State May Turn to Investors to Finance High-Speed Rail System
California transportation officials believe a proposed $25 billion high-speed rail project will help maintain the state’s economic growth and vitality, and they’re looking to private investors as a possible source of capital for getting the system on track.
A high-speed rail system could be built as early as 2016. It would move 42 million passengers annually at speeds approaching 200 mph , or perhaps even faster.
Such a system would be a tremendous boon to business, said Dan Leavitt, deputy director of the California High-Speed Rail Authority.
“It offers increased mobility at a time when roads and airports are becoming increasingly congested. There are many reasons why business should be interested in high-speed rail,” Leavitt said.
What’s more, the system would be completely self-supporting. Once built, it would bring in an estimated revenue of $970 million a year on annual capital costs of $580 million, said John Barna, deputy director of the rail authority.
Barna and Leavitt spoke at an open forum Feb. 25 in San Diego to take public testimony and incorporate the information into a report to the state Legislature. The report will be presented some time in May, he said.
The report will not include any financial recommendations. Earlier proposals discussed a possible statewide sales tax increase to finance construction, Barna said.
Instead, the report will focus on whether a high-speed rail system would be feasible, and recommend whether to proceed with $25 million of environmental studies over two years.
Private Investment Opportunities
Funding for the project itself would only be considered after the environmental studies have been completed. The issue may appear on the ballot in 2004, Barna said.
Private companies could be asked to step in. Once the environmental work is done, it’s possible the project could become more attractive to investors interested in the project, Barna said.
There are tremendous opportunities for investment, primarily for construction. The lion’s share of the capital cost for the system , about 90 percent , goes to building the system, Leavitt said.
Other investment opportunities include the rail cars themselves, and the high-tech communications and signaling network to make high-speed rail work, Leavitt said.
Even after the system is built, there will still be rich opportunities , in retail and other development in the properties around high-speed rail stations, Leavitt said.
700 Miles Of Track
As proposed, the high-speed rail system for California would lay 700 miles of dedicated track that would connect San Diego, Los Angeles, Sacramento, San Francisco and points in between. Express trains would run nonstop between the major cities, Barna said.
If the high-speed rail system were built, San Diegans would be able to get to Los Angeles in one hour, nine minutes; to Sacramento in three hours, 11 minutes; and to San Francisco in three hours, 32 minutes, Barna said.
These travel times would make high-speed rail an attractive alternative to flying or driving , especially with an estimated ticket cost of $48 from San Diego to either San Francisco or Sacramento, full fare.
Estimated prices are calculated in 1999 dollars, Barna said.
Another benefit of high-speed rail is that it would include commuter routes with intermediate stops in suburban areas. A trip between Downtown and Mira Mesa would take only seven minutes, while a commute between Downtown and Escondido would be 17 minutes, Barna said.
Barna calculated future ridership at 32 million intercity trips a year, with 10 million additional commuter trips from suburbs around San Diego, Los Angeles and San Francisco.
High-speed rail would supplement, not replace, the traditional forms of transportation like highways, air and conventional rail. Barna expects high-speed rail to capture 15 percent of all the intercity trips in the corridor, and 35 percent of all the trips longer than 150 miles. All other forms of transportation , most notably highway traffic , would make up the rest.
Two Possible Technologies
There are two possible technologies for high-speed rail. A “steel-wheel-on-steel-rail” system , such as the Japanese “bullet” train, the French TGV and the German ICE , is a proven system, having carried more than 5 billion passengers in these countries.
If California adopts similar technology, a high-speed train could travel through the state at speeds of up to 220 mph, although the trains have been tested as fast as 320 mph, Barna said.
A magnetic levitation, or Maglev, train uses magnets to lift and propel the train. Because a Maglev train hovers over a guideway, the system creates no friction or rolling resistance, allowing a Maglev train to travel even faster than steel-wheel systems , at speeds in excess of 300 mph, Barna said.
Currently, there are no Maglev systems operating in revenue service anywhere in the world. However, both Germany and Japan have been developing and testing Maglev prototypes, and it is possible that one or both countries could begin construction on a commercial Maglev train later this decade, he said.
Jean-Pierre Ruiz, executive vice president of rail-car manufacturer Renfe Talgo of America, supports efforts to bring high-speed rail to California.
“A strong economy needs a strong transportation network, one based on the three-legged stool of airports, highways and rail. In California, one of those legs is very short, and weak,” he said.
The next open forum will be held March 30 in Escondido.
Information and feedback can also be sent via the Internet at the California High-Speed Rail Authority’s Web site (www.cahighspeedrail.ca.gov).