» California’s fast train network should be built, but can its backers maneuver around the difficult federal grant system that is supposed to fund it?
Here’s a little-known fact about California’s geography: The Central Valley, believe it or not, is situated between Los Angeles and San Francisco.
All kidding aside, the California High-Speed Rail Authority’s choice of the Fresno-Bakersfield route for the system’s first construction phase has produced a flurry of criticism, most recently from the California Legislative Analyst’s Office (LAO, a sort of CBO for California). The LAO released a report this week that suggests that the project be reevaluated, perhaps by being absorbed into Caltrans (the state department of transportation) or possibly by being refocused on other initial corridors, such as Los Angeles to Anaheim or San Francisco to San Jose, which could act as improved commuter rail corridors if the whole system were never completed.
The report has its inaccuracies and parts of it deserve the skewering Robert Cruickshank provided it. Most significantly, the notion repeated by the report that faced with limited funds it is “more realistic” to focus on shorter corridors within metropolitan areas rather than between them completely misunderstands the value of high-speed rail.
The stretch through the Central Valley — along which trains will travel at 220 mph — is the crucial investment for a fast train system in the state. By allowing trains to accelerate to extremely fast speeds not possible within metropolitan areas, the system can produce true time savings over automobile and air alternatives.* Without the Central Valley link, the network would simply be a series of improved commuter lines.
Unfortunately, incremental improvements, rather than major new investments, are what the financing system that has been developed so far by the U.S. Congress and Department of Transportation is better at producing.
The problem California is now encountering has been a difficulty with the federal intercity rail process since its formulation with the 2009 Stimulus. Ironically the grant-making process — supposedly designed with high-speed rail in mind — has been more effective in funding smaller upgrades to existing Amtrak corridors than it has in financing large construction programs like California High-Speed Rail. This was a foreseeable dilemma.
In August 2009, before states had even submitted their grant requests, I wrote that the allocation system as initially designed would do few favors for the advancement of major projects:
“The problem is that the FRA [Federal Railroad Administration] has no standardized system by which to hand out those funds; as of now, it looks like the Department of Transportation will simply distribute money every few months to the projects it deems most valuable. As a result, California could get a billion here for the Transbay Terminal or a billion there for a line between Bakersfield and Merced, but never receive a guarantee that the feds will fully fund their prescribed share of the entire corridor’s construction costs. This is a huge problem, because a public agency shouldn’t be expending massive amounts of money on sections of a train system it doesn’t know it can finish completely. The private partners California hopes to interest in its program will not be excited about helping out on a train line they aren’t sure will ever open.”
And indeed, my predictions were right on point: The DOT has distributed relatively small grants every few months to its preferred projects (the two I anticipated were in fact funded) but it has never said it would fully commit to the completion of the entire California line. This has produced the second thoughts and hesitation on the project we are now seeing on the part of California politicians afraid that they will never get the federal dollars for which they have been hoping.
What is needed — and what has been needed for more than two years — is a Full-Funding Grant Agreement for intercity rail projects. Like the system used by the Federal Transit Administration for New Starts major capital projects, this agreement would commit all relevant entities to the financing and construction of a specified “Minimum Operating Segment” (MOS) designed specifically to offer mobility improvements without necessitating other segments to be completed to be viable. For public transportation projects, this contract ensures that Washington, the local transit agency, and other funding entities will keep to their word and finish the project by contributing a pre-determined share of total costs. This has been an efficient and effective system,** so bringing it into the intercity rail arena is a no-brainer.
What is currently funded in California — the Central Valley section — would likely not qualify as an MOS because it has not been designed and studied as an independent project; alone, it would probably not attract enough riders to justify its cost. A high-speed project like California’s, which requires entirely new tracks, would preferably be analyzed as a whole (as it has been) and funded as such. The same is true for other proposed true high-speed rail routes, like Amtrak’s $117 billion Northeast Corridor plan or a new route between Dallas and Houston, which this week received a $15 million planning grant from the DOT. In order to be built effectively and efficiently, each would need a signature from the federal government that ensures that a certain percentage of costs would be covered.
Lacking the significant budgetary authority to commit to such a process in any place proposing a high-speed rail line costing more than $5 billion, however, the DOT has had to hand out grants to smaller aspects of the $43 billion California project with the hope that one day the funding will come through for the entire system. This puts California officials in a bind: Are they supposed to be able to to attract private investment with such few assurances from Washington? Are they supposed to proceed with construction, even if they cannot be sure that the whole project will be completed? The federal government’s grants imply that Washington will put up its share of the project’s cost, but they certainly do not guarantee it.
The LAO report effectively suggests that the project be put on hold pending the answers to these questions. If California cannot be sure that it can fund the entire system, the logic goes, perhaps it should not be building the central stretch. But abandoning the work the state has done so far, or just delaying the program in hope of more definite policies in the years ahead, is a recipe for giving up on the project altogether. Today, California has momentum on its project — a supportive governor and billions of dollars in the bank amassed just over the past two years — so in the face of confusion in Washington, it at least has a chance to move forward. If the state relaxed its grip now, would it be able to keep going?
* Frequently overlooked is the fact that some of the world’s most successful high-speed routes, whether between Paris and Lyon or between Barcelona and Madrid, are more accurately high-speed lines in the countryside between the cities. At the ends of the routes, within the metropolitan areas themselves, trains generally run on slower-speed older lines.
** With the exception of a certain project in New Jersey.
Image above: High-Speed Rail in California’s Central Valley, from California High-Speed Rail Authority