Critics slam high-speed rail business plan

Peninsula economists say project would endanger California's economy

Peninsula critics of California's proposed high-speed rail system released a new report Monday night challenging the economics behind the controversial, voter-approved project and accusing the agency charged with building the rail system of deceiving the public.

The 100-page report, titled "The Financial Risks of California's Proposed High-Speed Rail, was written by economist Alain Enthoven, former World Bank analyst William Grindley and financial consultant William Warren. The authors argue that the California High-Speed Rail Authority has made "implausible" claims about the costs and ridership projections of the high-speed rail line, which the authority hopes to build by 2020.

The heavily referenced report cites a slew of other recent studies criticizing various aspects of the San Francisco-to-Los Angeles line, including reports from the Legislative Analyst's Office, State Auditor Elaine Howle, and the Institute for Transportation Study at University of California Berkeley. It also surveys other existing high-speed rail systems around the world and concludes that under the current plans, California's system would not be economically self-sustainable.

Proposition 1A, which voters approved in 2008, allots $9 billion for the 800-mile project but prohibits public subsidies for rail system's operation.

The authors argue that the rail authority's plans to fund the system through a combination of federal grants, private investment and local contributions (along with the $9 billion voters approved for the system in November 2008) are more hopeful than realistic. They claim the authority has not yet received any private-investment proposals.

"To not have secured one private lender's commitment in a state that houses the world's largest and most successful risk capital companies speaks volumes," the report states.

The report's three authors write that they "do not oppose high-speed rail in concept," but challenge the assumptions in California's current plan.

"The 2008 Prop 1A promise that captured many voters was that the CHSR would not cost the taxpayers a penny," the report states. "After months of work on this report, we were forced to conclude that the Authority's promise seemed an impossible goal.

The report recommends that state officials demand a "credible financial plan"; establish an independent peer review panel to review the finances; bring in a rail builder and operator "to advise the Legislature on the financial realities of building and operating a system"; and cut off funding for the system.

What is community worth to you?
Support local journalism.


Like this comment
Posted by Gern Blanston
a resident of Menlo Park: Linfield Oaks
on Oct 12, 2010 at 1:12 pm

I couldn't agree more with the conclusions stated above. I, too, support HSR in principal, but the plan put forth by the CAHSR Authority is mired in fantasy and, in terms or ridership projections, outright fraud, and the taxpayers deserve a completely new look at all the assumptions round which the current plan is based.


Like this comment
Posted by R.Gordon
a resident of another community
on Oct 12, 2010 at 1:44 pm

NEVERTHELESS...........HSR will still happen.....


Like this comment
Posted by Menlo Voter
a resident of Menlo Park: other
on Oct 12, 2010 at 2:08 pm

Mr. Gordon:

endlessly repeating that HSR will happen is not going to make it happen. It takes money. Money that the CHSR doesn't have and never will.

Like this comment
Posted by Cass Apple
a resident of Atherton: West Atherton
on Oct 12, 2010 at 3:27 pm

I'm not surprised the report reached these findings, but would like to read it. Is it available to the public, perhaps on a web site?
I am surprised that in Silicon Valley, there is support for HSR, a technology that I think will be superseded (in the US) by systems including electronically-controlled automobiles--technology that is being developed right here in the valley.

Like this comment
Posted by sunk costs
a resident of Menlo Park: South of Seminary/Vintage Oaks
on Oct 12, 2010 at 3:39 pm

Web Link

Looking ahead...instead of looking backward. Railroads were terrific and innovative in the 19th century. It's folly to invest in a project of this nature now.

Like this comment
Posted by Morris Brown
a resident of Menlo Park: Park Forest
on Oct 12, 2010 at 4:15 pm

Cass Apple and others:

The report is available at:

Web Link

Like this comment
Posted by editor
a resident of Menlo Park: University Heights
on Oct 12, 2010 at 8:01 pm

The link above should work now. There was an error in the URL. It takes a minute or so to load.

Like this comment
Posted by Don Barnby
a resident of Menlo Park: other
on Oct 13, 2010 at 11:38 pm

The report is also available WITH APENDICIES A, B AND C at The apendicies are well worth reading too.

Sorry, but further commenting on this topic has been closed.

Stay informed

Get daily headlines sent straight to your inbox.

Contemporary Indian restaurant, Ettan, headed to Palo Alto
By Elena Kadvany | 5 comments | 6,280 views

Good News: The New Menlo Park Rail Subcommittee Hits A Home Run
By Dana Hendrickson | 12 comments | 1,753 views

Premarital and Couples: Tips for Hearing (Listening) and Being Known
By Chandrama Anderson | 0 comments | 1,512 views

Two degrees can do all that?
By Sherry Listgarten | 17 comments | 1,265 views

Tame, Maim and Claim the Wild Sea Vegetable
By Laura Stec | 9 comments | 744 views


Register today!

On Friday, October 11, join us at the Palo Alto Baylands for a 5K walk, 5K run, 10K run or half marathon! All proceeds benefit local nonprofits serving children and families.

Learn More