Dump CAHSR, Urges TRANSDEF
In Op-Ed, Breaking It All Down Is The Group’s President
Reprinted with permission, TRANSDEF ©
By David Schonbrunn*, TRANSDEF President
Without private capital, a California High-Speed Rail (HSR) system cannot be built. It's too costly to be built with just state and federal funds. The 2008 HSR Bond Measure was premised on a third of the investment in HSR coming from the private sector. The absence of private investors in the project 17 years after the bond measure proves that it cannot succeed. Potential investors stayed away, obviously concluding they could not make a profit.
HSR Is A Viable Business
TRANSDEF knows that California HSR is an attractive business, if approached with cost-consciousness (California High-Speed Rail Authority’s (CHSRA) plans are vastly more expensive than necessary). We know this because we were present for the dress rehearsal of the presentation made by the American subsidiary of the French National Railways, SNCF, to the CHSRA in October 2010. The SNCF Powerpoint addressed what SNCF saw as the key weakness of the CHSRA project–its insistence on building the initial system without private capital and without the direct involvement of a firm with HSR operating experience. The presentation suggested that CHSRA use the structure of a Pre-Development Agreement to bring an experienced operator on board immediately to direct the project. SNCF was accompanied by a major U.S. investment bank that was ready to fund the construction of the San Francisco to Los Angeles phase of the project without a ridership guarantee.
A major condition of its proposal was SNCF’s insistence that it select its own route. While part of the Pre-Development process was to refine a route, SNCF had tentatively concluded that I-5 would be much a faster--and straighter--route than the politically distorted route approved by the Authority–as well as much less expensive and less disruptive to build. SNCF believed the Authority’s route to be a money-loser, and would not accept ridership risk for it. Note that, despite all the talk about the merits and demerits of an I-5 route, the SNCF proposal was not premised on a specific route. It proposed a process to bring in private capital and an experienced operator.
CHSRA did everything possible to discredit and bury the LA Times story on the SNCF proposal, going so far as to reach back into history to tie the railroad to the Holocaust. With all the slurs flying around, it is important to note that SNCF was not asking CHSRA to turn the project over to it. They were instead asking that CHSRA establish a Request for Qualifications process, leading to an open Request for Proposals process, which would result in the selection of an operator. They were fine with the possibility that the winning proposer could be another firm.
CHSRA Chooses The Dark Side
Had the CHSRA been operating in the public interest, it would have held public hearings on the proposal and on the desirability of setting aside its favored route. The line would probably be operating now between LA and SF, with an international HSR operator selected through an open bidding process. This would have been consistent with the business model recommendations of the High-Speed Rail Peer Review Group in their very first letter, which stressed the importance of the participation of the HSR operator throughout the design process. Instead, CHSRA kept the proposal secret and continued pushing its politically driven route.
Given the overarching need for private capital, the 2008 Report of the Responses to the Request for Expressions of Interest is highly significant. It indicated that no HSR operator was willing to undertake the ridership risk of investing in the CHSRA’s project. Operators claimed that ridership guarantees were needed to reduce the financial risk, but such subsidies were strictly prohibited by the HSR Bond Measure. The Authority’s 2012 Business Plan rested on the foundational assumption (see pg. 4-3) that no private capital would be invested before the Central Valley segment of the project was connected to Silicon Valley, when the project might turn a profit. That in turn was tens of billions of dollars away, with no pathway to acquiring the resources.
With the Trump Administration starting to investigate CHSRA, and saying it wants to pull back past grants, there is no feasible way for the project to go forward. The State is broke, and will not be able to keep footing the bill. This project needs to be stopped before throwing more good money after bad.
Who Does The CHSRA Serve?
The SNCF’s commonsense proposal would have reduced the risk to the State of California by bringing in private funding that would have been committed to making the project actually operate. (As of 2025, after spending upwards of $8 billion, there is still no track laid or service provided. This is unheard of in the international rail industry.) The SNCF proposal would have brought in the expertise needed for critical design decisions, along with private capital willing to assume ridership risk.
When the history of California’s HSR project is told, its failure will be seen to have been caused by the Authority itself, not its opponents. By rejecting the SNCF proposal, keeping it secret, and then mounting an all-hands-on-deck damage control effort to snuff out the story when it finally became public, CHSRA clearly told the world that its commitment was to its army of consultants, not to delivering an HSR project to the people of California.
* For the last 30 years, David Schonbrunn has been President of TRANSDEF.org, a non-profit environmental organization advocating for better transit. TRANSDEF is currently challenging the rail project of Valley Link. As part of a coalition of cities, counties individuals and environmental organizations, TRANSDEF sued CHSRA, challenging its EIR in 2008. The litigation with CHSRA lasted until 2022, when the California Supreme Court declined to review our Appellate case. After also serving as President of the Train Riders Association of California, he is now Vice-President.
While the author is correct about the problems with CA HSR being primarily political, the opening premise that “without private capital, a CA HSR system cannot be built” because “it's too costly to be built with just state and federal funds” is laughable and disproved by the dozens of HSR lines built all over the world since CA voter approval of the Prop 1A HSR bond $9 billion system starter down payment in 2008 in and by states and countries whose economies are dwarfed by CA’s ($4 trillion) and the US’s ($29 trillion) economies.
The author brings to light many problems with CAHSR I was not familiar with. Obviously its leadership placed its chips on the wrong advisors and the wrong strategy. With 20/20 hindsight the best approach would have been to build Bakersfield - Los Angeles first, which does not have passenger train due to both geography and host railroads’ refusal to let Amtrak run regular service via Tehachapi Pass. A straight route parallel to I-5 would have allowed the new train to show its stuff. With enough riders to generate positive cash flow more investors would have had confidence to invest in future segments, e.g., Bakersfield-San Jose.