Richard Katz: High-Speed Rail’s Moment of Truth; Legislators Should Step Back

Audience Question: Richard, update us on the status of high speed rail, which I know has been an interest of yours: I keep reading that it’s dead in California, and if not it ought to be dead in California. What do you think?

Richard Katz: I think anytime a project goes from $40 billion to $60 billion just based on a report, somebody ought to take a serious look at where it’s going and what’s going on. It’s an example of a couple of competing interests and something to watch that we all should be careful of in the future. Deadlines are there for a good reason: we want to get money on the street; we want it to be spent as quickly as possible; we want it to be working for people today. We saw this on the 405 in ‘Carmageddon’. The opposition to projects now has a new tool. They don’t have to take you to the court and win: they just have to delay you past the deadline for TIGER grants or any of the federal money. And the reason we wound up not fighting those couple of nutjobs on Mulholland who were giving us grief on the 405 was the $190 million to build that Howard Berman got out of DC. If it wasn’t shovels-in-the-ground by a certain date, we were going to lose all that money. So we couldn’t afford to take the time to fight and win a silly lawsuit. Thus, there’s a new tool now that obstructionists have in just delaying. (Not that they needed more tools). I think we’re going to get a lot of it done, but as David Gratz was saying earlier, it’s going to be in bits and pieces. 

The second part of your question: “should it be dead?” You know, it’s going to die on its own, the rate that it’s going. The problem is Brown realized this late because he took the view at the beginning that this was Arnold’s train: he fought for it; he wanted it. Someday someone will be able to explain to me why the President of the United States thinks this is his “Go to the Moon” project à la Kennedy because it’s nothing like that. But he’s holding onto it like it is, the way it is. 

The train right now has got to step up and answer the critics. This whole thing about the ridership numbers, this whole thing about the business plan: you’ve got to fix it yourself first. If any of you guys here in any of your companies are willing to invest $20 billion dollars in the train based on what you know today, I’d much rather talk to you about the $9 billion I need for the MTA because it’s a better bet. So the fact that they keep dodging that because of what the ERR is based on is a problem. You’ve got to straighten up your own house. It’s not like the private sector is not going to run their own numbers, and that could be really embarrassing. The escalation of costs is frightening, and I still question some of the ridership numbers. That doesn’t make this a bad idea, but you’ve just got to be straight up about it. They want to build a station in Sun Valley off the 5. (For the life of me I cannot figure out why). Somebody saw it as a redevelopment spur, if you will. And they say, “we need a parking garage for 12,000 cars,” which I think is the size of one of the Disney parking lots. I thought about Sun Valley, which I used to represent: if you had every car that drives into that structure for a year, or maybe two, your total may not be 12,000. That comes from the ridership numbers. 

It’s been frustrating to spend two years on the authority, to have those hearings all over the state about where to build the first segment, and to have the feds come in and say, “thanks, appreciate it.” And they did it because there’s enthusiastic support for it in the Valley, unlike the peninsula or the South Bay cities and parts of Southern California. It’s the only truly high-speed part that they’re building. And it’ll be easier to clear environmental and get something in the ground by next September. 

What I think Jerry Brown realized was that although Arnold had promoted high-speed rail, saying, “those are Arnold’s appointments” is not convincing. If they’re not in the ground turning dirt by September, Jerry has to write a three-and-a-half billion-dollar check and give it back to the feds. And I’m pretty sure he doesn’t want to do that. So they’re in this dilemma: how do you fix it? There’s no time-out that you can take to fix it, which is what they need. They need a time-out that allows them to reorganize. They need to sit down with the legislature and say, “here’s where we’re going.” And the legislature has to get off their backs and give them breathing room. And I think they also have to send a message that any of these bills that Alan Lowenthal and others are running that suggest that high-speed rail ought to be part of the Business, Transportation and Housing Agency, or Caltrans, or something like that, is just nuts and will kill private investment. Who’s going to put 20 billion of private money in high-speed rail if it’s a subsidiary of Caltrans? 

They have got a lot of problems. Jerry has, however, made some good appointments. I think Matt Toledo, the publisher of the L.A. Business Journal who took my slot, is good. I was disappointed that Jerry put a Northern California person on when Curt Pringle resigned because that cost us one more southern vote on that, and that does play a role. Tom Umberg’s trying to do a good job as chair; he’s as straight as they come. And it’s a thankless job at this point. 

Audience Question (David Abel): Could you update us on MetroLink’s ‘Story’?

Richard Katz: MetroLink’s a much better story. I’m proud of the changes that have taken place in MetroLink in the last year and a half. Our goal is to be the safest railroad in America in over the next two and a half years. 

We’re well on our way to doing it. We hired a CEO about a year and a half ago named John Fenton; he talks railroad. We’ve got a better relationship with other railroads than we’ve ever had before. 

We are the first railroad in the country to have the guardian fleet of crash energy management cars, which we helped design. These are cars that absorb the contact and disperse it through the whole car so you’ll never see the same kind of damage that took place in Chatsworth. These cars have cushioned bumpers to offset that. We are the first in the country to have inward and outward facing cameras in the cab of the train to help us monitor and make sure people are following the rules. And in case of an accident we have real time video of what’s going on to determine what took place and what we may have to change or not change. 

The crews that work at MetroLink are really extraordinary. We’ve got our struggles; money is hard to come by, and we have five member agencies who we depend on. Fenton’s business plan actually is to grow the system so that we can generate more revenue and be more creative. We did a train for the U2 concerts in Anaheim. The ticket promoters called up on Tuesday before a Friday-Saturday concert and said, “can you help us?” So we ran a special train Friday and Saturday from L.A. to Anaheim and from Oceanside to Anaheim. 11,00 boardings. We typically do 42,00 boardings on a weekday, so 11,000 is a significant number of people, particularly if 99 percent have either never heard of MetroLink before or had never been on a train. Apparently the great activity on board was making fun of all the people stuck in traffic on I-5 as the train cruised by. 

Also, we’ve sat down with AEG and L.A. Live. They have a goal of getting 30 to 40 percent of their people in the football stadium by mass transit; that’s a huge challenge in LA. We’re going to partner with them, as is Metro, to make that happen. We can get them to LA. Getting 30,000 folks from Union Station to Farmers Field is a  challenge. 

Ridership is growing. Last year we were the only railroad in the country not to run a deficit. Our budget is 178 million a year. Amtrak has a 600 million dollar deficit. Last year John Fenton brought our spending in 10 percent under budget, and that’s after paying for the cameras, after paying for a bunch of our security improvements, and after paying for a whole series of  consultants and forensic accountants to sort out all the bad stuff that had taken place under the prior leadership. 10 percent under budget, with all that stuff going on, is pretty impressive, and we think good things are ahead. 

Last Audience Question: Richard, any thoughts on what must be done to have a METRO line to reach LAX?

Richard Katz: The best shot to get a train to LAX would be to tie it to a 405 reliever project, and in my mind it may be more important actually than the subway. We do a lot of East-West stuff in this town but very little North-South. That’s where massive congestion is, but I’m not brave enough to go back to the people in the 405 corridor when we finish and say, “we want to tear it up again.” We’re looking at tunnels: a tunnel from Van Nuys Civic Center roughly to the subway station, either in Westwood or at the VA. One tunnel would be for mass transit, the other tunnel for hot lines. We could finance building the tunnel as a 3P project. It’s still in the preliminary stages. We’re looking at doing that as a way to get through there, and the logical thing will then be the extension from there to LAX. 

We did a carmageddon press conference at Sepulveda and Ventura overlooking it, and of course that was the day there was no traffic on the 405. I remember Tom Bradley and I stood on that roof in 1985 or 86 and talked about a high-speed train from LAX to Palmdale. So we’re still on it.