California Awarded Nearly $1 Billion to Begin Building HSR

U.S. Transportation Secretary Ray LaHood today awarded a $928.6 million grant to the California High-Speed Rail Authority for initial construction of California High-Speed Rail. Construction will begin next year in Fresno, creating tens of thousands of jobs in California.

“California’s population will grow by 60 percent over the next 40 years,” said Secretary LaHood. “Investing in a green, job creating high-speed rail network is less expensive and more practical than paying for all of the expansions to already congested highways and airports that would be necessary to accommodate the state’s projected population boom.”

On November 1, the California High-Speed Rail Authority released a new business plan that lays the foundation for an economically viable high speed rail system that will create 100,000 jobs in the next five years and reduce carbon emissions by 3 million tons annually.

The new business plan describes a phased approach to construction that will allow the Authority to adapt to changing financial conditions as it moves forward, segment by segment. The plan also updates cost estimates, ridership figures and funding expectations to reflect current economic realities. The objective is to create a fiscally sound project that will attract and drive private investment, generate strong revenues and operate without any public subsidies, just as other high speed rail networks do throughout the world.

“After conducting an in-depth analysis I am convinced that this is an open and balanced business plan,” said board member Mike Rossi. “This is a current, realistic and transparent plan and identifies the funds and financing necessary to implement high-speed rail in California.”

Construction will begin next year with a 130-mile segment in the Central Valley, stretching from just north of Bakersfield to just south of Merced. The $6 billion initial segment, which will serve as the backbone of the system, will be funded through the federal grant received today, previously-awarded federal funds, and California's voter-approved Proposition 1A.

Each segment of the construction project will have its own value and independent utility, and depending upon the availability of funding, each segment will complement the previous one while augmenting existing local and regional rail networks in a cooperative and coordinated fashion. Regional rail systems in Los Angeles and San Francisco have been receptive to the idea of blending existing services with the new system.

Additionally, no public operating subsidy will be necessary for the rail system. Like successful systems around the world, California’s HSR system will initially be built with public sector funds. When the system is operational, ridership will drive revenues that, in turn, will attract further private-sector investment.

To protect the taxpayers’ investment, the economic assumptions including inflation, cost of materials and ridership projections, included in this plan are realistic and conservative. The ridership projections have been rigorously tested by a peer-review panel of international experts.

The new business plan is available online on the California High-Speed Rail Authority’s website. The public will have 60 days to comment and help shape the final plan, which will be completed and provided to the Legislature in January 2012.