Imagine walking into a state of the art train in downtown San Francisco and traveling at speeds of
more than 200mph and arriving in Los Angeles less than three hours
later. No airport security lines, no traffic jams.
This is what California voters envisioned back in 2008 when they voted yes on high-speed
rail. But here we are 15 years later.
At the time it was estimated to cost $33 billion and would be complete
by 2020.
What happened?
At that time when we went to California voters, you know, that was for a portion of the
funding. And I think that's something that we're trying to be very clear about, is that we've never
had the full funding to construct and complete high speed rail in California.
Progress has been made.
We have one segment that's going to be completed this year.
We're working very hard to get the other two segments done, and we're also doing a lot of the
design work for Merced and into Bakersfield.
But there is not enough money left to complete the project.
Not even close.
The latest estimates show it will cost up to $128 billion to connect San
Francisco to L.A.
The project has spent to date about $9.8 billion.
We knew we've had a funding gap ever since the project started.
What I know is this the earlier we build it, the cheaper it will be.
CNBC visited California's Central Valley, where construction is underway to find
out what it will take to complete what would be the nation's largest infrastructure project.
High-speed rail dates back nearly 60 years.
The world watched in awe as Japan displayed its newly built bullet train during the
1964 Tokyo Olympics.
Japan's Shinkansen has since carried more than 6.4 billion passengers without a
single accident.
Talk of high-speed rail in California started in the 1980s, right as Europe was starting to build
out its high-speed rail network.
The California High Speed Rail Authority was established in 1996, but things didn't really
start happening until California voted yes on a $9 billion bond authorization.
The real turning point came about 2008, 2009.
However, it was very controversial at the beginning.
I mean, it still is, of course.
But but we did get it off the ground and we got the construction going.
The plan is to build an electric train that will connect Los Angeles to the Central Valley and then
San Francisco in two hours and 40 minutes.
Phase two of the plan will eventually extend from Sacramento to San Diego, totaling
800 miles, with up to 24 stops.
Why does the train go through the Central Valley?
You know, I look at a map and I'm like, well, what if it went along Highway Five?
Was that ever considered?
We were never on the five corridor.
And there's a reason for that. The bond bill that passed in 2008, it required the high-speed rail
authority to connect the cities of the Bay Area with the cities of the Central
Valley and then back to the cities of Southern California.
Brian Kelly became CEO of the California High-Speed Rail Authority in 2018.
And Dan Richard, the former chairman of the California High-Speed Rail Authority Board of
Directors, said that just connecting L.A.
And San Francisco was never part of the plan.
There's been a lot of controversy about why the Central Valley.
But here's the reality, in the lower part of the Central Valley, from Sacramento down to
Bakersfield, there are about 4 million people.
If it were its own state, it would be bigger than half the states in the United
States. That region has historically been underinvested and
left behind.
What is the most challenging part of the project as far as the construction goes?
Ultimately, if you talk about the entirety of the project from San Francisco to L.A.
it's probably the tunneling segment.
That'll be challenging work and it won't be cheap, but tunnels are built for rail all over the
world. They go through the Swiss Alps, if they can go through there.
We can figure out how to get them to Tehacapi.
That's why the cheapest section from Bakersfield to Merced will be completed first.
So far, 119 miles are under construction.
We are working very hard to have some kind of segment between that section ready to go
by 2030, between 2030 and 2033.
What do you say to the critics that say it's a train to nowhere?
I chuckle because even the initial operating segment between Merced and Bakersfield
connects three of the fastest growing cities in California.
I think that's been a common mindset for a lot of other projects, including Golden
Gate Bridge. Years ago, that was the same comment.
It was a bridge to nowhere, and I don't think any of us can imagine what it would
be like to not have that bridge connecting us to San Francisco.
Yeah, it looks close. It looks like you're close to ready to put the rails down.
Right. This is one of our signature structures.
You can see that with the arches behind us.
And then eventually, once we're done with all of the finishing touches on this structure, we'll be
ready hopefully by next year to start the planning process of putting down track and system.
CNBC also visited the high-speed rail construction site near Fresno back in 2019 and
there has been noticeable progress since then.
More bridges have been built, land has been cleared, roads have been moved and certain
sections are now ready for the track to go in.
From the last time you were here, a lot of different areas that we had started some utility
relocations, some more preliminary work at our construction sites, going from
30% design to now 100% design in the Central Valley is pretty significant.
Construction started here in Fresno in 2015, but before that, California's
especially stringent environmental review process slowed things down.
We have some of the most advanced regulation in the world regarding safety and environment in the
United States and these other geographies.
That's Bent Flyvbjerg, he's an expert on infrastructure megaprojects and recently published
a book, How Big Things Get Done.
Now, one thing with High-speed rail and actually any new rail project is that it's cutting
across a lot of land.
So you'll have a lot of landowners and neighbors who will be upset for losing their
land to the project.
In America,we value private property rights and that's okay, but it means you
have to get into full negotiation and pay fair market value for taking
needed private property to build a public works project.
When we finish just the environmental clearing process, that cost is about
$1.3 billion and that's for no steel in the ground or no cement.
422 miles out of the 500 miles from L.A.
to San Francisco have now been environmentally cleared.
The environmental documents that are key to being able to get the project done have finally moved
forward. We're expecting that by the end of this year, end of 2023, all 500
miles of the project will be cleared.
One of the goals of the project was to connect six out of the ten largest cities in the state
and bring economic growth to California's Central Valley, historically one of the poorest
regions in the state.
I think the greatest success that we've had is the impact on the community and the
workers in the Central Valley.
The Rail Authority says the project has created 10,000 jobs so far and generated
$13.7 billion for California's economy from 2006 to
2021. Since high-speed rail has never been built in the U.S.
before, it's been tough to find US workers with the necessary skills.
So California High-Speed Rail offers a training program.
Desrae Ruiz went through the apprenticeship.
She used to work at jewelry chain Claire's, but now has been an ironworker on the railroad for
five years.
Working on the high-speed rail has allowed me and my family to grow.
I had my second child in the beginning of my years on the high-speed rail.
Me and my husband bought our first home.
I purchased my first car and now I'm able to go back into college to continue
my degrees in construction.
Daniel Rodriguez was born and raised in California's Central Valley.
I feel like it puts a sense of pride for everyone around here to work hard at this job and just
whether it be for them or their kids or, you know, just the Central Valley, you know.
So it's nice to have a project to work on and be a part of and also have job security around here
to know that we're going to be working on this project for at least 5 to 10 years maybe, you
know and that's great.
In 2008, the same year that California voters approved high-speed rail, China began
operating its first high-speed rail line.
Since then, more than 25,000 miles have been built in the country.
But things worked differently in the U.S.
We're not going to bulldoze people out of the way.
I mean, we're just not going to do that in this country.
We're not going to bulldoze over endangered species.
You have to worry about environmental protection.
You have to worry about historic structures.
Governance is much more fractured in the United States.
So it's not centralized like so like France and Japan and certainly China.
The policy in the U.S.
is so subdivided, which is great for many things.
But of course the downside is that it becomes difficult to make big decisions.
In the U.S. local jurisdictions have a lot of say in infrastructure projects.
This has led to a lot of bickering about routes, political compromises and lawsuits over
environmental concerns or land rights causing costly delays.
It gives us everybody a voice, which is a good thing.
But when everybody has a voice, the effort to try to
harmonize all the different interests becomes that much harder.
At one time, on the first 119 miles of the project, there were 12 outstanding
lawsuits challenging whether we can spend money on right of way, challenging, whether it was
compliant with environmental laws, challenging whether or not it was the right use of bond
money. The High-Speed Rail Authority has won every lawsuit that has been filed against it.
We're down to 3 or 4 now.
We're in settlement discussions on all of them.
It kind of comes with the process here in California.
As you move through that environmental process, it can be litigious.
Early estimates vastly underestimated these additional costs.
And along with the rising cost of construction materials and inflation, the price of the project
has skyrocketed.
Its latest expected cost of up to $128 billion puts it
$100 billion in the red and it's not clear where the money is going to come
from.
One of the biggest hurdles, clearly is funding.
That roughly a little over $100 billion number.
It's a pretty fair assessment, and I think probably the most accurate assessment that
we've had on this project since its inception.
California is funding about 85% of that through the cap and trade and the bond dollars.
The federal government is funding about 15% of that with federal dollars we received mostly in
2009 and 2010.
We're hoping to balance that out a little bit more with our federal partner as we go forward.
It's going to need to be sort of a 60 over 40 relationship, if you will, between us.
As far as that that funding split, we can't get this project done
without federal support.
It's just not going to happen.
It's not unprecedented for the federal government to fund mega projects.
To put it in perspective, the Federal Highway Administration spent more than $72 billion on
highways in 2022, and the F-35 program is estimated to cost over
$1.7 trillion to buy, operate and sustain the aircrafts.
But the support has been weak coming out of Washington.
The bipartisan infrastructure bill passed in 2021 did allocate $66
billion to rail, which was the largest investment in passenger rail since the creation of
Amtrak. But no money was specifically set aside for high-speed rail.
Critics of the project want to keep it that way.
And I just don't want the federal government getting involved in this.
We shouldn't be subsidizing this program, not at any level of government, and certainly not federal
taxpayer money.
And I just believe that this is a problem.
I'm not anti-train, I'm not anti-worker, I am anti-fraud waste and abuse and I'm anti-bad
ideas.
There was bipartisan support for high-speed rail.
But, I will tell you that the day that President Obama came out and
announced that he foresaw an America where 80% of Americans
could be connected by their cities with high speed rail at that moment, at that
instant, the Republican support evaporated, which was just ridiculous
because, you know, there are no Democratic or Republican trains, just like there are
no Democratic or Republican potholes.
But these obstacles to completing mega projects are not unique to the United States.
Britain is building a comparable high-speed rail project that would link London to northern
England. It's also faced controversy, delays and costs that have skyrocketed to north of
$100 billion.
There's this stop go approach to delivering them.
You know that that now, then you're doing it and then you're not doing it.
That's very bad for projects.
If you decide to do a project like this, you need to do it and you need to do it in as short a
period of time as possible.
Therefore, it's a really bad idea that both high-speed two in the UK
and California high-speed rail are doing exactly this, taking a long time to deliver their
projects.
California's actively applying for grants from the Federal Government to help complete the project,
but competition is fierce.
Brightline West, a private company, is another high-speed rail project in the region.
Which hopes to take passengers from Los Angeles to Las Vegas and eventually connect to
California's line.
It has already received bipartisan support for a $3.75 billion federal
grant. So the question remains, will California be able to
finish this epic mega project?
I'm concerned about where they put this construction.
California would have been better off if they had started building from L.A.
north and from San Francisco south, because if the part that has been built turns out to be
financially a disaster, you know, people are not going to queue up for building the rest.
But if you had built in San Francisco and L.A.
And you could see a lot of people actually getting on that train, then there would be more of a
logic, you know, to actually finish the project.
I don't have any question that it's possible to finish it.
And actually, when you look at projects around the world, it's very rare that big projects like
this when you've already spent like billions and billions of dollars, that they actually get
stopped.
It's really easy to say, I don't want to spend the money on this, but it's our kids and our
grandkids and the future of the state and the environment and our society.
And every generation, I think has an obligation to make those kinds of
investments for the future.
It's cool to be a part of this.
I have two kids, so to see them and they're hopefully they have kids later on and just be a
part of it, Hey, my dad worked on that and maybe they want to get into the trade and motivate them
to do something like that.
I feel it's a part of history.
It's something that I'm able to to share and be proud of.
You can't build yesterday's transportation projects for today's and tomorrow's
challenges. You've got to build stuff that's different.
Electrified, renewable power, clean, fast rail is part
of that future. It's happening all over the world and it needs to happen here, too.