California unveils $98bn HSR plan

The US state will build a first stretch worth $6bn using public funds. It hopes that, once the stretch is operational and generating revenue, it will help unlock some $11bn in private capital to help fund the high-speed rail programme.

The US state of California is inching closer to the prospect of high-speed rail following yesterday’s unveiling of its 2012 business plan – a revamp of the original – for an ambitious $98.5 billion high-speed rail network.
 
The latest version assigns a higher level of investment at the construction stage than what was originally predicted, but also outlines how the state plans to attract some $11 billion in private capital to help implement its high-speed rail ambitions.
 
In its recent business plan, California’s High-Speed Rail Authority explains that it will build a first, 130-mile stretch of high-speed rail line between Fresno and Bakersfield, using public capital. That first stretch should cost some $6 billion and is expected to serve as a springboard for private sector participation. 
 
The rail agency is hoping that, once the Fresno-Bakersfield stretch is operational in 2017, it will demonstrate solid-enough revenues to bring in a private sector partner to fund its operating costs. In addition, the success of the first stretch is expected to convince the private sector of the economic viability of the rest of the programme.
 
“Private sector involvement is feasible because each of the operating sections generates a net operating profit,” the High-Speed Rail Authority writes on its business case. “Based on projected cash flows from operations, nearly $11 billion in potential private sector capital is anticipated once [the first stretch] is in operation.”
 
California’s rail project marks the US’s first foray into the high-speed market. The bullet train’s speed essentially doubles that of Amtrak’s Acela, achieving a pace of more than 200 miles per hour. Although the preferred route and phased direction for the comprehensive project – especially in the later stages – remains uncertain, the rail could span up to 800 miles from the capital city of Sacramento down to San Diego. 
 
The US state has embarked on the project in anticipation of a projected skyrocketing population over the coming decades. California compares the project’s $98.5 billion price tag favourably with the $171 billion it would cost the state to construct the thousands of miles of highways, airport gates and runway expansions needed to create the same capacity that the high-speed rail network is set to accommodate.