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California Bullet Train Gets $4.2 Billion Green Light For First Phase While Bigger Challenges Loom

By Alan Ohnsman

In a breakthrough for the country’s most expensive public infrastructure project, California’s bullet train finally appears to have the money and the legal approval to complete its first leg. What remains a challenge is how to link that initial 171-mile route through the state’s Central Valley agricultural heartland to population centers in Los Angeles, San Francisco and San Jose—and how its designers will overcome California’s mountainous terrain and seismic risks.

State legislators agreed last month to release $4.2 billion earmarked for the train’s first phase, between midsize cities Bakersfield, Fresno and Merced. The project may also benefit from more than $2 billion of federal Bipartisan Infrastructure Law funds set aside for passenger rail. Extending service to the San Francisco Bay Area and Los Angeles would boost the amount of track to 500 miles and the train’s total price tag to as much as $105 billion. That’s far above an initial estimate of about $40 billion when California voters approved a $10 billion bond measure to help build it in 2008.

“It’s not an easy task to build a system like this,” said Brian Kelly, CEO of the California High-Speed Rail Authority. “It’s a tough slog, but it’s one worth doing.”

“We identified out of the infrastructure bill six different programs that we can compete in for different project elements,” Kelly told Forbes. “Those six different pots total about $70 billion over the next five years.”

PROPOSED STATEWIDE ALIGNMENT

California_bullet_train

Orders for the first trains could go out as soon as next year. Companies including Siemens, which has a passenger-train factory in Sacramento, and Alstom, which builds them at East Coast plants, both have Amtrak contracts and will likely compete for California’s business.

“There’s several other train manufacturers, from around Asia and the world, building high-speed trains,” Kelly said. “There’s no shortage of suppliers.”

Auto-obsessed America is a global laggard in high-speed rail, a service widely available across Europe, China, Taiwan, South Korea and Japan, which pioneered the technology six decades ago. While many of those trains run at speeds of up to 220 miles per hour, the fastest line in the U.S. is Amtrak’s Acela service between New York and Washington, topping out at 150 mph. Amtrak is upgrading the Acela fleet on its profitable Northeast Corridor between New York and Boston with new Alstom trains that will boost speeds to 160 mph. Future track improvements should increase that even further.

 

California has no monopoly on high-speed dreams. Florida-based Brightline, the only private passenger railroad in the U.S., is expanding its Miami to West Palm Beach service to Orlando next year, offering top speeds of 125 mph. The company, controlled by Milwaukee Bucks co-owner and Fortress Investment cofounder Wes Edens, also expects to announce new funding plans and a revised timetable for its delayed Brightline West, a train from Las Vegas to suburban Los Angeles that may move passengers at 200 mph when service begins late this decade. (Brightline has also said it may eventually connect to California’s bullet train at a future station in Palmdale.) Another private initiative, the Texas Central Railway, hopes to begin construction soon on a 240-mile high-speed line between Dallas and Houston. Planning has also begun for a Pacific Northwest line that would whisk passengers on high-speed trains from Portland, Oregon, to Seattle and Vancouver, British Columbia.

But all the programs share the same challenge the Golden State faces: finding billions of dollars to turn them into a reality.

Critics of the California project have long argued that it would have been faster and cheaper to design a system running along Interstate 5, the tedious backbone highway that connects Los Angeles to the Bay Area. But Fresno Mayor Jerry Dyer bristles at that idea because it would bypass the Central Valley cities.

“Those are the types of comments that led to the creation of I-5 many years ago, that caused Fresno and the Central Valley to be left out of the California economy,” he told Forbes. “This is an opportunity for Fresno and the Central Valley to be recognized as a part of California. Anyone who thinks that they can bypass Fresno and the Central Valley again doesn’t have a heart for people.”

Merced, the northern terminus of the first phase, will tie into an existing regional commuter train linking to Sacramento and the Bay Area, though a high-speed connection isn’t likely until the late 2030s. Including service to San Francisco, San Jose and Los Angeles, the California High-Speed Rail Authority estimates that 50 million riders will use the system annually, generating about $3.4 billion of fare revenue.

“Anyone who thinks that they can bypass Fresno and the Central Valley again doesn’t have a heart for people.”

– Fresno Mayor Jerry Dyer

Construction work in Fresno has clogged downtown streets and will be a headache for its nearly 530,000 residents for at least another year. While the Central Valley region is known mainly as the center of the state’s vast agriculture industry, Fresno’s population is rising in the wake of the Covid pandemic as its relatively affordable housing and cost of living draw Californians able to work remotely. High-speed rail, particularly if and when the system links to San Francisco and Los Angeles, will make it even more appealing, Dyer said.

“This has stimulated a lot of interest in terms of venture capitalists and others who have expressed an interest to come in and develop in Fresno,” he said. “But it’s important on our end that we not allow people to come in and buy buildings and land bank—to wait for the development to occur—but to develop now, in anticipation of high-speed rail.”

Joyce Rey
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Joyce Rey
Joyce Rey

Joyce Rey is one of the most respected names in luxury real estate worldwide, having represented some of the most significant properties in the world.

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