Chinatown, the sequel

There’s a doozy of a battle being waged right now over the future, or lack thereof, of California’s high-speed rail project, which, if it’s ever built, would connect San Diego, L.A., the Central Valley, the Bay Area and Sacramento. The battle’s being written about fairly regularly in the California and even the national press. But I think a major piece of the picture is being missed. On Wednesday, the California dailies came out with stories about the latest skirmish in the high-speed rail fight, a report by the supposedly nonpartisan state legislative analyst on the project. Here’s the nub of the San Francisco Chronicle’s take:

California should eliminate the independent agency overseeing its planned high-speed-rail system and hand over development of the project to Caltrans, the nonpartisan legislative analyst concluded in a report issued Tuesday.

The state should also consider scrapping its current plan to begin construction on the system with 140 miles of track in the Central Valley – a change that would require approval from the federal government. Instead, officials should consider building the first portion of the system in either Northern or Southern California, or between the Bay Area and the Central Valley, the report says.

As the Legislature weighs these changes, it should slash funding for the project from the requested $185 million next fiscal year to just $7 million, the Legislative Analyst’s Office report additionally recommends.

Stories in the NY Times, San Jose Mercury-News and Sacramento Bee were similar, and I can’t fault reporters on deadline for parroting an official report that seems to cast doubt on both the management of this multibillion-dollar project and the project’s financial viability. There are legitimate questions about whether the federal government will ever provide the more than $30 billion (minimum) needed to complete the project. And the high-speed rail authority that is now managing the project has been disingenuous about operating costs, IMHO. No matter what the authority says, it is very unlikely this rail system can operate without a continuing subsidy from the state, and the state is absolutely dead broke. But something else is almost certainly going on here, and I think it’s best described by analogy. When I was a reporter covering the county government for the Houston area, the nexus of governmental shenanigans involved infrastructure that drove development. Highways and flood control projects were regularly built in ways that just happened to drain otherwise undevelopable land and put freeway exits right in the center of those newly dry tracts, thereby increasing the value of that favored property by huge multiples. The land, post-infrastructure improvements, was sometimes worth 20 or 30 times what it had been purchased for, or even more, and the original purchasers always happened to have connections to government. Now, let’s switch from highways to high-speed rail: How much do you think decaying, tenantless downtown property in Nowhere, California, will be worth if  a glitzy new high-speed rail station goes into the center of that otherwise godforsaken Central Valley burg? How much more desirable is it going to be to live in the Central Valley, if you can hop on a train and be in LA or San Francisco in an hour or so? The California high-speed rail project is, at its core, a development scheme. Wherever there’s a station, apartments and stores and bars will spring up — and whoever owns the property and the rights to develop there will make a fortune. If control of the high-speed rail project is taken away from the authority created when voters approved the rail plan and given to the state transportation department, and if the first segments of the line are built in the Bay Area or L.A., then, obviously, different landowners and developers are going to make money than if the authority is allowed to continue to start the rail line in the Central Valley.  We’re talking the kind of money that makes Chinatown look like a small-time hustle, and it’s about time someone started talking — and writing — about the grafting possibilities here.

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Filed under High-speed rail, Jack Nicholson

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