California Voters May Decide High Speed Rail's Fate at Ballot Box in November 2008

MIR last interview you in July 2003, around the time that you released the EIR for the California high-speed rail project. A $10 billion bond is now scheduled for the November statewide ballot. Bring us up to speed on California high-speed rail.

The primary thing that has taken place is that we have actually now completed our program-level EIR. That was completed in November 2005 for most of 800-mile route, except for the entrance to the Bay Area. That part is almost finished. By the time the bond measure goes before the voters, the entire route will have clearance with knowledge of where the routes are going to be and where the stations are going to be.

In addition to that, we have done our ridership revenue estimates, because the last one we had was in the late ‘90s, so it was close to ten years old. The new ridership revenue modeling showed that the ridership, because the cost of fuel and other things have changed substantially, is more than twice what we had anticipated before. It's the same story with revenue. Our surplus revenue estimate is over $1 billion by 2030.

In addition to that, we are engaged in the project-level EIR between L.A. and Orange County. We entered into an agreement with Orange County Transportation Authority to expedite the project, because they want to make specific improvements between Anaheim and L.A. That's moving ahead.

We have brought in a team of financial consultants from Lehman Brothers and IMG Group to look at the financing of the project for Phase 1, which is San Francisco to Anaheim. We expect it to cost about $30 billion. That financing plan is in effect.

Finally, and probably one of the most significant elements, is the encouragement of the governor and his appointees to the board, who are now moving aggressively towards exploring the concept of public-private partnership to bring private sector financing to the project and greatly reduce the cost for taxpayers. That activity is in full co-operation mode, and we expect to get at least a third of the cost of the project from private sources.

Describe the proposed High Speed Rail project, especially Phase 1.

The whole project is an 800-mile long, state-of-the-art, grade-separated 220-mph train. Phase 1 is from San Francisco to Anaheim. To reach decisions as to where to start, where to build the first phase, and how to proceed with the budget, we looked at the cost and revenue potentials and operational benefits of many, many pairs of stations. We found out the most tactical and profitable one is the segment between Anaheim and San Francisco. That segment is close to 500 miles long, and it will take about ten years to build. Once it's completed, it will have substantial-close to $1 billion a year-surplus revenues. That revenue will go toward financing the rest of the project.

Within that, we have to build it in segments. Even Phase 1 will take 10-12 years. We are now looking at L.A./Anaheim being one of the early segments, San Francisco/San Jose being another possibility, L.A./Palmdale, and L.A./Riverside-doing these as the first segments where we can actually build the structure, the tracks, and we can put in the systems for operation. But if we don't have our trains on it, at least Metrolink or CalTrain or some other trains can use it and the public will benefit from it.

Are we talking about a cost of $50 million a mile? What are the financial analysts telling you the cost is to put this new service into place?

It's roughly $50 million a mile. Obviously in urban areas, it's more expensive. Places with more grade crossings will drive up the cost. In the L.A.-to-Anaheim section, many of the grade crossings have already been done for Metrolink and freight and other purposes. Many more remain to be done. Orange County plans to make an investment in adding more tracks and other improvements in that corridor. So the synergy there is that we can put our dollars with the Orange County dollars and get the whole thing completed. We will eventually be able to use it, but meanwhile, Metrolink can use it, as well.

The High-Speed Rail Authority and its efforts have been on and off the political and legislative agenda for much of a decade. What factors explain going to the ballot this fall with a bond measure?

There are many factors. One of the factors is the element of time. The longer people hear about it and the more time we have to actually explain to people what it is and why they benefit from it, we get people to realize more and more that high-speed rail is to not only get people from L.A. to San Francisco but gets people from any place within that corridor to another place within that corridor. It's not just a single-purpose for L.A. to San Francisco, but also serves the Central Valley, Orange County, and all the rest of the places. That has taken some time for people to recognize.

We have, through our environmental process, managed to get it to a critical stage where many of the controversies have been resolved. It's now ready to start the process of construction.

In addition, things have been happening in the outside world. The price of gas has gone to $4.00 per gallon. People are becoming far more conscious about greenhouse gases and the fact that we need to reduce our dependence on foreign oil. Air travel has become more and more cumbersome and unpleasant.

Today, the high-speed train enjoys the strongest political support since the beginning of the discussion of the high-speed train. The governor, the leadership in the Senate and the Assembly, and a large number of legislators all support it. The chambers of commerce are beginning to jump in and become more supportive. It's one of those things where you have the business community and the environmental community joining forces to support something, and it gets to be very, very serious.

What technology has the High-Speed Rail Authority chosen to implement?

The technology that we chose is the steel wheel on tracks. The reason we chose that is, in our environmental process, we came to the realization that, in urban areas, particularly San Francisco to San Jose, there is virtually no practical way to create a corridor to build an infrastructure exclusively for high-speed trains. In order to do that, our only choice would have been to tunnel them under the whole region. The only way we could get from San Jose to San Francisco was to be in the CalTrain corridor and share tracks with them, because they weren't ready to give it up. They are using the steel wheel already, so we have to create the wheels and tracks to match theirs so we can put our trains on their tracks and use them jointly.

The same situation is becoming clear in Southern California-L.A. to Orange, L.A. to Palmdale, L.A. to Riverside. For all of those segments, once we get close to the urban areas, we just can't have a separate 50-foot right-of-way going straight into, say, Union Station and have it exclusively to ourselves. There isn't enough space. That is why we went to steel wheels. And it's the same reason that the Germans and the French and everybody else has gone to steel wheels, as well, because they already had the tracks and stations in the big cities, and they were planning to use them for other purposes, as well.

What are the bond measure's particulars?

The bond measure is $9.95 billion dollars. It's on the ballot for this November. Nine billion of that is for high-speed trains. That is to be matched with at least 50 percent from other sources. We have $9 billion, but we have to get another $9 billion or so from other sources, be it federal or private, in order to use the $9 billion from the state. If we can't get the matching money, we won't be able to spend the $9 billion. That is about $18 billion of construction money. We obviously expect to get $9-10 billion from private sources.

The other $950 million is for other rail improvements outside the high-speed train that will complement the high-speed train, like Metrolink, BART, and some of the light rail projects in Southern California. For example, the money in Los Angeles will go to MTA, and MTA will decide where to put it. The money is for complementary services to high-speed trains that will go to each region based on the formula, and they will decide where they're going to put it and how they're going to use it.

MIR has reported a number of proposals coming out Congress and from various governors about rebuilding America-a time for investing in infrastructure for the 21st century. How does that echo the federal effort and fit into your work with the High-Speed Rail Authority in California?

At the federal level, it's finally becoming the reality. The Congress has been talking about creating inter-city high-speed rail programs for the last couple of years, and the commission created by the U.S. Congress to look at the future of transportation funding and where it should be met last December. One of the things that the commission recommended was that the federal government should recognize for the first time that the inter-city high-speed rail trains are going to be a fundamental part of transportation and there should be a new category of federal funding for those projects.

The U.S. Congress is leading that way-we've talked to Senator Feinstein and Senator Boxer and our congressional delegations, and they've all committed to working toward the creation of a new rail program at the federal level, where the federal government would be funding projects like ours and in the Northeast corridor and other areas that need high-speed trains. We are pretty certain that the next federal transportation authorization that will be under a new administration will create such a program. This administration obviously has not and will not be supportive of it, but the term is up in 2009.

Even the Federal Aviation Administration has finally come out and said that air service alone is not going to meet the needs of some of these corridors, and the country and states should look at building high-speed trains as a way of reducing congestion at airports like LAX and SFO. Again, there's a merging of all these things happening that makes this the perfect time to move forward, because of all the external and internal forces that are moving in that direction and coming together.

If we talk again in December, what will we be talking about?

If we talk in December, we'll be talking about why it's taking so long to get L.A. to Orange County or L.A. to whatever place going, and why we aren't awarding contracts and why we're not seeing construction. From there on, that's what we'll be asking.