Among the headaches Gavin Newsom will inherit as governor: California’s troubled bullet train

Gov. Jerry Brown hands incoming Gov. Gavin Newsom a tough decision: delay indefinitely the goal of a statewide bullet train system and salvage something useful out of the billions of dollars already spent, or stick with the original vision and find at least $50 billion in new money to keep it going.

The pergola section of the California bullet train’s San Joaquin River Viaduct at the Fresno/Madera county line. (California High Speed Rail /)

 

Either option will probably lead to a clash between the project’s die-hard supporters and its skeptics. Almost every major engineering and construction firm has a big stake in the project, as do unions, small businesses and city governments. The outcome will depend on how much fiscal pain and risk Democrats are willing to accept.

So far, Newsom has only hinted at what he will do, saying at times the effort must continue in some form — though with less gusto than Brown exhibited as he championed what has grown into the nation’s largest infrastructure effort over the last eight years.

Newsom  has his own alternative big-ticket priorities: universal healthcare, early childhood education, homelessness and climate change. None of them involve the $77-billion rail project.

More than a dozen California officials, construction executives, engineers and academics who study transportation say the project’s problems go so deep that the state will probably have to settle for something far less than the original blueprint of a high-speed rail network through almost every major city from Sacramento to San Diego — at least until the middle of the century or later.

The California High-Speed Rail Authority has enough money to keep going for two to four years before it could exhaust its cash stockpile, depending on the flow of state funding and whether costs continue to increase. But time is the project’s enemy, as inflation adds $1 billion to $2 billion to the project’s cost for every year of delay.

Though the bullet train won the support of voters in 2008 and remains popular among Newsom’s constituency, cracks are beginning to emerge in the unconditional support Brown had engendered among Democrats. Republican opponents generally want an outright cancellation.

The authority is currently building 119 miles of track and structures in the Central Valley for an estimated $10.6 billion, up from an original estimate of about $6 billion. The initial construction would run from Madera to Wasco, two small cities that hardly fit into the international standard for bullet train end points.

The decision to first link the Central Valley to the Bay Area eliminated the connection to Southern California for the foreseeable future, which Rendon said left voters feeling “that a rug has been pulled from under them.”

A scathing investigation by State Auditor Elaine Howle in November faulted the project for poor contract management, failure to review contractor invoices, shortsightedly rushing into construction and an over-reliance on costly outside consultants.

Among the unresolved issues is the decision to put little initial investment in the state’s two biggest cities, Los Angeles and San Diego, the difficulty of satisfying fiscal and operational requirements set in the 2008 bond act, a lack of support to raise new funding, and the project’s flawed governance.

Without a realistic and concrete plan, there’s risk the project will make its own unanticipated adjustment when some future crisis arises.

One possibility is that the high-speed rail in the Central Valley would connect in Merced with the Altamont Corridor Express commuter rail system that runs through the Altamont Pass to San Jose. In fact, the commuter system’s executives are quietly positioning for that very possibility.

It would operate far slower and with less capacity than a high-speed system and it could require awkward connections, but it would be a system that the state could improve in the future.

The San Joaquin Regional Rail Commission, which operates the Altamont system and the Amtrak system in the Central Valley, is extending the commuter rail system to Merced in a $300-million project, a more modest plan than the rail authority’s idea of connecting the Central Valley through a $10-billion-to-$12-billion tunnel under the Pacheco Pass east of Gilroy. The authority’s 2018 business plan acknowledges that it cannot afford the tunnel.

“No matter how you look at it, Merced will be the northern point of high-speed rail for quite some time,” said Stacey Mortensen, Altamont’s executive director. “So we need to get there. We are trying to be part of the solution.”

During his campaign for governor, Newsom told The Times the project is “achievable and realistic” and said that he is “committed” to a partial system from the Central Valley to the Bay Area. That is almost identical to the rail authority’s plan for a San Francisco-to-Bakersfield segment by 2029, expected to cost $29 billion to $37 billion. Based on the rail authority’s financial statements, Newsom’s idea would be short by $8 billion to $16 billion, counting all of its sources of revenue through 2029 and assuming no further cost growth.

The entire project needs an outside evaluation and cost estimate, construction industry executives say privately. Flyvbjerg agrees that an outside panel of experts could be useful, but only if the state’s political leadership accepted and followed the recommendations.

One industry executive cites the model of the Fiscal Management and Control Board that helped stabilize Boston’s Big Dig highway project with tight controls on spending.

Troubled projects are often finished, though they often become financial drains on governments, Flyvbjerg said, pointing to bankrupt or unprofitable systems such as the London-to-Paris bullet train through the English Channel tunnel or airport systems in Stockholm and Oslo.

“You reach a point of no return,” he said. “It means throwing good money after bad. It is very common in mega-projects.”

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