California’s High-Speed Rail Project Grapples With Ever-Increasing Costs and An Ever-Extending Timeline

California’s ambitious high-speed rail project, aimed at connecting Los Angeles to San Francisco with a two-hour-and-forty-minute train ride, is facing significant delays and funding challenges. 

In the 15 years since the approval of a $9 billion bond authorization in 2008, not a single mile of track has been laid. The latest project update, which was released in March by the California High-Speed Rail Authority, estimates that completing the entire system from LA to San Francisco will now cost between $88 billion and $128 billion from the original estimate of $33 billion. The massive increase is largely due to inflation and increased construction costs.

CNBC reported last month that according to Brian Kelly, CEO of the California High-Speed Rail Authority, the project has so far spent $9.8 billion.

“We knew we’ve had a funding gap ever since the project started,” Kelly said. “What I know is this: The earlier we build it, the cheaper it will be.”

While 85% of the funding has come from the state of California, officials emphasize that federal support is crucial for its completion. CNBC quotes Speaker Emerita Nancy Pelosi being hopeful about the project getting federal support.

“I do believe that the infrastructure bill enables us to have resources at the federal level in California,” the former House Speaker said. “It didn’t spell out specifically one thing or another. It has categories and we fit into those categories.” 

To further drive the point, she added: “Biden is a railroad person, as you know, personally, officially, politically, and in every way. He’s an advocate for railroads. And then this is the ultimate high-speed rail.”

Current House Speaker and Bakersville native Kevin McCarthy of course does not agree. In March, he told CalMatters in a statement that he believes “in no way, shape, or form should the federal government allocate another dollar to California’s inept high-speed rail.” 

He added that “the California High-Speed Rail Authority has missed countless timelines and deceived the public about costs which are exorbitantly higher than originally estimated.”

The environmental clearance process alone has cost $1.3 billion, despite no actual construction on the ground. Some advocates are calling for reform of the National Environmental Policy Act to streamline infrastructure projects with positive environmental impacts.

Another contributing factor to the project’s delay and cost is the tunneling section outside Los Angeles. To minimize expenses, construction began in Fresno in 2015, as it is a more cost-effective section to build. However, the project faced difficulties due to what Kelly says was a premature start, leading to a rough beginning. 

“They got into construction before they were ready to get into construction,” he said. “The good news is most of that is in our rearview mirror. And as we go forward, we’re getting the sequencing and chronology of our work right, and I’m very confident about the future of this project.“

As optimistic as Kelly is, there are more roadblocks ahead. The Orange County Register reported yesterday that shortly after the March update, construction had to be halted in a number of sites near Corcoran after the area flooded. 

A spokesperson for the Authority confirmed to the OC Register that construction in most of the sites in the area will restart this month, while the remaining sites are expected to resume construction by September. It is unclear how the months-long suspension will impact the project timeline. 

The California High-Speed Rail Authority aims to have the operational section between Bakersfield and Merced in service between 2030 and 2033. However, without additional funding, it remains uncertain how and when the project will reach completion.


Information for this story was found via CNBC, Forbes, CalMatters, the OC Register, Twitter, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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