Hello guys, you are watching Railways Explained! In previous couple of videos, we've dealt
mostly with China, its high-speed rail network and Belt and Road Initiative, but also, we
spoke about Maglev technology and its application in modern transport systems. If you agree, now it's time to change geographical
and political hemisphere, and to visit the United States. Our today's topic has for a long time been
on our list. The reason why the preparation of this video
took so long is because the infrastructure project that we are going to discuss has been
happening over a long period of time, with a lot of twists and changes, but also controversy. Therefore, it was necessary to check all these
details and then to find a way to sum them up into one comprehensive video. In the following twenty or so minutes, we'll talk about construction of a famous high-speed railway line in California. Let's waste no more time and proceed with
the video. HOW IT ALL STARTED? California has been evaluating the potential
of constructing a high-speed rail line for almost four decades. The state first pursued the idea of a Shinkansen-style
Southern California high-speed railway line which was initiated by private firm American
High-Speed Rail Corporation. In 1981, this company started negotiations
with relevant authorities, and even launched activities related to obtaining required documentation. However, by 1984, it was all stopped, officially
due to lack of financial resources. Then, in the mid-90s, the idea of Californian
high-speed railway line was revived once again, as growing population in this American state
became an increasing strain on its highways, airports and conventional railway lines. At federal level, as part of the High-Speed
Rail Development Act from 1994, Californian high-speed railway line was identified as
one of five priority corridors within the US high-speed rail planning. This time, the planned route linked the major
metropolitan areas of San Diego, Los Angeles, San Francisco Bay and Sacramento via San Joaquin
Valley. A year before, the California Legislature
created the Intercity High-Speed Rail Commission, which was charged with determining the feasibility
of construction of such corridor and, in 1996, the Commission issued a report that concluded
that such project was feasible. Also, in 1996 the California High-Speed Rail
Authority or let s just use the term Rail Authority, was established, in order to begin
formal planning and preparation of a ballot measure. Ballot measure in the United States is some
form of referendum, where a piece of proposed legislation is put on a public vote, in order
get either approval or rejection by the public. In the year 2000, the detailed study was conducted,
and project proposal was finally shaped, in the form as we know it today. The ballot measure was scheduled for 2004
general elections, but the State Legislature voted its withdrawal. Finally, after more than a decade since the
initial proposal, the project received voters approval in November 2008. On a ballot measure, in what was called the
Proposition 1A, with the support of 53%, the public approved issuing of 9,95 billion USD
for the future high-speed rail line. This act also included the funds in the amount
$950m dedicated for financing the capital improvements of commuter, intercity and local
transit lines, which are supposed to complement the future high-speed railway line. Off course, Proposition 1A and legislation
that followed, also set some standards and performance levels that the future project
should meet. The most important three were the following:
Where conditions allow, minimum speed of the service should be 200 mph (320 km/h)
Maximum travel time between San Francisco and Los Angeles should not exceed 2 hr 40
min, and The high-speed rail should be financially
self-sustaining, which means that the operation and maintenance costs should be fully covered
by the revenue. The decision to finally start the project
was made in 2011, after the detailed environmental studies have been carried out and the procedure
of public opinion gathering has been completed. Ok, after this brief timeline, we must say
a few words about what exactly Californians have voted for. THE SCOPE OF THE PROJECT The project of construction of Californian
high-speed rail is actually divided into 2 phases. Phase 1, which refers to the 520 miles (837 km) long section San Francisco - Merced - Los Angeles-Anaheim, which is the section that
was approved by Californians as part of Proposition 1A. But, we also have the Phase 2, which refers
to the future line extensions from Merced to Sacramento and from Los Angeles to San
Diego, with the total length of 280 miles (450 km). In that way, the whole project actually covers
800 miles (1287 km), including up to 24 stations, with design speeds of up to 220 mph (354 kmh). Rail Authority decided to begin construction
in the Central Valley, on the first section from Merced to Bakersfield in the length of
174 miles (280 km). And that s one the most controversial parts,
in addition to skyrocketing of project costs. However, before we jump to controversies,
let s first discuss whether California should have a high-speed rail at first place. IS CALIFORNIA SUITABLE FOR HSR SYSTEM? Successful introduction of high-speed rail
services requires satisfying a certain set of preconditions. Among most important is the one which says
that high-speed corridors should be located between large urban areas, with strong traffic
flows, spaced ideally between 100 and 500 miles. Distances below 100 miles are best covered
by car or conventional rail, while distances above 500 miles are best covered by the airplane. Given the fact the distance between San Francisco
and Los Angeles is about 450 miles, California s high-speed rail easily meet this norm. In terms of the size of the cities that this
line would serve, Greater Los Angeles Area and the San Francisco Bay have a combined
population of about 28 million people. Traveling from San Francisco to Los Angeles
by plane usually takes less than an hour, but if you take into account door-to-door
travel times, which include travel times to and from the airport, check in and security
procedures, the travel time between these cities becomes more like five hours. In spite of all inconveniences, Los Angeles
San Francisco corridor is one of the busiest short-haul flight corridors on the planet,
and by far the busiest in the United States. Regarding the ground transportation, travel
times that you are seeing on the screen maybe the best shows the time savings the travelers
might realize in case California becomes high-speed. High-speed train, between all the pairs of
the cities that are seeing, at least for a double cuts the time you would otherwise spend
in a car. Not to mention conventional railway. But, of course, the medal always has two sides. Some argue that California lacks geography,
demographics and even cultural tradition, that all played a significant role in countries
like France, Germany and Japan which, to a certain degree, made their high-speed trains
economically viable. As we already indicated, some serious criticism
is related to the decision to construct a first segment of line in California s Central
Valley. The reason for this is the fact that the cities
along this segment are relatively small and unlikely to generate any significant amounts
of traffic. This is even more problematic, if you take
into account that the financial arrangement which would ensure financing of the complete
project, simply does not exist. Even the selected route to connect LA and
SF is sort of debatable. Some argue that politicians, in order to fulfil
campaign promises and enable access to high-speed rail to certain cities, influenced the route
to change its most reasonable course. Also, the lack of political support is obvious,
public opinion is divided, and private investors lost their interest, which are all essential
for any project of this calibre. At the end, maybe the most significant argument
against this project is related to the project costs, which are, according to some, simply
too expensive. And furthermore, the prospects of finding
money which would cover complete project, are not that good. But, before you draw a conclusion, let s first
take a deeper dive. CONTROVERSY AROUND INVESTMENT COSTS AND FINANCING We said earlier that, on a ballot measure,
voters approved this project and approved the issuing of 9,95 billion USD in bonds to
commence with the construction. The Federal government also joined the club,
but only with symbolic 3.5 billion USD. It was planned that this sum will be enough
to cover app. 20% of total needed investment, which is projected at 45 billion dollars during
2008. The problem was, after the construction started,
due to issues with acquisition of land, environmental requirements, consultants etc, the projected
costs of the project skyrocketed all the way to 98 billion dollars. However, if we stick to the official data,
according to the Business plan of Rail Authority for 2020, cost estimation of the Phase 1 is
72 billion USD, including the savings which arose due to decision to share the part of
the route with the existing commuter rail. This of course, will have the impact on maximum
speed on certain segments, and, in that way, on total travel times. In addition, beside state and federal government,
the Rail Authority secured certain amounts of money from the so-called Cap-and-Trade
funds. The Cap-and-Trade Program is basically a program
that creates a powerful economic incentive for significant investment in cleaner, more
efficient technologies. 25 percent of annual Cap-and-Trade funds went
for the purpose of this high-speed project, and, in that way, as of December 2019, the
Authority received $3.2 billion. In addition, Rail Authority assumes that Cap-and-Trade
fund will in future provide between $500 and 750 million USD each single year. Now, if you put all we said onto a pile, between
now and 2030, the Rail Authority can count on a budget between 20.6 and 23.4 billion
USD. While this amount of funding is considerable,
it is still far from enough to complete the Phase 1 of the project. WHERE ARE WE NOW AND WHAT ARE THE PLANS? As we said, the section from Merced to Bakersfield
was selected to be the section where the works will start. In fact, they started 5 years ago, and today
we have app. 30 active construction sites, spanning 119 miles from Fresno to Bakersfield. These works are divided into five construction
packages (CP), and, now, we will try to say a few words about each. For CP1, design-build contract valued at approximately
$985 million, was awarded on August 2013 and it covers the initial segment from Madera
to Fresno. Construction was originally expected to begin
in 2013, but it has been delayed due to slow pace of property acquisition, until 2015. A groundbreaking ceremony was finally held
in Fresno, on January 6th, 2015, which marked the official beginning of sustained construction
activities on this project. For CP2 and CP3, design-build contract was
awarded on December 11th, 2014, in the amount of $1,2 billion, and it related to the design
and construction of a 65-mile (105 km) stretch from the south end of Fresno to near the Tulare-Kings
county line. CP4, in the amount of $347.5 million, is related
to the 22-miles (35.4 km) long segment from Tulare-Kings county line to the city of Shafter. Originally, the CP4 was supposed to cover
30 miles all the way to Bakersfield, but it had to be shortened, due to disputes with
the cities of Bakersfield and Shafter. Dispute is related to the need to renegotiate
the routes through these two cities. In addition to these 4, we have the CP5, which
is yet to be defined and developed. In any case, if you want to find out more
about the scope of each of these CPs, you can check out the link in the description. Just to help you understand the scale of this
project, we will mention some activities beside these packages. For example, in the Bay Area, Caltrain is
electrifying the 51-mile commuter rail corridor between San Francisco and San Jos . Rail Authority
contributed $714 million to help convert this heavily used rail line from diesel to clean,
electric service and to lay the foundation for a high-speed rail shared use corridor. In the Los Angeles Basin, Rail Authority is
helping the LA Metro, with $442 million for the Phase A of the Link Union Station project,
in the effort to transform Los Angeles Union Station into a world-class transit and mobility
hub which includes high-speed rails. We are not going discuss current progress
of works, bearing in mind that construction sites are not continuous and they span over,
as we said, 30 different places. If you still want to know more, Rail Authority
has a fantastic site where you can find all the details that you might need. For today s video, let s just have a look
into the deadlines from Rail Authority s bi-annual reports, which are on regular basis submitted
to the California State Legislature. The Business plan for 2012, predicted the
2028 as the deadline for completion of the Phase 1. Of course, as time passed, the deadline was
delayed. New deadline for Phase 1, According to the
Business plan for 2018, was set to be 2033 and for the Merced - Bakersfield segment,
deadline was postponed from 2026 to 2029. But, as would some say, Rail Authority never
fails to disappoint. In Business plan for 2020 they set a new deadline
for Merced - Bakersfield as 2031, which let us assume that the whole Phase 1, in best
case scenario, cannot be completed before 2035. That s of course the case if Rail Authority
manage to find sufficient funding, which, at this moment, sounds like a dream. PROFITABILITY: EXPECTATIONS VS REALITY Now, before we come to a conclusion, let s
at least try to give you an insight into the million-dollar question: will California s
high-speed line ever be profitable? Well, short answer: most likely, no. According to strict definition of profitability,
this project will hardly ever pay off. Just like in case of most high-speed projects
anywhere else on the planet. If that answer works for you, you can stop
the video here. If you want to hear the but part, you are
on the right track. In search for the answer, we again reached
out to Authority s Business Plan for 2020. It gives some data about ridership and forecasted
revenue for each year from 2033 to 2060. The applied model has three scenarios, or,
simply put, it gives data for high, medium and low ridership and revenue. We decided to stick with the data for medium
scenario. So, for the first year of operation of Phase
1, it is expected to have about 12.1 million transported passenger and revenue of 1,2 billion
USD. After 12 years, for example, model forecasted
ridership of 40,5 million passengers and revenue of 5,3 billion USD. On the other side, estimated costs of Operation
and Maintenance for first year of operation are expected to be 770 million USD. After 12 years, those costs are expected to
reach 2,4 billion. When comparing data for the whole period from
2033 to 2060, it is safe to say that this high-speed line is expected to cover its operation
and maintenance costs. Not only this, but also predicted revenue
will in addition generate more than 70 billion USD by the year 2060. That might be enough to cover even the investment
costs of the project, of course, in case they remain on this level. Also, beside these costs that we mentioned,
there are other costs that were put out of equation, such as depreciation and general
costs including overheads and fees. In order to determine the exact level of coverage
of total costs of the project and operation, we would have to analyze more documents including
the Feasibility study. In any case, we might leave that for another
video, because, as we already mentioned in some of our previous works, vast majority
of high-speed railways are not even being built to make profits. As an old proverb says, the rabbit sleeps in
another bush. CONCLUSION For the end of this video, we could talk about
the requirements and issues related to environmental protection, land acquisition and property
rights. We could also discuss poor management, endless
lawsuits, profitability issues and many other thigs. But, we won't. It s all already well known. Actually, we are thinking to draw attention
to something other. We said that current projected funds for this
project are somewhere between 20.6 to 23.4 billion $. And yes, we all know this is far
from enough. The State of California provided all but 3.5
billion which were obtained from Federal government. This is only 15% of these projected funds
and only 5% of the total value of Phase 1. If America wants this project completed, this
seems to be quite unacceptable. We will remind you that Federal government
built the nation s Interstate Highway System through securing grants to the states that
covered most of the construction costs. We all know what the impact of this investment
was on nation s economy and what it meant for the mobility of American freight and citizens. But also, we all know that this system is
not profitable . With high-speed railways, we are talking about
something which represents a commitment to a cleaner and more sustainable transportation. We are also talking about something that moves
people away from roads and airlines. We are talking about something which will
reduce congestion and boost productivity. And, we are talking about something which
might reduce US dependence on foreign oil, increase economic activity and, at the end,
create additional jobs. In any case, if America wants to prove it
is able to complete this project, and finally, start developing its high-speed rail network,
we think it is necessary for the Federal government to show additional commitment for this project
and help out the state of California. Also, the benefits of high-speed rail must
be assessed at larger scale, and in that way presented to public. The words high-speed railways and direct profitability
in majority of cases, should not be even put into same sentence. The benefits of high-speed rail should be
evaluated through global impact on the economy and the citizens. Without going into much details, we will only
give you a few hints: mobility of people, availability and affordability of transport,
better flows of workforce, relief of urban areas, opportunity to live in cheaper neighborhoods,
impact on the environment and many, many other. Finally, we do believe that this project might
be quite beneficial for the American society and that the US have the capacity to complete
it. But not before it is set as priority, by both,
the officials and the public. Don t get us wrong, but the lack of money
should not be an excuse for further delays. If you allow us to make such comparison, the
value of this project is only one tenth of the US military expenditure in Afghanistan
from 2001 to 2019, which, according to the US Department of Defense, was $778bn. This was Railways Explained, until the next
time, goodbye!
