The National Corridors Initiative, Inc.

A Weekly North American Transportation Update

For transportation advocates and professionals, journalists,
and elected or appointed officials at all levels of government

Publisher: James P. RePass      E-Zine Editor: Molly McKay
Foreign Editor: David Beale      Webmaster: Dennis Kirkpatrick

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September 6, 2011
Vol. 12 No. 35

Copyright © 2011
NCI Inc., All Rights Reserved
Our 12th Newsletter Year

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IN THIS EDITION...   In This Edition...

  News Items…
Irene Blows Down Amtrak And Local Rail In
   Northeast Region
Obama Will Beat Drum For Infrastructure Funding
In Thursday’s Jobs Speech
Long-Awaited FRA Decision Sets New Regs
   For US Implementation Of Positive Train Control
Canadian Transport Minister To Keynote 6th Annual
   Canada Maritime Conference
  Transit-Oriented Development…
New Transit Station Already Triggering Rebirth
   Of Boston Central City Neighborhood
  Economic Lines…
Lack Of Federal Investment Hurts American
   Transit Businesses
  Selected Rail Stocks…
  Across The Pond…
Breakthrough In Longest Tunnel In Bavaria Along
   The Berlin – Nuremberg High-Speed Corridor
London’s Crossrail Delays Awarding
   Rolling Stock Contract
Doing Right By The Public: PPPs In High-Speed Rail
  Publication Notes …

NEWS OF THE WEEK... News Items...

Irene Blows Down Amtrak And Local Rail
In Northeast Region

Most Service Now Restored, But One Line In New York State Remains Suspended Indefinitely

By David Peter Alan

The entire Northeastern region, especially the area near New York City, was told to expect the worst. Hurricane Irene would strike that part of the nation with hurricane-force winds, bringing massive destruction and equally massive flooding in her aftermath. In much of the metropolitan area, the week-end of August 27th and 28th was the week-end without transit; an eerie time when there was little to do but stay home, regardless of the weather. In much of New Jersey, the week-end without transit became a long one, with no transit on Monday, either. It was also a long and lost week-end for potential Amtrak riders, many of whom had no trains for more than three days.

It had been decades since a hurricane had made a direct hit on the Northeastern portion of the nation, so government at all levels insisted on maximum-possible preparedness. That included suspending rail service before New Jersey, New York and New England felt the brunt of the storm. Evacuation from some areas began as early as Thursday and Friday. Amtrak Train #66, which left Newport News, Virginia, at 4:55 on Friday afternoon, was the last train headed north from the Tidewater area. The train was sold out, and many of the riders had large bags, stretching the carrying-capacity of the train to its limit. At station stops where there was scheduled standing time, such as Richmond and Washington, D.C., train crews announced plainly that there would be no more trains until the storm had passed, so smokers grabbing a few puffs on the platform or riders stepping off for a break would be sure to get back on the train. It would be more than a week before a passenger train would run on that line again.

By Saturday, Amtrak was shutting down. Florida service had already been canceled going north, and Amtrak made its last runs on the Northeast Corridor (NEC) line beginning early Saturday afternoon.

Long-distance trains from New York to Miami, New Orleans, and Chicago were also canceled, even though Irene affected only small portions of their routes. The Silver Star operated only within the State of Florida, as far north as Jacksonville. The Silver Meteor did not operate at all. Empire Service within the State of New York, as well as the Lake Shore Limited through New York State to Chicago, were not to run their full schedules for almost a week.

Sunday was the day without Amtrak. Afterward, service came back, but slowly because of flooding in Trenton. Trains operated between Washington, D.C. and Philadelphia on Monday, but full Washington-Boston service (including Acela trains) was not restored until Tuesday, along with the Downeaster service to Portland, Maine. Trains between Philadelphia and Harrisburg also ran on Monday afternoon. Some Empire Service trains to Albany and some trains between New Haven and Springfield began to operate on Wednesday. Trains left New York for Florida and New Orleans on that day, also. Because Vermont was hit hard by the storm, the Vermonter and Ethan Allen Express did not return until Thursday. The final service restorations were Newport News to Richmond, Virginia on Saturday and full Empire Service on Sunday.

Flooding at Trenton

Photo: Via Internet Sources

At Trenton Station, all tracks were under water.

Local rail transit in most of the Northeast region was suspended for some time, but the impact varied, depending on location. Washington, D.C. was west of the main path of the storm, so it did not lose local rail at all.

The Tidewater area of Virginia was the first region to be hit by the storm, and Hampton Roads Transit, the local transit provider, suspended service at midnight on Friday. That included The Tide, a new light rail line in Norfolk, which had opened for service only one week earlier (there will be a feature report on that line in a future edition of D:F). Service resumed at noon on Sunday.

In Baltimore, the Maryland Transit Administration (MTA) suspended light rail service on Saturday at 6:00 and subway (Metro Rail) and bus service at 9:00. Service was mostly restored on Sunday, although without light rail service between North Avenue and Hunt Valley, due to fallen trees. Full service was restored on Thursday. MARC commuter trains do not operate on week-ends, and they ran on a reduced schedule on Monday, with full service on Tuesday.

The Southeastern Pennsylvania Transportation Authority (SEPTA) in Philadelphia had hoped to run service on Saturday until 12:30 a.m., essentially the end of the service day. Due to the Amtrak shutdown, service on some commuter rail lines was suspended at 5:00 that afternoon. Other service ran until 11:00. Service began to return on Sunday, and most service was running on Monday. Four commuter rail lines, including the line on Amtrak rail to Trenton, did not run that day. At this writing, riders on the SEPTA Trenton Line are still being bussed from Levittown/Tullytown, the next-to-last stop on the line, to Trenton, because the interlocking that allowed SEPTA trains to switch between platforms at Trenton was destroyed by the flood.

At the other end of the region, the Massachusetts Bay Transportation Authority (MBTA) kept service in the Boston area going through Saturday and for a few hours on Sunday morning to accommodate night workers who needed to get home. The outage lasted for only one day, and service was running again on Monday, with some difficulties for parking, not service, on the light rail line to Riverside.

The big transit story was in the New York area. While Saturday was a cloudy day with little rain, Governor Andrew Cuomo and Mayor Michael Bloomberg directed that city subways and buses suspend service at 12:00 noon. New York’s local railroads, Metro-North and the Long Island Rail Road (LIRR), followed suit. The LIRR did not send trains east to Montauk or Greenport after Friday evening, but sent one train westward on each line on Saturday morning. By mid-afternoon, there was no more transit in New York City, Cuomo and Bloomberg made that decision even though the weather was not so bad that day. Port Authority Trans-Hudson (PATH) trains between New Jersey and Manhattan also shut down Saturday at noon, as did New Jersey Transit trains on a statewide basis. NJT light rail and bus service continued until 6:00 pm. By early evening, when the rain began to fall in earnest, there was no more transit.

Sunday was the day without any rail transit. Nothing ran in the entire New York metropolitan area, or anywhere else in New Jersey, even though Irene had lost her hurricane force when she hit the region.

Bringing transit back was another matter. PATH trains began running at 4:00 Monday morning, and much of the subway and bus system in New York City was up and running that day, as well. Limited bus service in the city had actually resumed on Sunday. Ironically, Sunday was not a rainy day in New York City; the weather was cloudy for most of the day, with short breaks of sun. The storm was ravaging New England at the time, but it appeared to have passed through the New York City area.

Commuter rail came back more slowly. Many of the electrically-operated lines on the LIRR were back in service in time for the commuter peak on Monday morning; lines to Port Washington, Huntington, Ronkonkoma, Hempstead, West Hempstead, Far Rockaway and Babylon were operating. Electrified lines to Long Beach and non-electrified lines (Oyster Bay, Port Jefferson, Greenport and Montauk) were not operating yet, due to storm damage and flooding. With two exceptions, service on those lines was restored on Tuesday, Montauk service was restored on Wednesday and Greenport service resumed on Thursday.

Also on Monday afternoon, Metro-North Railroad, which operates trains to suburban areas in New York State and Connecticut, began to operate a Sunday schedule on the lower portion of the Harlem Line to White Plains, the Hudson Line to Poughkeepsie, and the New Haven Main Line to New Haven.

Service on the New Canaan Branch in Connecticut was restored on Tuesday, and trains resumed on the upper Harlem Line north of White Plains and the Waterbury Branch in Connecticut on Wednesday.

The last line to come back was the Danbury Branch, also in Connecticut, on Thursday.

Ironically, trains east of New Haven on Short Line East ran later on Saturday, with the last departure at 7:05 pm. Service was suspended on Sunday, but returned on Monday afternoon.

The hardest hit of all rail lines was the line between Suffern and Port Jervis, New York, owned by Metro-North and operated for them by New Jersey Transit. Ironically, the last pre-storm train on Saturday left Hoboken Terminal for Port Jervis at 1:14 pm. The storm caused severe washouts along the line. Metropolitan Transportation Authority CEO Jay Walder said it would take months to repair the damage and invoked emergency powers to speed the process. In the meantime, the MTA is providing buses from Port Jervis and Middletown, New York to Beacon on Metro-North’s Hudson Line, and between Harriman and the Ramsey/Route 17 park-and-ride station on New Jersey Transit.

Metro-North did not report that other intermediate stations on the line are being served. Until Irene damaged the railroad, trains operated from Port Jervis, through Suffern to NJT’s Hoboken Terminal.

In New Jersey, the only rail line that ran on Monday was the Atlantic City Rail Line, to Philadelphia. Service resumed on that line during the early afternoon. Light rail and some bus service returned on Monday, although some bus routes were delayed or eliminated, due to flooded roads.

Photo: MTA / Hilary Ring

Hurricane Irene damage is surveyed first hand. Chairman Jay Walder surveying damage on the Port Jervis Line with MTA Board Members Susan Metzger and Carl Wortendyke.

On Tuesday, most of NJT’s rail service came back. Due to flooding at Trenton, there was no service south of New Brunswick, except some commuter trains to a park-and-ride station at Jersey Avenue.

At that time, the tracks at the Trenton Station were still under water. Most service returned on NJT on Tuesday, except New Brunswick to Trenton and west of Montclair State University on the Montclair-Boonton Line, a portion of the line that operates only during peak hours. There were delays and trains bypassed stations in flooded towns, but most service ran on Tuesday. Trenton service returned on Wednesday, along with peak-hour service west of Montclair.

There are no trains between Suffern and Port Jervis, on the portion of the railroad in New York State, operated by Metro-North. It is not known when service will return, since Metro-North’s parent, New York’s MTA, has said that it could take months to repair the damage.

The news releases issued by the providers indicate that they were proud of their ability to restore service as quickly as they did. Rider advocates in the region do not necessarily agree. They have criticized Amtrak and the transit authorities for shutting down service so early on Saturday and not restoring it more quickly. Next week, we will report the reactions of some of those rider advocates.

David Peter Alan is Chair of the Lackawanna Coalition in New Jersey and covers Amtrak and local transit. He was on the last train from Virginia on Friday, August 26th, after riding the Tide light rail line in Norfolk.

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Obama Will Beat Drum For Infrastructure Funding
In Thursday’s Jobs Speech

From The Christian Science Monitor

WASHINGTON, SEPT 3 -- As Americans wait to hear his much-anticipated jobs speech on Thursday, President Obama is already urging Congress to extend the Surface Transportation Bill, which would save thousands – perhaps millions – of jobs around the country right now. This bill funds construction of roads, bridges, mass transit systems, and other infrastructure projects, and if Congress doesn’t act to renew the bill’s authority, such funding will stop at the end of September when bill expires.

“Right away, over 4,000 workers would be furloughed without pay,” Obama said in his weekly radio and Internet address on Saturday. “If it’s delayed for just 10 days, we will lose nearly $1 billion in highway funding that we can never get back. And if we wait even longer, almost 1 million workers could be in danger of losing their jobs over the next year.”

As Brad Knickerbocker reported in the Christian Science Monitor Saturday

“….on funding for infrastructure projects, Obama has powerful allies.

AFL-CIO President Richard Trumka and Thomas Donohue, president of the US Chamber of Commerce – hardly political bedfellows – both are urging Congress to continue infrastructure funding.

“On Friday, the bipartisan US Conference of Mayors issued ‘A Common Sense Jobs Agenda.’

‘It is a matter of urgent necessity that Congress pass a clean extension of the current Transportation Bill – without policy and funding changes – and extend the gas tax to give Congress time to pass the larger reauthorization bill,’ mayors of the nation’s largest cities wrote. ‘If such an extension is not signed by the President by September 30, the entire program will be suspended – causing the loss of 1.8 million jobs and doing irreparable harm to our economy. In this scenario, the Highway Trust Fund will lose $100 million dollars each day and the Trust Fund would completely run out of money early next year.’ ”

Adding to the urgency is the immediate need to clean up and rebuild from the widespread damage to infrastructure caused by Tropical Storm Irene.

D:F will follow this issue closely and publish a full report in our next edition.

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Long-Awaited FRA Decision Sets New Regs For
US Implementation Of Positive Train Control

From Internet Sources

WASHINGTON --- U.S. Transportation Secretary Ray LaHood this past week announced a proposed series of changes to Federal Railroad Administration (FRA) regulations governing the installation of “Positive Train Control” (PTC) systems in the United States.

The amendments promulgated effect automated train control technology and will add an additional layer of control over the speed and position of trains relative to each other on a railroad system’s tracks, to reduce or even eliminate the possibility of train collisions.

“Ensuring the safety of our railroads is a top priority,” said U.S. Transportation Secretary Ray LaHood. “Thanks to President Obama’s leadership in reducing regulatory barriers, these proposed amendments will provide regulatory relief while maintaining our commitment to safety.”

Positive train control is currently required on routes carrying poison inhalation hazard (PIH) materials and on routes that provide intercity and commuter passenger service. If a railroad opts to reroute the shipment of PIH hazardous materials off such a rail line and chooses to not install PTC there, the company must currently request FRA approval and conduct a complex set of analyses. The amendments proposed would eliminate the need to perform those analyses, but do not impact the existing requirements to install PTC on lines used to provide passenger rail service.

“We believe that the proposal provides a balance of safety regulation and cost to the industry,” said FRA Administrator Joseph C. Szabo. “We look forward to working together with the railroads as they concentrate on areas where positive train control is much-needed.”

The FRA had come under criticism by Class I and other freight railroads for mandating PTC on virtually all rail systems by December, 2015; the Rail Safety Improvement Act of 2008 requires certain passenger and freight railroads to install PTC systems.

The Notice of Proposed Rulemaking (NPRM) was published in the Federal Register on Wednesday, August 24.

“The FRA invites comments on all aspects of the proposal. Interested parties are invited to submit comments by October 24. Comments received after that date will be considered to the extent possible without incurring additional expenses or delays.

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Canadian Transport Minister To Keynote
6th Annual Canada Maritime Conference

From Internet Sources

MONTREAL --- The Honorable Denis Lebel, Minister of Transport, Infrastructure and Communities and Minister of the Economic Development Agency of Canada for the Regions of Quebec, will give the keynote address on the first day of the Canada Maritime Conference to be held September 20-21, 2011, at the Fairmont Queen Elizabeth.

Quebec is embarking on a major economic development push, Plan Du Nor, to be implemented over the next 20 years in the development of Northern Quebec, and it is expected to have a major impact not only on the need for increased Canadian rail capacity, but on rail systems in the United States, especially those in New England and in Central US.

Other conference highlights include:

For more information about this event, or to register, visit: Online registration is available through Friday, September 16th, 2011.

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TOD... Transit-Oriented Development...  

New Transit Station Already Triggering Rebirth
Of Boston Central City Neighborhood

BOSTON --- The paint is not dry on the new Commuter Rail transit station at Four Corners/Geneva in Boston --- indeed, the building is still under construction ---- but private real estate interests are already planning the rebirth of a large, nearby neighborhood building that has stood vacant, or underutilized, for years.

Reporter Pat Tarantino of the Dorchester (MA) News wrote this past week:

“With construction on the new Four Corners/Geneva MBTA commuter rail station well underway, local developers are preparing for the new stop by remodeling and repurposing a longstanding neighborhood landmark. The AB&W Building at 157 Washington Street, built in the 1920s, has always housed local businesses, but the Codman Square Neighborhood Development Corporation (NDC), which bought the property in 2007, plans to turn the space into a 24-unit housing complex, which they hope can help turn this stretch of Four Corners into a bustling commuter and commercial center.

“Codman Square NDC director of real estate development Mark Dinaburg said the 28,000 square foot site is a ‘key transit oriented development’ due to its proximity to the commuter rail stop little more than a block away. The station is set to be complete about three months after residents move into the restored building.

“According to local historians and neighbors, the building was originally used as an automotive showroom until shortly after World War II, at which point it operated as a candy factory and was a regular hang-out for neighborhood children. Following the factory’s closure, a local business owner re-opened the space in the 1980s to produce automotive parts, calling the company Americans Black and White, a reference to the diversity of the Four Corners area. The business operated until 2005, when the empty space began to draw the attention of CSNDC,” reported The News.

For the full story go to

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ECONOMIC LINES... Economic Lines...  

Lack Of Federal Investment Hurts
American Transit Businesses

From Passenger Transport Newsletter Of
The American Public Transportation Association

WASHINGTON --- Almost three quarters (74 percent) of private-sector businesses serving the public transportation industry incurred flat or declining business over the past year because of uncertainty in federal investment, a down economy, and a lack of investment on the state and local level, according to a new APTA study.

The report, “Impacts of the Recession on Public Transportation Businesses,” shows a 25 percent average decline among reporting businesses. Over half (56 percent) lost business from their public sector transit clients; 52 percent expect to lay off employees or cut back hiring as a result.

“This is further evidence that tells us now is the time to invest in our public transit infrastructure to create jobs and boost our economy,” said APTA President William Millar. “Cutting money to public transit systems simply means the loss of jobs, most of which are in the private sector.”

A proposal currently in the House of Representatives would cut federal investment in public transportation by more than 35 percent. According to the Senate Banking Committee, these proposed cuts could lead to the loss of 141,000 jobs.

Uncertainty because of the delay in passing a federal transportation authorization bill is also a big factor, with 74 percent citing that and 67 percent naming the current weakness of the U.S. economy as having a negative impact on business revenue. One respondent’s statement was typical of many: “It is one thing to make cuts, see their magnitude and make business adjustments. It is a completely different story when even the cuts are up in the air—nothing can be planned for!”

Public transportation businesses are facing challenges, just as transit agencies are. So the case for more investment in public transportation applies not only to public sector agencies, but also to the private sector businesses that support them.

The text of the report is available here:

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STOCKS...  Selected Rail Stocks...


Berkshire Hathaway B (BNSF)(BRK.B)69.3769.84
Canadian National (CNI)71.6670.83
Canadian Pacific (CP) 55.4055.90
CSX (CSX)20.5621.09
Genessee & Wyoming (GWR)48.1048.85
Kansas City Southern (KSU)50.9850.65
Norfolk Southern (NSC)65.1265.18
Providence & Worcester(PWX)12.8512.08
RailAmerica (RA)12.7212.36
Union Pacific (UNP)88.2789.55

Beginning August 29, 2011, we will be adding Berkshire Hathaway (BRK.B)
as an indicator for BNSF Railroad, as well as RailAmerica (RA).

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ACROSS THE POND... Across The Pond...  

Installments by David Beale
NCI Foreign Editor

Breakthrough In Longest Tunnel In Bavaria Along
The Berlin – Nuremberg High-Speed Corridor

Major Milestone Reached On German’s Largest High-Speed Rail Construction Project

Via Deutsche Bahn AG Press Release

Erfurt / Bad Staffelstein, Germany: Back on the 29th of August tunnel workers and miners saw during a traditional ceremony, the proverbial light at the end of a 3756 meter (2.34 mile) long Eierberge tunnel in Lichtenfels County. The tunnel is part of the largest infrastructure project in Germany, namely the construction of the new high-speed rail corridor between Nürnberg (Nuremberg) and Berlin. With the so-called tunnel breakthrough, Dr. Rüdiger Grube, Chairman of Deutsche Bahn AG, thanked Susanne Ramsauer that she had accompanied the tunneling in the old mining tradition as a patron – and representative of St. Barbara, patron saint of miners and tunnel builders, to protect the miners against the dangers of the underground work.

DB-Chief Grube said: “Today marks an important milestone. With the completion of the engineering buildings, tunnels and large bridges which are due this year and next, we are well underway for an on-schedule commissioning of this important new European connection in 2017.

The view inside the Eierberge Tunnel in northern Bavaria

Photo: Deutsche Bahn AG

Digging for speed – the view inside the Eierberge Tunnel in northern Bavaria.

The tunnel is the longest of eight underground structures of the project in the German state of Bavaria. The investment in the tunnel is about EUR 140 million (US $200 million). An information center provides detailed insights and an excellent view from the top of the building site.

From the southernmost to the northernmost of the tunnel project, from Eierberge tunnel to the Osterberg Tunnel in Saxony-Anhalt, 24 of the 25 construction sites are in the advance stages of construction or already completed. In a few weeks, the last of the 25 tunnels will be started. The entire high-speed rail corridor, formally known as German Unity Transport Project (VDE) No. 8 includes the 500-kilometer-long route between Berlin and Nürnberg-Erfurt-Leipzig/Halle.

Currently, the construction of the project in states of Bavaria, Thuringia and Saxony-Anhalt, employs approximately 4,500 people directly. The project is financed by the federal government, the European Union and Deutsche Bahn.. The investment amounts to approximately EU 10 billion (US $14 billion). The passenger and freight transport in the trans-European network represents a competitive and environmentally friendly alternative to road and air transportation. The travel time from Munich to Berlin will decrease after completion of the construction by approximately four hours – high-speed trains today follow an indirect route from Nuremberg to Berlin via Kassel, Göttingen, Hildesheim and Wolfsburg.

Return to index

London’s Crossrail Delays Awarding
Rolling Stock Contract

Via New York Times

LONDON - Crossrail, Europe’s largest infrastructure project which will create a major east-west underground heavy rail link under London to the rest of the UK’ rail network, has delayed the award of a contract to supply trains for the $26 billion project to save money, a move which could allow the government’s review of public procurement to be taken into account.

D:F readers can read the entire article on the NY Times website:

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COMMENTARY... Commentary...  

Doing Right By The Public:
PPPs In High-Speed Rail

By Yonah Freemark In The Transport Politic

As the retrenchment continues in the American public sector, private-sector investors are likely to play an important role in paying for fast train systems.

California Governor Jerry Brown, a longtime supporter of the development of high-speed rail, has not given up on his state’s plans for an extensive network stretching initially from San Francisco to Los Angeles, and then onto Sacramento and San Diego. Despite cost estimate increases, opposition to the line among residents of some affected areas, and a total loss of new federal funding thanks to anti-investment Congressional Republicans, Mr. Brown has made evident in recent weeks his support for the line.

Construction on a segment in the Central Valley between Merced, Fresno, and Bakersfield is still planned to get under way next year. Funding for that initial link is mostly lined up, thanks to state commitments and federal grants resulting from the stimulus of early 2009. But because of more detailed projections, the 178-mile first phase of the project is now expected to cost far more than initially envisioned — $10 to $13.9 billion instead of $7.1 billion — and it will need an injection of funds from another source to be constructed. With a promise to the state’s citizens that another demand for California-wide funds will be avoided, few local dollars to contribute, and an utter inability to rely on Washington for practically anything, that means the system will have to find private investors to join in. Whatever the relative merits of allowing private companies to invest in what is fundamentally public infrastructure, California has no other place to turn for the successful completion of its system.

California is not alone; with a depressed economy and few public sector funds available, there is increasing recognition of the importance of engaging private-sector funds in the creation of infrastructure. Illinois Governor Pat Quinn signed a bill this week authorizing public-private partnerships (PPPs) to be used for the creation of infrastructure in his state.

Critics of the California High-Speed Rail Authority have repeatedly argued that the agency would be unable to locate businesses that might be willing to contribute to the system, but international examples suggest that there is significant private sector interest in infrastructure construction. The Authority will release a request for qualifications soon and select a winning bidder in early 2012. But it has yet to clarify the manner in which it would structure its relationship with private companies in terms of financing, construction, and operations.

For precedents, the state should look to France, which has recently signed two very large deals with private financing and construction conglomerates for the completion of two new extensions of its already large high-speed rail network. They provide two different models for engaging Public Private Partnerships (PPPs).

The first is the Bretagne-Pays de la Loire (BPL) high-speed link, which will connect Western France to the existing northern branch of the Atlantique line with 182 km of new tracks between Le Mans and Rennes for a cost of EUR 3.4 billion. The connection will reduce running times from Rennes to Paris by 37 min, making it possible to travel on 320 km/h TGV trains between the cities in less than 1h30 by the time construction is complete in 2016.

The PPP contract here is being mostly funded with public sector sources; RFF, the public infrastructure owner, will contribute EUR 1.4 billion, with state and local governments paying about a billion Euros more. 30% of the costs will be financed by the private sector group Eiffage. These loans will be paid back over twenty years with pre-determined fees from RFF and the government.

Like the Rhônexpress project in Lyon that connects the city center to the airport, this PPP arrangement essentially keeps the operations risks in the hands of the public sector; if ridership comes in under estimates, it will have to scrounge up funds from elsewhere to pay Eiffage its standard due. If ridership is higher than estimates, RFF will make a profit on its investment.

The other much larger project soon to begin construction in France is the Sud-Europe Atlantique line, which will extend the southern branch of the existing Atlantique line 302 km from Tours to Bordeaux. This EUR 7.8 billion program will by 2017 bring Bordeaux within 2h05 of Paris, about an hour faster than today. Ridership to and from that city and Toulouse, planned to be about four hours away from Paris, is expected to rise substantially.

Because of the expected profitability of the line, RFF signed a concession contract earlier this year with a private consortium called LISEA made up of Vinci construction company (33.3%), the Caisse des Dépôts (25.4%), SOJAS investment company (22%), and AXA bank (19.2%). The 50-year contract, which includes construction, operations, and maintenance, is the largest-ever PPP for a high-speed rail construction project in Europe.

LISEA will contribute EUR 3.8 billion to the project, with the remainder of costs being financed by the public sector, from local, regional, national, and European sources. Much of the private funding will come from low-interest, long-term loans that will be repaid through charges on TGVs and other trains using the line, which will eventually be passed on to the ticket-paying passenger. The public sector funds are grants, so about half the line’s construction cost is expected to be paid back through ridership over the course of fifty years.

Unlike the BPL line, which limited risks of operational profitability and line ridership to the public sector, in this case the private investors will be responsible if initial estimates fall short.

If it wasn’t clear, the business case for Sud-Europe Atlantique line, like that for the California High-Speed Rail Authority, assumes operational profitability. Considering that the international record shows that high-speed rail systems have little difficulty achieving self-support, these are not unsound predictions. In both cases, the advantage of acquiring private-sector support for the project is delaying public investment and using future revenues to pay back construction costs. Each approach has its advantages, especially in terms of where risk is directed.

It would be a mistake to conclude from these examples that private-sector involvement will save any significant money over the long-term. Fundamentally, the creation of PPPs to fund projects such as California High- Speed Rail does not mean that the public at large will end up being responsible for a smaller percentage of overall costs. Indeed, the U.S. Department of

Transportation’s Office of Inspector General released an under- recognized report last month that expounded on this fact significantly.

By considering a series of PPP highway projects in the U.S. and abroad, the study noted that they “have a higher cost of capital than traditional public financing… [and] involve equity investors who own stakes in the projects, share in the profits, and expect to earn higher rates of return for the risk they undertake,” in addition to having to pay taxes public projects do not have to pay. Even if PPPs have lower design and construction costs, may be able to more effectively increase tolls, decrease percentage of evading users, and take more advantage of concessions*, they are usually not able to offset the higher costs resulting from the formerly noted issues.

Some states like Illinois and Indiana have “made” billions by leasing off highways to private investors for billions for fifty years or more, but the report argues that “the funds paid upfront to the public sector under a PPP are paid in exchange for future revenues, often in the form of tolls.”

In other words, while the taxpayer may appear to be getting a discount now by having a business group pay for infrastructure, users of that same infrastructure will inevitably have to face the costs of future tolls. In the case of high-speed rail, replacing public sector investment during the construction phase with private financiers using loans means higher ticket prices in the future to pay back a portion of the costs of construction. There is no free lunch.

The question is whether benefits of a transportation investment are enjoyed by the entire public or whether they are reserved to the specific people who take direct use of it. Transportation economists are convinced of the value of user fees, which assume that it is inefficient to carry out redistribution through indirect means, and for them, it makes perfect sense to charge users the full cost of not only the operation but also the construction of the infrastructure they are using. (Many economists would also argue that high-speed rail projects have significant

positive externalities like pollution reduction and land use prioritization attached to them that demand direct grants from the government to cover some costs.) This user-fee approach is the method being used in the financing systems of the PPPs discussed here.

Others, however, would argue that the benefits of infrastructure like high-speed rail are economy-wide and that they should be paid for not only by users but by all members of the population through taxes. If we take this side of the argument, it becomes less clear that the best value for the society is to divert most costs to users. A grant-based system assumes that benefits of a transportation investment are felt by people throughout a country (such as through economic growth) and therefore just charging the riders for the costs of capital investments would be inappropriate.

Encouraging private investment in the California high-speed system now may make it more feasible to envision its construction in the short-to-medium-term. Delaying using future public sector revenues to pay for a project today is the basis of much long-term investment, so there is nothing particularly out of the norm about this idea.

But the use of such investment will realistically mean a future of higher ticket prices resulting from the need to pay off the bonds taken out for the project’s completion.

Nor is the involvement of private-sector groups in a public-sector project risk-free. In fact, the devastating example of the United Kingdom’s High-Speed 1 line, connecting London to the Channel Tunnel, suggests that any decision to incorporate private investors in public infrastructure should be approached with skepticism — even trepidation.

A report from the Public Interest Research Group, also released this summer**, established a number of valuable principles for PPPs that are useful to consider in evaluating whether or not to include private groups in the funding process for a high-speed rail line. These suggestions include aligning “private sector incentives with public sector goals,” only pursuing PPPs “where ample competition exists,” ensuring “clear public accountability,” retaining public control over system decisions, limiting lengths of contracts, and guaranteeing transparency in the contracting process.

In addition to considering the French examples for PPP contract models, these are helpful suggestions that should be taken to heart by the California High-Speed Rail Authority as it develops its plan to bring fast train service to the state.

* Many of these fiscal advantages may (or may not) stem from the ability of private sector groups to avoid paying workers living wages, comply with minority workforce inclusion programs, fulfill expectations expressed by the public in the democratic system, and so on.

** For the sake of full disclosure, I served as a reviewer for the PIRG report.

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