California High Speed Rail

[JOHNNIE36]

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?

 

[Mulligan]

Well I hear their are a lot of people from Fresno are wanting to get to Bakersfield for quick weekend getaways. Seriously though, I don't buy bonds, but I thought these things never work out. If its not anymore profitable than Amtrack or LV Monorail it will be another financial moneypit. Maybe Im wrong but people love their cars. And if gas ever gets too high which it never quite seems to happen, you watch natural gas ( currently a little over $1 a gallon I read ) will come in and save the day and mass transit will be avoided yet again.

 

[eytonxav]

And I thought this was about high speed rail from LA to Vegas

 

[Lsbcal]

I'm a Californian but it sounds like a very poor idea. As I recall it was voted on in 2008 before the economic meltdown had taken hold of the average voter's mind set. Here is the Wikipedia version if you want some details: California High-Speed Rail - Wikipedia, the free encyclopedia

I hope this thread does not become another California bashing festival or a chance to show off one's political biases.

 

[ziggy29]

I hope this thread does not become another California bashing festival or a chance to show off one's political biases.

+1

The first segment runs from Madera to Bakersfield? Seems silly. If the money runs out after the first segment, we have a line that goes from almost nowhere to almost nowhere. The main idea has to be to connect LA, Sacramento and the Bay Area population centers, and the first segment reaches none of those. Of course, this will be the cheapest segment by far with no mountains to work around, lots of open space and fairly cheap land (by CA standards).

 

[easysurfer]

I'm not a Californian. By me seems they talk about high speed rail each four years (hmm..about election time), then never follow through.

If they get in done and complete the project, nice to have options of travel.

 

[ziggy29]

I'm not a Californian. By me seems they talk about high speed rail each four years (hmm..about election time), then never follow through.

If they get in done and complete the project, nice to have options of travel.

And you have to watch them for follow through. I was still living in San Jose when Santa Clara County approved an extension of a half-cent local sales tax over 20 years to extend BART to San Jose. The vote was 70-30 in favor of the tax, more than the 2/3 required by Prop 13 for a targeted tax increase.

But the economy went south in the 2000 dot-com bust and officials said they couldn't afford the BART extension project with the revised revenue projections. The voter-approved tax, specifically targeted for that project, did not disappear (of course). So the voters still get their tax and more than a dozen years later, BART to San Jose is just a dream for many.

 

[ERD50]

I hope this thread does not become another California bashing festival or a chance to show off one's political biases.

Based on the replies so far, it sounds like a bad idea. So what's wrong with criticism of the people who approved it, and those who voted them into office? And criticizing a politician isn't automatically a sign of 'political bias'. CA in particular is not in a position to throw money down rabbit holes.

-ERD50

 

[Mulligan]

+1

The first segment runs from Madera to Bakersfield? Seems silly. If the money runs out after the first segment, we have a line that goes from almost nowhere to almost nowhere. The main idea has to be to connect LA, Sacramento and the Bay Area population centers, and the first segment reaches none of those. Of course, this will be the cheapest segment by far with no mountains to work around, lots of open space and fairly cheap land (by CA standards).

It appears it is to eventually connect San Fran to LA for a modest final cost of $68 billion dollars. I guess it is a political issue out there at the capital as the senate approved it on a party line vote of 21-16. Gov. Brown said it is important for job creation and for population increase that will occur out in that area. Republicans are saying it is spending money they don't have and its a train to nowhere that the subsidies will blast a hole through their budget.

 

[ERD50]

from the wiki link earlier (emph mine):

In January 2012, an independent peer review panel published a report recommending the Legislature not approve issuing $2.7 billion in bonds to fund the project.[27] The panel of experts was created by state law to help safeguard the public's interest. The report said that moving ahead on the high-speed rail project without credible sources of adequate funding represents a financial risk to California.

So why did they approve it, if this panel set up to safeguard the state's interest said "no"?

-ERD50

 

[Lsbcal]

Based on the replies so far, it sounds like a bad idea. So what's wrong with criticism of the people who approved it, and those who voted them into office? And criticizing a politician isn't automatically a sign of 'political bias'. CA in particular is not in a position to throw money down rabbit holes.

-ERD50

I voted against it in 2008. The discussion in this thread so far has not presented enough real evidence that it is a bad idea although my bias says it is a bad idea.

I'm just hoping for reasoned discussion instead of axe grinding. Go ahead, convince me. But I realize it's so much easier to say nasty things about the opposition. To be fair, I do it all the time with DW while watching the news. Like, "oh boy there they go again in Kansas, or Illinois, or Florida, or Greece, or ... whatever"

P.S. I hope you do not feel bad if I left out your state.

 

[easysurfer]

And you have to watch them for follow through. I was still living in San Jose when Santa Clara County approved an extension of a half-cent local sales tax over 20 years to extend BART to San Jose. The vote was 70-30 in favor of the tax, more than the 2/3 required by Prop 13 for a targeted tax increase.

But the economy went south in the 2000 dot-com bust and officials said they couldn't afford the BART extension project with the revised revenue projections. The voter-approved tax, specifically targeted for that project, did not disappear (of course). So the voters still get their tax and more than a dozen years later, BART to San Jose is just a dream for many.

As mentioned before, seems like every election cycle the talk of high-speed rail comes up. The first time I was excited thinking in a few years, travel from major cities would be shortened. Plus, the thought of riding on a high speed rail sounded fun. But now, many years later, my view is may high speed rail may still be a good idea if it ever comes true, but I'll believe it when I see it.

 

[FIREd]

The first segment runs from Madera to Bakersfield? Seems silly. If the money runs out after the first segment, we have a line that goes from almost nowhere to almost nowhere. The main idea has to be to connect LA, Sacramento and the Bay Area population centers, and the first segment reaches none of those. Of course, this will be the cheapest segment by far with no mountains to work around, lots of open space and fairly cheap land (by CA standards).

My thoughts exactly. I am just afraid that this will become "the train to nowhere". I think this is a good idea on paper, but looking at the magnitude of the project just here is San Francisco makes me doubt it will ever be completed.

 

[Mulligan]

I voted against it in 2008. The discussion in this thread so far has not presented enough real evidence that it is a bad idea although my bias says it is a bad idea.

I'm just hoping for reasoned discussion instead of axe grinding. Go ahead, convince me. But I realize it's so much easier to say nasty things about the opposition. To be fair, I do it all the time with DW while watching the news. Like, "oh boy there they go again in Kansas, or Illinois, or Florida, or Greece, or ... whatever"

P.S. I hope you do not feel bad if I left out your state.

Although I don't have a dog in this hunt, but I enjoy reading about it. In my state of MO, we barely want to subsidize gas for city busses so a high speed rail of $68b would be out of our league. If what I read to be true, Gov. Brown has the belief of " build it and they will come". That can be a dangerous strategy with $68 billion at stake, and the usual " cost overruns " have to be thought about too.

 

[Texas Proud]

I am not sure of the various travel options out there.... but I know that they have been trying to get high speed rail in a triangle from Houston to Dallas to Austin....

But, as they have shown a good number of times, there are a LOT of flights you can take to get there... and we are supporting the airline industry with a lot of support...

If the only good way to get from A to B is by car, then the local politicians will want to build something....


As for AMTRACK.... from what I remember, they do make good money up north between the major cities of Boston, New York, Washington DC.... but I only read that awhile ago, so who knows for sure now....

 

[Mulligan]

I am not sure of the various travel options out there.... but I know that they have been trying to get high speed rail in a triangle from Houston to Dallas to Austin....

But, as they have shown a good number of times, there are a LOT of flights you can take to get there... and we are supporting the airline industry with a lot of support...

If the only good way to get from A to B is by car, then the local politicians will want to build something....

As for AMTRACK.... from what I remember, they do make good money up north between the major cities of Boston, New York, Washington DC.... but I only read that awhile ago, so who knows for sure now....

I watched a program that mentioned Amtrak and you are correct one makes money up their and another only loses about 5 bucks per person. However the one from New Orleans to LA loses $400 per person and Chicago to SF loses $190 pp. The further you spread it out and the less dense the population, the more the cost. I certainly wouldn't know if any of the Amtrak data would relate at all to the CA project. But I certainly would hate to be on the hook for any subsidies.

 

[Bestwifeever]

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?

I don't think anyone has answered your question, Johnnie .

Do you think there would be a possibility of default on the bonds?

 

[grasshopper]

And I thought this was about high speed rail from LA to Vegas

No, that was Hunter Thompson in the Red Shark or the White Whale.

 

[Koolau]

And I thought this was about high speed rail from LA to Vegas

THOSE bonds I would buy!

 

[ls99]

I have w*rked in the rail trasnport business 15 years, -using the term business very loosely.

My observation and prediction:

1 California is broke
2 Whatever numbers are projected for cost, are smokescreen, they will be a factor of 4 or more greater by the time all is said and done.
3 It will never pay for the operating costs, let alone the initial investment.

 

[Koolau]

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.

 

[mountaintosea]

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.

 

[M Paquette]

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.

 

[JOHNNIE36]

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.

 

[MooreBonds]

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.