The Burlingame Voice

High-Cost Rail- Part 155 CA Legislature Balks at Cost

The LA Times remains on the case regarding the high-cost boondoggle that continues to trudge along in the Central Valley.  In a piece titled Newsom and California lawmakers hit an impasse on financing bullet train the Times notes

A battle to secure an additional $4.2 billion for the California bullet train has hit an impasse, with Gov. Gavin Newsom and legislative leaders failing to reach a compromise Friday.

Unless the two sides resume talks soon, any additional money for the bullet train will have to be negotiated in 2022, forcing the rail project to dip further into the roughly $2-billion pot it has in hand....a large coalition in the Assembly wants some of the money diverted to high-speed rail segments in Southern California and the Bay Area.

The negotiations were led by Assembly Transportation Chair Laura Friedman (D-Glendale), who has been pressing the bullet train project to improve its performance after a history of cost increases and schedule delays. Friedman has contended for months that there was no reason to give the rail authority the full $4.2-billion appropriation when it wasn’t needed in immediate years.

The legislative dispute could affect the willingness of Congress to provide federal funding for the bullet train out of a $3.5-trillion budget resolution.

One can only hope.  We are at Recall minus nine days.  I believe virtually anyone who would win on Question 2 would immediately put a bullet in the bullet train, including MeetKevin.  I know I would as I noted here.  It would be Day 1.

My Gubernatorial Pipe Dream

Today was the last day to file papers to replace Gavin Newsom as governor of California.  I did not get my paperwork in as planned.  Ever since Arnold bested a field of 135 candidates to replace Gray Davis in 2003, I have regretted not throwing my hat in the ring.  But I was busy back then.  What could be more fun than a "gadfly" run at the governor's mansion?  More importantly, for $4,200 anyone could have their candidate's statement printed in the voter guide and mailed to all 20.9 million registered voters in the state.  That is a bargain!

I didn't get around to filing today, but I did write my candidate's statement.  Here you go:

Day 1:  I will kill the High-speed rail project saving California taxpayers $100+ billion.  Newsom knows it is the right thing to do, but cannot buck Big Labor.

Day 2:  I will redirect all available infrastructure funding to our water systems and new storage.  We cannot address housing until we have sufficient water security for the population and businesses that are already here.  Our best defense against climate change is a lot more trees that need water.

Day 3:  I will quadruple our wildfire firefighting capabilities by redirecting much of our $105 billion budget surplus to personnel and equipment.  There is no excuse for being surprised 5 years in a row and we need those trees, not the pollution from the wildfires.  It's a no-brainer.

Day 4:  I will sign an executive order guaranteeing Californians easy, cost-effective access to all sources of energy including natural gas, gas for cars, propane and nuclear power without limitation.  Existing local restrictions will be invalidated, and the existing solar credits and net metering will continue.

Day 5:  I will clear the way for single-family residential zoning to stay single-family residential zoning.  These neighborhoods are the backbone of our communities and need to be safeguarded.  There is plenty of R2 and R3 zoning to meet our near term housing needs.

Day 6:  I will issue a series of RFPs to upgrade the primitive computer systems at the EDD, the DMV, the court system and the voter registration system while recouping the $30+ billion of EDD fraud that Newsom seems to have forgotten about.

Day 7:  I will issue an executive order that reinforces cities’ and town’s rights to have at-large city council and school board elections when they have less than 100,000 residents.  Postage stamp-sized governance is not good governance.

Then I will have dinner at the French Laundry. I will pay for my own dinner and no lobbyists will be invited.  Breakfast at Alana's the next morning and then back to work.  There is plenty more to be done.  When you read that voter's guide before September 14, you know what to look for!  I appreciate the people who previewed my agenda and offered to host a coffee for me.  That and $30 million would have done the trick :-)

High-Cost Rail- Part 154 Kopp Speaks Out...Again

It's no April Fool's Day joke that high-speed rail is continuing to burn through cash in the Central Valley with ever more delays and reduced expectations of service--if it ever starts service.  We noted that the originator of this boondoggle, Quentin Kopp, saw the light and become a vocal opponent eight years ago here in Part 87.  That was a long time ago on any construction project, but the problems with this one grow by the year.  Kopp published an opinion piece in the Daily Journal that highlights a number of problems:

While I was chairman of the authority, a state general obligation bond for $9,950,000,000 was approved on Nov. 4, 2008, by taxpaying California voters, with specific provisions safeguarding taxpayer money and construction and operation of high-speed rail, including a ban on taxpayer subsidy for operating expenses.....Bond proceeds were intended to stimulate private investment, federal appropriations and local investment. Sadly, my promises to voting taxpayers haven’t been kept since I left the authority governing board in 2009.  Not one penny has been raised from private investors or local governments. There’s $5.5 billion of voter-approved general obligation bonds unsold.

While Kopp focuses on the financing legalities, the cost side of the equation is slipping out of control.  Another contractor has raised the big, red flag on the Authorities' failures and the impact on construction time--where time really is money.  The LA Times reports

A major construction team on the California bullet train project notified the state rail authority this month that it will not complete a 65-mile section of the future route in Kings County until at least April 14, 2025 — nearly two years after the date that the state included in a business plan adopted Thursday.  A construction team led by the Spanish firm Dragados described a chaotic system for projecting future construction progress because of state delays in securing land for construction.  Dragados said it has had to hire workers as land becomes available and then lay them off as it awaits new parcels. It said that “trepidation” among subcontractors and suppliers is resulting in higher risk that must be priced into bids for work. 

Combing through the LA Times article, we can assemble a partial look at the massive overruns from delays and change orders:

Contractor         Distance    Known Overruns        Pending Overruns      Parcels To

                                                                                                                 Acquire

Dragados             65 miles     $134 M approved           $642.5M                      264

Tutor Perini         31 miles           n/a                          $250M                        500+ 

Ferrovial             22 miles      $193 M approved            n/a                            n/a

Back to Quentin Kopp for the finale:

Caltrain electrification was blessed by the Legislature in 2018 with $775 million from the high-speed general obligation bond, which is illegal under Proposition 1A notwithstanding its worthiness, and is presently subject to a lawsuit by Kings County and other Californians, including me, pending in the California Court of Appeal.

Good for him.  Eight years past his epiphany he's still at it.

High-Cost Rail- Part 153 Bait and Railroad Switch

The never ending saga of high-cost rail cash bleeding away in stunning amounts continues unabated.  But there is new news on a bait and switch on the actual construction as reported by the Fresno Bee yesterday.  Here are the lowlights

The authority, (Rail Authority CFO Brian) Annis said, has already exhausted most of its other sources of money for the Madera-to-Shafter work, for which the cost is now estimated at about $13.8 billion. That new estimate is about $1.3 billion more than what was forecast a year ago by the agency.

The quarterly cap-and-trade auctions have generally amounted to an average of about $180 million for the high-speed rail authority, Annis said. But the effects of the COVID-19 pandemic knocked the May 2020 auction down to only about $6 million. That auction, and two subsequent auctions in August and November, cost the agency about $288 million in projected cap-and-trade income, officials estimate.

You have to love the use of the verb "cost" here.  The quote of the year so far is

“Hoping that the federal government will come in and save your asses is not a business plan,” said David Schonbrunn, president of the nonprofit Transportation Solutions Defence and Education Fund, or TRANSDEF.

But here is the bait and switch on construction

Additionally, the business plan now calls for building a single set of tracks, instead of two, along most of the 119-mile stretch. (CEO Brian) Kelly said one set of tracks would allow for the testing of train sets and other systems before early passenger operations commence between Bakersfield and Merced in about 2029.

Kelly said building only one set of tracks as an initial phase reflects the agency’s ability to construct what it has money to achieve, and could persist even into passenger operations along the route. “We believe we can meet all the operating requirements” with one set of tracks along with sections of passing tracks, Kelly told board members Tuesday.

Imagine if Caltrain only had one track end-to-end with some passing track sections along the way and was supposed to run four or five times as many trains as it does now.  And was supposed to run them at 120 mph.

Recycle Your Chronicle...Or Not

We can assign this to the I Told You So file, or the What Did You Expect? file or the Have You Learned Anything From This? file.  Today's SF Comicle editorial titled "What's wrong with recycling" in the print edition lists a comedy of errors that can be expanded upon in a number of directions.  But first, let's read some excerpts:

Back in 2012, the California Legislature declared it the policy of the state that by 2020, at least 75% of the state’s waste would be reduced, recycled or composted. It was a bold legislative goal that turns out to have been a waste of the paper it was printed on.  Since the target was set eight years ago, the state’s annual landfill disposal has grown steadily from about 40 million tons a year to nearly 50 million. The recycling, composting and reduction rate, meanwhile, fell from around 50% to 37%, or about half the rate lawmakers set out to achieve.

One of the heaviest blows to the effort in recent years came from China and other Asian nations that stopped accepting discarded plastic and other materials from wealthy countries such as the United States, much of which was unusable garbage falsely counted for domestic purposes as recycled.  (Imagine THAT!)  That forces officials to contend with more waste that is unrecyclable in general or at least within California’s borders, where state and local regulations can make it difficult to build and even maintain recycling facilities. (Imagine THAT!)

This is the Chonicle!  There's more about plastic bags with recycling triangles on them that aren't recyclable, lithium ion batteries (like Teslas) and propane tanks, but you will have to click through to read the tale of woe.  My point is to draw a direct line between the clowns who pass these laws and do nothing to facilitate meeting the goals.  Let's ban natural gas in new construction, ban gas powered cars by 2035, build 30 miles of high-cost rail instead of recycling plants in-state to recycle our own stuff, overload the electrical grid so we are at the mercy of adjacent states in a crunch, fine PG&E for not trimming enough trees after the fact and shovel taxpayer money at any number of misguided goals.  In the meantime, groups like the Sierra Club line up like lemmings on the approved agenda with no clue that any of it will actually help the environment.

Me?  I'd just like to know that my empty detergent bottle was going to be recycled nearby, I will have reliable power, someone is balancing development with the worst case scenario for water availability in our arid state and my taxes aren't being siphoned off by anyone other than prisoners scamming the EDD.  What is Newsom's approval rating again?

Exodus - Part 2 Elon Musk Departs

Back in July we asked "how big? and how long?" would be the exodus from the Bay Area?  We got one more view of just how big today when the Wall Street Journal reported that Elon Musk said at a WSJ CEO Summit council this week he has moved to Texas.

Taking up residence in Texas comes with personal benefits for Mr. Musk: The state doesn’t collect state income or capital-gains tax for individuals. The auto executive qualified this year for billions of dollars in stock-option compensation as part of a pay-package agreement, making him the second-richest person in the world.

During the spring, when Mr. Musk was sparring over coronavirus shelter-in-place orders that shut his factory near San Francisco, California Gov. Gavin Newsom told CNBC he was “not worried about Elon leaving any time soon” and the state was committed to the car maker’s success. “We may not be the cheapest place to do business but we are the best place to do business,” Mr. Newsom, a Democrat, said.

California’s taxes underlie many of the complaints. Its personal income tax tops out at 13.3% for amounts over $1 million a year, the highest in the nation. Capital gains are taxed at a similar rate.

In a separate piece this week, the WSJ also highlighted how mid-tier cities are gaining population at the expense of SF and NYC

For every person who moved to the Bay Area from Austin between April and October, 2.9 people moved in the other direction, according to an analysis from LinkedIn. That is a 39% increase from a year earlier.

Perhaps the Gavinor could make a phone call, apologize and get back Musk's tens of millions of dollars in annual California taxes.  He would also have to call the CEOs of HP Enterprise, Palantir and dozens of start-ups and sports stars.  But as the Journal noted "Many who call the Bay Area home have expressed relief at the departure of tech professionals who have been blamed for driving up the cost of living and congesting the freeways."  When I was an analyst, we called that a "going out of business strategy".  Nobody is less pleased with the over-development of the Peninsula than me, but if we are to fund the good stuff (schools, social services, infrastructure, pensions) and the bad stuff Newsom wants (high-cost rail, costly green policies, giveaways) then he might want to pick up the phone and start calling. 

High-Cost Rail- Part 152 San Mateo Wakes Up

You really have to just laugh sometimes when you read supposedly professional and elected officials' statements on long-running issues.  It makes you wonder where they have been for years?  This week's comments on HSR wait times for cars from various leaders in San Mateo are perfect cases in point.  The Daily Journal gets a couple of quotes that start the laughter

Once both efforts are realized, there will be so many trains traveling through the corridor that in downtown San Mateo, cars could be stuck at railroad crossings for as long as 20 minutes per peak hour, said Brad Underwood, San Mateo’s Public Works director.  And that’s based on Caltrain’s “baseline” growth scenario. If Caltrain opts for the “high-growth” scenario then gate downtime goes up to almost 27 minutes per peak hour.

“It’s a huge concern in the city,” Underwood said.  San Mateo councilmembers have echoed the concern.  “We can’t have our intersections closed for 26 minutes during peak hours. It shuts down the city,” Councilwoman Diane Papan said at a meeting in August.

Back in 2015, the frequency of trains was well-documented, for example in Part 108 of this saga 

Parsons said the high-speed rail system could carry 116 million passengers a year, based on running trains with 1,000 seats both north and south every five minutes, 19 hours a day and 365 days a year. The study assumes the trains would be 70% full on average.

It was old news five years ago, but San Mateo is just waking up to the problem.  Years ago San Mateo was a non-player in the Peninsula Cities Consortium that sought to stop high-speed rail's destruction of the Peninsula and our collective budgets.  Now their residents will have to sit in their electric vehicles pondering the waste of time, money and reduced emergency vehicle response time because of that decision.   

High-Cost Rail- Part 151 Will Corona Kill H$R?

As we ponder the paltry silver linings of the Corona pandemic, one that appears increasingly likely is nails in the coffin of High-speed Rail.  I recently asked a reporter for CalMatters if she thought the state budget disaster from COVID-19 might put an end to HSR.  Her somewhat political response was that, like many issues in Sacramento, politicians on both sides of the issue will attempt to use the pandemic to support their prior positions.  We've already seen that as some politicos attempt to position the giant sucking sound from the Central Valley as a necessary construction job program. Oh, please.

Today the Wall Street Journal ran an editorial titled "Democrats Bite the Bullet Train: The coronavirus may finally kill Jerry Brown’s boondoggle to nowhere".  The Journal recaps things a regular Voice reader would already know, but it's a nice summary.  I've added some back links to earlier Voice posts:

In the very small department of coronavirus silver linings, a budget crunch in California is causing Democrats to re-examine some wasteful spending. This includes, fiscal saints be praised, former Gov. Jerry Brown’s bullet train to nowhere.

Gov. Gavin Newsom last year scaled back progressive ambitions for a 500-mile high-speed train from Orange County to San Francisco due to cost overruns, logistical headaches and legal challenges. Instead the state would build a 171-mile starter train between Bakersfield and Merced in the Central Valley.

Democrats now want to shorten the line to the 120 miles of track already under construction and run lower-cost diesel trains in lieu of cleaner electric ones. Recall that the train’s original purpose was to reduce carbon emissions. California’s 2008 bond initiative also said the train “will not require operating subsidy.”

The state High-Speed Rail Authority now projects the 171-mile stretch would cost $20 billion to build and lose between $40 million and $90 million a year. Even that assumes millions of people living in the Central Valley each year will ride the train to Merced and then use commuter rail to connect to San Jose.

As economic consultants William Grindley and Bill Warren have pointed out, a round-trip between Bakersfield and San Jose would take 12 hours and 10 minutes and cost $189 without a subsidy and $104 with a subsidy.

Assembly Democrats are pushing legislation that would allow $5 billion to be redirected from the Central Valley choo-choo to commuter trains in Southern California and Bay Area. This would relieve highway congestion and perhaps ease housing demand in dense coastal cities. Democrats in Sacramento deserve credit for setting new pandemic priorities.

Reports of the BART budget shortfall and the Caltrain slippage and budget bloodiness should give the Assembly Democrats even more incentive to redirect precious transportation money to the "bookends" in LA and the Bay Area.  The commuter line fallacy is the latest attempt to justify HSR, but even the long daily hours on HSR don't capture the full commute time to any location that is not in walking distance of Diridon Station.  Getting to the Highway 237 nerve center or anywhere near Google or Facebook's campuses adds another half hour on a perfect day.  Now is the time, Governor.  Carpe diem.

Caltrain Red Ink, Shutdowns, Delays

The headlines read "Rough path for transit on horizon" (Chronicle), "Financial outlook for Caltrain is grim" and "Fears grow over delay of Caltrain electrification" (Daily Journal).  Ridership is down about 90% and the line is looking at more than an $80 million budget deficit through FY21.  It's hard to imagine getting on a crowded SRO train again, but it's easy to imagine many of the newly-minted work-at-home employees will continue at least some days.  What to do?

During the meeting, officials said additional federal funding beyond the CARES Act will be needed as well as a dedicated funding source. A proposed eighth-cent sales tax for Caltrain in each of the three counties along the corridor is winding its way through the approval process for placement on the November ballot.  Without new funding, furloughs and even a systemwide shutdown all become possibilities, officials said.

A hiring freeze has been implemented and overtime has been eliminated, to name two moves, and further reductions to service was also proposed. Even with the extremely low ridership of late, Caltrain is still running hourly service and a total of 40 trains a day, down from the usual 92 trains per day.

We noted the delays on the electrification program back in August when things were flush and the DJ is highlighting it again

According to John Funghi, chief officer of Caltrain’s Modernization Program, the foundation work is being paused this time because Balfour Beatty is running out of rebar cages needed for the job. That’s because Balfour Beatty failed to order more of them on time, Funghi added.   To stay on schedule and complete the remaining 1,380 foundations by the end of the year, an average of 174 foundations must be completed a month. Caltrain Board Member Dev Davis claimed fewer than 50 foundations have been completed a month on average since the work began.  But Funghi has argued monthly averages don’t provide the full picture as some months 50 foundations may be installed while other months are scheduled to see as many as 300 foundations installed.

Davis isn’t buying that argument.  “John you have said that for the last three months at least, including two of the months where we had zero foundations,” she said. “I’m sorry but I cannot believe it any longer.

From the sounds of it, a lack of rebar is the least of Caltrain's problems right now.  The sad thing is during all of the Board discussions being reported, nobody says "Hey, why don't we call the Governor and suggest he kill high-speed rail and use some of that money to prop up regular rail?"  As I noted elsewhere, there are at least a few Assemblymen thinking along those lines, so why doesn't the Caltrain board jump on board?  It would certainly add credibility to the November ask for more sales taxes to fund rail.

High-Cost Rail - Part 150 "Shut-up and play the game"

It's been six months since we posted about the on-going delays and spiraling budget of the high-cost rail system that is burning through roughly $46 million per month in the Central Valley.  Most Bay Area people I speak with think either a) "hasn't this thing been killed already?"or b) "it will never get to the Peninsula" or c) "it will die of its own accord when the money runs out and we'll have an archaeological monument in Fresno".  If you only read the SF Chronicle, then aside from other problems you have, you would think HSR is basically on-track to become a cost-effective commuter line into SF.  They can even get ostensibly legit train people to write editorials to that effect.

So we have to rely on the LA Times for real reporting on what is going on with our money and it ain't pretty.  In a piece this week titled California bullet train officials say they were told to suppress bad news and ‘shut up’ a couple of named whistle blowers and a number of supporting anonymous sources paint a disturbing picture

When Mark Styles was hired in October 2018 to help oversee Central Valley scheduling for the California bullet train, he soon learned he had walked into a mess.  A core problem was the project’s operating culture, in which managers for WSP, the bullet train’s lead consultant, threatened to punish or terminate employees if they failed to toe the company line, Styles said.  “I was told to shut up and not say anything,” said Styles, a career construction manager who was hired as WSP’s senior supervisory scheduler in the project’s Fresno office.

..Other ex-WSP employees in the Fresno office, including engineer Vera Lovejoy and project controls coordinator Todd Bilstein, say they were also discouraged from sharing bad news with bosses.   Bilstein also left in 2019 after a nine-month tenure.  “If I was to give a talk at a construction conference, I would say they were not following generally accepted project management principles,” he said.

Some of the details of the slippages that are going to cost several bundles include

To install track by 2022 would normally require all of the bridges, viaducts, trenches and other structures to be completed beforehand. As a stopgap measure, the rail authority now plans to install track in five-mile discontinuous segments, which the Federal Railroad Administration has criticized as illogical.

Today, the rail authority is short by 497 of the 2,042 parcels it needs, according to its most recent progress report. In December, the authority acquired only five parcels.

But the kicker comes from an anonymous source

“They have all these people in top jobs with no technical background,” said a top executive at a major European engineering firm, who worked on the project. “They are politicians. They never disclose the full cost. They give you incremental truth. They believe that is a successful business model. They should cancel the contracts and start over.”

I'm not sure I agree with the conclusion, but his problem statement sounds accurate.  Imagine if we took a tiny sliver of what we are burning in the Valley and did the ten or fifteen key grade separations on the Peninsula, got the Caltrain electrification back on schedule and upped the frequency of service?  Ah, it's nice to dream small.