[SF Examiner]

via link from Trainnews.org


A new report says California’s proposed high-speed railroad could cost state taxpayers more than 3X the official $43 billion cost projection. Three Bay Area analysts who have followed the project now estimate a $138 billion total cost.

Increased costs comes from new construction developments and lower-than-expected federal contributions.

The California High Speed Rail Authority expected about $18 billion from the federal government. In a new era of fiscal austerity, it’s unlikely to receive more than the $3 billion it has already secured.

Cost estimates for the Fresno-to-Bakersfield segment were revised from $7 billion to between $10 million and $13.9 billion, an increase will cause construction costs to hit $66 billion.

CAHSR has secured $9 billion in state bond revenue, but estimates that the state would have to borrow $4.6 billion a year for 30 years — resulting in a total cost of $138 billion.
The authors noted “That would double California’s current debt.”

Currently, the projected cost of the state’s high-speed rail project is $43 billion. The new report breaks down the revised spending:

$66B Revised overall budget for project
$3.3B Federal grant funding
$9B State bond funding
$5.3B Local government loans
$48.2B Private sector loans
$4.6B Annual payment for loans
30 years Duration of payback for loans
$138B Total debt repayment of project

The report was complied by William Warren, Stanford management professor Alain Enthoven and former World Bank economist William Grindley.


Investors might wait to back rail project until trains are running
[LA Times]

Private investors may not be willing to invest in the California bullet train project until after it begins operating, the California High-Speed Rail Authority said in a letter to key legislators, an acknowledgment that again raises serious questions about how the state is going to fund the $43-billion construction over the next decade.

Originally, the authority hoped to build the system based on three sources of funding: federal, state and private money. The letter by the authority, sent Friday, said for the first time that private investors are unlikely to put up cash before the system is operating.

Although it is not impossible to find some private money, the letter said “the authority is planning for a more likely market scenario in which private capital is attracted based on the revenues of the project once revenues are proven.” The failure to attract private investors earlier is seen by many critics as evidence that the state’s plan is excessively risky.


Time to pull the plug on this pipe dream?