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Not So Fast: ETA for California's $68 Billion Bullet Train Project Uncertain as Costs Rise

California's high-speed rail project has taken heat from state legislators and members of Congress for its ballooning price tag, which is more than double the estimated cost when voters approved funding back in 2008.
Photo by Rich Pedroncelli/AP

California's quest for speed is starting to look like an increasingly expensive proposition.

The state's much-touted high-speed rail project, which will purportedly whisk passengers from Los Angeles to San Francisco in just under three hours, is currently projected to cost nearly $68 billion — more than twice the estimated cost of $33 billion in 2008 — and could go even higher.

Members of Congress and the California State Assembly sent a letter demanding the release of an internal report from the California High-Speed Rail Authority that was originally disclosed by the Los Angeles Times late last month. Released on Tuesday, it shows a projected 31 percent increase in estimated costs for the first phase of the train's construction.


When calculated with inflation, the price for the first phase would go from $27 billion to roughly $40 billion. Future inflation estimates could push the overall price of the project to $71 billion, according to the document, which the rail authority says was an internal draft not meant for the public.

Voters approved a bond measure in 2008 to partially fund the California High-Speed Rail Authority in order to construct the rail line. The line is designed to have 24 stations on more than 800 miles of track between San Diego and San Jose and allow trains to go up to 200 miles per hour, making it one of the largest public infrastructure projects in the country. The rail authority has said that the state would like to see a private company operate the trains.

But critics say the project is too costly and insist that the rail authority doesn't have enough money to see the high-speed line come to fruition. No private funders have stepped forward to fill the gap in state and federal funds, though Lisa Marie Alley, a spokesperson for the rail authority, said they have had interest from more than 60 potential partners.

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"California's high-speed rail project has doubled and tripled in costs while ridership numbers have decreased, ride times have slowed, and whole segments of the project have been cut off," Republican Congressman Jeff Denham said in a statement. Denham represents the 10th District, which lies to the east of San Jose and San Francisco; he was one of the authors of the letter sent to the rail authority. "This was supposed to cost $33 billion and get riders from San Diego to Sacramento in three hours. Now we're looking at $100 billion in taxpayer dollars for a train that'll never reach either end."


Denham said he would like to see the project go back to voters for another ballot measure with the new price tag attached.

Alley said that the rail authority has full confidence it will be able to find private sector partners to help pay for the train. It currently has $12 billion in funding — $9 billion in state funds and $3 billion from the federal government — along with a guaranteed contribution of 25 percent of the state's cap-and-trade profits each year. Last year the cap-and-trade program yielded $500 million to the authority, though Alley said some future estimates put that number as high as $2 billion a year.

The rail project is not unique in the hurdles it still has to clear, according to Karen Frick, co-director of the University of California Transportation Center, who outlined some of the challenges all "megaprojects" face: costs that keep increasing over time, controversy over development and financing, and clashes over control and communication among the authority, the legislature, and the public.

Such infrastructure projects, Frick said, "can become hugely controversial, and we're seeing that with the high-speed rail line. It's not a surprise because people have different, strong opinions about both the positive impacts and the negative impacts — to the environment, to people, to businesses."

She added that because so many issues have been raised over the cost and feasibility of the project by both government and the media, potential investors might have grown wary of signing on to help fund it.


"The more issues that surface with the high-speed rail, the more it demonstrates a high-risk for private investment," Frick said. "Is there really an opportunity for the private sector to gain in this?"

Martin Wachs, professor emeritus at UCLA's Luskin School of Public Affairs, said that the rail project is unique in its scale, which is larger than other major public works projects in recent years like Boston's Central Artery/Tunnel Project (known as the Big Dig) or the eastern span replacement of the San Francisco-Oakland Bay Bridge. The scope of the project, coupled with the length of time it will take to complete it, mean that any predictions for profitability or ridership are at this point just guesses, which could scare away investors.

"Nobody's putting up money. Why wouldn't they? Because the private sector is risk averse," he said. "The unknowns are more than the knowns."

But because the authority only started soliciting private funding over the summer, Wachs said that it is too soon to say whether or not it will be able to raise enough money from the private sector to fund the project.

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A statement from Denham's office said it had "long warned that the Authority is not being honest with the public about the true costs of constructing High Speed Rail in California."

The original Times piece on the cost overruns said that the paper's analysis of project documents and interviews with experts suggested that it would be nearly impossible for the rail authority to lay down 300 miles of track from Merced to Burbank and construct necessary bridges, tunnels, electrical systems, and other elements by 2022, as planned. Officials hope to complete Phase One, which will link Los Angeles and San Francisco, by 2029.


"They have failed to disclose huge cost overruns and after they boasted private firms were interested in funding this project, we now know these firms are unwilling to put up any private money," Assemblyman Jim Patterson told the Times. "What's worse, we have learned that the [rail authority] ordered its own experts to keep their findings secret from the public."

Alley, the rail authority representative, took issue with Denham's letter and the reporting on the internal document that appeared in the Los Angeles Times, which made it seem as though the authority was purposefully not releasing higher cost projections to the public.

"We are one of the most scrutinized organizations, delivering one of the largest infrastructure projects in the US right now. It is a huge priority for the board and the administration, since we are using taxpayer funds and we want to use them the best way we can to continue to be open and transparent," she said. "So the root of the story and the premise was false that we were hiding something."

Denham, Patterson, and other Republicans have made it clear that they hope to thwart any future government funding for the project, though Alley said that the authority expects the balance to be made up by private investors.

Wachs, of UCLA, said that political sniping and controversy is par for the course on major projects like the rail line.

"You could say that it's politically courageous to proceed or say that it's irresponsible, but the fact that you could take positions that vary so dramatically leads, of course, to a very political debate," he remarked.

Construction on the first section of the high-speed train started earlier this year. Alley said that the authority would continue endeavoring to bring down the cost and speed up the timeline for the train's completion.

Follow Colleen Curry on Twitter: @currycolleen