The Burlingame Voice

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.

High-Cost Rail - Part 149 Diesel or Electric?

Our last chapter in the high-cost rail saga involved delays costing tons of money and painted a glum picture of waste here.  The SacBee is reporting on an Assembly Transportation Committee meeting in Fresno yesterday where several assembly members posed overly-logical questions and offered alternative approaches to the Gavinor's Merced to Bakersfield all-electric white elephant.  That needs another $4.8 billion--likely much more. Here are two different views of where to spend more money.

Assembly Member Laura Friedman, D-Burbank, gave voice to rumblings among legislators that some of that money may be better spent on improvements that will ultimately be needed for high-speed rail in other parts of the state.  She discounted what rail authority CEO Brian Kelly and others described as the value of completing Merced-Bakersfield as a fully electrified high-speed line to demonstrate that it can be done.  Instead, she said it is more important to invest in segments in more populated areas that can demonstrate value by increasing ridership significantly over existing levels.

She's talking about LA-Anaheim-San Diego or even the LA-Vegas route that is being discussed.  The other change of direction idea involves sticking with diesel!

Daniel Curtin, a member of the Rail Authority board since 2015 and a Sacramento resident, advocated for a different way of thinking among his board colleagues that includes acceptance of incremental improvements in train service through the Valley with 125-mph diesel trains running on the new line now under construction, rather than spending billions more on electrification and new trains.

“The question not being addressed is simply this: is it better to ride a 170-mph train from Bakersfield to Merced and then have to get off and wait for a different train … if your destination is San Jose or Sacramento?” Curtin said. “Or is it better to have a one-seat ride through the Central Valley from Bakersfield to Merced then on to San Jose or Sacramento on a 125-mph train? … The one-seat ride is always the answer, always.“

The bottom line is the same--we've burned through billions of dollars, taken a lot of private property, there is no plan to get to the population centers either technically or financially and no business plan to ever make back what has been spent.  But plunge ahead we must according to the governor.

Earthquakes: Early Warning in Mexico

We do it all here at the Voice.  Topics galore that go from intensely local to lessons learned from afar.  Today's WSJ has an article about the early warning systems - plural - serving Mexico City.  They have three.  We Californians have a half of a system and nothing that reaches regular residents.  Here's the lessons that I drew from the piece:

-A non-profit called Center for Seismic Instrumentation and Registry (CIRES) has the government stamp of approval, but two tech start-ups, Grillo and SkyAlert are taking a different, more digital approach.

-CIRES has 96 sensors on the Pacific Coast that feed a system that makes public announcements on TV, radio and public places with the idea of a one-minute warning.

-Grillo and SkyAlert want to send alerts via wireless networks to phones, Twitter and in-home alarms--in other words more immediate and personal.

-The choice of sensors is important to avoid false alarms with a choice between cheap Asian sensors and better Japanese sensors (I know, both are Asian, but Japan has been working on this problem for years.

The Local Angle:  First, here is you reminder that the BNN Emergency Drill Day is coming up on October 12th.  Last year's is described here.  Find the closest one to you and join it.  Second, if we are to be burdened with high-cost, high-speed rail, the least the Authority can do is spend a little of the $100+ billion on an early-warning system and interface the trains to it.  You could argue Caltrain and Amtrak should also do that and they should, but they aren't doing 110 mph through densely populated areas.

High-Cost Rail - Part 148 More Delays: More Dollars

The reason I call it "High-cost rail" is because no one really has any idea what this boondoggle will eventually cost if it isn't killed or amputated down to a Central Valley white elephant.  No one who is paying attention could think it will be less than $100 billion and with the way things are going $150-175 billion is not out of the question.  If all you read are the local papers, you don't get the picture of the extreme sucking sound coming from the Central Valley.  But the LA Times remains on the case and provides us with these disturbing observations

Seven years after its land buying program began, the California High-Speed Rail Authority has yet to acquire hundreds of parcels, even though the state has the power to condemn property in the way of its future tracks.  At the same time, the rail authority has become landlord to surplus acreage that serves no purpose in furthering high-speed rail but still must be managed by the state. It owns toxic waste sites, vacant lots and rental homes.  The California High-Speed Rail Authority is now a player in the agriculture industry with at least 466 acres of land under cultivation, a side effect of having to purchase entire fields just to acquire a corner for the rail route.  So far, it has yet to secure roughly one-sixth of the 1,859 parcels it needs for the 119 miles between Madera and Wasco.

Even while it has fallen behind schedule in buying property for its future tracks, rail authority managers have underestimated the footprint they need to relocate utilities — including gas transmission pipes, communication cables, electrical wires, water mains and sewers — that sit in the route of the bullet train. 

A June contract amendment the rail authority signed with utility giant PG&E reveals some of the costs involved.  The new five-year deal, a copy of which was obtained by The Times, adds $27 million to the bill for just PG&E’s equipment. Other big operators requiring so-called third party relocations include AT&T, Kinder Morgan, Southern California Edison, Union Pacific Railroad, BNSF and various irrigation districts.

If you click through to the whole piece you will get a slimy feeling up your leg about land buys in downtown Fresno that make you wonder what is really going on here.  But wait, there's more

The new land requirements complicate efforts by rail authority leaders to turn around years of delays, cost overruns and technical problems that are threatening political support for the project. The need for the additional parcels is coming as legislators, frustrated by a decade of slow progress, are considering shifting some of the bullet train funding from the Central Valley to project segments in Southern California and the Bay Area.

Here is the quote of the week:

Another middle manager said more delays are inevitable, lamenting, “I am going to ride this train, but I am afraid it is going to be my ashes in an urn. I told my kids to take my ashes on the bullet train.”

Kudos to the Times.  If I could give them a Pulitzer I would.

Caltrain Electrification Starting to Slip Behind

For some reason, the SF Examiner lands in B'game driveways on Sundays.  Maybe that is when the progressive rag makes most of its money off of real estate ads so they need to bump up the print run.  This Sunday's edition highlighted that "Monitor warns of two-year Caltrain project delay" and then describes the back and forth between a federal monitor" and Caltrain about what constitutes a delay.  The project arrived in B'game about a year ago as noted here.  Here is a taste of the warning

“The overall progress of work is far behind the original schedule,” that oversight monitor warned. Foundation placement and the installation of the overhead electrical contact system are “far behind” initial projections, they wrote.  But the federal oversight monitor wrote in a June report, “The Electrification contractor’s most recent Schedule Update Narrative for May 2019 shows a Substantial Completion date of March 3, 2022, compared to the contractual date of August 10, 2020, which represents a further slippage.”

Caltrain, for its part, said it is firm that construction is on schedule for 2021, with trains expected to be running by 2022. That date is also a change — Caltrain’s program plan initially showed the electrification project’s “substantial completion” marked for August 2020, but Caltrain acknowledged in its own project report that this date has slipped to September 2021.  That project report is also not publicly available on Caltrain’s website, a break in common practice with other transit agencies, leading to concern from Caltrain officials. It is a public document.  Instead, the report was provided to the San Francisco Examiner by a source under the condition of anonymity and became the heated subject of discussion at the Caltrain board’s meeting Thursday.

My least favorite part of the piece was the opening teaser line:

Caltrain’s soon-to-come electrified trains may one day whisk commuters from the South Bay to San Francisco with BART-like frequency, easing congestion on freeways and bolstering the local economy.

I'll get into this more later, but suffice it to say the ONLY two ways we will ever see BART-like frequency from Caltrain is if high-speed rail never reaches the Peninsula or if the budget and land-takings go up dramatically to add "passing tracks".  There are some nice graphics from Caltrain-HSR reports that illustrate that.  Once I find them I will share them, but intuitively we know this to be true.  Imagine adding a local bus route around the Indy 500 brickyard track.  But Caltrain is stuck--the money for electrification comes from high-cost rail so they have to button-up and press on.  Here is the new wall in San Mateo at 25th Ave.-- no room for a passing track there.

The Ups and Downs of Caltrain

With the recent news about Caltrain, I have an opportunity to connect some dots - or at least try to connect some dots since they don't all fit very well.  First we have the news that Caltrain ridership is down again.  Mid-week ridership dropped for the sixth straight month and is down 2.3% this year compared to last year or down about 1500 boarding per week.  In Monday's Daily Post our County supe, Dave Pine, was quoted as saying overcrowding maybe one factor.  Sort of like Yogi Berra's old saw "nobody goes there anymore, it's too crowded."

Some other factors are a shortage of shuttle drivers for the last-mile connections to business parks and medical centers, the increase in pass prices, the wet winter, and according to Caltrain COO Michelle Bouchard "overall economic cooling"!  Doesn't feel cooler out there to me.  The second dot is the planning for capacity increases.  Last Friday, the Daily Journal had a piece that you might be able to link to here if you haven't used up your free allotment for the month.  The basic question is how many trains to add, how many stops to add with those additional trains and where might four tracks be needed to accommodate the increased frequency?  The transit agency has been studying three scenarios for growth - "moderate", "baseline" and "high".  High-growth equates to 2.5 to 3.25 times the recent mid-week ridership and would require more expresses and a local stopping every 15 minutes along the route--which in turn drives the need for four tracks.  You have to wonder how Caltrain would pull off even modest lengths of four-track given the new housing developments immediately next to the right of way?  We've seen it in San Mateo and San Carlos and there are more on the way.

The "moderate" scenario in Caltrain's 2040 vision would actually trim stops at the downtown San Mateo station from 70 to 58 while the baseline would drive 116 stops.  The high-growth would need 196 stops and a number of grade separations to keep from completely snarling car traffic on the Peninsula- including ambulance, police and fire trucks.  That's a lot of money that doesn't exist right now meaning that dot is hard to connect.  And of course we have the specter of High-cost Rail running on the Peninsula.  Money continues to be burned on high-speed rail planning even though there is no real plan to get through the mountains in either Northern or Southern California.  The current thinking is that no new passing tracks would be needed on the Peninsula for HSR, but the confluence of moving parts makes that a tenuous decision at best.  The hand-waving in today's Daily Journal piece was impressive.  I think it's safe to say neither the local cities nor the County nor the State have a clue how train service will accommodate the needs of growth on the Peninsula.  The dots are disconnected.