Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

Archive for January 29th, 2014

California’s Bullet Train Hobbled by Fresh Legal, Fiscal and Political Uncertainties

leave a comment »

This post is taken from an email newsletter I subscribe to. In very small, pale grey italic print at the bottom of each issue appears the following statement “Please feel free to forward or reprint this item with appropriate citation” So that is what I am doing.

Much of the rest of the “first world” enjoys High Speed Rail. Japan lead the way – still does – China is building lots of it. France has been very successful – and has pretty much eliminated internal passenger air traffic. Electric trains produce a lot less ghg than jet aircraft – and they are competitive both on time and price. Only North America seems immune. About the closest we can get is the Acela service Amtrak provides in the North East Corridor – though nowhere else would regard that as “high speed”. Ken Orski provides insight into why changing this situation looks very much like Mission Impossible. California HSR is not dead yet. But it sure looks like it faces some formidable obstacles.

Amtrak Cascades, being operated by Spanish Talgo trains could be a lot faster than they are – but they are on freight railways. Given their own right of way they could be very competitive with I5. There are good cases for high speed trains between several city pairs in Canada including Calgary – Edmonton, Toronto – Ottawa – Montreal. Possibly even Toronto – Chicago or Toronto – New York. But given this analysis, I am not going to expect to ride one of these on my lifetime. Pity.

———————————————————-

Barely recovered from the damaging effects of the Sacramento Court ruling denying the California High Speed Rail Authority access to Prop 1A bond funding, the bullet train project has had to face fresh challenges.

First came the news that Congress has zeroed out any funds for high speed rail in the FY 2014 omnibus appropriation bill, the fourth straight year no new monies have been provided. This put to rest any lingering hopes of a future resumption of congressional funding for the California bullet train. But it has not deterred the California High Speed Rail Authority from officially still expressing a hope for federal subsidies. “We believe that it is reasonable for the federal government to continue investing in intercity and high speed passenger rail systems, like California,” Authority Chairman Dan Richard stated in his recent congressional testimony.

Next came a House Subcommittee on Railroads hearing on “The Challenges Facing California High Speed Rail.” Committee chairman Rep. Jeff Denham (R-CA) wanted some “straightforward answers to straightforward questions” as he put it in his opening statement. Specifically, how was the Authority going to match the $2.25 billion the Federal Government has provided to the project, now that the court has foreclosed the possibility of using Proposition 1A bond funds? And where would the remaining funds to complete the entire 300-mile Initial Operating Segment (IOS) come from?

Cap-and-Trade Funds as State Matching Contribution

Authority Chairman Dan Richard had some straightforward though not necessarily satisfying (to Rep. Denham) answers. Governor Brown, Richard said, has sent a letter to FRA reaffirming the State’s commitment to honor California’s obligation to match the federal spending. The matching money would come from the cap-and-trade pollution trading funds.

Richard confessed he could not predict whether the state legislature would approve the use of cap-and-trade funds for the project. Even if those funds were to be approved, they would not become available by the April 1 deadline when the state must start matching the federal grant. The Chairman did not elaborate how the Authority would handle its obligation, come April 1.(However, in the Governor’s proposed new budget there is a provision to advance $29 million to keep the project moving. The loan, which would come from the state transportation account, could presumably be used as a first down payment in the required matching funds).

Nor did Chairman Richard mention the strong opposition by environmental groups, notably the Sierra Club. “The problem with taking that money and applying it to high-speed rail,” said Kathryn Phillips, head of California’s Sierra Club, “is that we don’t anticipate that we’re going to get the benefits of reductions in greenhouse gas emissions in the short term. … It is irresponsible to not apply that money to those programs that will get you greenhouse gas emission reductions now.” Other critics alleged that the HSR project does not meet the legal test that it would result in reductions of greenhouse gas emission that are “real, quantifiable, verifiable and enforceable” as the law requires. Editorial opinion of some California newspapers (San Jose Mercury News, U-T San Diego) echoed these criticisms.Even the LA Times, a steadfast supporter of the project, expressed some doubts (“Yet the delays, the rising cost, the judge’s ruling and the waning public support should give pause to even the strongest advocates. Can the rail authority line up a financing plan? Is the project still viable? We hope the answer is yes. But the state shouldn’t spend a dime of cap-and-trade money on it until we know for sure.”)

A Re-defined “Usable Segment”

Chairman Richard did not address the court ruling requiring the Authority to identify sources of funds and show completed environmental clearances for the entire 300-mile Initial Operating Segment extending from Merced to San Fernando Valley. Instead, Richard testified that the Authority’s revised funding plan will consider the 130-mile construction section from Merced to north of Bakersfield to be the new “usable segment.” By connecting to existing Amtrak service at Bakersfield, the Chairman said, this stretch will have operational utility, hence it will qualify as a “usable segment” within the meaning of Proposition 1A. The judicial rulings pertaining to the longer 300-mile stretch from Merced to San Fernando Valley are thus no longer relevant in his opinion.

But longtime critic, attorney Michael Brady does not see this as a meaningful solution. The re-defined Merced-to-Bakersfield usable segment will be conventional rail only, he told us, whereas Proposition 1A requires that a “usable segment” be electrified, with all the attributes of a genuine high speed rail system. Moreover, Proposition 1A says a usable segment must operate without an operating subsidy and must have adequate ridership. The Authority’s redefined usable segment will flunk both tests, Brady said. “Hooking it up to an existing Amtrak line will not get them out of these requirements.”

Long-Term Funding

As for long-term funding, a precise funding plan for the entire system is not possible, Richard testified. However, the Governor’s budget proposal “establishes an ongoing state commitment of cap-and-trade proceeds to the project.” The measure includes an initial $58 million for planning and $191 million for construction and right-of-way acquisition in the first phase of the project. Once the line to San Fernando Valley (Palmdale) has been completed and operational, the opportunity for private investment will be ” greatly increased” according to Richard.

“This is an internationally proven investment model and is common to almost all recent high speed rail projects in the world, where capital investment begins with the public sector and then becomes shared with the private sector” to pay for further expansion, Richard testified. As an example, he cited high speed rail systems in France, Spain and The Netherlands which, he said, attracted private investment once ridership was established. However, the parallel is not quite correct. True, European high speed rail systems were able to attract private sector interest after EU opened up cross-border rail passenger services to competition in 2009 . But the public-private partnerships took the form of running private high speed rail services (such as Thello, Westbahn and NTV) on publicly-owned rail infrastructure—they did not involve private capital contributions to expand the physical facilities of the high speed rail networks.

Despite Chairman Richard’s reassuring statements, the prospect for future private investment in the California HSR project still remains very much an open question.

Federal Railroad Administration Position

At the hearing, the Federal Railroad Administration and its Deputy Administrator, Karen Hedlund also came in for some sharp questioning. Why has the agency not suspended reimbursements until the High Speed Rail Authority presents a viable plan to identify a new source of the required state match, Chairman Denham wanted to know. Given so much uncertainty around the project, why wouldn’t FRA take the prudent step to hold off spending more taxpayer dollars until they are satisfied that California has remedied these legal setbacks?

Hedlund chose not to respond directly to the Chairman’s questions. Instead, she stated that “at this time,” the Authority was not in violation of the grant agreement. However, she conceded that should California fail to match the federal grants as required by the funding agreement (i.e. beginning April 1), the government could collect the owed matching funds by withholding other federal grants. Rep. Denham followed this up by introducing a bill, with the support of every member of the state’s Republican delegation, to suspend federal spending on high speed rail “until sufficient non-federal funds are available.”

The Governor’s Surprising and “Desperate” Move

On January 24, in an unusual move, Gov. Jerry Brown’s administration petitioned the California Supreme Court directly to overturn the Superior Court ruling that barred the State from selling the Proposition 1A approved bonds The state’s request to skip the appellate court review is considered as unprecedented. “In my 47 years of appellate practice, I have never seen something like this,” said Michael Brady, one of the attorneys for the Central Valley landowners who sued the Rail Authority.The Governor’s move is “an act of desperation,” observed the respected California columnist Dan Walters. The State in its brief argued that the normal appeal process could take years to resolve and the delay would cause “irreparable injury absent immediate intervention by this Court.” The brief is asking the High Court for an answer by March 1.

As reported above, the Authority is facing an April 1 deadline to begin matching the federal grant with state funds. There are speculations that, threatened with a cut-off of federal funds in the event of non-compliance with the deadline and having concluded that using cap-and-trade funds might be politically risky given the strong environmentalist opposition, the Brown administration concluded that it had no alternative but to take this drastic step in an effort to gain access to the bond funds.

The Authority’s move has caught observers by surprise. Just ten days earlier Chairman Richard gave the impression that the Authority would comply with the judge’s ruling and re-do the funding plan. “My view is that we go back and do exactly what the Judge has said,” Richard testified before the House Railroads Subcommittee. .

Back in December, we wrote that further delays in the project’s groundbreaking (already more than a year behind schedule), the prospect of multiple challenges over bond validation, a likelihood of drawn out negotiations over right-of-way acquisition and expropriation and, most importantly, the Authority’s inability to identify credible sources of non-federal money to complete the entire 300-mile line to the San Fernando Valley, “all add up to a very problematic future for this transformative project.” The events and disclosures over the past month have done nothing to lessen this impression.

Kenneth Orski
Editor/Publisher
Innovation NewsBriefs (celebrating our 25th year of publication)

Written by Stephen Rees

January 29, 2014 at 11:41 am

Breaking the Political Gridlock

with 4 comments

Anne Golden at SFU Woodwards on January 28, 2014

Actually I have shortened the title: what was advertised was “Breaking the Political Gridlock to Address the Transportation Challenge: Lessons Learned from the Greater Toronto and Hamilton Area”

The first of a new lecture series with the title “Rethinking Transportation: New Voices, New Ideas” by the City Program. Gordon Price announced that the next two lectures will be by Andrew Coyne and Charles Montgomery, but he is also asking for ideas of new people we have not heard from before to address the topic. He invited suggestions to be sent by email to price (at)  sfu.ca

I found myself by chance seated with “the great and the good” name dropping Mike Harcourt, Nancy Oleweiler, Clive Rock, Mark Allison, Ken Cameron, and many other familiar faces.

The evening started with a video on the Greater Toronto Areas transportation challenges. Sadly so far all I can find now using transitpanel.ca address is this statement from the Minister.

I have created a storify from the tweets of other people present

Anne was the Chair of a Transit Investment Advisory Panel set up by the Premier of Ontario to examine funding options for transit expansion in the Greater Toronto & Hamilton area.

UPDATE  Jan 31

Making the rest of this blog post redundant, PriceTags now has the “complete and slightly revised text of Anne Golden’s lecture”.

She said that the issues in Toronto are different to Vancouver but similar.  Population growth is rapid – and the region of 6m now is expected to reach 10 m in 18 years. The tipping point of congestion has already passed. “The situation is intolerable. Everyone agrees it’s a crisis but no-one wants to pay for it.” The region is  already exceeding earlier population forecasts and has reached the level now expected for 2021.

Vancouver was always seen as leading the way with its land use policies – the Agricultural Land Reserve and “intensification” of urban development 18 years ago when Translink was proposed. The Premier of Ontario was uncomfortable with the present situation but she doesn’t have a majority government

Context

The Premier required a fast turnaround: the panel was given three months to produce its report and was already appointed when Anne was approached to Chair it. “The Mayor of Toronto was already misleading the public on a number of topics including transit.” It was widely recognized that finding a solution to congestion would be the “cornerstone of success” but there was considerable doubt it could be achieved.

Reaction to the announcement of the Panel was cynical: it was portrayed by the media as a way to postpone decisions. The Scarborough line was dominating discussion. The Mayor had rejected replacement of the existing SkyTrain like Scarborough LRT with a more conventional light rail system. He claimed that a subway extension was the only acceptable solution even though ridership would not justify the higher construction cost. Metrolinx was rehired to review its decision that LRT was the most suitable technology. The chaotic result destroyed public trust in the process. There is in fact $16bn worth of construction on transit under way now – including a heavy rail connection to Pearson Airport from an existing GO Transit line using diesel multiple units (see notes below).

The panel produced a plan that is “practical, doable” with unanimous support across the panel – which was drawn from a wide variety of interests inkling business and the Automobile Association. The simple solution chosen was to select a few revenue tools, and then borrow  against this new revenue stream. It included a raise in gas tax,  a “redeployment” of  some of the HST and a half percent increase in Corporate Income Tax (CIT). The amount of borrowing is to be a low multiple (2.5x) of the stream and does not affect the provincial debt. It did not ask too much from any one group.

The were dozens of meetings with groups and the public.

Hard truths

  • Subways are not the only good transit
  • Transit does not automatically drive growth: transit must link up places effectively
  • Construction is not the only cost
  • Riders are not the only beneficiary: driving commute times in Toronto exceed that of Los Angeles and building transit will relieve congestion

UPDATE Thanks to Price Tags here is a Toronto Star article which sets out six truths more clearly – notice too that the links at the bottom of the article not longer point to the source material

The benefits are spelled out in the report. The myth was that nothing was happening, and also that we can pay for transit expansion by cutting waste in the existing bureaucracy. This is the mantra of the Mayor and the opposition but it is not the case. “Where’s the waste?” The province already has the lowest spending per capita  – lowest in the country – and it is rising at less than the rate of inflation. Ontario is reducing its deficit. It is also unrealistic to sell capital assets such as land to fund transit.

After the report was released the tone of the media became more respectful. There was also some new research on employment patterns, which showed that the Metrolinx proposals no longer met expected demands so they had to “make some tweaks”. They did this by setting  priorities in the plan – which previously had not been included. Transit investments must ease congestion, and the Yonge St subway line is already congested. People already travel north to board southbound trains as they were unable to get on full services further south. The “Big Move” proposal did not add up to a network. The major adjustment was to build a relief line first to reduce existing congestion in the system.

There is widespread distrust of transit accounting. It was proposed to phase in gas tax at 3c per litre initially eventually to rise to 10c, plus the CIT increase and HST diversion.

It is critical how these things are communicated. The CAA’s Executive Director felt it would be unpopular but “it’s the right thing to do”. The gas tax could be capped if necessary and the revenue replaced by a switch to more HST diversion. “Don’t have to go back and ask again.”

There is a two year “kickstart program” including desirable improvements such as real time next bus information at bus stops.

The price of gas went up 5c since the report was released. “No one noticed.” Gas tax will still be less than Montreal and the average impact was calculated at $80 per family per year. At the same time it was also projected that $800 would be the cost of more congestion but the mainstream media ignored that.

Business was in favour of getting a bigger, better labour pool. Companies that had moved to the outer suburbs were moving back into town to get better labour. And even after the increase Ontario will still have a comparatively low  CIT.

Tolls are seen by the public to be avoidable. But even though they would have to be applied to every route they would take too long to implement, and the cost of collection would be high.
Road pricing will be needed eventually

As one of those consulted remarked: “Dedicated or fuggeddaboudid”

Transparency is going to be critical. Depoliticized decision making will replace decisions  “unimpaired by any information”. Every project will have a published business case analysis.
The Scarborough subway is not justified by ridership: but even Karen Stintz of the TTC defended it on the grounds that “Scarborough does not feel part of the City”. Investments must be based on more than just self esteem. This had given rise to projects like the “Sheppard stubway” – “at least you can always get a seat on it!”

Each proposal is designed as part of an integrated network

Governance

Toronto Hamilton doesn’t have a region wide government. Many people suggest “Make it an authority like the airport”. Metrolinx does not have tax power

They would like to be able to capture land value increase but it is not seen as a reliable revenue source. She said that the Reichmann company drove the financing of Crossrail in London.

All governments have a role to play, but the feds are “missing in action”. Federal contributions are ad hoc and not programmed. Jane Jacobs said that large cities are what drive the economy of Canada (as opposed to natural resources).

Guidelines have to become policies with teeth. It is not about ideology. We must all be on the same side. We need champions. The strategy is not just about transit it is about transportation [and should also be about land use].

Media

There is a “new world of ADD communication” Reporters is the “lock up” at the reports release were already tweeting and filing before the report document was handed out. These days, she said, everyone is an expert. [Actually I heard that forty years ago when I started work for the GLC: everyone with a driver’s license thinks its an advanced degree in traffic engineering]

There is a “dumbed down” broadcast media driven by a short news cycle. They only rporte th gas tax increase with instant responses from live interviews with startled people at the gas pumps. “Informed people are [portrayed as] elites  – who drink cappuccino!”

She said “Democracy works best with filters” and equated the Referendum with “mob rule”. She also pointed to an [Gary Mason’s] article about the Denver transit referendum in Monday’s Globe & Mail [paywall] People had time to absorb what was proposed – and could see benefits for themselves. Business leaders got behind the proposals. There is “no short cut”.

Trust

A dedicated standalone fund is necessary but not sufficient. People are influenced by events like the Senate scandal and find institutions untrustworthy – including the church. But they
trust the airline pilot or the surgeon “because you have no choice”

There is no single rule for leadership – despite all the books proclaiming their own. There are always going to the inherent tensions requiring  compromises and tradeoffs. There is no template for regional government: the Greater Toronto Services Board (which preceded Metrolinx) did not last. Land use and economic planning is not integrated – and TransLink does not meet the test of good governance.

Our reputation is at stake, “the region that does it right … mostly.”

The will be ten million people in 18 years time in the GTHA. City regions cannot rest on their laurels. Greater Vancouver  produces about half of BC’s GDP: the GTA 40% of Ontario’s

Q&A

1. Are there many other regions in same boat?

New York (pedestrians, bicycles, role of design) Washington (streetcar), Denver, LA (at long last). We did study what others are doing

2. Intermediate Capacity Transit Systems were not considered in Toronto. Do you have an a priori down on SkyTrain?

I don’t know nearly enough knowledge about technology to answer that. The business case is the analysis to determine mode choice. “Buried LRT” was chosen for the Eglinton Line (“to keep it out of the way of the traffic”) but its business case never published. It is now halfway built but great care was taken not to take away the road space from cars.

3.  Were walking, biking, car sharing considered?

Our remit was  very specific. We not have time to consider cycling

4.  Transit Oriented Development:  what research did you do on value capture?

Didn’t get into value uplift not done enough

5. What would you have done if you had had 6 months?

If we had we would have done more consultation, and considered options like no parking on King and Queen Streets [major streetcar routes in downtown Toronto] as well as reconsidering truck delivery rules

6. Does concentration on office employment makes peak hours worse?

An excellent relief line will help

7.  Development charges?

These are under review. We don’t charge the true cost of debt in suburbs. They got hooked on Development Cost Charges: they are a perverse incentive “like a drug”. 

8.  You talked about congestion not Climate change or carbon taxes.  Flooding Richmond might be a bigger cost than congestion

We didn’t look at Carbon tax not viable. Canada is becoming less interested in being green
People are stretched and cranky

Cost of collection of tolls is too high

Revenue from gas tax has a limited life. The 1m more cars the rein expects will help but it is time limited

9 Province doesn’t have a clue about munis

From where you sit is what you see. TTC is bigger than Metrolinx but they have to concentrate on immediate political situations. Maybe need a provincial office for the Metro area – that used to be the case in Toronto when Gardner Church ran it. BC should bring Metro Vancouver and Translink together

10 Do people understand opportunity cost (citing the avoided cost of congestion she referenced)? E.g. road tolls

“I am not optimistic that there is enough white space”. The speed of communications defeats the consideration of complex issues. “The big lie is winning”

————————————–

NOTES

GTA Toronto population is 5.8 million.

“Big Move” is a comprehensive 25 year $50bn transit plan for GTHA with a goal of a 33% mode share. Phase 1 is the $16bn under way now which includes $800m for a makeover of Union Station. The Bloor Danforth subway extension to Scarborough City Centre will cost ~$3bn. The Eglinton Crosstown line is 12 miles png and will open in 2020. The 7 mile Finch West line will start in 2015 with scheduled completion in 2020. An 8 mile Sheppard East LRT will connect the Sheppard subway  terminal at Don Mills to Morningside starting in 2017 completion by 2021. The Union Pearson line will be open next year. 37 miles of BRT are being built in York Region and Mississauga. Tunnelling has been completed on a 5.4 mile extension of the Spadina subway to Vaughn. It will open in 2016 and is the first TTC line outside of the city.

source: Trains February 2014

Written by Stephen Rees

January 29, 2014 at 10:52 am