High-Speed Rail: Do We Have the Will?

Tomorrow morning, I’m getting on a train from Washington, DC to New York. It’s going to take me almost three-and-a-half hours to get there.

Image: Transport Politic
Amtrak envisions a new path for 220 mph high-speed rail on the Northeast Corridor. Image: ##http://www.thetransportpolitic.com/2010/09/28/amtrak-unveils-ambitious-northeast-corridor-plan-but-it-would-take-30-years-to-be-realized/##Transport Politic##

Sure, I could pay more for an Acela and get there in less than three hours.

But why can’t it take 90 minutes?

Yesterday, Amtrak unveiled a plan [PDF] to build a high-speed rail line between Washington and Boston, with trains running up to 220 miles per hour. Estimated travel time between DC and New York: 96 minutes. New York to Boston: 84 minutes.

And the price tag? They’re expecting it to cost $4.7 billion a year for more than 25 years.

The high cost of the project has led observers to characterize it as worthy but improbable. Like many conversations about the future of rail, this one is full of hand-wringing about how to pay for it all. So what are the options?

First, according to Mark Reutter, author of Making Steel, there’s the Highway Trust Fund, which pays for both highways and transit. In a recent policy paper, Reutter states that “Congress could easily allot $5 billion a year for HSR construction – without an increase in the gas tax – by cutting out earmarks and formula-based grants that now soak up billions of dollars.” His numbers come from a government oversight report on the ineffectiveness of the current HSR program.

But at a panel discussion today in Washington on the issue, Ken Orski, founder of the transportation newsletter “Innovation Briefs,” said using the Highway Trust Fund is a nice idea, but “any such proposal would raise howls of indignation and opposition not just from the highway interests but also from transit.” He’s in favor of an independent Rail Trust Fund.

Another strategy is to identify who would benefit from high-speed rail and find a way to get them to contribute to its cost.

Pierce Homer, transportation director at the engineering firm Moffat & Nichol, is a proponent of this approach, known as “value-capture.” “Who benefits from HSR? What are the economic benefits?” he asked. “There have to be individuals, organizations, institutions, regions, quarters that see benefit and value from an investment in high-speed rail and are willing to pay for it.”

Homer said it hasn’t been common for HSR to be funded this way, but value capture techniques are frequently applied to transit. He cited the Dulles rail extension in Northern Virginia. “About $400 million of that two-and-a-half billion dollar project are being paid for by commercial real estate,” he said, noting that office buildings and office parks in the area signed a petition asking to be taxed in support of the rail extension.

The potential of rail to jump-start economies along the corridor suggests that it should be feasible for some of that value to help pay for the rail line itself.

When a Spanish woman in the audience mentioned her country’s system (in addition to the oft-cited ones in Germany and Japan) as a model for fast and reliable rail service, Petra Todorovich of the Regional Plan Association noted that the Spanish HSR network has been paid for with general government funds. Spain also got huge financing bonuses and grants from the European Union.

Ultimately, Todorovich suggested, the most important resource Spain has drawn upon is political will. “In that country, their High-Speed Rail program is a national priority.”

  • Steve

    What about the other hi speed corridors in the country.
    The corridor between Chicago abd Detroit has been in
    place for a very long time and isn’t anywhere near close
    to being done. Lets stop stalling and getthe work done.
    Make something happen…

  • Andy

    Amazing how traveling >200 miles in 3.5 seems so slow to most people. Someday, long after peak energy has been fully realized by everyone, people will look back in amazement that we used to travel so fast.

    For at least a few hundred thousand years, we were limited to travel by foot, maybe sustained 8mph or so if we wanted to run a few miles. Then we realized horseback could increase the speed and duration of our trips. It was only within the past hundred-or-so years that we’ve come to expect anything over 20mph to be possible. Now, a trip at 65mph is just so darn annoying that we beg for 220mph trains.

    If only people were content with getting back to a human pace. I’m content with being limited to the speed that I can propel myself by bike. I wish more people were. It’s our addiction to speed that has exacerbated global warming, given us the free time to waste watching television, and allowed industries to expect global shipping within days. What was so bad about the human pace? We’re in such a rush to do nothing at all (as Coldplay would say).

  • We may have the will ($23 billion for 12 kilometers of tunneling, anyone?), but do we have the competence to pull this off in less than $117 billion?

  • JJM P.E.

    From what I’ve seen, cutting out inefficiency in the trust fund could double the number of projects that could be funded.

    One bridge my department when from $1/2 million as a locally funded project to $1 1/2 million as a federal aid project.

  • ryan

    @Andy: I guess you then have no interest in ever seeing the outside world? other than by bicycle and sailboat. i don’t understand the peak energy people who actually expect us to undo technology to solve the problem than to further develop it to do better.

    It’s ridiculous that this obvious corridor isn’t getting priority, and especially surprising considering how much influence the BosWash corridor has.

  • Andy

    Good one, Ryan. I won’t see the outside world expect by bike and sailboat. 😀 And you’ll see it mostly by sitting cramped up in cars, trains, and planes?

    I’m not totally against these things. I drive places and I’ve flown many places. I just know that these options won’t last forever the way they are, and I’m okay with that. It’s not that people who understand peak energy want to undo technology, they just realize that it can’t last forever that way.

    I just don’t understand the addiction to always going faster and farther. We went so long without that need, and did just fine.

  • The reason Spain has political will for HSR projects is because they build lines at 1/10 the cost for what Amtrak is proposing.

  • +1 to what DE said.

  • paulb

    I’m thinking about the way the economy seems to be going and figuring this train will be like the movie Up in the Air, full of expense account passengers comparing Platinum AmEx bonus points and whomever you find in first class on airplanes these days (I have no idea).

    Most likely I will be riding the Fung Wah bus, which may not be high-speed rail, but at least it exists, and I can afford it.

  • mark

    I agree with paulb. The big problem with the NEC is that it subsides the rest of the underfunded Amtrak system and is unaffordable to regular people. Often it’s cheaper to fly to Florida than take the train from NYC to Boston. I love the idea of high-speed rail, but it is useless to me if it costs 20x more than the bus. As it’s structured now, Amtrak is a limo on rails. Let’s get the ticket price down and then talk about high-speed rail.

  • Bob

    I think the idea is great, but why not complete it in different steps? NYC (Penn Station) TO DC should be completed by 2020 as an absolute necessity. Then do the new route to Boston over 15 years. DC-Penn Station just basically needs upgrades, not a whole new route. Get that section done ASAP!

  • Doug

    mark, you’re mostly right. There is so much latent demand for train travel (hey, it’s comfortable and reliable!) that Amtrak really needs to expand its capacity for it to make economic sense to lower prices. Look at some of the pages on Tranpo politics: they indicate that Amtrak can run pathetic numbers of trains at pathetic speeds. When they clear that up somehow, then maybe you’ll see both higher speeds and lower prices. (It just looks like there’s not enough track in the northeast right now to run regional rail, Amtrak regional, and Acela.)

    Of course, when I’ve ridden the train in the past, they’re usually nowhere near full, so perhaps they do need an economics lesson.

    http://www.thetransportpolitic.com/2009/10/26/amtrak-contemplates-a-renewed-northeast-corridor-and-lays-out-the-stakes/

  • Josh

    Out of curiosity, how much of the cost that’s being quoted is due to the payout required to acquire rights-of-way along an already-crowded urban/suburban corridor?

  • We have the money to build this. It is crucial to our national security objectives to reduce our consumption of foreign oil (as even more people who drive or fly will shift to electric-powered transportation).

    Energy policy drives a significant portion of our military objectives.

    And we’ll spend about the same amount of money on Afghanistan in 2011 as it would cost to build this true high speed rail line.

    An investment like this — as well as those in Californai, Florida, the Midwest and around the nation — that will reduce our reliance on foreign oil should be a national priority and put off-budget (just as our wars in Afghanistan and Iraq currently are).

    We have the money. It is always a question of priorities and will.

    And that begins with you — a citizen and voter — deciding that it is your will that your government invest that amount of money.

    From there, convince other citizens and ultimately your representatives to implement the public will.

    But it begins with a citizen deciding that we should spend $15 or $20 billion annually on foreign-oil reducing infrastructure projects as a matter of national security.

  • Ian Turner

    Why can’t we use value capture to finance subway construction here in New York? The subway system creates huge amounts of value, mostly in real estate, and new lines would be expected to do the same.

  • MRN

    Good god. One could realistically commute from Philadelphia to midtown on a daily basis. That would be sweet, albeit, creating an entirely new kind of sprawl.

  • This is a great idea, the speeds are amazing, but the cost is incredibly high. If a highway were to cost this much money, people would go crazy. O’Hare airport’s expansion plans only cost 7 billion in comparison. I wish we had that 7 billion to do some major reconfiguration of the rail in Chicago, but we don’t. 117 billion for one route is ridiculous and unnecessary… Perhaps improve the route, yes, but I don’t understand why they chose such an expensive way to do things… Use the current infrastructure and improve it to get top-notch speeds! Amtrak has always run under what they say they run at, so the Acela never actually runs at 150 mph… I don’t trust anything Amtrak has to say, as a constantly subsidized money-losing company.

    What we need to do is come together and create a coalition of rail companies, interests, and partners. We need to get a fund together from these companies by providing them a business plan that will make money, rather than lose it. Much like this article says, private companies will have an interest if there is potential to make money. Well, let’s get at it then and create a large coalition. We need to stop relying on the federal government to do everything for us, if you want to look at the future of HSR under the government just look at Amtrak’s history.

  • Woody

    Nobody knows how much this will cost. The $117 billion figure is Year Of Expenditure. That assumes a certain rate of inflation, both general and specific to big infrastructure projects. Who knows what things will cost between 2030 and 204o? Really? How does Amtrak know? Hired an expert from Wall Street? Remember “Dow at 36,000”, published in 1999?

    At TheTransportPolitic, Yonah says that in current dollars, the project is estimated to cost a mere $42 billion. That’s another artificial number, of course, because it assumes that everything from the Environmental Impact Statements to the tunneling and track laying and new rolling stock would all be done and paid for in 2010.

    But I find the $42 billion figure more useful in thinking about this thing than a figure based on guesses about what tunnels and things will cost 25 years or so from now. It makes it easier to compare with most other rail projects underway or even under discussion.

    For example, by the Present Value methodology, California HSR would cost only $30 billion, not $40 to $50 billion by most other estimates. So, $30 billion for Cali’s HSR vs $42 billion in 2010 dollars for NEC HSR. That’s a lot easier for me to swallow. (Alon might point out that the rest of the world could build them both for a fraction of the US cost, but I’m just trying to compare one overpriced apple with another overpriced apple, say, one a California apple and one a New York apple.)

  • Jass

    Woody is right.

    Also, to put in in perspective, NASA just announced a 55 BILLION Mars project.

  • kevd

    If we were investing at the rate Spain is investing (1% of GDP annually) we’d have enough money for this entire project (in current dollars) in 1/2 a year.

    We don’t want to spend the necessary funds, so we get slow ass amtrak, people waste time in traffic and a GDP doesn’t expand as it could. Its only going to get harder and harder to catch up to the rest of the developed world.

  • kevd

    “Yonah says that in current dollars, the project is estimated to cost a mere $42 billion”
    sorry. Current US GDP is 14.5 TRILLION dollars.

    Sorry, closer to 3 1/2 months.

  • HFK

    What will give us the most bang for our billion bucks if our goal is reducing total vehicle miles traveled? Will shuttling a select group of folks between DC and NYC at 2-3x the speed do it? Or will making our everyday lives, i.e. home-to-work, work-to-store, home-to-school, home-to-park, etc., less auto-dependent gain us far more?

    I am a railfan and an urbanist to the core, but the numbers we are throwing around here are outrageous and it seems to me that a lot of folks brush them off like play money. Just one billion of those dollars could go to brushing up transit systems, encouraging TODs, etc., in one of the many towns that are in dire need of sprawl retrofit and options for travel. The mileage we go to find shopping, work, play and go to class add up to far more than our occasional trips far afield.

  • Woody

    HFK, I’m sympathetic to your point. And I have to say that every HSR or even High(er) Speed Rail proposal I have seen expects to raise the fares because the faster trips are worth more.

    Today three trains a day take a miserable 6 hours or so crawling from Detroit to Chicago. The Midwest plan for trains running up to 110 mph includes a substantial increase in the ticket prices when the running time is cut to about 3 hours. The planners seemed unconcerned about displacing many of the current riders who may not be able to afford higher fares. And nobody seemed interested in low fares with more trains, more seats, more passengers, as if there were no value in that stuff.

    I don’t know that this plan for the NEC got into pricing at all. Probably the 220 mph trains would have close to airline fares. After all, they are looking for operating surpluses of nearly $1 billion a year. But at least this plan offers an abundance of capacity, so regional trains could be more reasonably priced. Also, the states have been talking about linking their commuter trains for extra-local, extra-cheap services. That is, Jersey Transit from NYC to Trenton, SEPTA thru Philly and Delaware, then MARC into D.C.

    Meanwhile we shouldn’t sneer at current Amtrak service, but push to improve it. Or sneer at ObamaRail, with a number of routes planned for 110 mph. Building the roadway for 110 mph costs only a fraction of the cost of true HSR. But then, with true HSR you get to count passengers by the tens of millions. That ain’t chopped liver.

  • Woody, $42 billion is not the cost in 2010 dollars. It’s the net present value of $117 billion in YOE dollars, discounted at 7%. The 7% discount rate comes from standard USDOT calculations, but is much higher than other rates. SNCF’s proposals use a 4% discount rate, the expected inflation rate is about 2%, and for global warming, environmentalists propose a zero discount rate. The lower the rate is, the more the net present value is. This means the cost is much more than $42 billion in real money.

    Kevd, you’re still punting on the fact that in Spain projects like this don’t cost $117 billion. The reason Spain is willing to spend 1% of its GDP on rail is that it’s an efficient use of money there: for the same amount of money, it builds ten times the route-km that Amtrak’s proposing. All over Europe, you see projects canceled or berated for wasting money over costs that Americans consider normal. It’s not that there’s more will there; it’s that there’s more efficiency.

  • Alon Levy, can you explain why you believe European projects are so much less expensive than American projects?

  • To a good approximation, it’s because Europe doesn’t have the FRA. It’s not the only explanation, but for small projects, the US has no good regulations for modernized trains: nearly everything requires a variation or an exemption, and these add up money in consultant and legal fees.

    Another explanation: the US is really bad about reining in contractors. The MTA is the worst, as its infrastructure contract awarding process is so byzantine that only people who can’t get private sector work apply. In Spain, which has the lowest costs in Europe, this is reversed, and the CEO of Madrid Metro emphasizes getting high-quality contractors as a way to keep costs down, as well as doing the engineering in-house. Tellingly, where the MTA behaves like Madrid Metro, namely in rolling stock procurement, it gets below-average prices.

    These don’t directly apply to Amtrak, which is assuming the worst of the FRA’s regulations will go in a few years. Here the issue is company culture: Amtrak is happy with its medium speeds and lax schedules. Its real wishlist is the NEC Master Plan, which is itself too expensive because the lax schedule adherence requires compensating by adding capacity; timed overtakes are much cheaper, but were not invented here. Culture can be brutal, as SEPTA discovered: when its management tried to modernize regional rail, the workers tagged them as outsiders rather than traditional railroaders, and those who had seniority moved to Amtrak and Conrail.

  • Robert Hale

    I agree with you, Alon, that both of the above problems pose challenges to the completion of a Northeastern high speed rail line. But the core problem is that there is no steady, dedicated source of revenue for rail projects in this country at basically any level of government. In fact, it is easily conceivable that with a steady cash flow from sound sources, the culture at agencies such as the MTA and Amtrak would change dramatically. The current system requires agencies to waste time and energy bartering with politicians and special interests instead of focusing on their core missions. To get the wheels turning for rail projects, what is called for is cold hard cash. Everything else will fall into place quickly following.

  • First, following up on my previous comment, here is the writeup by Madrid Metro’s CEO explaining how it built a subway for $50 million/km (about one thirtieth the cost of Second Avenue Subway).

    Second, I don’t think the problem is just lack of dedicated revenue. Giving Amtrak (or the MTA, or BART, or LACMTA) more money in the past hasn’t made it more competent. Where government starvation of funds has made things worse is in my view in three places:

    1. Pressure to cut all costs led agencies to lay off in-house planning staff, forcing them to rely on consultants too much. Consultants can end up raising the overall costs.

    2. Early 20th century ideas of reform have led to procurement practices where the lowest bidder gets the contract. This actually increases costs, because the process gets lower-quality bidders. In New York, the MTA can only protect itself against shoddy work by having over-exacting specs, which competent contractors don’t want to deal with when they can get private sector work instead.

    3. For Amtrak specifically, Congressional pressure to move into the black forced the Acela to open for service prematurely. Responding to this, the FRA demanded it satisfy its crash safety standards, which ruined the trains’ performance and made them much higher-maintenance than intended.

    The key here is that every step of the way, government could reform its agencies without throwing more money at them. This is certainly true in the case of Amtrak, which could get full-fat HSR in the Northeast for ten billion instead of a hundred billion if it were interested in cost cutting. But the only people who have a persistent political interest in cutting government costs tend to be very conservative and want to abolish government, not make it more efficient.

  • Thanks for posting these ideas, and for the link to the Madrid report. The actionable items that I see are (1) to avoid external project managers for major projects and keep the management in-house (2) secure 24-hour turnaround from political leadership on all major decisions and (3) separate designer and builder. Perhaps a design-build contract is a nice way of satisfying #3 by making them the same entity, but the Madrid Metro CEO seemed very insistent that the two should be separated.

    What am I missing?

  • I think you’re missing two things. One, Madrid made a special effort to select contractors for quality as well as price. American cities don’t, which is penny-wise and pound-foolish. Contractors can be an even bigger headache than consultants if they’re dishonest or incompetent. Two, I don’t know about the rest of the US, but in New York, design-build is illegal, as is any arrangement giving the agency discretion about selecting contractors for both price and quality.