The Difference in the Texas and California HSR projects

By Carlos Aguilar, Texas Central CEO and President

Yesterday at California’s State of the State address, Governor Gavin Newsom announced that the California High Speed Rail project will only be proceeding for the segment servicing the Central Valley, abandoning the original plans to connect Los Angeles to San Francisco via high-speed train service.

We fully understand the complexities of the California High Speed Rail (HSR) project and the drivers that have led to the Governor of California’s decision to limit the scope of that state’s HSR. It is important to contrast both the physical facts that make our project different, as well as the government versus private approach to building such large-scale infrastructure.

Project Complexity:

Linking San Francisco and Los Angeles, using the Central Valley as the chosen route, a distance of 520 miles, was always intended to achieve many developmental goals, including economic integration of one of the poorest regions in the State. This also implied significant complexity and cost to the build plan, now recognized by Governor Newsom.

The main challenge, as noted in the press releases, is connecting the Central Valley to the main centers of population in the Bay Area and Los Angeles. This is why the current range of expected cost in California is between $77 billion and $98 billion. Out of this figure, the tunnels required to link the valley to San Jose (Pacheco Pass) and Los Angeles (Tehachapi Mountains) collectively, could cost well over $20 billion with significant underground risk.

To put this in perspective, the potential cost of these tunnels alone, is more than the total projected cost of Texas Central’s 240-mile project to link Houston and North Texas.

Economic Reality / Financial Efficiency required by Private Investment:

Our project is in Texas intentionally. After reviewing over 90 pairs of cities to determine the most commercially successful place to deploy a high-speed train, Houston to Dallas was the answer. The Houston to Dallas/Fort Worth region is by far, the most rapidly growing region in the nation. In 2018, Dallas and Houston combined added 224,700 jobs, compared to number two city, New York, at 115,500 jobs. No other region even comes close.

This generates significant congestion in roads and air travel infrastructure, which gives rise to a third choice: high speed rail. At the right distance, with the right economic links between Dallas, Houston and the Brazos Valley, and without the complexities now evident in California, our approach is more financially feasible.

As an investor owned project, not a government project, our financial discipline is rooted in the economic model and timelines for significant, public use infrastructure. Given economic realities, this is the right way to build this large-scale infrastructure for the public good, at the right time, to alleviate the growing congestion growth is bringing to our area, and so reduce public investment in other infrastructure.

We know the market and economics between North Texas and Houston match and exceed those of successful train routes globally. We are confident the Texas line will provide the ridership to sustain the operations, repay the debt and provide a return to the investors.

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