California’s High Speed Rail Authority says the pandemic has slowed construction and increased costs—to the tune of hundreds of millions of dollars—in what has already been a slow and costly project.
The latest plan, generally re-drafted every two years, lists several ways the pandemic has slowed and increased the cost of construction due to everything from revenue losses, to staffing shortages from mandatory quarantines and even land acquisition issues, all stemming in some way from Covid-19 and the related lockdowns.
“Like literally everything in our lives, the pandemic has certainly had an effect,” said Boris Lipkin, regional director of the agency, during a panel hosted by Bay Area urban planning think tank SPUR on Tuesday.
For instance, revenues from the state’s cap-and-trade program, which auctions off permissions or “allowances” to emit greenhouse gasses, fell last year, likely due to decreased economic activity. The High Speed Rail (HSR) Authority typically draws between $500 and $750 million from cap-and-trade revenues annually. In 2020, however, it drew $288 million less than projected.
Meanwhile, roughly 250 agency workers had to quarantine in 2020, adding further delays. The agency has employed more than 5,200 workers since the start of the project, according to the latest business plan.
The HSR Authority also said California courts' closures slowed land acquisitions needed to build the rail system. The reduced court capacity may have also delayed progress in combating a lawsuit from Kings County resident Aaron Fukuda and farmer John Tos, which was originally filed in 2016. Tos’ lawsuit was struck down by the Sacramento Superior Court in 2018, but Tos filed an appeal in the Third District Court in May 2019, which is still awaiting a decision.
Construction plans for the rail system have been revised numerous times in the last decade. For example, the HSR Authority has waffled between installing two rail tracks or only one side on a 119-mile segment through Madera, Fresno, Kings, Tulare and Kern counties.
The HSR Authority is soliciting bids from contractors to build either option so it can compare costs, Lipkin said. Either way, he doesn’t expect the decision to be a problem for future riders. “There’s enough capacity with that reduced system to meet the service planning that we’ve done for that initial segment,” Lipkin said.
High-speed rail was approved by Californians in 2008, when 52 percent of voters approved Proposition 1A, which called for the issuance of $9.95 billion in bonds to fund a 200-mile-per-hour train that would deliver passengers from Los Angeles to San Francisco in less than three hours.
Back then, the construction of the rail system was estimated to cost $33 billion, according to the 2008 business plan. Now the “base” estimated cost is $83 billion, but could reach $99 billion, recent reports say.
The Bay Area segments of the system alone will cost billions of dollars. The San Francisco to San Jose segment is estimated to cost $1.65 billion, while the San Jose to Gilroy segment will cost $3.19 billion.
These ballooning costs have lowered support for the project statewide, according to a 2018 report from the Public Policy Institute of California. When polled residents were informed of the cost of the project—at that time estimated to be $68 billion—54 percent were opposed. Support rose to 55 percent when residents were asked how they would feel about the project if its costs were lower.
Money is both the problem and the reason for the problem, Lipkin said. As in any development or infrastructure project, delays cost money because things like inflation and fluctuating market pressures on the construction and materials industries can dramatically increase costs without the project itself changing. The HSR Authority has struggled to get money on the front end to make progress before costs rise, Lipkin said.
So far, construction has been funded primarily through Proposition 1A revenues, federal grants and the state’s cap-and-trade proceeds. Between $20.6 and $23.1 billion are available to spend, but the estimated cost to complete the Merced to Bakersfield portion alone will cost between $21.3 and $22.8 billion, according to the plan.
Even so, HSR Authority staff remain hopeful that President “Amtrak Joe” Biden’s administration will prioritize funding the project, particularly as Transportation Secretary Pete Buttigieg has long been a proponent of high-speed rail. “How do we balance those available resources to build as much as we can?” Lipkin said. “We are better positioned now than we've been... there's more in front of us than behind us.”
The California High Speed Rail Authority’s Draft Business Plan is posted online. Public comment on the plan will be accepted up to March 12 via an online form. Residents may also email [email protected] to submit comments on the plan.