What I learned today about SNCF and California HSR
By Stephen Smith, on July 10th, 2012
If you’ve been following me on Twitter, you’ll know that I spent this afternoon on the phone with folks in California, looking into the recent SNCF-CHSRA bombshell. To summarize: SNCF, the highly experienced French national high-speed rail operator, apparently had a plan for California’s HSR network, but was turned off by the highly politicized routing. Namely, they wanted to make a straight shot from LA to San Francisco by running along the flat, government-owned I-5 corridor with spurs out to the eastern Central Valley, whereas the California High Speed Rail Authority (CHSRA) and state politicians wanted the main line to go through every little town in the Central Valley, directly. Now, all of this wouldn’t be a scandal, except for the fact that nobody at SNCF ever mentioned it to the public or the media.
That’s what the LA Times reported, but David Schonbrunn, a pro-HSR, anti-CHSRA activist, says there’s more to the story – SNCF not only advocated I-5, but they actually had private investors lined up! Here’s his letter to the LAT:
Your otherwise excellent story “High-speed rail officials rebuffed proposal from French railway” was far too kind to California High-Speed Rail Authority officials. At the time of its proposal, SNCF had the investment backing to actually build the LA-SF line, in a deal that sheltered the State from the risk of subsidizing an unprofitable project.
The Authority’s 2012 Business Plan covered up this offer, instead insisting that no private capital would be willing to invest until the first high-speed line showed a profit. The $6 billion Central Valley project approved last week by the Legislature thus exposes the State to unlimited operating losses. Worse yet, before that line can be completed, it will need an additional $27 billion from the federal government–quite unlikely in today’s political climate.
I’d sure like to understand the thinking behind the rejection of the French offer.
It’s unfortunate the story didn’t run earlier. It would have informed the Legislature’s debate.
In response to the stunning levels of vitriol and bad faith, TRANSDEF posted these comments:
After first responding to the SNCF story with a deer-in-the-headlights "No comment," CHSRA is now in full damage control mode. The sheer number of slurs and easily disprovable allegations in Richard's letter indicates panic over this story. As second fiddle in CHSRA's attack machine, Robert resorts to making stuff up, too.
The vehemence of the combined response says we've struck a nerve. That's a tacit admission that SNCF made a proposal that somehow threatened the status quo.
Consider this one point: If the proposal was even a quarter as bad as alleged here, why would the Authority have clamped such a tight lid of secrecy on it? It just doesn't wash...
Readers of this blog are invited to check out the other side of the story on our website: transdef.org (Robert could even add it to his blog roll!)
BTW, note that 'the significant controversy over SNCF's role in the Holocaust' arose only after SNCF made its proposal, potentialy disrupting the CHSRA's happy family of consultants. Did Bob Blumenfield suddenly wake up one day, outraged by the injustice? Or was this a commercial counterattack, disguised as the voice of conscience?
With all the slurs flying around now, it is important to note that SNCF was not asking CHSRA to turn the project over to them. They were instead asking that CHSRA establish a Request for Qualifications process, leading to an open Request for Proposals process, which would result in the selection of an operator. They were totally aware that the winning proposer could be another firm.
Note that, despite all the recent talk about the merits and demerits of an I-5 route, the SNCF proposal was not premised on a specific route. It was solely a process to bring in private capital and an experienced operator.
The Authority’s rejection of this seemingly commonsense proposal to reduce the risk to the State of California raises disturbing questions of where CHSRA’s loyalties lay. CHSRA’s 2012 Business Plan insists untruthfully that no private firms would invest in the project until after (1) the State had spent $6 billion on 130 miles of Central Valley track, (2) somehow found $27 billion to connect it to Los Angeles, and then (3) showed an operating profit. By contrast, the SNCF proposal would have brought in the expertise needed for critical design decisions along with private capital willing to assume ridership risk, thereby greatly reducing the State’s exposure.
By rejecting the proposal, keeping it secret, and then mounting an all-hands-on-deck damage control effort to snuff out the story, CHSRA is clearly telling the world that its commitment to its army of consultants outstrips its commitment to the people of California.
Robert’s take-down of the messenger (LAT) misses the point entirely. SNCF presented a proposal in conjunction with a U.S. investment bank that was willing to finance the entire LA-SF line. This was a project that made enough business sense to them–it minimized costs while optimally serving the primary market–that they were willing to accept full ridership risk.
Had the Authority been seriously committed to building its project, it would have conducted a bidding process, hired an international consortium, and would now be using the ARRA funds to build an I-5 alignment.
For reasons that appear contrary to the public interest, The Authority covered up this offer in its 2012 Business Plan, instead insisting that no private capital would be willing to invest until the first high-speed line showed a profit. In other words, the entire plan is based on a lie. It calls for the State to take on the full cost of building a line to LA, without any private money and without a prayer of any additional federal support.
The $6 billion Central Valley project approved last week by the Legislature exposes the State to unlimited operating losses, and worse yet, no way forward to a statewide system. That’s just what a take-the-money-and-run scam would look like.
Go ahead and rant all you want. I can’t see how you can call yourself an HSR advocate if you'd rather have 130 miles of unconnected track in the Central Valley than a working HSR system.
Senator Simitian of Palo Alto gave the speech of his life.
Although a long-time supporter of the concept of High-Speed Rail for California, Simitian’s conclusion was: "This is the wrong plan, in the wrong place, and at the wrong time." He was also concerned that voters would react to this vote by turning down the Governor's tax extension measures in November, with devastating consequences to education and social service programs.
Senators DeSaulnier and Lowenthal, Chair and former Chair of the Senate Transportation and Housing Committee, who have held countless hearings on High-Speed Rail, spoke out strongly against the measure. These three and Senator Pavley were the only Democrats voting against the funding measure.
According to press reports, a 2010 promise by the President to secure the vote of Representative Jim Costa on health care reform resulted in the federal insistence that its HSR funding go entirely to Costa's Central Valley district.
The three Senators were convinced that spending $6 billion in that area would put the State at great risk of being left with a very expensive piece of useless track.
They produced an alternative plan that would have spent most of the money on immediately useful track improvements in Los Angeles and San Francisco, including a $2 billion extension of Caltrain to the Transbay Transit Center. Read More...
Had the HSRA been operating in the public interest, it would now be under contract with an international HSR operator selected through an open bidding process, and be proceeding towards a fully funded LA-SF buildout (which, incidentally, would probably not have been challenged by the current litigants). Instead, if the project proceeds as planned, Californians will end up with a $6 billion track that can’t be used for HSR, and have no prospects of ever receiving a statewide system.
LA Times Story: High-speed rail officials rebuffed proposal from French railway
In response to today's article, TRANSDEF sent a letter to the Editor. Read More...
After the Court sustained the Demurrer with leave to amend on June 22, Attorney Brady filed a Second Amended Complaint on July 6. Because the State Senate was debating a funding measure for High-Speed Rail that afternoon, he brought with him one version that included a reference to the Senate passing the measure, and a second one that did not. With the Clerk’s Office at the Court closing at 4:00 pm, and the Senate vote occurring at 3:59 pm, Attorney Brady filed the latter version. He will likely supplement the Complaint after the Governor signs the bill into law.
The Amended Complaint includes allegations that funds are currently being expended in support of construction, in violation of Proposition 1A and that adoption of the Funding Plan also violated Prop 1A. Now that the Legislature has actually appropriated bond funds, the Authority will have a hard time arguing that the suit is premature.
All the associated documents are available on this page.
A nastier joke is the commitment to using blended systems--sharing tracks with commuter railroads in the Los Angeles area and the Bay Area. This is commonsense policy--one which TRANSDEF fully supports, once the Authority has demonstrated that a train can travel from Los Angeles to San Francisco within the statutory 2 hours 40 minutes with a blended system. Perhaps this is a formality, but the validity of the Business Plan rests on it.
The major problem with the blended approach is that the ridership estimate assumes 9 trains per peak hour (p. ES-13) or the internally inconsistent 6 trains per peak hour (p. 5-12). The 9 trains/hour greatly exceeds the HSR capacity of Caltrain in blended mode and may be a typo, while Metrolink’s HSR capacity in blended mode is unknown. In other words, ridership and revenue, which are the foundation of a viable Business Plan, may be overstated, casting doubt on the claim that all ridership scenarios result in a positive cash flow (p. 7-5), so that no ridership subsidy is needed. Compare this to the analysis by financial professionals associated with CC-HSR. Read More...
Other HSR articles in the LA Times:
A detailed look into whether the blended system would comply with Proposition 1A.
Peter Calthorpe’s Vision California vs. right-wing defenders of the status quo.
These comments propose an entirely new Altamont route, based on the Altamont Corridor Rail Project Preliminary Alternatives Analysis Report. (See an earlier Newsletter for an overview of this exciting project.) By avoiding the environmental impacts identified in earlier DEIRs, this alternative poses a challenge to the Authority’s stubborn insistence on the Pacheco route: An unbiased evaluation would determine the new Altamont alternative to be environmentally superior to Pacheco.
The comment letters and attachments are posted at the bottom of the Altamont page.
So far, the Authority has been allowed to frame the consideration of its plan, which makes it seem reasonable. Here's why it is necessary to pull back and look at the bigger picture:
The strictures of AB 3034 prohibit the very kind of incremental improvements that would be most sensible (and which are standard practice everywhere else in the world): building a HSR-compatible but unelectrified connection between Bakersfield and LA and improving the bookends to enable shared use. Doing all this would demonstrate the ridership potential of decent train service, which would allow an entirely different kind of discussion--a grounded one, rather than a theoretical one--of a statewide HSR system. Read More...
Here is the introductory paragraph on the Voice of Russia website:
In California, a project President Obama promised would transform US transportation may never be completed. The state’s futuristic high-speed rail network faces eroding political and public support, increasing cost estimates and criticism from some groups who call the project a “train to nowhere.” But supporters says a national high-speed rail network would not only support tens of thousands of construction and manufacturing jobs, but it would save travelers from being stuck in traffic for hours. Andy Kunz, president of the US High Speed Rail Association, and David Schonbrunn, president of Transportation Solutions Defense and Education Fund, discuss the present status and the future of this train.