that is similar to how Western Europe is, with each country having their own agenda/goals. Sure, they have some highways linking the countries (just like the US had some highways linking states together before the Interstate system), but it's not quite as easy to develop or maximize.

And as you point out, when the taxes on fuel are such, it can make far more economic sense to use trains, given their population density and infrastructure/support network, like other public transit and parking garages (or lack thereof)...although I would venture a guess and say that most of the major cities in Europe have not experienced urban sprawl like the US has. As such, the population densities have stayed relatively close to the urban centers - keeping mass transit not only an option, but sheer necessity, due to simple lack of place for parking garages and bigger streets (streets which were designed 300-500 years ago for horses).

That's why transit systems in Chicago and NYC can be viable...but why a mass transit in Podunk, Alabama can never be economically justifiable.

When we get to Eastern Europe (former Soviet Bloc), I imagine they have a different historical reason for mass transit - perhaps mostly a simple lack of disposable income under socialism for the masses to afford cars, and perhaps partly also to keep it easier to 'control' the movement of the masses from a socialist governance perspective?

Although, interestingly enough, based on another Wikipedia entry, the US car density is roughly 770 cars/1,000 people, while Western Europe averages roughly 600 cars/1,000 people - a higher number than I would have thought for W. Europe, given their widespread use of public transport.

Also, according to this Wikipedia entry, there are actually quite a few US Cities among the top 200 world mass transit systems....so, again, it comes down to the sheer numbers: the US population-wise has too many people spread out in medium and smaller cities to make extensive inter-city mass transit viable in all but a handful of situations.
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Old 07-07-2012, 03:55 PM   #31
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Gotta call BS on the comparative population density stats. Average population density including huge area of uninhibited land where no one is proposing building anything is misleading, to say the least. Parts of the US are dense enough other parts are not. You cannot just make a blanket assessment for the whole heterogeneous population distribution.
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Old 07-07-2012, 04:57 PM   #32
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Gotta call BS on the comparative population density stats. Average population density including huge area of uninhibited land where no one is proposing building anything is misleading, to say the least. Parts of the US are dense enough other parts are not. You cannot just make a blanket assessment for the whole heterogeneous population distribution.
...which is why I said:

Quote:
Originally Posted by MooreBonds View Post
Also, according to this Wikipedia entry, there are actually quite a few US Cities among the top 200 world mass transit systems....so, again, it comes down to the sheer numbers: the US population-wise has too many people spread out in medium and smaller cities to make extensive inter-city mass transit viable in all but a handful of situations.
As some people have referenced (I don't have the sources), Amtrack has mentioned that a few of their interstate routes are actually profitable in the super-dense NE. "A few", being the key word. Meaning that the vast majority are not. High speed or otherwise.

As I said, on a limited basis it can make sense (resource wise and economically)....but connecting extensive parts of the US is simply not feasible, given the costs from massive distances between many cities, ridership, and alternative means of transportation.

Actually...I just ran across this study done by the UK government, using 2003 data, which shows a vast majority of transit miles per capita still completed by cars in Western European countries:
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Old 07-07-2012, 05:31 PM   #33
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Powerpoints, EBITDAs, IRRs, RFRs, and AFL-CIOs aside, I've got 2 words:

easyJet, RyanAir.
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Old 07-07-2012, 05:53 PM   #34
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Powerpoints, EBITDAs, IRRs, RFRs, and AFL-CIOs aside, I've got 2 words:

easyJet, RyanAir.
Alas, the California air corridor is already running close to capacity, and the projected 67% rise in traffic over the next 25 years is going to have a negative impact on air travel performance in the region. Only one of the northern California airfields is in a position to significantly expand capacity to meet the new demand (San Jose International). Southern California is similarly constrained.
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Old 07-08-2012, 09:07 AM   #35
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Answer: It's all in the numbers.
Of course it's ALL about numbers. The devil is in the details. From time to time we're willingly choosing to ignore the inconvenient or unpleasant details for various reasons.

If George Costanza had done his part of number crunching in advance, then he probably wouldn't have uttered out "I will give you a raise!" to his secretary at NY Yankees.
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Old 07-08-2012, 11:36 AM   #36
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Transportation infrastructure was one of the great enablers that allowed this country to grow, prosper and be so competitive. It still enables, and with economic growth faltering and unskilled wages stagnating, it makes sense to continue to improve it, especially when it connects producers with markets or workers with employers. It doesn't appear that this project focuses on either of these two critical areas.

While there may be a market for high speed medium distance passenger transportation, I don't think it has a high priority, and as taxpayers funding is limited, funds should be used for something with greater economic impact.

Just my $0.02
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Old 07-08-2012, 04:11 PM   #37
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Alas, the California air corridor is already running close to capacity, and the projected 67% rise in traffic over the next 25 years is going to have a negative impact on air travel performance in the region. Only one of the northern California airfields is in a position to significantly expand capacity to meet the new demand (San Jose International). Southern California is similarly constrained.
I am really dubious of this projection. Overall the number of air passengers increased in the US from 2000 to 2010 by 7.5%. I seriously doubt that people are going to be flying significantly more now than are today. Airlines are basically selling seats at costs so there isn't much hope that lower cost will increase demand. The hassle factor of flying is still quite high and unlikely to decrease significantly baring sanity prevailing at the TSA and I am not holding my breath. For business travel, telemeeting are becoming an increasingly good alternative. I don't see CA experiencing population growth much above the US average (and we could see a decrease with high unemployment and dysfunctional government). Overall I doubt we see much over a 20% increase in air traffic or any other type of travel for that matter in CA.

It seems to me that HS rail in CA is a solution in search of problem.
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Old 07-08-2012, 04:52 PM   #38
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I am really dubious of this projection. Overall the number of air passengers increased in the US from 2000 to 2010 by 7.5%. I seriously doubt that people are going to be flying significantly more now than are today. Airlines are basically selling seats at costs so there isn't much hope that lower cost will increase demand. The hassle factor of flying is still quite high and unlikely to decrease significantly baring sanity prevailing at the TSA and I am not holding my breath. For business travel, telemeeting are becoming an increasingly good alternative. I don't see CA experiencing population growth much above the US average (and we could see a decrease with high unemployment and dysfunctional government). Overall I doubt we see much over a 20% increase in air traffic or any other type of travel for that matter in CA.

It seems to me that HS rail in CA is a solution in search of problem.
I hope you're right. As it is, things get bad just from a little fog on the Bay, or a shift in winds requiring OAK to take approaches from the north. And for what it's worth, I doubt that high speed rail will be The Answer. TSA is already indicating that they want to control passenger access and screening, and is pushing for station design with them in mind. So add two hours of TSA time to your travel time...

http://www.hsrupdates.com/news/detai...-systems--1101
http://www.npr.org/blogs/thetwo-way/...ist-for-trains

(Dr. Evil then parks a rented van full of the usual stuff at a rural underpass a minute before the train will cross...)

With no time savings, no cost savings, and all the inconvenience of flying, I should take the train why?
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Old 07-08-2012, 05:15 PM   #39
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I have read over all the posts. In fact, over and over and have come to this conclusion. All of this is doable if we want to spend the money. It would probably make for a better country. You all have to admit that in the last century we made great strides in transportation. Look back at how the automobile progressed, the airplane evolved and space travel. The railroads were around in the 1800's, they progressed and then stagnated. All of this in the 20th century. Here we are in the 21st century and I wonder what it holds. None of us will be around to see the end of the 21st century but if is goes as the 20th century went, we would be amazed. My grandfathers never saw space flight or even rode on a jet airplane. Unbelieveable!

This thread made me think about how many things we would like to do as a society but money holds the key to everything. Look at how many people are still without power in the midwest and northeast because of Tropical Storm Debby. I've thought about this for years but when the hell are we going to get rid of those ugly telephone poles? We ought to have all power lines underground. Aren't telephone poles and lines ugly? I hate them. Money. That's the name of the game.

Hopefully this is the basis for a new thread. I know there are a lot of sharp people on this forum and I'll bet we could come up with hundreds of ideas to improve our mode of living. The hell with the cost!

Sorry for the rant.
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Old 07-08-2012, 06:07 PM   #40
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After taking the Amtrak Coast Starlight even 70 mph would make it a 'fast train'. I don't think the cost of constructing a system with higher speeds is cost effective. As long as they are buying right of way buy enough to make it two tracks wide. If the day comes that rail work is indicated there would be enough space to divert to a parallel track.

Spend money on nice stations, easy boarding, dedicated track, 70 mph travel and many would feel the investment well worth it.

The Cascades run between Portland and Seattle is very popular but it still shares right of way with freight.
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