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Funding/subsidies worry potential partners in California's bullet train project
Author: Bob
Date: 10-17-2015 - 09:42
Construction of the first section of the planned Los Angeles to San Francisco rail line began earlier this year. But the state has only half the $31 billion needed to complete the initial operating segment between Burbank and Merced.
The appeal for financial and technical partners drew responses from across Europe, Asia and the U.S. But none of the companies expressed a readiness to invest their own money, and some included reservations about the risks.
The state, which has been counting on private investment as part of its funding plans, disclosed receipt of the responses last week. They were released Friday after Public Records Act requests were filed by The Times and other organizations.
Subsidiaries of the Spanish company Ferrovial SA wrote that most high-speed rail systems around the world require operating subsidies and that the same will probably be true for California's bullet train.
"We believe it is highly unlikely that the [California system] will turn an operating profit within the first 10 years of operation," the company's 37-page submission said. "More likely, [the system] will require large government subsidies for years to come."
Both German rail producer Siemens and Spanish construction company Sacyr Concesiones expressed similar concerns about whether the initial 300-mile segment between the Central and San Fernando valleys could operate profitably.
Sacyr warned that "it is our opinion that the revenue from ridership may not be sufficient to cover all [operation and maintenance] cost."
As part of the taxpayer protections written in to a voter-approved plan to provide funding to build the line, public subsidies for operation of passenger service were banned. State officials have consistently projected the train will turn a profit as soon as it begins carrying riders. The issue is the subject of a lawsuit scheduled to go to trial next year.
Dan Richard, the rail authority chairman, dismissed the suggestions that public subsidies would be needed once the trains are rolling, asserting that every major high-speed rail system in the world operates without subsidies.
That point has been in dispute for years, with critics asserting that most foreign systems are heavily subsidized and supporters arguing that high-speed rail networks operate in the black.
http://touch.latimes.com/#section/1780/article/p2p-84734733/
The appeal for financial and technical partners drew responses from across Europe, Asia and the U.S. But none of the companies expressed a readiness to invest their own money, and some included reservations about the risks.
The state, which has been counting on private investment as part of its funding plans, disclosed receipt of the responses last week. They were released Friday after Public Records Act requests were filed by The Times and other organizations.
Subsidiaries of the Spanish company Ferrovial SA wrote that most high-speed rail systems around the world require operating subsidies and that the same will probably be true for California's bullet train.
"We believe it is highly unlikely that the [California system] will turn an operating profit within the first 10 years of operation," the company's 37-page submission said. "More likely, [the system] will require large government subsidies for years to come."
Both German rail producer Siemens and Spanish construction company Sacyr Concesiones expressed similar concerns about whether the initial 300-mile segment between the Central and San Fernando valleys could operate profitably.
Sacyr warned that "it is our opinion that the revenue from ridership may not be sufficient to cover all [operation and maintenance] cost."
As part of the taxpayer protections written in to a voter-approved plan to provide funding to build the line, public subsidies for operation of passenger service were banned. State officials have consistently projected the train will turn a profit as soon as it begins carrying riders. The issue is the subject of a lawsuit scheduled to go to trial next year.
Dan Richard, the rail authority chairman, dismissed the suggestions that public subsidies would be needed once the trains are rolling, asserting that every major high-speed rail system in the world operates without subsidies.
That point has been in dispute for years, with critics asserting that most foreign systems are heavily subsidized and supporters arguing that high-speed rail networks operate in the black.
http://touch.latimes.com/#section/1780/article/p2p-84734733/
Funding/subsidies worry potential partners in California's bullet train project