A Quarter Floor in a High-Rise Block?
The Dreadful State of Australian Housing Affordability
By Wendell Cox
A new report by Bankwest shows that housing affordability for the nation’s “key workers” (nurses, teachers, police officers, fire fighters and ambulance operators) has become worse than desperate. The Bankwest report, BankWest_Key_Worker_Housing_Affordability/index.aspx> Key Worker Housing Affordability Report compares 2007 median house prices in the 8 capital cities to average annual earnings, using a standard that requires house prices to be 5 times or less the average (mean) annual earnings for each of the key worker classifications.
Rampant Unaffordability: In seven of the eight capital cities, the median house price was unaffordable for all of the five key worker classifications. The situation was only marginally better in the remaining capital city, Adelaide, where housing was deemed to be affordable for police officers. But even that sliver of light may have been extinguished, since house prices have rose so much Adelaide between 2007 and 2008 that police officer affordability may be a thing of the past.
Unaffordability by Local Government Area: The lack of housing affordability is pervasive down to the local government area (LGA) level.
• In Sydney, 100% of LGAs are unaffordable to nurses, teachers, fire fighters and ambulance operators. Things are not much better for police officers, with 93 percent of LGAs unaffordable.
• In Melbourne, 100% of LGAs are unaffordable to nurses. Other key workers face unaffordability in 71% and 84% of LGAs.
• In Brisbane, 100% of LGAs are unaffordable to nurses and ambulance operators. From 67% to 89% of LGAs are unaffordable to other key workers.
• In Adelaide, between 63% and 89% of LGAs are unaffordable to key workers.
• In Perth, 100% of LGAs are unaffordable to nurses, teachers, fire fighters and ambulance operators. For police officers, 93% of LGAs being unaffordable.
• In Hobart, between 50% and 83% of LGAs are unaffordable to key workers.
• In Darwin, 100% of LGAs are unaffordable to fire fighters and ambulance operators. Other key workers face unaffordability in 67% of LGAs.
• In Canberra, all LGAs are unaffordable to all key worker categories.
In all of the capital cities combined, housing is unaffordable for nurses in 96% of LGAs, for teachers and firefighters in 91% of LGAs, for ambulande operators in 90% of LGAs and for police officers in 81% of LGAs.
Unnecessary House Price Escalation: It was not always this way. Bankwest reports that since 2002, median house prices have increased at double the rate of key worker average earnings. Similar trends have been shown and concerns raised in our Demographia International Housing Affordability Survey, now in its fifth year of publication (Reference: http://www.demographia.com/dhi.pdf).
The problem, which has been increasingly acknowledged by economists in Australia and abroad is the stingy land use policies that have driven residential land prices through the roof in virtually all of the capital cities. At least one government understands. In its welcome relaxation of these destructive regulations, the Victorian government cites housing affordability as a principal justification. Often going under the name of “urban consolidation,” intention of these policies is to stop the expansion further into the plentiful land of the nation and force people to live closer to the urban cores --- this in a nation with less than 0.3 percent of its land area under urban development.
Other Workers are Key Too: The problem goes well beyond key workers. While the nation needs key workers living closeby to provide quality service to life, limb and mind, their salaries depend on the taxes and fees paid by other workers, many of whom have even lower earnings. Thus, as devastating as the affordability problem is to key workers, the crisis goes much deeper. An Australian household purchasing a house will pay, on average 70 percent more today relative to income than in the early 1990s. Virtually all of the difference can be attributed to the regulations that seek to remake cities to match a radical vision that is already well on its way to the Hong Kongization of some Sydney neighborhoods.
Giving Up on the Great Australian Dream? The Bankwest report notes that key worker housing affordabilty is somewhat less dire with respect to units. Police officers cannot afford units in 41% of capital city LGAs, while other key workers cannot afford units in from 59% to 78% of LGAs.
That is precious little comfort. The Great Australian Dream is about a house on a quarter acre block, not a quarter floor in a high-rise block.
Showing posts with label Greenhouse Gas Omissions. Show all posts
Showing posts with label Greenhouse Gas Omissions. Show all posts
2009/08/07
2009/06/26
Sound Transit Horror Stories: Letter from Seattle
Sound Transit's Rail Projects
Sounder Commuter Rail and Link light Rail as of 2008
12 years into its Sound Move Ten Year Plan (1996-2006)
By Emory Bundy
Sounder commuter rail
Sounder commuter rail
Although it absorbs the smaller portion of Sound Transit's funds--which mostly are allocated to Link light rail--Sounder commuter rail has the merit of having actually been put into operation. So there's a functioning entity to measure and evaluate. Its performance anticipates that of Link light rail.
Sound Transit's promises for Sounder commuter rail in the Sound Move Ten Year Plan tax package of 1996:
*82 miles in length, Everett to Lakewood
*Completed and fully operating in 2002, with 15 daily trains, 9 between Lakewood and Seattle, 6 Everett to Seattle
*Capital cost, $650 million
*Annual operating cost as of the benchmark year 2010, $10 million
*Ridership in 2010, 3.8 million boardings
*Farebox recovery, 27.5% of operating costs.
The record to date:
*75 miles of track completed
*10 of the15 daily trains are in operation , 7 from Tacoma to Seattle, 3 from Everett to Seattle
*Capital cost: $1.25 billion projected through 2010, with $1.1 billion more to follow via Phase 2 funds (second tax package, adopted 2008). The components to complete the Phase 1 $650 million capital development plan will cost approximately $1.8 billion, a $1.15 billion, 177% cost overrun.
*Completion of the 82 miles, promised by 2002, now is targeted for 2012-13.
*Operating costs exceed $30 million, triple the original projections--absorbed by only two-thirds of the promised daily trains.
*Annual ridership is 2.67 million, 70% that projected
.*Farebox recovery is 13% of operating costs, half the target
Most of the additional capital cost for Phase 2 is allocated to develop parking facilities added since the original Sound Move Ten Year Plan. Whereas much was made of "transit oriented development" at the outset--with images of people strolling, or perhaps biking to their handy train stop--virtually all Sounder's patronage is dependent on free, handy parking. People are enabled to live hither and yon, drive their SUVs and pickups to Sound Transit's far-flung parking lots and structures, and park free, in order to benefit from an enormously subsidized rail trip. Doug MacDonald, former Washington State Secretary of Transportation, and former Sound Transit board member, aptly dubbed Sounder, "Sprawl Rail."
"Transit-oriented development," doesn't mean live near your rail transit stop and get rid of your automobile. Were that the case, huge sums for parking facilities would be unnecessary. Rather, it means subsidies for commercial development near the stations, in addition to subsidies for the train system and its operations. E.g., there's a "transit-oriented development" in Kent, Kent Station. The municipality purchased the real estate for $15 million, spent $2 million for environmental remediation, and sold it to the developer for $5 million. Sound Transit then relocated its planned 800-stall parking garage to the opposite side of the tracks--where it brings traffic closer to downtown Kent--so the Kent Station developer could use the parking garage, free, for its customers.
The arrangement works because the clientele of Kent Station has virtually no relationship to that of Sounder. This is dramatized by the anchor tenant, a 13-screen cineplex. Since Sounder operates only during work day commuting hours, and people go to the movies evenings and weekends, Sounder patrons and movie-goers drive to and from the garage servicing Sounder's station and Kent Station without competing for parking spaces. Kent Station has almost nothing to do with transit, save the coming of Sounder provided a rationale for subsidizing the mall developer.
Central Link light rail
The vision of Link light rail was that of a 125-mile network linking all the major centers in the Central Puget Sound region (Snohomish, King, and Pierce counties). After several losses at the polls, a scaled-back 21-mile ten year "starter rail" plan was proposed, and the taxing authority was approved by public vote in 1996.
Central Link light rail was to run from the University District in north Seattle to South 200th, a short distance south of Seattle-Tacoma International Airport, at a cost of $2.3 billion. It was to be completed and operating in ten years, 2006, and demonstrate how well Sound Transit could build and operate a rail line. With this "test drive," the public could kick the tires and have confidence in approving additional, Phase 2 taxes for the rest of the 125-mile network, to completed and operating in 2020.
With great fanfare and bragging, a so-called Initial Segment of Central Link light rail (i.e. the "initial segment" of the "starter rail"), from downtown Seattle to Tukwila, will go into service in the summer of 2009, and be extended a short distance to the Sea-Tac Airport in 2010. Sound Transit then hurried to obtain its Phase 2 taxing authority, negating the public's opportunity to evaluate its Phase 1 performance. Initial Segment covers the cheapest, easiest portion of the promised Central Link segment, will cost as much as the proffered price of all Central Link, and is projected to have one-quarter the ridership promised in 2010. Also, four stations have been eliminated, and only 12 will be completed--four of them stations in the Downtown Seattle Transit Tunnel, originally built and financed nearly two decades ago.
For an additional $1.9 billion, Sound Transit plans to add two more of the Central Link stations by 2016, and reach the University of Washington's football stadium. At that point the $2.3 billion project, to be completed in 2006, will have reached neither end of the Central Link line (NE 45th in the U District and South 200th, south of Sea-Tac), it will have cost $4.4 billion, and be missing 7 promised stations. That will have exhausted the Sound Move Phase 1 taxes, even though extended for 10 years in addition to the original 10 years. Reaching the NE 45th and South 200th termini, now targeted for 2020, will add well over $1 billion, supplemented by Phase 2 taxes. As of 2020, for roughly $6 billion, Sound Transit's Central Link light rail is now scheduled for completion, 14 years late, absent 5 of the promised 21 stations, with a $3.7 billion cost overrun.
The Central Link ridership promised in 2010, 32 million boardings, won't be approached by 2020, with a system that will cost at least 2.6 times as much. Operating costs will be multiples of those projected, and the share covered by the farebox--forecast at 53%--will be but a small fraction.
As for the Phase 2 additions, which was supposed to complete the 125-mile light rail network by 2020, if all goes according to the current plan, only 50 miles will be completed by 2030. The cost per-station for that Phase 2 is projected at $650 million. For Phase 1, Central Link, the cost-per-station will be roughly $300 million, versus an original estimate a tad higher than $100 million.
In sum, the introduction of the two rail systems in the Central Puget Sound counties, is a slow, disruptive process, costing huge sums to build and operate. The bottom-line effect will be to degrade the already inadequate productivity of the public transit system. The time, money, effort, and distraction will add so little to transit ridership that the effect on the region's mobility will be indiscernible--save for the immense "opportunity costs," the resulting inability to make productive use the financial resources.
The attached graphs illustrate the trajectory of transit ridership, and the share of the region's entire transportation funding allocated to transit from local, state, and federal sources. Forty years ago transit received 29% of the funding, and delivered 6% of the transportation market share. If Sound Transit performs as well as it hopes to, and if the idealized smart growth land uses are fully adopted, by 2030 transit will serve 4% of the transportation market share, and absorb more than two-thirds of the region's transportation dollars.
Seattle Three County Transportation Tax Revenues
Seattle Transit Market Share: 1965-2040
Sounder Commuter Rail and Link light Rail as of 2008
12 years into its Sound Move Ten Year Plan (1996-2006)
By Emory Bundy
Sounder commuter rail
Sounder commuter rail
Although it absorbs the smaller portion of Sound Transit's funds--which mostly are allocated to Link light rail--Sounder commuter rail has the merit of having actually been put into operation. So there's a functioning entity to measure and evaluate. Its performance anticipates that of Link light rail.
Sound Transit's promises for Sounder commuter rail in the Sound Move Ten Year Plan tax package of 1996:
*82 miles in length, Everett to Lakewood
*Completed and fully operating in 2002, with 15 daily trains, 9 between Lakewood and Seattle, 6 Everett to Seattle
*Capital cost, $650 million
*Annual operating cost as of the benchmark year 2010, $10 million
*Ridership in 2010, 3.8 million boardings
*Farebox recovery, 27.5% of operating costs.
The record to date:
*75 miles of track completed
*10 of the15 daily trains are in operation , 7 from Tacoma to Seattle, 3 from Everett to Seattle
*Capital cost: $1.25 billion projected through 2010, with $1.1 billion more to follow via Phase 2 funds (second tax package, adopted 2008). The components to complete the Phase 1 $650 million capital development plan will cost approximately $1.8 billion, a $1.15 billion, 177% cost overrun.
*Completion of the 82 miles, promised by 2002, now is targeted for 2012-13.
*Operating costs exceed $30 million, triple the original projections--absorbed by only two-thirds of the promised daily trains.
*Annual ridership is 2.67 million, 70% that projected
.*Farebox recovery is 13% of operating costs, half the target
Most of the additional capital cost for Phase 2 is allocated to develop parking facilities added since the original Sound Move Ten Year Plan. Whereas much was made of "transit oriented development" at the outset--with images of people strolling, or perhaps biking to their handy train stop--virtually all Sounder's patronage is dependent on free, handy parking. People are enabled to live hither and yon, drive their SUVs and pickups to Sound Transit's far-flung parking lots and structures, and park free, in order to benefit from an enormously subsidized rail trip. Doug MacDonald, former Washington State Secretary of Transportation, and former Sound Transit board member, aptly dubbed Sounder, "Sprawl Rail."
"Transit-oriented development," doesn't mean live near your rail transit stop and get rid of your automobile. Were that the case, huge sums for parking facilities would be unnecessary. Rather, it means subsidies for commercial development near the stations, in addition to subsidies for the train system and its operations. E.g., there's a "transit-oriented development" in Kent, Kent Station. The municipality purchased the real estate for $15 million, spent $2 million for environmental remediation, and sold it to the developer for $5 million. Sound Transit then relocated its planned 800-stall parking garage to the opposite side of the tracks--where it brings traffic closer to downtown Kent--so the Kent Station developer could use the parking garage, free, for its customers.
The arrangement works because the clientele of Kent Station has virtually no relationship to that of Sounder. This is dramatized by the anchor tenant, a 13-screen cineplex. Since Sounder operates only during work day commuting hours, and people go to the movies evenings and weekends, Sounder patrons and movie-goers drive to and from the garage servicing Sounder's station and Kent Station without competing for parking spaces. Kent Station has almost nothing to do with transit, save the coming of Sounder provided a rationale for subsidizing the mall developer.
Central Link light rail
The vision of Link light rail was that of a 125-mile network linking all the major centers in the Central Puget Sound region (Snohomish, King, and Pierce counties). After several losses at the polls, a scaled-back 21-mile ten year "starter rail" plan was proposed, and the taxing authority was approved by public vote in 1996.
Central Link light rail was to run from the University District in north Seattle to South 200th, a short distance south of Seattle-Tacoma International Airport, at a cost of $2.3 billion. It was to be completed and operating in ten years, 2006, and demonstrate how well Sound Transit could build and operate a rail line. With this "test drive," the public could kick the tires and have confidence in approving additional, Phase 2 taxes for the rest of the 125-mile network, to completed and operating in 2020.
With great fanfare and bragging, a so-called Initial Segment of Central Link light rail (i.e. the "initial segment" of the "starter rail"), from downtown Seattle to Tukwila, will go into service in the summer of 2009, and be extended a short distance to the Sea-Tac Airport in 2010. Sound Transit then hurried to obtain its Phase 2 taxing authority, negating the public's opportunity to evaluate its Phase 1 performance. Initial Segment covers the cheapest, easiest portion of the promised Central Link segment, will cost as much as the proffered price of all Central Link, and is projected to have one-quarter the ridership promised in 2010. Also, four stations have been eliminated, and only 12 will be completed--four of them stations in the Downtown Seattle Transit Tunnel, originally built and financed nearly two decades ago.
For an additional $1.9 billion, Sound Transit plans to add two more of the Central Link stations by 2016, and reach the University of Washington's football stadium. At that point the $2.3 billion project, to be completed in 2006, will have reached neither end of the Central Link line (NE 45th in the U District and South 200th, south of Sea-Tac), it will have cost $4.4 billion, and be missing 7 promised stations. That will have exhausted the Sound Move Phase 1 taxes, even though extended for 10 years in addition to the original 10 years. Reaching the NE 45th and South 200th termini, now targeted for 2020, will add well over $1 billion, supplemented by Phase 2 taxes. As of 2020, for roughly $6 billion, Sound Transit's Central Link light rail is now scheduled for completion, 14 years late, absent 5 of the promised 21 stations, with a $3.7 billion cost overrun.
The Central Link ridership promised in 2010, 32 million boardings, won't be approached by 2020, with a system that will cost at least 2.6 times as much. Operating costs will be multiples of those projected, and the share covered by the farebox--forecast at 53%--will be but a small fraction.
As for the Phase 2 additions, which was supposed to complete the 125-mile light rail network by 2020, if all goes according to the current plan, only 50 miles will be completed by 2030. The cost per-station for that Phase 2 is projected at $650 million. For Phase 1, Central Link, the cost-per-station will be roughly $300 million, versus an original estimate a tad higher than $100 million.
In sum, the introduction of the two rail systems in the Central Puget Sound counties, is a slow, disruptive process, costing huge sums to build and operate. The bottom-line effect will be to degrade the already inadequate productivity of the public transit system. The time, money, effort, and distraction will add so little to transit ridership that the effect on the region's mobility will be indiscernible--save for the immense "opportunity costs," the resulting inability to make productive use the financial resources.
The attached graphs illustrate the trajectory of transit ridership, and the share of the region's entire transportation funding allocated to transit from local, state, and federal sources. Forty years ago transit received 29% of the funding, and delivered 6% of the transportation market share. If Sound Transit performs as well as it hopes to, and if the idealized smart growth land uses are fully adopted, by 2030 transit will serve 4% of the transportation market share, and absorb more than two-thirds of the region's transportation dollars.
Seattle Three County Transportation Tax Revenues
Seattle Transit Market Share: 1965-2040
2009/06/13
Mitsubishi 60 Gram Car
Mitsubishi has announced development of a lithium battery driven car, to be sold within two years. The car, the "MIEV Plug-In Electric First Drive" would travel as much as 100 miles (160 kilometers) between charges.
United States Data and Comparisons: GHG Emissions per Passenger Mile/Passenger KM are indicated below (From power plants - variation is due to mix of fuel sources used in producing electricity)
Average United States: 61 grams/37 grams
Lowest (Vermont): 1.4 grams/0,7 grams
Highest (North Dakota): 102 grams/62 grams
The average GHG reduction compared to the current US automobile and sport utility vehicle fleet average would be 83 percent.
European Union Comparison The MIEV would be 40 percent less GHG intensive that is required by the newly adopted European Union fuel economy requirements for 2020 (the equivalent of 101 grams per passenger mile or 62 grams per passenger kilometer).
The above calculations assume the US national vehicle occupancy rate of 1.6. The comparison to the present fleet includes upstream production and transport activities.
Mitsubishi MIEV Site
Edmunds Review
United States Data and Comparisons: GHG Emissions per Passenger Mile/Passenger KM are indicated below (From power plants - variation is due to mix of fuel sources used in producing electricity)
Average United States: 61 grams/37 grams
Lowest (Vermont): 1.4 grams/0,7 grams
Highest (North Dakota): 102 grams/62 grams
The average GHG reduction compared to the current US automobile and sport utility vehicle fleet average would be 83 percent.
European Union Comparison The MIEV would be 40 percent less GHG intensive that is required by the newly adopted European Union fuel economy requirements for 2020 (the equivalent of 101 grams per passenger mile or 62 grams per passenger kilometer).
The above calculations assume the US national vehicle occupancy rate of 1.6. The comparison to the present fleet includes upstream production and transport activities.
Mitsubishi MIEV Site
Edmunds Review
2009/05/21
The EU Sprawl Report: Rewrite Needed
The EU Sprawl Report: Rewrite Needed
For any who perceive that “urban sprawl” (a pejorative term for suburbanization) is an American phenomenon, the new European Environmental Agency report Urban Sprawl in Europe: The Ignored Challenge provides a radically new perspective. Yes, there is suburbanization in Europe, and plenty of it. Regrettably, Urban Sprawl in Europe is far from an objective, comprehensive review of urban trends. It blindly repeats dogma and, most importantly, fails to consider the momentous advantages that the land use developments of the last one-half century have provided in Europe.
The Positive: Hysteria is Absent
Starting with the positive, Urban Sprawl in Europe generally uses muted language and is devoid of the hysterical theology so often found in anti-suburbanization reports in the United States, Canada and Australia.
Repeating the Dogma
Nonetheless, there are serious problems with Urban Sprawl in Europe. Predictably, the report finds all manner of problems with suburbanization and no benefits. The report repeats the dogma that has misled planners and public officials in the United States, Canada and Australia. For example:
The European Model: Los Angeles
The report applauds Munich and Bilbao for being the only two urban areas studied that since 1950 increased their populations than their land areas. In effect, this means that Munich and Bilbao “sprawl” less in relation to their populations than they did in 1950.
The European Environmental Agency might be surprised to find out which urban area is the champion in that regard. It is Los Angeles, which managed to increase its population at more than double the rate of its increase in land area from 1950 to 2000. Moreover, during that period, urban development in Los Angeles was largely market, rather than planning driven.
The European Environmental Agency acknowledges that suburban low-density lifestyles are more attractive to people (so much for the theory that Europeans like high rise city living, while Americans, Canadians and Australians like the suburbs). Nonetheless, the report implies that it would be better for bureaucrats to make lifestyle decisions, not the people who are living the lives.
The Usual Absent Public Transport Vision
Predictably, the report complains about Europe’s automobile oriented culture. Just as predictably, the European Environmental Agency offers no vision that would get people out of their cars without seriously hobbling their mobility and quality of life. There is, of course, good reason for this. No such vision could be financed by any economy in the world (see The Illusion of Transit Choice).
Ignoring Economics
However, the most serious problem with Urban Sprawl in Europe is not what it says. The principal problem is rather what the report ignores.
Somehow, over the past 60 years, the Western European (and other high-income world nations) have suburbanized as never before and have embraced the personal mobility of the automobile. These developments that anti-suburbanites and the European Environmental Agency view as negative have in fact been associated with the greatest expansion of affluence in history --- what I call the democratization of prosperity.
Urban Sprawl in Europe simply ignores the important issues of economics. Research indicates that personal mobility is associated with greater economic growth and the reduction of poverty. There is plenty of evidence that development of housing on less expensive land on the urban fringe has created wealth and played a major role in producing a comfortable middle class. These are issues that an intellectually honest and comprehensive discussion would include.
The Risks of Ignoring Economics
The failure to consider these issues is already taking a toll in urban areas that have blindly followed the anti-suburban pied pipers. Some urban areas have consciously sought to limit personal mobility and seen businesses locate to other urban areas. The urban areas of Australia and New Zealand, along with Portland and a number in California have so strangled their land markets by development controls that the (see Second Annual Demographia International Housing Affordability Surveyhistoric relationship to incomes has been shattered. The result is that millions of future households will not be able to own their own homes or will have to pay hundreds of thousands of dollars more. This translates, at least in part, into consumer spending that will not occur, jobs that will not be created. United States Federal Reserve Board has published research showing that metropolitan areas with more stringent land use control experience less economic growth than would have been expected.
Revisions are Needed
Urban Sprawl in Europe would best be thought of as a preliminary working draft. Serious revision is required. The dogma needs to be replaced with objective research. Most importantly, the missing elements of economic impact need to be added.
For any who perceive that “urban sprawl” (a pejorative term for suburbanization) is an American phenomenon, the new European Environmental Agency report Urban Sprawl in Europe: The Ignored Challenge provides a radically new perspective. Yes, there is suburbanization in Europe, and plenty of it. Regrettably, Urban Sprawl in Europe is far from an objective, comprehensive review of urban trends. It blindly repeats dogma and, most importantly, fails to consider the momentous advantages that the land use developments of the last one-half century have provided in Europe.
The Positive: Hysteria is Absent
Starting with the positive, Urban Sprawl in Europe generally uses muted language and is devoid of the hysterical theology so often found in anti-suburbanization reports in the United States, Canada and Australia.
Repeating the Dogma
Nonetheless, there are serious problems with Urban Sprawl in Europe. Predictably, the report finds all manner of problems with suburbanization and no benefits. The report repeats the dogma that has misled planners and public officials in the United States, Canada and Australia. For example:
• The report ways that traffic congestion is greater is less compact (more sprawling) urban areas. The international data, some of the of which is cited by Urban Sprawl in Europe says the opposite. More compact urban areas --- what the European Environmental Agency would like, have more traffic congestion.
• The report says that air pollution exposure “may” be at higher levels in suburban areas because of higher volume and slower traffic. There is no “may” about it. Air pollution levels in suburban areas tend to be lower in suburban areas because traffic is less dense and it flows more quickly. While city versus suburban traffic data is difficult to obtain, San Francisco illustrates the greater traffic congestion that is evident in central cities compared to suburbs.
• The report claims that less compact urban areas are more costly, claiming higher transportation and infrastructure costs. The higher transportation costs are more than offset by much lower housing costs, a matter the report does not address. Infrastructure costs are not necessarily lower in more suburbanized areas, as Joshua Utt and I found in a report published by the Heritage Foundation .
The European Model: Los Angeles
The report applauds Munich and Bilbao for being the only two urban areas studied that since 1950 increased their populations than their land areas. In effect, this means that Munich and Bilbao “sprawl” less in relation to their populations than they did in 1950.
The European Environmental Agency might be surprised to find out which urban area is the champion in that regard. It is Los Angeles, which managed to increase its population at more than double the rate of its increase in land area from 1950 to 2000. Moreover, during that period, urban development in Los Angeles was largely market, rather than planning driven.
The European Environmental Agency acknowledges that suburban low-density lifestyles are more attractive to people (so much for the theory that Europeans like high rise city living, while Americans, Canadians and Australians like the suburbs). Nonetheless, the report implies that it would be better for bureaucrats to make lifestyle decisions, not the people who are living the lives.
The Usual Absent Public Transport Vision
Predictably, the report complains about Europe’s automobile oriented culture. Just as predictably, the European Environmental Agency offers no vision that would get people out of their cars without seriously hobbling their mobility and quality of life. There is, of course, good reason for this. No such vision could be financed by any economy in the world (see The Illusion of Transit Choice).
Ignoring Economics
However, the most serious problem with Urban Sprawl in Europe is not what it says. The principal problem is rather what the report ignores.
Somehow, over the past 60 years, the Western European (and other high-income world nations) have suburbanized as never before and have embraced the personal mobility of the automobile. These developments that anti-suburbanites and the European Environmental Agency view as negative have in fact been associated with the greatest expansion of affluence in history --- what I call the democratization of prosperity.
Urban Sprawl in Europe simply ignores the important issues of economics. Research indicates that personal mobility is associated with greater economic growth and the reduction of poverty. There is plenty of evidence that development of housing on less expensive land on the urban fringe has created wealth and played a major role in producing a comfortable middle class. These are issues that an intellectually honest and comprehensive discussion would include.
The Risks of Ignoring Economics
The failure to consider these issues is already taking a toll in urban areas that have blindly followed the anti-suburban pied pipers. Some urban areas have consciously sought to limit personal mobility and seen businesses locate to other urban areas. The urban areas of Australia and New Zealand, along with Portland and a number in California have so strangled their land markets by development controls that the (see Second Annual Demographia International Housing Affordability Surveyhistoric relationship to incomes has been shattered. The result is that millions of future households will not be able to own their own homes or will have to pay hundreds of thousands of dollars more. This translates, at least in part, into consumer spending that will not occur, jobs that will not be created. United States Federal Reserve Board has published research showing that metropolitan areas with more stringent land use control experience less economic growth than would have been expected.
Revisions are Needed
Urban Sprawl in Europe would best be thought of as a preliminary working draft. Serious revision is required. The dogma needs to be replaced with objective research. Most importantly, the missing elements of economic impact need to be added.
Note: These issues are dealt with in greater detail in War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life, a new book by Wendell Cox.
2009/04/16
Canada Residential Study: Greenhouse Gas Omissions
Suburban Housing More GHG Intensive?
Researchers at the University of Toronto estimated differences in GHG emissions between a typical low density detached house in the suburbs and a 15-story high rise apartment or condominium building in the central city. The study covered the impact of GHG emissions from “embodied energy” in the construction materials and day to day operations. The conclusion was that, on a per capita basis, the detached house produced 75% higher GHG emissions than the high-rise unit. Conversely, measured on a square footage basis, the detached house produced 6% less in GHG emissions than the high-rise unit. This research does not include energy used in construction.
All of the Difference is in House Size
The differences in house size were substantial, with the detached house being approximately 2,600 square feet and the high rise unit less than approximately 825 square feet. The square footage per capita in the detached house was approximately double that of the high-rise unit. Again, the apparent differences in energy consumption are a function of the size of the house. To achieve the apparent energy savings would require households to “downsize” their living space and standards of living.
Study Excludes Common Energy
Again, more importantly, the Canadian government data source cited in this research does not include common energy consumption, as in the case of the US RCES (See Below: Common Energy Consumption), which would be typical for a high-rise building. Thus, based upon the Sydney research (below), it is possible that the much smaller high-rise apartment produces more GHG emissions per capita than the detached house.
Common Energy Consumption
Residential energy surveys often fail to allocate common energy usage to housing units in multi-unit buildings, especially high-rise condominium or apartment buildings. Common energy includes living unit and building usage that that does not appear on energy bills, but rather is charged to buildings and included, in rents, mortgages or management fees.
According to the Sydney Water study, common energy consumption includes:
• Lighting (exterior, lobbies, stairs, hallways, parking lots)
• Elevators
• Centralized hot water supply including circulation pumps
• Centralized heating and air conditioning.
• Parking lot ventilation
• Common exhaust fans
• Pool and spa areas (including water heating, pumps, heating, ventilation, air conditional and lighting)
• Saunas
• Cooling tower pumps and fans
The Sydney Water research cited indicates that common energy consumption in multi-family buildings exceeds the amount used per capita in single family residences.
Research covering residential buildings in Sydney indicated that GHG emissions per capita are higher in multi-unit condominium buildings (high-rise, mid-rise and low-rise) than in single family detached or townhouses (attached houses). Unlike the US and Canadian data cited above, the Sydney study includes common energy use, which is shown to equal approximately two-thirds of direct household consumption in high rise condominium buildings (Box: Common Energy Consumption). These estimates do not include GHG emissions from construction of buildings or the embodied energy in building materials (Figure 1).
The Sydney research, which includes both energy on residential bills and common energy, indicates that lower density housing (detached and townhouses) tends to have less in GHG emission that multi-unit housing, both low rise and high rise.
Conclusion
Residences: Missing data on common energy consumption makes it impossible to draw any reliable conclusions on GHG emissions based upon residential building type from the Canadian research. Even with the incomplete data, the energy consumption advantages reported for the US and Canadian multiple-unit housing simply reflects smaller housing unit sizes. On the other hand, the Australian research, which includes common energy consumption, indicates that multiple unit buildings have greater GHG emissions per capita than the lower density detached houses and townhouses. The Canadian findings on embodied energy and the Sydney findings on common energy consumption suggest that, generally, high rise condominium living produces more in GHG emissions than single-family suburban residences.
There are, however, research gaps. There is only incomplete information on embodied energy in construction materials and virtually no information on the GHG emissions produced in constructing the various kinds of housing. Any definitive research would need to include these issues.
Additional Discussion on Common Energy
Researchers at the University of Toronto estimated differences in GHG emissions between a typical low density detached house in the suburbs and a 15-story high rise apartment or condominium building in the central city. The study covered the impact of GHG emissions from “embodied energy” in the construction materials and day to day operations. The conclusion was that, on a per capita basis, the detached house produced 75% higher GHG emissions than the high-rise unit. Conversely, measured on a square footage basis, the detached house produced 6% less in GHG emissions than the high-rise unit. This research does not include energy used in construction.
All of the Difference is in House Size
The differences in house size were substantial, with the detached house being approximately 2,600 square feet and the high rise unit less than approximately 825 square feet. The square footage per capita in the detached house was approximately double that of the high-rise unit. Again, the apparent differences in energy consumption are a function of the size of the house. To achieve the apparent energy savings would require households to “downsize” their living space and standards of living.
Study Excludes Common Energy
Again, more importantly, the Canadian government data source cited in this research does not include common energy consumption, as in the case of the US RCES (See Below: Common Energy Consumption), which would be typical for a high-rise building. Thus, based upon the Sydney research (below), it is possible that the much smaller high-rise apartment produces more GHG emissions per capita than the detached house.
Common Energy Consumption
Residential energy surveys often fail to allocate common energy usage to housing units in multi-unit buildings, especially high-rise condominium or apartment buildings. Common energy includes living unit and building usage that that does not appear on energy bills, but rather is charged to buildings and included, in rents, mortgages or management fees.
According to the Sydney Water study, common energy consumption includes:
• Lighting (exterior, lobbies, stairs, hallways, parking lots)
• Elevators
• Centralized hot water supply including circulation pumps
• Centralized heating and air conditioning.
• Parking lot ventilation
• Common exhaust fans
• Pool and spa areas (including water heating, pumps, heating, ventilation, air conditional and lighting)
• Saunas
• Cooling tower pumps and fans
The Sydney Water research cited indicates that common energy consumption in multi-family buildings exceeds the amount used per capita in single family residences.
Research covering residential buildings in Sydney indicated that GHG emissions per capita are higher in multi-unit condominium buildings (high-rise, mid-rise and low-rise) than in single family detached or townhouses (attached houses). Unlike the US and Canadian data cited above, the Sydney study includes common energy use, which is shown to equal approximately two-thirds of direct household consumption in high rise condominium buildings (Box: Common Energy Consumption). These estimates do not include GHG emissions from construction of buildings or the embodied energy in building materials (Figure 1).
The Sydney research, which includes both energy on residential bills and common energy, indicates that lower density housing (detached and townhouses) tends to have less in GHG emission that multi-unit housing, both low rise and high rise.
Conclusion
Residences: Missing data on common energy consumption makes it impossible to draw any reliable conclusions on GHG emissions based upon residential building type from the Canadian research. Even with the incomplete data, the energy consumption advantages reported for the US and Canadian multiple-unit housing simply reflects smaller housing unit sizes. On the other hand, the Australian research, which includes common energy consumption, indicates that multiple unit buildings have greater GHG emissions per capita than the lower density detached houses and townhouses. The Canadian findings on embodied energy and the Sydney findings on common energy consumption suggest that, generally, high rise condominium living produces more in GHG emissions than single-family suburban residences.
There are, however, research gaps. There is only incomplete information on embodied energy in construction materials and virtually no information on the GHG emissions produced in constructing the various kinds of housing. Any definitive research would need to include these issues.
Additional Discussion on Common Energy
2008/11/27
Griffith University Misrepresents Research
(Based upon an email commenting on a report by Griffith University, Queensland, on GHG emissions in Australia.)
The Griffith University researchers have really stretched on this one, having charged us with saying far more than we said. They painstakingly point out that correlation is not causation and then basically say that we found a causal relationship between urban consolidation and higher GHGs.
We did no such thing. Virtually exclusively we used the word "association" (or lack of it) to note the relationship between the studied variables and urban consolidation (the word appears 32 times).
Our report simply took the Australian Conservation Foundation (ACF) analysis to its logical conclusion. It is fine for ACF to do a report that identifies GHGs by local authority area --- and indeed their work so far as it goes is by far the best I have seen in the world. Since they did not complete the job, however --- to increase the size of the analysis zones so that a more "macro" view could be obtained, we did. In light of the causal relationship that urban consolidation proponents have liked to suggest between inner city living and lower GHGs, this was important and their failure to put this data out there was a serious omission. One can only wonder why the research was not completed (imagine the headlines in the Courier-Mail, Sydney Morning Herald, etc.).
We did offer conclusions, none suggesting cause. Our most important conclusion was that, given the strong association that seems to be in opposition to the widely held views of the urban consolidation agenda, policy should not leap before looking much more closely.
In my view, our research stands (along with that of the Australian Conservation Foundation, which is its data source), unscathed and has been criticized principally for something that it did not do. We noted association, not causation.
Specifically, the conclusions of our report are (page 14):
1. Lower GHG emissions are associated with locations farther from the core.
2. Lower GHG emissions are associated with more detached housing.
3. Lower GHG emissions are associated with greater auto use.
4. Lower GHG emissions are associated with lower population density.
What the ACF data says is that before “sleepwalking” into GHG reduction policies based upon preconceived (and even ideological) notions, it is essential that reliable data be developed so that policies can genuinely address the objective.
ACF Australian Conservation Atlas
Housing Form in Australia and its Impact on Greenhouse Gas Emissions
Griffith University Paper
The Griffith University researchers have really stretched on this one, having charged us with saying far more than we said. They painstakingly point out that correlation is not causation and then basically say that we found a causal relationship between urban consolidation and higher GHGs.
We did no such thing. Virtually exclusively we used the word "association" (or lack of it) to note the relationship between the studied variables and urban consolidation (the word appears 32 times).
Our report simply took the Australian Conservation Foundation (ACF) analysis to its logical conclusion. It is fine for ACF to do a report that identifies GHGs by local authority area --- and indeed their work so far as it goes is by far the best I have seen in the world. Since they did not complete the job, however --- to increase the size of the analysis zones so that a more "macro" view could be obtained, we did. In light of the causal relationship that urban consolidation proponents have liked to suggest between inner city living and lower GHGs, this was important and their failure to put this data out there was a serious omission. One can only wonder why the research was not completed (imagine the headlines in the Courier-Mail, Sydney Morning Herald, etc.).
We did offer conclusions, none suggesting cause. Our most important conclusion was that, given the strong association that seems to be in opposition to the widely held views of the urban consolidation agenda, policy should not leap before looking much more closely.
In my view, our research stands (along with that of the Australian Conservation Foundation, which is its data source), unscathed and has been criticized principally for something that it did not do. We noted association, not causation.
Specifically, the conclusions of our report are (page 14):
1. Lower GHG emissions are associated with locations farther from the core.
2. Lower GHG emissions are associated with more detached housing.
3. Lower GHG emissions are associated with greater auto use.
4. Lower GHG emissions are associated with lower population density.
What the ACF data says is that before “sleepwalking” into GHG reduction policies based upon preconceived (and even ideological) notions, it is essential that reliable data be developed so that policies can genuinely address the objective.
ACF Australian Conservation Atlas
Housing Form in Australia and its Impact on Greenhouse Gas Emissions
Griffith University Paper
2008/10/23
Seattle’s Expensive and Ineffective Rail Tax Proposal
Rail tax advocates are at it again in a number of US metropolitan areas, including Seattle. A recent story in the Seattle Post-Intelligencer caught our attention because of claims being made proposed rail expansions that would be financed by a proposed tax increase. Two issues stand out:
Greenhouse Gas Emissions: According to the article, the proposed plan will reduce greenhouse gas emissions (GHG) in the Seattle area by nearly 100,000 metric tons annually. Sounds like a big number. It isn’t. Based upon previously announced Sound Transit spending announcements (an equivalent increase of $1.1 billion annually, including capital and operations costs), the cost of this reduction would be about $11,000 per metric ton. That is 220 times the United Nations International Panel on Climate Change ceiling of from $20 to $50 per ton (the amount of spending per ton is the maximum amount necessary to accomplish deep reversal of GHG concentrations between 2030 and 2050). The Sound Transit plan is not only expensive in general terms, it is profligate in the amount of spending required to reduce GHG emissions. This is illustrated by the fact that at $11,000 per metric ton, it would cost more than double the Gross Domestic Product each year to reduce US GHG emissions by 50 percent --- an often cited goal.
Traffic Reduction: The article also cites a Sound Transit report indicating that the expanded rail system could reduce driving by 30 percent. Never before has there been a forecast of such a reduction in traffic in any urban area in the world and surely it won’t happen in Seattle. Indeed, it would be charitable to call the 30 percent reduction prediction “laughable.” In other rail projections, the expected traffic reduction rarely exceeds 1 percent, and even then is not achieved. Despite having studied transportation investments for decades, never before have we seen such absurdity. If Sound Transit were subject to the same regulations as apply to used car salesmen, heavy fines and even jail terms might be in the offing.
Wendell Cox is principal of Demographia (St. Louis) and a visiting professor at the Conservatoire National des Arts et Metiers in Paris. He was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley.
Greenhouse Gas Emissions: According to the article, the proposed plan will reduce greenhouse gas emissions (GHG) in the Seattle area by nearly 100,000 metric tons annually. Sounds like a big number. It isn’t. Based upon previously announced Sound Transit spending announcements (an equivalent increase of $1.1 billion annually, including capital and operations costs), the cost of this reduction would be about $11,000 per metric ton. That is 220 times the United Nations International Panel on Climate Change ceiling of from $20 to $50 per ton (the amount of spending per ton is the maximum amount necessary to accomplish deep reversal of GHG concentrations between 2030 and 2050). The Sound Transit plan is not only expensive in general terms, it is profligate in the amount of spending required to reduce GHG emissions. This is illustrated by the fact that at $11,000 per metric ton, it would cost more than double the Gross Domestic Product each year to reduce US GHG emissions by 50 percent --- an often cited goal.
Traffic Reduction: The article also cites a Sound Transit report indicating that the expanded rail system could reduce driving by 30 percent. Never before has there been a forecast of such a reduction in traffic in any urban area in the world and surely it won’t happen in Seattle. Indeed, it would be charitable to call the 30 percent reduction prediction “laughable.” In other rail projections, the expected traffic reduction rarely exceeds 1 percent, and even then is not achieved. Despite having studied transportation investments for decades, never before have we seen such absurdity. If Sound Transit were subject to the same regulations as apply to used car salesmen, heavy fines and even jail terms might be in the offing.
Wendell Cox is principal of Demographia (St. Louis) and a visiting professor at the Conservatoire National des Arts et Metiers in Paris. He was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley.
2008/10/01
California High Speed Rail: Service Unlikely to Livermore-Pleasanton-Dublin
The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.
The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.
In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.
All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.
In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.
All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
California High Speed Rail: State Agency Misleads State Senate & Public
The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.
The Issue Emerging public opposition will likely spread as site-specific urban, suburban and rural impacts become better understood. It is unlikely that the California HSR program will find smooth sailing among impacted communities. This finding is based in part on nascent opposition to the project. Opposition to prior HSR projects has been based on underestimated costs, overestimated ridership, eminent domain and environmental impacts. Also, the credibility of HSR promoters has waned as pledges of “no subsidy” or “only low subsidies” turned into calls for high subsidies. This Due Diligence Report identifies such factors as weaknesses in the CHSRA planning process.
In prior cases opponents have shown great resourcefulness in sustaining campaigns to oppose HSR construction. Opposition could spread, particularly in communities where train speeds and noise would be considered excessive, where massive elevated railways would create a “Berlin Wall” effect that divides communities—a prospect that has caused Menlo Park and Atherton to join in a lawsuit against the CHSRA’s environmental review process—or where a history of staunch opposition exists, such as in Tustin or San Diego County.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
The Issue Emerging public opposition will likely spread as site-specific urban, suburban and rural impacts become better understood. It is unlikely that the California HSR program will find smooth sailing among impacted communities. This finding is based in part on nascent opposition to the project. Opposition to prior HSR projects has been based on underestimated costs, overestimated ridership, eminent domain and environmental impacts. Also, the credibility of HSR promoters has waned as pledges of “no subsidy” or “only low subsidies” turned into calls for high subsidies. This Due Diligence Report identifies such factors as weaknesses in the CHSRA planning process.
In prior cases opponents have shown great resourcefulness in sustaining campaigns to oppose HSR construction. Opposition could spread, particularly in communities where train speeds and noise would be considered excessive, where massive elevated railways would create a “Berlin Wall” effect that divides communities—a prospect that has caused Menlo Park and Atherton to join in a lawsuit against the CHSRA’s environmental review process—or where a history of staunch opposition exists, such as in Tustin or San Diego County.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
California High Speed Rail: Big Losses & Huge Taxpayer Subsidies
The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.
The Issue There is little likelihood that the passenger or revenue projections will be met, that the aggressive travel times will be achieved, that the service levels promised will be achieved, that the capital and operating costs will be contained consistent with present estimates, that sufficient funding will be found, or that the system will be profitable.
It is likely that these circumstances will represent an expensive and continuing drain on the state’s tax resources. Under three of the four scenarios outlined in this report, an early bond default, taxpayer bailout, and investment losses by private funding participants could occur.
To address a fiscal shortfall, past and present proposals to finance HSR’s construction and operation through general obligation state bonds and sales taxes—along with matching funds from the federal and local governments—could be futile. Hence, the HSR system is unlikely to be completed in any form consistent with the current plan and that even the delivery of a recognizable Phase I could be most difficult.
The outcome could mean investors in the project will see no financial returns and the HSR system as proposed could require significant subsidies from California taxpayers in perpetuity.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
The Issue There is little likelihood that the passenger or revenue projections will be met, that the aggressive travel times will be achieved, that the service levels promised will be achieved, that the capital and operating costs will be contained consistent with present estimates, that sufficient funding will be found, or that the system will be profitable.
It is likely that these circumstances will represent an expensive and continuing drain on the state’s tax resources. Under three of the four scenarios outlined in this report, an early bond default, taxpayer bailout, and investment losses by private funding participants could occur.
To address a fiscal shortfall, past and present proposals to finance HSR’s construction and operation through general obligation state bonds and sales taxes—along with matching funds from the federal and local governments—could be futile. Hence, the HSR system is unlikely to be completed in any form consistent with the current plan and that even the delivery of a recognizable Phase I could be most difficult.
The outcome could mean investors in the project will see no financial returns and the HSR system as proposed could require significant subsidies from California taxpayers in perpetuity.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
California High Speed Rail: Projections Attacked by Senator Mills & UC Berkeley Professor
The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.
The Issue Even before the much higher 2030 ridership projections were released, the CHSRA’s forecasts had come under unusually provocative criticism. University of California professor and transportation textbook author William Garrison characterized claims of massive ridership and low fares as “outrageous statements and lies,” which echoed the evaluation of the world infrastructure research previously cited.
Additionally, Former State Senate President James Mills, who is also considered the “father” of the San Diego Trolley, served on the CHSRA board. He expressed similar views. It is reported that Mills resigned from CHSRA at least partially because he “couldn’t get the truth” out of staff. He is reported to have “described the entire project as ‘based on a fallacy’ of wildly exaggerated ridership projections. It stems, he said, ‘from hiring a consulting firm (and) letting them know what you want them to say.” This is an extraordinary statement from a long-time and continuing rail supporter, who nonetheless, points to a significantly flawed planning process.
Both of these statements were made on the basis of earlier ridership projections, which were far less aggressive than are being currently used by CHSRA.
There are multiple indications that the CHSRA ridership projections appear to be absurdly high. Ridership inflation is consistent with the experience of demand exaggeration that has been identified in the world infrastructure research. As a result, it can be expected that CHSRA fare revenue will be far less than anticipated, leading to financial difficulties.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
The Issue Even before the much higher 2030 ridership projections were released, the CHSRA’s forecasts had come under unusually provocative criticism. University of California professor and transportation textbook author William Garrison characterized claims of massive ridership and low fares as “outrageous statements and lies,” which echoed the evaluation of the world infrastructure research previously cited.
Additionally, Former State Senate President James Mills, who is also considered the “father” of the San Diego Trolley, served on the CHSRA board. He expressed similar views. It is reported that Mills resigned from CHSRA at least partially because he “couldn’t get the truth” out of staff. He is reported to have “described the entire project as ‘based on a fallacy’ of wildly exaggerated ridership projections. It stems, he said, ‘from hiring a consulting firm (and) letting them know what you want them to say.” This is an extraordinary statement from a long-time and continuing rail supporter, who nonetheless, points to a significantly flawed planning process.
Both of these statements were made on the basis of earlier ridership projections, which were far less aggressive than are being currently used by CHSRA.
There are multiple indications that the CHSRA ridership projections appear to be absurdly high. Ridership inflation is consistent with the experience of demand exaggeration that has been identified in the world infrastructure research. As a result, it can be expected that CHSRA fare revenue will be far less than anticipated, leading to financial difficulties.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
2008/09/30
California High Speed Rail: The Exorbitant Cost of Greenhouse Gas Reduction
The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.
The Issue The inconsequential contribution of high speed rail (HSR) to the California greenhouse gas (GHG) reduction goal would be achieved at great cost.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
The Issue The inconsequential contribution of high speed rail (HSR) to the California greenhouse gas (GHG) reduction goal would be achieved at great cost.
• Assuming the most optimistic figures (Scenario 1), the HSR cost per ton of CO2 removal is nearly 40 times the IPCC ceiling of $50 per ton and nearly 200 times the price of carbon offsets now for sale and being purchased by leading California political officials.
• Assuming the least optimistic figures (Scenario 4), if the HSR cost per ton of CO2 removal were used for the entire 169,000,000 metric ton California objective, the total cost would be more than the current California gross state product ($1.8 trillion). If the nation were to reduce CO2 emissions by 3,000,000 tons (consistent with the McKinsey report) at the same cost per ton as HSR, the total annual cost would be 2.5 times the present gross domestic product of the United States ($33 trillion). Obviously, reducing CO2 emissions at this cost would decimate the economy and increase both unemployment and poverty.
• HSR’s impact on CO2 emissions is so inconsequential that a similar reduction would be achieved by a statewide 0.5 mile per gallon improvement in car and SUV fuel economy in 2030. This is less than the apparent improvement in national new auto and SUV fuel efficiency between the first six months of 2008 and 2007, based upon an analysis of the 20 leading vehicle models (10 autos and 10 SUVs).
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
California High Speed Rail: Only Gilroy to Palmdale May be Affordable
The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.
The Issue Should insufficient funding be available, the Phase I San Francisco-Los Angeles line could be scaled back to new HSR infrastructure limited to the section between Gilroy and Palmdale (a skeletal system). This would make it possible for high-speed trains to complete the downtown San Francisco to downtown Los Angeles route by operating at lower speeds over the existing-but-upgraded commuter rail and freight tracks between San Francisco and Gilroy and between Palmdale and Los Angeles (and perhaps to Anaheim).
Given the difficult financing situation, and considering how HSR construction costs vary for different segments, such a skeletal system could well emerge. For example, it appears that approximately one-half of Phase I construction costs are attributable to the San Francisco–Gilroy and Anaheim–Los Angeles–Palmdale segments. Hence, it is possible that the Gilroy–Palmdale section of the line could be built for between $15 billion and $22 billion, depending on the extent of capital cost overruns. It would be possible to fund such a truncated line from the currently hoped-for financing sources (state bond, matching federal funding and private investment). However, as indicated in Due Diligence Financial Projections obtaining this even this amount of funding is likely to be difficult.
Further, the Authority has indicated that the earliest segments to be built will be in the San Joaquin Valley. The first segment includes “development of a test track from Bakersfield to Merced, regardless of whether the Altamont or Pacheco Alignment is selected. Thus, the Central Valley is served between Bakersfield and Merced for either alternative.”
Consequently, events could develop in such a way that genuine HSR service would operate only between the peripheries of the Los Angeles and Bay Areas, namely Gilroy and Palmdale, meaning that California would have the form but not the substance of high-speed rail. The speeds on such a skeletal system would be faster than current rail services, but would fall far short of HSR standards and would provide little or no competition to airlines between the two major markets.
Because the existing Bay Area and Los Angeles rail lines are heavily utilized, the CHSRA would need to add track capacity, electrify the lines, and enhance grade-crossing protections. Even with such upgrading the HSR trains would need to mesh with the operating schedules and travel times of the commuter trains.
The skeletal system would be able to provide service between San Francisco and Los Angeles on a non-stop schedule of up to 5 hours and 30 minutes and between San Francisco and Anaheim with a stop in Los Angeles on a schedule of up to 6 hours and 15 minutes.
Another factor relevant to the Palmdale–Los Angeles segment is that the Southern California Association of Governments (SCAG) envisages construction of a maglev train system. Plans include maglev lines from the Los Angeles International Airport to the Palmdale airport. Such a development could exacerbate financial challenges for the HSR line, resulting in truncating even the Phase I operation into Los Angeles. This could result in Palmdale being the southern terminus for the HSR system with passengers transferring between it and the maglev system.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
The Issue Should insufficient funding be available, the Phase I San Francisco-Los Angeles line could be scaled back to new HSR infrastructure limited to the section between Gilroy and Palmdale (a skeletal system). This would make it possible for high-speed trains to complete the downtown San Francisco to downtown Los Angeles route by operating at lower speeds over the existing-but-upgraded commuter rail and freight tracks between San Francisco and Gilroy and between Palmdale and Los Angeles (and perhaps to Anaheim).
Given the difficult financing situation, and considering how HSR construction costs vary for different segments, such a skeletal system could well emerge. For example, it appears that approximately one-half of Phase I construction costs are attributable to the San Francisco–Gilroy and Anaheim–Los Angeles–Palmdale segments. Hence, it is possible that the Gilroy–Palmdale section of the line could be built for between $15 billion and $22 billion, depending on the extent of capital cost overruns. It would be possible to fund such a truncated line from the currently hoped-for financing sources (state bond, matching federal funding and private investment). However, as indicated in Due Diligence Financial Projections obtaining this even this amount of funding is likely to be difficult.
Further, the Authority has indicated that the earliest segments to be built will be in the San Joaquin Valley. The first segment includes “development of a test track from Bakersfield to Merced, regardless of whether the Altamont or Pacheco Alignment is selected. Thus, the Central Valley is served between Bakersfield and Merced for either alternative.”
Consequently, events could develop in such a way that genuine HSR service would operate only between the peripheries of the Los Angeles and Bay Areas, namely Gilroy and Palmdale, meaning that California would have the form but not the substance of high-speed rail. The speeds on such a skeletal system would be faster than current rail services, but would fall far short of HSR standards and would provide little or no competition to airlines between the two major markets.
Because the existing Bay Area and Los Angeles rail lines are heavily utilized, the CHSRA would need to add track capacity, electrify the lines, and enhance grade-crossing protections. Even with such upgrading the HSR trains would need to mesh with the operating schedules and travel times of the commuter trains.
The skeletal system would be able to provide service between San Francisco and Los Angeles on a non-stop schedule of up to 5 hours and 30 minutes and between San Francisco and Anaheim with a stop in Los Angeles on a schedule of up to 6 hours and 15 minutes.
Another factor relevant to the Palmdale–Los Angeles segment is that the Southern California Association of Governments (SCAG) envisages construction of a maglev train system. Plans include maglev lines from the Los Angeles International Airport to the Palmdale airport. Such a development could exacerbate financial challenges for the HSR line, resulting in truncating even the Phase I operation into Los Angeles. This could result in Palmdale being the southern terminus for the HSR system with passengers transferring between it and the maglev system.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
California High Speed Rail: Exaggerating the Impacts on Modal Alternatives
The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.
The Issue One of the most eggregious exaggerations in a planning process rife with exaggeration and over-promotion has been the California High Speed Rail Authority's estimates of the cost of accomodating the future rail customers by highways and airports if the system is not built.
If the system were built, diversion of traffic from the highways and airports would be imperceptible. On average the CHSRA-developed Highway Alternative (calculated by this Due Diligence Report would reduce traffic congestion five times as much as HSR. Meeting the demand that would otherwise be switched to HSR would require much less alternative investments compared to the cost of HSR. The costs of the CHSRA’s asserted Highway and Aviation Alternatives to HSR cost of $82 billion is highly inflated due to dubious assumptions and fundamental flaws. Examples include the CHSRA proposing far more highway construction than is necessary to accommodate the demand.
Moreover, the CHSRA treats the commercial aviation system as if it is static—as if efficiencies to enhance capacity are impossible.The diversion of passengers from aviation is over-estimated. The CHSRA assumes that airlines will cancel a large share of the flights within California because passengers will have switched to HSR—and the diversion will free up airport capacity and make it possible to avoid costly airport expansions. This is not the experience even on the premier Japanese and French systems, which show that strong air markets remain after HSR corridors are in operation. The CHSRA’s created Highway and Aviation Alternatives is of no value in genuine cost analysis or in evaluating future roadway and airport expansion needs.
Call it cheerleading.
The Issue One of the most eggregious exaggerations in a planning process rife with exaggeration and over-promotion has been the California High Speed Rail Authority's estimates of the cost of accomodating the future rail customers by highways and airports if the system is not built.
If the system were built, diversion of traffic from the highways and airports would be imperceptible. On average the CHSRA-developed Highway Alternative (calculated by this Due Diligence Report would reduce traffic congestion five times as much as HSR. Meeting the demand that would otherwise be switched to HSR would require much less alternative investments compared to the cost of HSR. The costs of the CHSRA’s asserted Highway and Aviation Alternatives to HSR cost of $82 billion is highly inflated due to dubious assumptions and fundamental flaws. Examples include the CHSRA proposing far more highway construction than is necessary to accommodate the demand.
Moreover, the CHSRA treats the commercial aviation system as if it is static—as if efficiencies to enhance capacity are impossible.The diversion of passengers from aviation is over-estimated. The CHSRA assumes that airlines will cancel a large share of the flights within California because passengers will have switched to HSR—and the diversion will free up airport capacity and make it possible to avoid costly airport expansions. This is not the experience even on the premier Japanese and French systems, which show that strong air markets remain after HSR corridors are in operation. The CHSRA’s created Highway and Aviation Alternatives is of no value in genuine cost analysis or in evaluating future roadway and airport expansion needs.
Call it cheerleading.
California High Speed Rail: Service to Pomona Unlikely
The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.
The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.
In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.
All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.
In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.
All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
California High Speed Rail: Service to San Gabriel Valley Unlikely
The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.
The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.
In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.
All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.
In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.
All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
California High Speed Rail: Service to Ontario Unlikely
The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.
The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.
In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.
All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.
In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.
All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
California High Speed Rail: Service to Modesto Unlikely
The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.
The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.
In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.
All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.
In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.
All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
California High Speed Rail: Service to Temecula-Murrieta Unlikely
The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.
The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.
In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.
All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.
In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.
All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
California High Speed Rail: Service to Stockton Unlikely
The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.
The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.
In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.
All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.
In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.
All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.
Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich
Additional information
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