Friday, September 11, 2015

With High-Speed Rail, California and Texas Face Similar Challenges

California and Texas seem poised to become the first states in the nation to complete high-speed rail (HSR) projects. The two projects seem vastly different at first - one implemented by a public authority using state and federal funding, the other a private enterprise of one-quarter the length. But the two states face similar challenges, particularly regarding land acquisition and political opposition to the projects. Issues of environmental clearance also threaten to delay construction.

Below is a run-down of key characteristics of the two projects for comparative purposes - including the speed of the train, the length of the system, the total projected cost and cost-per-mile, public and private funding, public opinion and political support, land acquisition, and environmental clearance.

California: 220 mph

Texas: 200 mph

California: 800 miles from Los Angeles to San Francisco

Texas: 240 miles from Houston to Dallas

Total projected cost
California: $68 billion

Texas: $12 billion

Cost per mile
California: $85 million

Texas: $50 million

Public funding
So far, California has relied exclusively on public funding for the $30-billion initial operating section (IOS). The 2008 ballot initiative allowed for up to $9 billion in the sale of bonds (it's currently put $2.7 billion towards the IOS), matched with $2.25 billion in federal funding under the Recovery Act. The state was later awarded an additional $1.6 billion reappropriated from other states, such as Ohio, which refused money for its own high-speed rail projects. However, with the current Congress quite hostile towards high-speed rail and generally unable to get its act together on transportation funding, it is likely California will not see any more federal funding for the project.

The state will also allocate between $500 million and $1 billion in cap-and-trade revenues each year toward the project.

According to its 2014 Business Plan, it still needs about $20 billion in yet-uncommitted funds for the IOS.

Texas Central Partners, the for-profit company spearheading the HSR project, has pledged not to use any public funding.

Private funding
Private funding has been elusive for California's HSR project thus far. Given the $20 billion it still needs to raise for the IOS, it's increasingly important that the California High-Speed Rail Authority woo private investors. During a research project earlier this year, I spoke with someone at CHSRA who seemed confident that the cap-and-trade funding mechanism makes them an attractive candidate for private funding, and that they will be able to get private loans they can pay back once the IOS is operational.

As stated above, Texas Central Partners has pledged to rely exclusively on private funding. So far, it has raised $75 million, on-target with its fundraising efforts but a drop in the bucket compared to the total $12 billion price-tag.

Public opinion
California voters narrowly passed the ballot measure with 52.7% of the vote, and public opinion has remained about the same since then: 53% of California residents support the project according to recent polling, while 42% oppose it (those numbers are virtually flipped for "Likely Voters"). The project remains a deeply divisive issue in the state.

I'm not able to find any polling on high-speed rail in Texas; I suspect that some polling will become available shortly, now that the route/alignment has been narrowed down. But given the fact that public funding won't be solicited for the project, how important will public opinion be to the projects success or failure?

Political support 
Governor Jerry Brown has been one of the project's most fervent supporters, having advocated for HSR in California since the 1970's. But Brown is term-limited, and it remains to be seen whether California's next governor will continue supporting the project. Gavin Newsom, for instance, has signaled that he would rather spend the money on other things.

The state legislature is generally supportive of the project, having passed legislation to place the bond sale initiative on the ballot back in 2008, and the cap-and-trade revenue allocation more recently. But there is vocal opposition in the legislature, as well - much of it from Republicans who think the project is too costly and from representatives of districts whose constituents are being displaced by eminent domain - and as the project drags on into the 2020's, that opposition may become stronger.

Texas is in an interesting position: because the project doesn't require public funding, that removes a particularly salient argument against HSR. Indeed, Governor Greg Abbott has largely avoided taking a position on the project, only stating that he wants taxpayer dollars and private property rights respected. 

The state legislature is deeply divided on HSR: a rider that would have killed the project by prohibiting the state Department of Transportation from spending any money on the project (including coordinating or overseeing construction) was removed from the budget this Spring, but many lawmakers, particularly those representing the rural communities between Houston and Dallas, remain opposed to the project.

Texas, then, doesn't have the public champion for HSR that California has in Jerry Brown, but without the necessity of public funding, it may not need one.

Land acquisition
Land acquisition is one of the greatest obstacles facing the project. As of January 2015, the state had acquired only 23% of the 1,332 parcels of land necessary to complete the IOS. There are dozens of eminent domain cases currently lingering in the courts, many having to do with the fact that the land being condemned is farmland whose owners argue they are losing not only land, but profits for which they should be compensated. These cases are thus delaying the project but also driving up costs.


Texas Central Partners has narrowed its alignment down to somewhere in the "Utility Corridor," which runs along a swath of power lines on public land. However, in order to maintain top speeds, it may have to cut through "prime farm and ranch land green fields," which would require eminent domain to acquire any privately held land. As California has seen, this land acquisition can run up costs, hurt public opinion, and delay construction.

Environmental clearance
Environmental clearance has been a sticking point for the California project, which has been sold as being more environmentally friendly than current transportation options. In November 2013, the Sacramento County Superior Court postponed the release of public funding because the project didn't have the necessary environmental clearance - but in July 2014, the Court of Appeals reversed that ruling and freed up the funding. The state more recently settled a pair of lawsuits filed under the California Environmental Quality Act (CEQA), but with five other environmental cases still lingering in the courts, the project may continue to see delays as additional clearance may become necessary. (Currently, the project has federal clearance, but not clearance under CEQA, which is part of what's at issue here.)
The Federal Railroad Administration is currently preparing the environmental impact statement, after which there will be opportunity for public comment and revision. That process is expected to take 18 to 24 months; there's no indication yet that anything in the statement will derail the project, but it's still early on in the process so we will have to see what gets revealed.

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