High Speed Rail: Truth or Consequences
Last month, on Crosscurrents, we aired “The Planning Problem” - a documentary by Nathanael Johnson exploring how and why big budget projects like “The Big Dig” in Boston or the eastern span of the Bay Bridge right here cost several times more than they’re expected to. Transportation planning expert Bent Flyvbjerg told us 90 percent of such projects go over budget, and there are three main reasons why: statistical errors, overoptimism and something he calls “strategic misrepresentation.”
BENT FLYVBJERG: It’s not irrational lying. It’s actually rational. So, for instance, you go to Washington, D.C. to get money for projects in San Francisco or Chicago or Miami, you have this incentive that the people will try to get as much money out of D.C. as possible with whatever means it takes because they are in competition with other cities. And how do you do that? You do it by underestimating the costs and overestimating the benefits.
QUENTIN KOPP: The transportation projects incur often cost overruns from estimated original costs. But that is not universally true.
Judge Quentin Kopp is one of nine members of the board of the California High Speed Rail Authority, charged with getting the fast train to the station, on time and on budget. Judge Kopp is a well-respected proponent of high speed rail, but his project does have its critics, like Sacramento Bee columnist Dan Walters.
DAN WALTERS: The Authority has yet to present a plan that has realistic ridership, realistic financial numbers, and shows that the thing would actually work and fill some demonstrated public need.
Earlier this summer, the Institute of Transportation Studies at UC Berkeley released a report finding the High Speed Rail Authority’s ridership projections to be "unreliable." Yet when it comes to “public need,” a study released last week showed more than three-quarters of surveyed Californians support high speed rail. And a couple of Novembers ago, voters did approve a nearly $10 billion bond to help get the $43 billion train project rolling.
To help sort through this conflicting information, KALW's Ben Trefny called Dan Walters, a longtime Sacramento Bee columnist who's been following this issue closely and asked him, 'What exactly are we on the hook for?”
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DAN WALTERS: That money cannot be spent, under the terms of the bond measure itself passed by voters, unless there is a full commitment of financing for the system. You can’t just go spend ten billion and hope that you get something else down the road, it doesn’t work that way. And so you have to have a complete system plan that’s viable before the thing.
So everything is tied to something else. The idea of getting private financing or even federal money is contingent on ridership data, which then generates fare data, because the fares are supposed to cover all the operating costs of the system. And the ridership numbers that have been put out have been excoriated by no less than the University of California’s own Institute of Transportation Studies. They just say they’re totally unreliable, totally unrealistic.
So you have a whole bunch of moving parts here, but you can’t. You’ve got to at some point stop them from moving, and you have to have something that’s cogent. Something that hangs together in terms of ridership, in terms of financing, in terms of operating costs, in terms of route – the route is still in dispute – before you can start. If you start building a system without all this in place, first of all you’re violating the spirit, if not the letter, of the ballot measure that was passed, and secondly, you’re committing the state to kind of a bottomless pit of money without any idea as to what lies on the other end.
BEN TREFNY: Do you think that high speed rail is necessary for the transportation future of California with the state’s population growing as it is?
WALTERS: Not necessarily. High speed rail, first of all we don’t know what we’re really talking about here. Are you really talking about high speed rail? Are you talking about bullet trains that will zip people from San Francisco to Los Angeles in two hours, the way they kind of imply? Well, you can’t do that and also serve Fresno, Merced, Modesto, and so forth, which they’re also promising to the Valley. So then they’re talking about, ‘Well, we’ll have some bullet trains, we’ll have some slower trains that stop along the way.’ But they seem to be counting the whole thing as bullet train stuff even though really they’re not talking about bullet trains. They’re really talking about creating two train systems, and how they would actually fit together.
In my most recent column on this, I pointed out that they’re claiming, ‘Well look, we did this survey, and 70 percent of people say they would use it. People who travel between Northern California and Southern say they’d use it.’ But the question wasn’t asked, ‘Would you use a bullet train?’ The question was asked, ‘Would you use a bullet train if it was cheaper than flying or driving?’ Well, OK, why wouldn’t you say that? Why wouldn’t you respond positively? But, in fact, they cannot prove that it would be cheaper than flying or driving. They just make this, they put an assumption in there that is basically unsupported by the reality of it.
What if you tell people the [fare of the] train ticket – they’re projecting a fare, for example, between San Francisco and Los Angeles of about $105 in current dollars. Rather than saying that would be cheaper than driving or flying, why don’t you say what it costs to drive or fly? It costs about $60 in gas, if you count it that way. It costs about $200 in auto mile travel if you do it at 50 cents a mile, if you take in the full account of insurance and everything else. But people don’t make decisions based on all that. They make [it on], ‘How much gas is it going to take me?’ And it only counts if there’s only one person in the car. If you get two or three people in the car, then the scale decreases.
They talk about [a train ticket] being cheaper than an airline fare, but they’re using the maximum possible airline fare to make that calculation, rather than the real fares. You can buy a ticket right now between San Francisco and LA on Southwest Airlines for about $80. They use $150, because that’s the highest possible fare that Southwest will charge as a basis of comparison. But in fact you don’t pay $150 for that Southwest Airlines. Most people don’t. They pay the $80 because they buy it seven days in advance or something like that. So those are the kinds of micro sorts of things that create a scenario – ‘would you take the train if it was cheaper than driving or flying’--and based on that assumption most people would say yes, and that’s exactly what happened. That’s propaganda, that’s not information.
What the High Speed Rail Authority has done is they’ve paid $9 million to a high-powered public relations firm, Ogilvy, to sell this project to the media and to the public, and this poll was part of that. They’re using our money to propagandize us, and I do not think that is appropriate at all.
TREFNY: Do you think it’ll end up happening?
WALTERS: I don’t think it’ll ever happen because I do not think they can ever get the money together from private investors. Because the private investors are going to want what the Authority itself says in its own business plan: revenue guarantees. And revenue guarantees mean you have to be willing to give them money out of the public purse to guarantee a certain level of revenue so they will justify their investment, and that’s exactly what’s prohibited by the bond measure that voters passed. In other words, they would want something that is illegal to give them.
I think what they’ll try to do is this: I think there are two scenarios that are more realistic. One of them, they’ll spend the other $950 million that’s not high speed rail on commuter rail improvements on the San Francisco peninsula and in Southern California and let it go at that. That’s one possibility.
The other possibility is they’ll actually try to put a piece of track in place because the federal money that they’ve so far committed--and it’s only a couple of billion dollars--is contingent on having something actually going by 2012. And that they’ll try to get some dirt moved and some track laid for a so-called demonstration project, because that would then psychologically commit us to doing whatever is necessary to finish it, just like the Bay Bridge. Once you start building it’s hard to stop it. Or the Big Dig in Boston, the same sort of way. And then we would say, ‘Well, we’ve got to pass another bond issue, we’ve got to do this, we’ve got to put on a special tax, we’ve got to do this because we’re committed to it now, we’ve started building it,’ rather than do it the right way, which is [to] lay out a realistic plan. Don’t try to spin us. Don’t try to propagandize us. Lay out a realistic plan. Tell us what this thing will really cost. What it’ll really cost to operate it. How much the ridership is really likely to be. Those are the sort of judgments that private investors are going to make. And they’ve already basically told them, ‘Hey, unless you give us revenue guarantees, we don’t think this thing makes sense for us.’
So you have to do it. Why try to fool the public? When government gets into the business of propagandizing its citizens, even for good causes, even for stopping smoking or something like that, it starts your way down a slippery slope. Suddenly the taxpayers are paying for themselves to be manipulated by, for political reasons, and that’s not healthy, no matter what the so-called good cause may be. Because it can just as easily be used for bad causes, can’t it? I mean, that’s just not a healthy thing to do in a supposedly free and open society.
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Quentin Kopp is a former San Francisco supervisor, a former state senator and a retired superior court judge. He was chairman of the California High-Speed Rail Authority when voters passed that nearly $10 billion bond in 2008, and he still serves on the board. Kopp helped the state secure $2.25 billion in federal funds, and he’s working on a proposal, to be submitted Friday, for up to a billion more. It’s a lot of money. And before we go ahead and spend it, recall the words of planning expert Bent Flyvbjerg. He studied hundreds of major infrastructure projects around the world and found that 90 percent of them go over budget. Flyvbherg spoke with KALW’s Nathanael Johnson in his documentary, “The Planning Problem.”
BENT FLYVBJERG: Urban rail projects in the U.S. generally have a dismal track record. There are a few successes, but most of them don’t look good. Therefore you would have to be extra careful in the planning of a big thing like the California high-speed rail.
So we presented that to California High-Speed Rail Authority board member Quentin Kopp.
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QUENTIN KOPP: Well there’s no question about the fact of a project like this, which is unprecedented, has to be watched carefully. That’s the responsibility of the nine-member board of directors of the Authority. To say that every transportation project has caused overruns is gilding a lily because that’s not true. There are examples, I can think of one light rail line project in Seattle, Washington, which was under the estimated and budgeted amount. So it’s an overstatement to cast the high-speed rail project as inevitably being subject to a cost overrun.
And secondly, the estimated cost of the first phase, which is San Francisco to Anaheim, through Los Angeles and some other cities, which I can explain as requested, is $42.6 billion. But it is erroneous to put that amount in terms of 2009 dollars. That figure is based on year of expenditure dollars. And it’s based on year of expenditure dollars precisely because of a requirement of the Secretary of Transportation of the United States in order to qualify for federal funds from the American Recovery and Investment Act. So that $42.6 billion is realistic, not in terms of 2009 dollars, but in terms of 2012, 2013, so forth, up to the year 2020.
TREFNY: So just to be clear, you’re saying then that come 2020, it will still be at $42 billion.
KOPP: That’s correct. That’s as good a figure as the High-Speed Rail Authority and the Department of Transportation of the United States and the Federal Railroad Administration, which participated, achieved.
TREFNY: So with a history though, as Bent Flyvbjerg, who studies major program management at Oxford University has found, and has covered in this documentary, he found 90 percent of major projects end up having cost overruns. And those also have numerous watchdogs on them. But still, the Big Dig goes $10 billion over.
KOPP: Oh, the Big Dig is not even in the same class.
TREFNY: The Bay Bridge goes billions over.
KOPP: The Bay Bridge isn’t in the same classification. The extra costs on the Bay Bridge, I’m somewhat familiar with because when I was in the State Senate, it was my legislation that created the original funding based upon an estimate from the Department of Transportation of the state of California, which did not take into account two or more years of delay caused by the then mayors of Oakland and San Francisco because of their insistence that a different design alignment be established and then implemented by Caltrans.
TREFNY: But then we have costs tripling by most estimates at that point. I mean, two years delays and…
KOPP: I don’t argue with the fact that transportation projects often incur cost overruns from estimated original costs. But that is not universally true. And most of those projects are not based upon year of expenditure costs. That is a significant difference, and that’s a policy established by the Secretary of Transportation and it’s a sensible policy. And that’s the policy that the California High-Speed Rail Authority has used as of December 2009, and will continue to use.
TREFNY: How can you make sure when you’re projecting costs and ridership, which are two of the big things in question, when you’re projecting 20 years down the line, how can you be sure that your estimate is as good as it can possibly be?
KOPP: By the quality of the engineers and the cost experts and the ridership experts who supply the data for those estimates. You get the best possible firms and the best possible people that you can. I’m satisfied that the High-Speed Rail Authority has obtained the services of the best experts in terms of ridership forecasts and in terms of construction costs and engineering and design costs.
TREFNY: The researcher who we spoke with, Bent Flyvbjerg, he said there are three general reasons why costs go over. Statistical mistakes is one, over optimism is another and strategic misrepresentation is the third, which is what he then described as a euphemism for just trying to sell something to people.
KOPP: Hyperbole about a project.
TREFNY: Which is a reality in a lot of cases.
KOPP: Well, it may be a reality for many people in public office, with the public trust, but it’s not this public official’s reality, and never has been. I’ll let my reputation for fiscal discipline, for preaching it, for practicing, speak for itself; for 26 years of elected office on the San Francisco Board of Supervisors and the California State Senate. With respect to statistical errors or statistical fallibility, of course that’s always possible. And that was identified about a year ago with respect to one of the ridership projections, and it was a decimal point error. And it’s corrected and then recalculated. Same thing is true, for example, two, three years ago in terms of projecting what a one-way ticket on high-speed rail to Los Angeles would be. As I recall, the estimate was $55. That was corrected as of last December to about $103 to $105.
KOPP: And that data will be refined as conditions change. Some costs will decline. For example, two years ago, in the program EIR, it was estimated the cost of right away acquisition would be about $4 billion. That estimate is less than $4 billion now because real property values have declined over the past two years. The same will occur with respect to construction bids, construction bids for other projects, because we’re not going to construction until the year 2012, but 2010 construction bids are less than they have been for major governmental and private projects, such private projects as are being built now.
TREFNY: Well, with cost projection for how much it would cost for a one-way trip from San Francisco to Los Angeles, if that estimate has almost doubled since the time that voters helped pass this nearly $10 billion bond, I mean, that’s a much different number from what it was before.
KOPP: It’s different, and so the…
TREFNY: It could affect ridership.
KOPP: It could affect ridership, and price increases could affect ridership by air, and could affect ridership in terms of motor vehicle traffic. Nobody sits down to predict what a one-way airplane ticket from San Francisco to Los Angeles will be in the year 2015 or 2016. Nobody predicts what it will cost to drive from San Francisco to Los Angeles in the year 2015, 2016, 2020. The High-Speed Rail Authority has an obligation and has, to the best of its ability, to calculate what that will be for high-speed rail. The High-Speed Rail Authority is conveying a sense that is deeply felt of responsibility to provide, to the extent humanly possible, the best kind of forecast, whether it’s a right of way acquisition, an engineering design expense, a construction cost, or operational costs, including ticket prices.
TREFNY: So for Californians who are still dealing with a very difficult economy, a lot of people have lost their jobs, even since they passed the bond measure, and they’re able to fly or drive to Los Angeles from here, and they may be souring on the idea of putting so much money into such a large infrastructure project at this point. What would you tell them that says this is still worth doing?
KOPP: Well, I don’t have to tell them because they already believe it. What basis do I say that? As indicated in the last couple of days, two firms, Fairbank, Maslin, Maullin Metz & Associates and Public Opinion Strategies, pursuant to request, surveyed Californians, and the result of the survey was perhaps surprising to those who might express the same question in the same way as you just expressed it. Some 76 percent indicated support for the project. 34 percent said they want the project to move as fast as possible. 42 percent said they’d like to see the trains operate with some concerns over costs and timing. And that’s expectable and entirely natural. Only 13 percent indicated outright opposition to the project. As a matter of fact, in the Bay Area, where 277 residents were surveyed, 40 percent wanted it built as soon as possible, which was six points higher than the statewide total, and just 10 percent in the Bay Area wanted it stopped, which was three points lower than the California average.
TREFNY: So those numbers and statistics, they show favorable feelings toward high-speed rail, but it’s possible to use statistics in any way that you want, really. You surveyed X number of people. These are the ones you’re going to then publicize and share because it shows favoritism.
KOPP: Well, I don’t understand that. This was a poll with questions. Do you support California high-speed rail? Yes or no?
TREFNY: Did it offer alternatives?
KOPP: Yes, yes. It offered alternatives, how would you get from here to Los Angeles?
TREFNY: What if we expanded the airports?
KOPP: It showed more support for high-speed rail than either rail or motor vehicles.
TREFNY: Than improving the highway system or doing…
KOPP: I can’t recall if that was a specific question. I think it was. I think it was.
TREFNY: Was that commissioned by you?
KOPP: It wasn’t commissioned by us. It was commissioned by Ogilvy, which is...
TREFNY: Your public relations firm.
KOPP: The public relations firm, but it was not part of our contract with Ogilvy. In other words, Ogilvy did this independently.
TREFNY: So you’ll be going to DC to compete for more funding because there’s another $2.3 billion that’s on the table there, that was not claimed by other high-speed rail projects from around the country. What will you tell DC about why you need that money?
KOPP: Well, when you say go, you mean in a figurative sense.
TREFNY: Not you yourself…
KOPP: We’re submitting an application by April 6.
TREFNY: Your paperwork will go to DC.
KOPP: Yeah, right. The paperwork will go to DC.
TREFNY: Your electronic documents will go to DC.
KOPP: It will be based upon the schedule of the project, the fact that we’re on schedule to have a certified EIR by Sept. 30, 2011. We’re scheduled to obligate funds that are granted by Sept. 30, 2012.This particular survey, I’m sure will be a part of the presentation to assure people in the Department of Transportation that Californians want high-speed rail. And anything else that…
TREFNY: And that your budget predictions are holding true?
KOPP: Yeah. Yeah. That we’ve complied with the requirement of estimating cost and time in terms of years of spending the money. And that ought to count for a lot.
TREFNY: And everything that you’re going to be telling the federal government, this is not strategic misrepresentation in any way?
Judge Quentin Kopp is a board member with the California High Speed Rail Authority, and served as chair from August 2006 to July 2009. You can find the rail authority’s most recent business plan here.
Sacramento Bee columnist Dan Walters has covered California issues for more than forty years. You can find his latest column on high speed rail here.
What do you think about California’s high speed rail project? Do you believe it will come in on time and on budget? Does it matter, with California’s population projected to rise and its oil dependency increasingly questioned? Join the discussion on our Facebook page.