High Speed Rail: Taxpayer Risk Assessment Presentation by Wendell Cox Heritage Foundation

1. High Speed Rail: Taxpayer Risk Assessment Presentation by Wendell Cox Heritage Foundation 4 March 2011

2. High Speed Rail: Taxpayer Risk Assessment

3. TheCalifornia High Speed Rail Proposal: A Due Diligence Report The Tampa to Orlando High Speed Rail Project: Florida Taxpayer Risk Assessment

4. Needs v. Wants

5. The Context UNPRECEDENTED PUBLIC FISCAL CHALLENGES Stop buying things we don’t need

6. Planning Process v. Taxpayers BROKEN PROMISES & EXAGGERATIONS

7. California V. the Taxpayers FALLING RIDERSHIP – ADVOCACY BY THE LEGISLATURE Annual Ridership (Millions) CALIFORNIA COURT DECISION “Voters know that the arguments in the ballot pamphlet are advocacy, but they assume – wrongly, in this case – that the ballot label, title and official summary are objective.  We are very pleased that the Court’s ruling demands that, in the future, only an objective party can prepare those portions of the ballot material which are currently recognized as being ‘official.’”

8. High Speed Rail The Need? Interstate 5 between San Francisco & Los Angeles Chicago O’Hare International Airport O’Hare International Airport: Chicago

9. Federal Profits & Subsidies TRANSPORTATION PROGRAMS: 2006 Per Passenger Mile: 2006$

10. Broken Promises: Capital Costs COST PROJECTIONS • SUBSIDIES • PROJECTIONS • FLYVBJ Kunming (Yunnan) Railway Station

11. Based on a sample of 258 transportation infrastructure projects worth US$90 billion and representing different project types, geographical regions, and historical periods, it is found with overwhelming statistical significance that the cost estimates used to decide whether such projects should be built are highly and systematically misleading. Underestimation cannot be explained by error and is best explained by strategic misrepresentation, that is, lying.

12. Capital Cost Overruns INTERNATIONAL RESEARCH Flyvbjerg Magnitude Cost Escalation Low End Of Range: May have Been 300%

13. Capital Cost Increases: California BEFORE A “SHOVEL IS TURNED”

14. Projected and Potential Costs & Subsidies TAMPA TO ORLANDO HIGH SPEED RAIL LINE

15. Faulty Planning USING URBAN HIGHWAY COSTS IN RURAL AREAS Expansion Not Justified CALIFORNIA PROJECTION (EXAGGERATED COSTS) $66 BILLION HSR ATTRIBUTABLE COST USING FHWA UNIT COSTS $0.3B HSR not Principal Justification for Expansion • Expansion not needed • Used urban costs in rural areas • Attributed all avoided costs to high speed rail

16. Fast Mail 1877 NYC-Niagara IMAGE Most High Speed Rail = Faux Speed Rail

17. Capital Cost Increases: Chicago - St. Louis THE ELUSIVE 4-HOUR SCHEDULE Faux Speed Rail Generally less effective than high speed rail

18. Broken Promises: Ridership & Revenue Los Angeles

19. Ridership Projections HighRESULT: LOWER REVENUES (& LOSSES) Flyvbjerg Magnitude Ridership Exaggeration

20. California: Faulty Projections AIRLINES AND HIGH SPEED RAIL SYSTEMS Before Ridership Projection Reduction

21. Population: Florida & Northeast Corridor ORLANDO-TAMPA V. WASHINGTON-NEW YORK Population (Millions)

22. Ridership: Florida & Northeast Corridor ORL-TPA COMPARED TO WASHINGTON-NEW YORK Annual Rides (Millions)

23. San Francisco Exaggerated Claims: Air & Auto Congestion

24. Faulty Planning USING OUT-DATED AIRLINE VOLUMES

25. Impact on Airlines & AirportsMARGINAL, AT BEST Even with the large diversion of air passengers predicted by the Rail Authority (35% to 56%), we found that the projected runway demand at SFO would only be reduced 4-7%, due to the large number of SFO flights not associated with the California market. …Finally, it is possible that the airlines would compete more effectively with fares than assumed in the HSR report. Regional Airport System Plan (San Francisco Bay Area) O’Hare International Airport: Chicago

26. Potential for GHG Reduction: Airlines COMPREHENSIVE HSR SYSTEM: 2030 Jamin, Shafer, Ben Akiva & Waitz, 1999

27. HSR Competes Poorly with Cars COSTLY, SHORT TRIPS DOOR-TO-DOOR TIME LONG • CONNECTIVITY (LAST MILE PROBLEM) • CAR NEEDED TO COMPLETE TRIP • CONGESTION IS IN URBAN AREAS • NOT BETWEEN • HIGH TOLLS: • TOKYO-OSAKA $100+ • PARIS-MARSEILLE $75+ • GASOLINE • JAPAN: Nearly $6/Gallon • FRANCE: Nearly $7/Gallon Millau Viaduct, France

28. HSR Cannot Compete with CarsNEED FOR A CAR AT THE DESTINATION Automobile travel differs from air or rail travel in that it generally involves door-to-door service, offers greater flexibility in time of departure, and does not require travelers to share space with strangers. Consequently, rail travel must be extremely competitive in other dimensions, such as speed or cost, to attract automobile travelers.

29. Faulty Planning CLAIMED AUTO TRAFFIC CONGESTION IMPACTS  Highway Capacity Volume/Capacity Ratio Higher is More Traffic Congestion Before Ridership Projection Reduction

30. Faulty Planning CLAIMING LITTLE PARKING NEEDED: USING TRANSIT

31. Exaggerated Claims: Environment Southern Greenland

32. Cost Effective Greenhouse Gas ReductionUN IPCC MAXIMUM RANGE Shenyang, China $20 $50 Market Less than $15 McKinsey Average $17 Above $50 is wasteful Detracts from efforts to reduce GHGs

33. Cost per Ton of CO2 Removed: California2030 PROJECTIONS & IPCC CEILING New Ridership Projection would Increase 50% IPCC CEILING ($50)

34. Potential for GHG Reduction: Airlines COMPREHENSIVE HSR SYSTEM: 2030 Jamin, Shafer, Ben Akiva & Waitz, 1999

35. GHG Emissions/Air Passenger Mile LOS ANGELES-SAN FRANCISCO: LIFE-CYCLE Grams/Air Passenger Mile Adjusted for Airline Passenger Miles Estimated from Chester & Horvath U.Cal (Berkeley) Average Occupancy Airline, Car. HSR 60% Occupancy

36. California: 71 Year GHG Payback CONSTRUCTION & OPERATIONS • CHSRA ridership assumptions • UC Berkeley “Mid-Point” Projections HSR INDUSTRY Misleading claims Power Generation (Nuclear Power)

37. High Speed Rail & GHG EmissionsSTUDIES FROM SWEDEN & THE UK Rail investments are in general not a cost-effective climate policy instrument. The reason is that despite great investment costs it is only possible to affect a very small part of carbon dioxide emissions from the transport market.

38. Includes Construction Impacts (Unique)

39. Taxpayer Risk: International DB Frankfurt Train: Gare de l’est

40. Profitability Claims ONLY PARIS-LYON & TOKYO-OSAKA (MAYBE) Iñaki Barrón de Angoiti, director of high-speed rail at the International Union of Railways in Paris, referred to the short Paris-Lyon and Tokyo-Osaka routes as the only ones in the world that have “broken even.” The New York Times, May 29, 2009

41. Japanese National Railroad: The Record LOSSES, DEBT & PRIVATIZATION: 1950-1986 Tokyo-Osaka Opens   Impact on National Debt ($US Billions) Privatization (1987)

42. European Passenger RailPUBLIC FUNDING: INCLUDING OFF BALANCE SHEET AMTRAK IG REPORT

43. Perils of Private Investment TAIWAN & UNITED KINGDOM

44. Protecting Taxpayers Stop buying things we don’t need Albuquerque

45. Paris 1890s • 1: No tax funding: high speed rail is not needed. • 2: If public financing: • (A) Surety bond (performance bond) for Flyvbjerg magnitude cost escalation. • (B) Consortium investors: Unlimited corporate guarantees (including repayment).