Findings

1. $58 million of state funding has been spent by the Authority during the last ten years for high-speed rail planning. The Authority's current plan envisions initial rail service to run from Anaheim-Los Angeles to San Francisco via Fresno and San Jose. This service would begin in about 2020. A second phase is anticipated to link San Diego (via Riverside) to the system at Union Station in Los Angeles, and it will connect Sacramento to the system in the vicinity of Merced. This second phase of service is expected to begin five to ten years after the initial phase. A statewide program environmental impact report and an environmental impact statement for the project were certified in 2005.

2. The High-Speed Rail Authority's business plan should be updated. The Authority's business plan was adopted in 2000. Because it has not been updated, the plan is based on data that is now a decade old. While the Authority has prepared a revised demand forecast and is preparing a new cost estimate, it is expected that the Authority will update its business plan in advance of the November bond election.

3. The $9.95 billion bond program to fund high-speed rail development in California was originally scheduled for the November 2004 election. The bond election, however, has been delayed twice by the Legislature at the request of the Governor and is now scheduled for November 2008. The first effort to implement a funding program for the high-speed rail plan occurred in 2002 with the passage of Senate Bill 1856 (Costa), Chapter 697, Statutes of 2002. This measure would authorize the sale of $9.95 billion in general obligation bonds, $9 billion of which would be allocated for planning and construction of a high-speed rail segment between San Francisco and Los Angeles. The additional $950 million was designated for conventional rail projects to provide connectivity with the high-speed rail system and other modes of transportation.

4. Construction cost inflation has eroded the purchasing power of the proposed bond program, resulting in a scaling back of the rail system. The Authority's 2000 business plan envisioned that the entire rail system could be constructed for $25 billion. Since 2000, construction cost inflation has driven the cost estimate up to about $40 billion, resulting in the project being divided into two phases. The first phase, which would link Los Angeles and San Francisco, is estimated to cost about $33 billion. The second phase is estimated to cost $7 billion. If the bond proposal were to be adjusted for inflation, the $9 billion proposed in 2004 for the high-speed rail project would need to be increased to $13.3 billion, according to information provided by the Legislative Analyst's Office. In addition, the amount allocated for the rail connectivity projects would have to be increased to about $1.1 billion.

5. The strategy for funding the high-speed rail project is unclear. The Authority testified that it expects the construction cost of the initial segment to be paid in equal shares by state government, the federal government, and the private sector through a public-private-partnership arrangement. The $9 billion designated by the state's bond program to the high-speed rail project is less than one-third of project's estimated total cost. To date no federal program has been established to underwrite the construction of high-speed rail in California. Although the Authority is seeking to ascertain the interest level of private firms in building, operating, and maintaining the system, at this time it is premature for any firm or consortium to propose a specific funding strategy or commitment. 

6. Potential risks associated with the high-speed rail project require analysis. Several potential risks are associated with the construction and operation of high-speed rail. Neither the Authority's 2000 business plan nor any of the agency's subsequent documents discuss the risks that might be associated with the project. Among the possible risks that need to be considered are construction cost increases, patronage and revenue estimates, financial capacity (including third party financing), state general fund exposure, right-of-way costs, unforeseen technological complications, and regulatory barriers (both state and federal).

7. Commute trips on the high-speed rail service are forecasted to exceed business trips. According to the patronage forecast for 2030 presented by the Authority during the committee hearings, 30 percent of all trips will be commuter trips (work trips of less than 100 miles in length). The forecast also expects recreational travel to account for 34 percent of the trips, business travel for 11 percent, and the ill-defined category of "other" is expected to be about 25 percent of total trips.

8. Highest number of high-speed rail trips will begin and end in the Southern California region. Of the 94 million trips forecasted for the high-speed rail service for 2030, the greatest number of trips (about 18 million) will begin and end within the six county Southern California region. Slightly more than 16 million trips will involve travel between Los Angeles and San Francisco, the system's primary destinations.

9. High value business trips are expected to yield the greatest revenue. The Authority estimates that 91 percent of the system's revenue will be generated by  high value business trips, where travelers are willing to pay a premium, --and only 9 percent of total revenue will derive from commuter trips.

10. Door-to-door travel time savings from high-speed rail travel, when contrasted to comparable airline trips, will vary throughout the system.  Passengers traveling between Fresno and Los Angeles will enjoy a total trip time savings of 29 minutes. The travel time savings for passengers between San Diego and Los Angeles is 44 minutes. Travel time savings between Los Angeles and San Francisco would be 2 minutes.

11. Regional innovations in commuter rail services currently being planned in northern and southern California are expected to be compatible with high-speed rail. The Orange County Transportation Authority (OCTA), in collaboration with the Authority, is preparing a project EIR for incorporating high-speed rail into the Metrolink commuter rail corridor between Anaheim and downtown Los Angeles. OCTA's goal is to run service every 30 minutes between Orange County and Los Angeles. Similarly, Caltrain, the commuter rail operator between San Francisco and San Jose, has embarked upon a facility, equipment, and service upgrade program. This will result in a fully grade separated and electrified right-of-way, and the deployment of light weight European passenger rail equipment. These improvements will be fully compatible with the high-speed-rail system.

12. California has made substantial ridership gains in intercity and commuter rail service since the 1970's. Amtrak services in California account for 20 percent of the company's national ridership. Indeed, the service between San Diego and Los Angeles is the second most heavily patronized route in the country, and the route between Sacramento and the Bay Area is the third. The service from Bakersfield to Oakland ranks sixth in the country. Metrolink, the commuter rail provider in southern California, reports that 80 percent of its riders are former auto commuters and in some corridors it carries more people than an adjacent freeway lane at rush hour.

13. High-speed rail will have demonstrable environmental benefits. Once service begins, the high-speed rail system will have less environmental impacts than airport and highway investments that would carry the equivalent number of trips. The Authority is currently undertaking an assessment of its potential greenhouse gas footprint which is also expected to be favorable when compared with other transportation modes.

14. Institutional reform is necessary in order to ensure greater accountability on the part of the Authority. Transportation policy making in California is structured to ensure that there is both regional and state oversight in the formulation of major investments in the transportation system. The regional transportation planning agencies and the metropolitan planning organizations carry out this responsibility at the regional level. Similarly, the California Transportation Commission (CTC) provides statewide oversight, prioritization and accountability. The Authority operates outside of this framework because it is not required to have its program reviewed by the CTC, as are other state transportation investments, although it has endeavored to include regional planning agencies where appropriate.

15. A venue should be provided to enable the regional commuter rail agencies and the two major freight railroads operating in the state to review and comment on any of the Authority's plans that would impact their operations. The Authority plans to use the right-of-way of the state's public and private railroads and also use existing station facilities, thereby potentially impacting the ridership and schedules of the other service providers. There is, however, no formal process in place that would allow the Authority and the various affected railroad operators to meet and discuss these issues of mutual concern.