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March 24, 2010

The Trouble with High-Speed Rail

Billions in costs for how many riders?


On the morning of April 16, 2009, President Obama, flanked by the vice president and the secretary of transportation, announced a plan to devote $8 billion of his economic recovery package (the stimulus), plus another $1 billion a year for five years, to fund high-speed rail corridors across the nation. “Imagine whisking through towns at speeds over 100 miles an hour, walking only a few steps to public transportation, and ending up just blocks from your destination,” the president said. “Imagine what a great project that would be to rebuild America.”

Nine months later, in January of this year, the administration specified where and how those billions of high-speed rail dollars would be allotted. The biggest winners were two long-planned bullet-train routes: One in Florida, designed to span the 80 miles between Tampa and Orlando, which took in $1.25 billion of federal money; and the other in California, a proposed system that would eventually connect Sacramento, San Francisco, Los Angeles, and San Diego, which collected $2.3 billion. The highly traveled Northeast Corridor route that currently stretches from Washington, D.C., to Boston received only $112 million.

Some commentators have praised the administration’s funding plans, but the divvying has struck many other observers as odd. The biggest puzzlement is why a procedural impediment involving an environmental review resulted in the Northeast Corridor receiving so few federal dollars. “If we really wanted to have high-speed rail in this country, and have it be a great success” said Joseph Vranich, author of the books Supertrains and Derailed, “then what we would do is concentrate the funds on the New York-Washington corridor, which is the top corridor in the country.” Amtrak’s Northeast Corridor routes transport some 15 million passengers per year, and the nation’s only purported high-speed train, the Acela, travels between Washington and Boston, but currently does so at an average speed of less than 80 miles per hour.

Obama has also been criticized by those who see trouble in the breadth of his high-speed rail ambitions. Robert Puentes, a senior fellow at the Brookings Institution, told U.S. News and World Report, “The advice was, pick one or two corridors and invest wisely.” But instead, the administration is “spreading the peanut butter thinly all over the place.” Other commentators have pointed out that the speedy trains that work in parts of Europe and Asia won’t work in a vast United States, with its dispersed inhabitants. Robert Samuelson noted in a Washington Post column on the subject that the population density of Japan, for instance, is 880 people per square mile, while in America, there are just 86 people per square mile.

Can the Obama administration counter the naysayers with numbers and data? No, it cannot. For high-speed rail is simply an imprudent and inefficient answer to an unreal American transportation need. One has only to look at the history and development of the nation’s most-advanced, Obama-touted high-speed rail projects — in Florida and California — to see that the administration’s plan is merely a high-speed way to waste untold billions.

Florida

Welcome to the i-4 Corridor — a blazing, flat, 84-mile stretch along Interstate 4 that slices through the middle of the Florida peninsula between Tampa, on the west coast, and Orlando, inland, but only 25 miles from the Atlantic. In many ways the corridor divides Florida politically as well as physically, with big, brash, liberal counties like Broward (Fort Lauderdale) and Miami-Dade lounging below the asphalt strip, and more-rural, more-conservative counties, especially those clustered within the panhandle, situated above it. The corridor gained notoriety in the 2008 presidential campaign when it was widely reported that whichever candidate won the most votes between Tampa and Orlando would win the Sunshine State and, likely, the presidency. That turned out to be true. Though the race wasn’t a close one, Obama did indeed pocket the most votes in Florida’s contested band, and he went on to take the state and the White House.

Obama was back in the i-4 Corridor in January of this year, on the morning after his State of the Union address. In front of a raucous crowd inside a University of Tampa gymnasium, the president pledged to make central Florida the nation’s high-speed rail pioneer. “We are going to start building a new high-speed rail line right here in Tampa,” he said. “I’m excited. I’m going to come back down here and ride it.”

“That dog won’t hunt,” said Governor-elect Lawton Chiles, reacting to a plan to use state taxes to fund high-speed rail.

Maybe he will, and maybe he won’t, for the Sunshine State has a long and fraught history with high-speed rail. It goes back more than three decades, beginning in 1976, when the state legislature mandated a transit study that eventually concluded that constructing a high-speed line along the i-4 Corridor would be feasible. In 1982, Governor Bob Graham visited Japan and was impressed by its Shinkansen bullet trains. Upon his return he authorized creation of the Florida High Speed Rail Committee, which subsequently released a report that found the state’s infrastructure inadequate to handle future growth and recommended construction of a high-speed rail line.

Over the following decade, Florida flirted temperamentally with high-speed rail, occasionally conducting feasibility studies of a potential, expanded Tampa-Orlando-Miami route. But high-speed rail was expensive, and there was significant opposition to using tight state dollars to bankroll it. “That dog won’t hunt,” said Governor-elect Lawton Chiles in 1990, reacting to a plan to use state taxes to fund high-speed rail construction. But in following years, Florida’s lawmakers came to realize that if superfast trains were ever going to crisscross their peninsula, the state would simply have to play a major role in financing them. With Florida’s highways ever more clogged and deteriorating, with population growth confounding road expansion and repair plans, the legislature decided to commit $70 million per year for several years for the planning of a high-speed rail line.

Proposals were submitted, and in February 1996 the state selected Florida Overland eXpress (fox), a consortium of four American and international companies, to construct a $6.3 billion French tgv (Train à Grande Vitesse, or “high-speed train”) system between Tampa, Orlando, and Miami. The formal deal was signed in August, but it was a risky, rickety one that hinged on the federal government’s willingness to give the state $300 million in cash and guarantee $5 billion in bonds. Washington worked as Washington tends to work — slowly — and after months of lobbying Congress with nothing to show for it, the high-speed rail deal was teetering. Florida politicians grew restive. One state senator, for instance, called the project a “boondoggle” and said that “the whole thing” made him “nervous.”

During the next two years, Florida taxpayers devoted several million dollars to more studies of the feasibility of the proposed Tampa-Orlando-Miami line. But the studies were largely inconclusive; a Tampa Tribune reporter wrote in 1998 that despite all the examination “not much has been learned about whether trains traveling lickety-split between the trio of Florida cities can turn a profit.” With federal support of the project still dubious, and with so many of its details still left undefined, newly elected Governor Jeb Bush killed the plan in January 1999, less than two weeks after taking office, saying that it would cost taxpayers too much for a gain too uncertain.

But though the fox scheme was dead, bullet trains in Florida were not. An elderly southwest-Florida businessman named C.C. Dockery quickly resurrected the issue by spending $2.7 million of his own money to put a specific question on Floridians’ November 2000 election ballots: Should the state Constitution be amended to mandate construction of high-speed rail? That year, when Floridians had such trouble voting for president, they had no trouble voting “yes” on Dockery’s amendment.

Thus did the Florida Constitution come to command that construction of a high-speed rail line connecting the state’s five largest cities must begin on or before November 1, 2003. Yet the amendment did not specify how the construction was to be paid for. And so, mere months before November 2003, the revitalized high-speed rail project again seemed hopeless: The state legislature was not going to put up hundreds of millions of dollars for it, and neither were private investors. And so Floridians again found themselves with an imminent opportunity to vote on a train-related constitutional amendment — this time, on one that would repeal the high-speed rail language that they had approved in 2000. Repeal that language they emphatically did, voting almost 2-to-1 for the new amendment.  

Again, the dream seemed dead. But then President Obama swept into the Sunshine State, and Floridians began to dream once more.

There are many political reasons why Florida was the right place for Obama to launch his high-speed rail push. Florida is a swing state, for one. And when arguments about the effects of stimulus dollars matter, as they do, the original Tampa-Orlando route no doubt appealed to Obama because of its “shovel-readiness”; estimates are that construction can begin in late 2010. But many reasons for making Florida the country’s high-speed rail showpiece are not political — they are practical. Florida is flat, which obviously simplifies construction and makes it less expensive. The state Department of Transportation also already owns over 90 percent of the Tampa-Orlando route’s right-of-way — most of the phase’s proposed high-speed rail track would run in the median of i-4 (some of it would also run along the medians of Interstate 275 and State Road 528). And unlike other tracks, the planned Tampa-Orlando line would accommodate only high-speed locomotives (not other, slower trains), and it would contain no grade crossings, which is unusual in American rail systems.

In fact, to call it a Tampa-Orlando route is rather disingenuous because the trains will avoid Orlando entirely.

Yet, the showpiece has its flaws, and not a few of them. The first problem is construction funding, which remains iffy. Florida estimates that building the i-4 Corridor route will cost $3.2 billion (many believe this number is too low). The state requested $2.6 billion in high-speed rail stimulus funds and was given $1.25 billion. So, though Florida has agreed to make available each year $60 million of its own money (despite a $3 billion state deficit), significant construction costs remain. “We asked for $2.6 billion and clearly that’s what we need to implement this project,” Nazih Haddad, Chief Operating Officer of Florida High Speed Rail, told the Sarasota Herald-Tribune in late-January after the state learned how much federal money it would receive. Haddad told me he is confident that more federal money is forthcoming, and Obama has said that all his high-speed rail grants are merely “down payments.” Indeed, the 2010 federal appropriations bill does contain another $2.5 billion for high-speed rail. Nonetheless, the Sunshine State is beginning to build a multi-billion-dollar rail system without knowing where much of the money is coming from. That fact is at least a tad disconcerting.

More importantly, assuming the train is ready by 2015, when it is scheduled to begin service, who will ride it? A major concern is that potential passengers will be dissuaded from hopping aboard simply because the train won’t take them anywhere near their final destinations. Good public transportation in Tampa and Orlando is nonexistent, and so it would seem that any rail system connecting the two cities must deposit its riders in several urban locations, including the downtown districts. But the i-4 Corridor route does not do this. In fact, to call it a Tampa-Orlando route is rather disingenuous because the trains will avoid Orlando entirely — the last stop heading east is the Orlando International Airport, some ten miles outside of town.

There is also the plain fact that, while it is estimated that the train ride will last 55 minutes with stops, it takes only 90 minutes to drive the same distance. If a potential high-speed rail passenger in Tampa factors into his trip the time required to get to the city’s train station (which could easily take an hour), park his car, purchase tickets, and wait for the train, he would probably decide to drive to Orlando. If he then considers that were he to take the train he would arrive not in Orlando but at Orlando International Airport, which could leave him tens of miles from his final destination ( 14 miles from Amway Arena, where the Orlando Magic play, for example), and that he would arrive there without a car and with no good way of getting around the city, he would definitely decide to drive to Orlando. In a late-October 2004 editorial titled “Going Nowhere Fast,” the editors of the St. Petersburg Times wrote that Florida had “spent nearly three decades studying high-speed transit to no particular avail.” After years of research there was still “almost no evidence” that a high-speed rail route “would serve large numbers of riders,” especially because Florida’s major cities were not “adequately prepared to transport bullet train riders to their final destinations.” Six years on, and nothing about this situation has changed.

Tampa and Orlando are not dense cities like New York or Washington, D.C.; rather, they are sprawling urban areas encompassing many cities. The Tampa Bay area covers some 2,000 square miles, and Greater Orlando spans over 4,000. Their 5 million residents are far-flung. Not only do these people like their cars; they need their cars. And so do tourists, who might use the proposed high-speed train to travel from Orlando’s airport to Disney World, where a station is planned, but who will still need to rent a car to get just about anywhere else, including anywhere remotely near the beach. What’s more, the need for high-speed rail from Orlando airport to Disney World is hardly obvious. It’s about 25 miles, or less than the distance from Washington’s Dulles Airport to the White House. The Florida Department of Transportation estimates 2,715,500 annual passenger-trips in the high-speed rail route’s first year of operation and 3,120,000 in its fifth year. Those numbers are wildly hopeful.

And who will pay to keep the i-4 Corridor trains running, even if they’re mostly empty? Haddad said that ticket sales will cover operating costs, but Randal O’Toole, of the Cato Institute, disagrees. “Fares won’t come close to covering the operating costs,” he told me. “They never do. I’d be surprised if in Florida they even cover half.” A 2009 Florida Times-Unionarticle gives backing to O’Toole’s assessment, noting that “Ticket sales at affordable prices don’t cover all the operating costs of any railroad.”1 When pressed, Haddad seemed to at least allow the possibility that ticket sales wouldn’t be sufficient. But even if they aren’t, he said, there’s always that annual $60 million in state funds to make up the difference. At least for a while.

Carl Hiaasen, the Miami Herald columnist and longtime witness to Sunshine State wackiness, nailed it. Florida’s high-speed rail’s “prospects for profitability are the same today as they always were: Nil,” he wrote recently. The “money delivered by President Barack Obama . . . should have come with a note: ‘Here’s a gift from Uncle Sam. Now go build yourselves something you can’t possibly afford to operate.’”

California

To go from San Francisco to Los Angeles is no picnic. You could drive, but traffic will be nasty, and the fastest route, Interstate 5 through the Central Valley, will still take six hours on a good day. A scenic ride on California State Route 1, which hugs the Pacific coast, will take you nine or ten hours. Flying is quicker, of course (about one and a half hours from takeoff to touchdown), but then you have to deal with all the airport hassles, and a one-way ticket costs $70. How about the train? Well, the Amtrak Coast Starlight chugs between Los Angeles and Oakland (you can then switch trains or take a bus into San Francisco) — a journey that lasts about eleven hours and costs 60 bucks.

The High Speed Rail Authority’s previous work also came under fire for being “not just sloppy, but misleading.”

No surprise, then, that Californians have an attraction to high-speed rail. The state first broached the subject in the early 1980s, when a private company proposed building a 130-mile bullet-train line between Los Angeles and San Diego. That project eventually sputtered out, though, after encountering a combination of logistical snafus and political opposition. In 1996, talk of bullet trains was revived when the California Intercity High Speed Rail Commission, a panel formed by Governor Pete Wilson, released a proposal for a statewide high-speed rail system — a route that would eventually run between Sacramento and Los Angeles, with the first segment connecting Los Angeles and San Francisco. The panel estimated that total construction costs would be either $18 billion (for a vhs system, which would travel at 220 mph) or $26 billion, for Maglev, which could reach speeds of 310 mph and shuttle passengers from L.A. to San Francisco in two hours. The California High Speed Rail Authority was established to begin the actual planning process, and in 2000, it put forth its plan for a 700-mile network that would serve more than 42 million annual riders by 2020, with trains reaching speeds of 220 mph, and with an updated construction cost of $25 billion.

But prospects for high-speed rail in the Golden State quickly lessened. Although the California legislature had voted to place on the November 2004 ballot a $10 billion bond measure for high-speed rail construction, a new governor, Arnold Schwarzenegger, supported subsequent legislation successfully postponing that measure (he also slashed the High Speed Rail Authority’s budget). Moreover, the estimated cost to build the system had ballooned in just four years from $25 billion to $37 billion. The High Speed Rail Authority’s previous work also came under fire for being, as an Oakland Tribune reporter put it in late 2004, “not just sloppy, but misleading.” A ballot measure that would’ve asked voters in 2006 to approve funding for the rail system was again postponed, while disputes over the proposed route (Pacheco Pass? Altamont Pass? Both?) had become ubiquitous and heated.

High-speed rail’s end seemed near. But then, revitalization. In November 2008, in the midst of a massive state budget shortfall, a worldwide economic crisis, and home foreclosures galore, California voters approved Proposition 1a, a $10 billion bond measure — a down payment on the Los Angeles to San Francisco portion of a new high-speed rail system. With that vote, and with the Obama administration’s recent promise of $2.3 billion, thoughts of high-speed rail in the Golden State have come roaring back.

California does not have the same advantages that Florida’s i-4 Corridor does — for instance, California will need to make major land purchases and build some 24 passenger stations — but it does have many of the same drawbacks. In fact, in California, the drawbacks are perhaps even larger. The biggest is cost.

Florida believes that it will need $3.2 billion to construct the i-4 Corridor route. Estimates of what it will cost to build California’s system started at $25 billion and have since exploded. In 2008, the state guessed that it would require $45.4 billion to build the entire system, and $30.7 billion for the first phase, Anaheim to San Francisco. But the newest, inflation-adjusted estimates now put just the price of the Anaheim to San Francisco route at $42.6 billion. California expects to receive about $18 billion from the federal government; so far, Washington has donated a mere $2.3 billion. The state also expects to receive $12 billion from private investors, but the High Speed Rail Authority has provided scant evidence that it can raise anywhere near that amount. Californians are beginning to wonder: With our state’s budget gap currently at $20 billion, how much more may we be asked to pay to get these trains rolling?

There are other problems, too. In a February 28, 2010, article in the Los Angeles Times, reporters Rich Connell and Dan Weikel wrote that one-way ticket prices between Los Angeles and San Francisco have risen “from $55 to $105.” The increase “shows healthier surplus revenue, which may appeal to private investors. But estimated ridership falls by about one-third, to about 40 million annual boarders in 2030.” The High Speed Rail Authority’s projected annual ridership number, now 40 million, has fluctuated over the years from a low of below 40 million to a high of nearly 100 million. Now, for the first time, its estimates are being widely questioned. “This just smells funny,” state Senator Alan Lowenthal, a high-speed rail supporter, said in February. “We’ve never understood their models.”

Lowenthal chairs the Senate’s transportation committee, which is beginning to examine the projected ridership figures. It should. A September 2008 report from the Reason Foundation concluded that California’s ridership projections at the time were “absurdly high — so much so that they could well rank among the most unrealistic projections produced for a major transport project anywhere in the world.” The report continued: “Under a passenger-mile per route-mile standard, the chsra [High Speed Rail Authority] is projecting higher passenger use of the California system than is found on the Japanese and French hsr [high-speed rail] networks despite the fact that these countries have conditions that are far more favorable to the use of hsr.” Such untamed overestimates make it probable that the rail line will “fall far short of its revenue projections, leading to a need for substantial additional infusions of taxpayer subsidies.” That is a major predicament, especially because such subsidies are illegal. The $10 billion bond measure that passed in 2008 expressly prohibits any public operating subsidy for California’s high-speed rail.  

Adding to the ridership doubts is the fact that California’s cities, like Florida’s, are sprawling. Without a car, it’s not easy to get from one place to the next. The Reason Foundation report notes that “the San Francisco urban (urbanized) area’s transit market share is 3.8%, Los Angeles is 1.6%, San Diego 1.2%, San Jose 0.8% and Sacramento 0.7%,” which means that “the overwhelming majority of hsr trips are likely to require a car at one or both ends to complete the trip in a reasonable time and with reasonable comfort.”

Other setbacks came in January, when the California Legislative Analyst’s Office, the legislature’s nonpartisan watchdog, issued an evaluation of the High Speed Rail Authority’s most recent business plan. It found the following:

  • The rail plan offered an “uninformative timeline” and presented an “inconsistent order of events.”

  • The rail plan contained “no risk management strategy.” For instance, it addressed “the risk of incorrectly forecasted ridership with one sentence,” murkily noting that “the risk ‘would be mitigated by policies that continue to draw people to reside in California and encourage high-speed rail as an alternative mode of transportation.’”

  • The rail plan did not “provide any numerical ranges nor confidence intervals for projections contained in the plan (such as cost, revenues, or ridership).” Thus, “the risk of not realizing the forecasted ridership, revenues, or costs is unknown.”

These conclusions are simply devastating. Perhaps the most-damaging among them, even though it’s not particularly new, is that the High Speed Rail Authority’s latest business plan contains no realistic outline of how California will pay to build a high-speed rail system. And so the ridership problems, political problems, route problems, timeline problems all become secondary — none of them matters if billions of construction dollars never materialize.

At this point, it seems likely that Florida will build an 80-mile route that nobody will use. In California, it seems likely that several billion dollars will go toward constructing a high-speed rail system that will never be finished and never be operational, because the requisite money can’t be found.

A billion here, a billion there

Nonetheless, the obama administration pushes onward, encouraging states such as Florida and California to concoct bogus high-speed rail plans and then dispersing billions of dollars to them. All the while, nobody has an accurate idea of what these scattered high-speed systems will actually cost the country, all total, in the end. History shows that official construction estimates are usually lowballed big-time. A 1990 evaluation by the U.S. Department of Transportation of 10 major American rail transit projects found that their average cost overrun was about 50 percent; the real costs of seven of the ten projects were between 30 and 100 percent higher than their original estimates. A 2003 study carried out at Aalborg University in Denmark evaluated 258 transport infrastructure projects completed in 20 nations on five continents between 1927 and 1998. It found that the costs of nine out of ten projects were underestimated, and that for rail, actual expenses were some 45 percent higher than predicted. Ridership projections are typically way overshot, too, though not as whoppingly so as in Florida and California.

The designers of Florida’s and California’s proposed high-speed rail routes say that ticket sales will pay for their respective system’s operating costs. No doubt those who are planning lines in other American corridors will say the same. The claims are surpassingly dubious. Only two dedicated high-speed railways in the world — one connecting Tokyo and Osaka, and the other between Paris and Lyon — have ever broken even on their initial and ongoing expenditures. And many European high-speed rail systems that are deemed cost-effective actually receive lots of extra help. A 2008 study, commissioned by Amtrak’s Office of the Inspector General, notes that European passenger railways often count the government funding they receive as revenue, and that some systems receive “off-balance sheet” public funding, “typically provided for staff and pension obligations, debt service, restructuring, and past capital investments.” The report concludes that, when all is said and done, “European Passenger Train Operations operate at a financial loss and consequently require significant Public Subsidies.” They require far more in subsidies than Amtrak, in many cases, and Amtrak is subsidized at $ 32 per passenger. In 2008, Amtrak lost $1.1 billion.

The economics of high-speed rail do not work, especially in America. Could this be why the Obama administration habitually makes its case for domestic bullet trains by ignoring numbers and appealing to history? Transportation Secretary Ray LaHood has said that “President Obama’s vision for high-speed rail mirrors that of President Eisenhower, the father of that Interstate highway system,” and others, including the vice president and the president himself, repeatedly make the same comparison. But the analogy is inapt for several reasons, one of which is that U.S. highways serve all 50 states (not ten dispersed corridors) and the average American travels those roads for thousands of miles each year. According to Randal O’Toole’s calculations, if the proposed high-speed rail routes were to be built, the average American would ride them for fewer than 60 miles annually.

Americans have recently digested federal expenditures of hundreds of billions of dollars. Is it possible that the country’s taxpayers, many of whom will never in their lifetimes ride a bullet train, will remain unbothered as tens and probably hundreds of billions of dollars more are allocated to high-speed rail experiments in districts far from their own? Is it possible that these taxpayers will countenance the squander in order to achieve the president’s “vision for high-speed rail in America”? It is possible, but it is unlikely — and it is unwise for the administration to bet on the long-term willingness of Arkansans, Minnesotans, Alabamans, etc. to continue funding its high-speed rail reverie.


Liam Julian, a Hoover Institution research fellow, is managing editor of Policy Review.


1 In 2008, Acela did make a profit. It’s debatable whether $270 for a round-trip Acela ticket is “affordable,” but it is certainly far, far more than Floridians will pay to travel between Tampa and Orlando.