Quentin Kopp questions "blended" high-speed rail
High-speed rail: Inflated ridership and revenue numbers
By Kathy Hamilton
But this brings up a larger question: if the original ridership estimates were large enough to justify 10 trains an hour---key in determining the Pacheco vs Altamont route---and now two to four are planned per commuter hour, are we headed for a subsidy? Over the years there have been reductions in ridership numbers and even the cost of a ticket has come down, but the revenue remains strong. How can this be?
Grossly underestimated operating costs no doubt played a significant role in how the Authority can claim no subsidy will be required. Other high-speed rail projects have operating costs more than double the operating costs claimed by the HSRA. In the bill that passed appropriations, SB 1029, there is a requirement that updated ridership numbers as well as the operating costs be studied compared with other high-speed rail systems:
The High-Speed Rail Authority shall, as part of its January 1, 2014, Business Plan include: A proposed approach for improving a) demand projects (ridership) b) operations and maintenance cost models, and c) benefit-cost analysis as applied to future project decisions. The Authority shall also submit a copy of the study by the Union Internationale des Chemins de Fer (the international union of railways) examining how the authority’s estimated operating costs for high-speed rail compare to high-speed rail systems in other countries.
...Ridership numbers for the system have had some minor tweaks over the past few years, and the numbers have been scaled down, but the foundation of some of the data has not changed since the early 2000’s. Unfortunately these updated numbers are being prepared by the same company, Cambridge Systematics, that did the last ridership numbers and they were suspect.
See what various professors at the University of California, Berkeley, Institute of Transportation had to say about the work done by them. In short, “The model is not fit for public policy making. You cannot tell if the project will make money or lose money.”
And as a reminder the Ridership Peer Review Panel was reviewing the ridership data as well. They were instructed by CEO, then Roelof van Ark, that the numbers were good enough to move forward. This team, hired by van Ark, was a purely internal review team, an advisory group, so to speak. It was disclosed at a Senate Transportation Committee meeting examining peer review groups on November 28th that the head of the committee, Frank Koppelman, and one of the top executives of Cambridge Systematics (CS), were close friends. Koppelman also received consulting fees from CS. In addition he was paid $231,000 for his work on the ridership panel. (See material submitted to the Senate Transportation Committee after testimony by Elizabeth Alexis from Californians Advocating Responsible Rail Design...)
Nothing was done after those findings were delivered by the professors at UC Berkeley. The High-Speed Rail Authority said UC Berkeley analysis was not correct. It was a case of my expert against yours, theory against real life. And to add insult to injury, no one questioned the High-Speed Rail Authority when they awarded the $5 million dollar contract to Cambridge Systematics to work on an updated ridership model.
The importance of these numbers is simple and clear...If you overestimate ridership and underestimate cost to operate, you underestimate revenue. That could leave the public with a life-long subsidy, forbidden by law.
And there's a really good chance they are not accurate. According to Megaproject and Risk author, Bent Flyvbjerg, “There is a massive and highly significant problem with inflated forecasts for rail projects. For two-thirds of the projects, forecasts are over-estimated by two-thirds.” (See more of Flyvbjerg’s thoughts on mega projects.)
The Governor thinks it may be ok to have a subsidy despite the fact it’s against the law. Listen to the first minute of conservative talk host Larry Elder on Good Day LA. Here’s a snippet of the conversation, “When Elder pointed out that there’s no way this train will be run without state subsidies, Brown replied, “You don’t think the freeways are run with subsidies? The airports are run with subsidies. Come on. It costs money”...
AB 3034, the enabling legislation of Prop 1A, requires proof of ridership for the segment being built, and there are not current numbers for that section in the Central Valley it’s no secret that the ridership is not in the Central Valley. Chairman Dan Richard knows it too. He stated at the Mountain View Senate Meeting held March 13, 2012, “Our business plan never intended...that we would operate the HSR in the central valley. That has never been part of our plan for exactly the reason you said, there’s not sufficient ridership to do that. In our plan of November 1st, we said after this ICS was built the next thing that would happen was an IOS, and that would be the first true operation of high-speed.” (ICS is "Initial Construction Section," and IOS is "Initial Operating Segment" that reaches to the San Fernando Valley)
But proving ridership must be done before construction, not after the segment is built... This requirement was put into law to provide the voters comfort that they won’t be on the hook for an unprofitable link, which is why the entire IOS is supposed to be constructed at once and it must be guaranteed to be profitable...In AB 3034, there is no mention of a segment smaller than a usable segment. That what is being constructed is not a usable segment is even acknowledged by the Authority and their attorneys. To be clear what is proposed to be built in the Central Valley is a set of tracks that will not be high-speed rail ready.
As Senator Simitian said on April 18, 2012:
You’re talking about spending all of our federal money, $3.5 billion plus more than ¼ of our state money for a total of $6.2 billion to produce 130 miles of conventional rail in a low ridership area that doesn’t have Positive train control, that doesn’t have electrification, and that doesn’t have high-speed rail rolling stock, and with no guarantees of further federal funding [or] private investment and no plans to come back to ask the taxpayers for another bond measure.
For this and many other reasons Senators Joe Simitian, Alan Lowenthal and Mark DeSaulnier, who knew the most about this project, voted not to fund it.
Labels: High-Speed Rail, Quentin Kopp
posted by Rob Anderson @ 1:02 PM
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