September 21, 2017 - From the September, 2017 issue

CA High-Speed Rail Chair on the 'Transformative' Impacts of 'Connecting' California

As the California High-Speed Rail Authority seeks a new CEO to guide the program’s next phase, Board Chair Dan Richard expounds frankly on the political and financial challenges ahead. Yet he also illustrates how, even in its nascence, the massive infrastructure project has become a lightning rod where cities and private interests are coalescing to reinvest in the Central Valley—and why he believes connecting California will boost the local, regional, and even national economy.


Dan Richard

"The strategic implications of high-speed rail go far beyond the immediate benefits for California’s economy. Because of the Build America provision, we’re on the cusp of encouraging a whole new manufacturing sector around high-speed trade." —Dan Richard

The High-Speed Rail Authority is at something of a crossroads today—searching for a new CEO as the program continues to evolve. From your perspective, what will the new leader have to address?

Dan Richard: Any program goes through an evolutionary phase. As we look for new leadership, we’re focused on the needs of the program at this point.

Our former CEO, Jeff Morales, really helped to launch the program and forge relationships with stakeholders. But now, we find ourselves in the midst of a major infrastructure construction program. In my mind, right now we need someone with deep experience in project delivery, and a track record of dealing with scope, schedule, and budget issues around large, complex, integrated infrastructure projects.

Let’s take a step back: Why is this project such a high priority for the governor? 

I’ve been privileged that Governor Brown has given me the opportunity to work on what is becoming the nation’s largest infrastructure program.

Anyone who knows Jerry Brown knows that he has always been focused on the future. When he was governor the first time, he was at the cutting edge of the technology revolution that was sweeping Silicon Valley. Now, he’s looking ahead to the needs of a state that will soon have 50 million people.

Modernizing the transportation system is a priority for the governor, and high-speed rail is just a part of that. We’re putting billions of dollars into connected systems at the regional and local levels, and we’re looking at a tremendous leap forward in California’s rail network, with high-speed rail as the spine. But transportation is not the governor’s only priority.

Any society—or company, for that matter—that wants to flourish in the future needs to invest in its physical infrastructure and its human capital. I see this governor as very committed to long-term investments in our physical infrastructure—transportation, energy, and water—as well as in our human capital, by advancing the efficiency of our education.

Jerry Brown’s father was one of the great builders of America. As governor, Pat Brown helped build California’s university system, highway system, and water system. His son sees that legacy, not in terms of a personal legacy—there are no Jerry Brown state office buildings out there—but in terms of a moral obligation to the future. That’s just who he is.

That’s what has drawn me to this project, as well: a sense that we’re living off of the infrastructure investments made by our parents’ and grandparents’ generations, and that we have a moral obligation to future generations to continue to make those kinds of commitments.

What are the political roadblocks making it so difficult to plan infrastructure for the future?

For one, there is a disconnect between long-term needs and short-term politics. People are focused on their next election and on the next day’s news cycle, and that’s fundamentally inconsistent with a political imperative of short-term sacrifice for long-term gain. There’s no advantage for politicians to make major commitments if doing so will cause any short-term discomfort—like increased tax burden or disputes over environmental issues.

This is not a liberal versus conservative phenomenon. Our friends down in Texas, trying to build the Texas High Speed-Rail Line there, are finding similar resistance on both sides of the spectrum. There’s a sense that people don’t benefit by investing in something that they’re won’t get to cut the ribbon on for a decade or more.

But I think there’s also something more insidious than political drag at work, and that is a decline of confidence in institutions. Americans seem to be losing faith in our ability to do big things. That’s why, when Jerry Brown decided in 2011 that he would embrace the high-speed rail program, his statement was along the lines of: “I want to show that America can do big things again.”

We’ve built such tremendous things in this country. The Golden Gate Bridge was controversial; there were 2800 lawsuits against it. But we built it, and we’re proud of it. We built amazing energy and transportation infrastructure decades ago, but we have lost confidence in our ability to take on those challenges.

Let’s turn to the role of the federal government in the high-speed rail project. Is California on its own for this investment?

Currently, it’s mostly California investment. However, it’s critical to point out that we would not have gotten off the ground had it not been for federal support. We ran into legal challenges in California that limited our ability to access state bond money, and only federal money allowed us to get construction underway. We’ve had $2.5 billion in federal stimulus act money, and almost $1 billion in additional federal money. Not only that, but our partners at the Department of Transportation worked with us to allow us to spend those dollars first, with the promise that the state would match as our funds became available.

On one hand, we have to express deep gratitude to the federal government—mainly through the Obama administration, but even continuing into this administration—for helping us get on the ground. On the other hand, there’s no prospect of additional federal money at this moment. But I expect that to change.

If no more federal money were forthcoming, then the federal share at the end of the day would be roughly 5 percent of the cost of this project. That is inordinately and ridiculously low compared to normal federal shares of transportation projects—especially because the strategic implications of high-speed rail go far beyond the immediate benefits for California’s economy.

High-speed rail will allow Silicon Valley to continue to flourish by relieving some of the housing pressure. It will open up freight rail capacity for ports that see 40 percent of America’s imports. And because of the Build American provision, we’re on the cusp of encouraging a whole new manufacturing sector around high-speed trade. The federal government should continue to be a full partner in this effort, particularly when California is stepping forward with more than $20 billion of state investment.

Let’s dive into the connection between the Central Valley and Silicon Valley. What do you expect the impact on jobs, housing, and transit infrastructure to be?

We’re already seeing tremendous impacts from the mere promise of high-speed rail, let alone the reality. We’re seeing immediate job growth and a high level of activity in the Central Valley, which has been subject to poverty and socioeconomic and environmental challenges.

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In Fresno, one of the poorest counties in the United States—with a poverty rate in excess of 25 percent— the unemployment rate has fallen below 10 percent for only the fourth time in the last 25 years. Academic studies are pointing to high-speed rail investment as the main reason for that. We’re also working with the city of Fresno on development plans around their station. The word that comes to mind is “transformative”: I think this investment is going to transform Fresno and other Central Valley cities that have been hollowed out over the years.

On the other end of the line, we’re seeing tremendous excitement in San Jose about the prospect of high-speed rail coming in, and Google has just announced a new 20,000-person campus at the Diridon High-Speed Rail Station in Downtown San Jose. That is going to be one of the densest rail hubs in America, and will also be used by BART, Caltrain, and Amtrak.

There is great excitement among business and civic leaders on both ends of the line—from the Central Valley to Silicon Valley—about the long-term economic boost to both regions, by helping with the jobs/housing situation, as well as providing immediate investment opportunities.

This issue includes an interview with the Metro team working on improvements to Los Angeles Union Station, which are planned to eventually incorporate high-speed rail. Talk about what buildout Southern California can expect to see in the near future.

The first leg of high-speed rail will connect Central Valley to the north. I know this was a disappointment to some folks in Southern California, but we think that it will ultimately be to their benefit.

Why? I firmly believe that, the minute the first high-speed train starts running in California—no matter where it is—everything is immediately going to change. Therefore, our business plan was predicated on the notion that the best thing we could do is to get trains up and running as quickly as possible—and that meant starting in Northern California. I believe that that choice will accelerate the extension of the system to Southern California.

Ultimately, high-speed rail will have the benefit of connecting north and south. But we don’t want it to be an all-or-nothing proposition in the meantime. We’re using high-speed rail dollars to make early investments in the Southern California corridor that provide immediate transportation benefits even as we’re laying the groundwork for the full buildout.

One example is a major grade separation in Los Angeles—one of the most dangerous at-grade crossings in the state. That project is going to yield a 40 percent increase in capacity to the eastern part of the Los Angeles basin. We are also supporting one of the most important infrastructure projects in Southern California: the run-through tracks connecting the northern and southern segments of Union Station. This will mean that people won’t have to get off a train, walk through the station, and get on another train. Longer term, the prospects for Union Station are very exciting.

Our next issue will include an interview with the leadership of Japan Central and Japan Rail East about their network. What have you applied in California to what exists already around the world in terms of high-speed rail?

Since the U.S. is going to be the 20thcountry in the world to do high-speed rail, it would be arrogant and foolish of us to ignore lessons from around the world—and we have no intention of ignoring those lessons. We have huge admiration for the accomplishments of Japan, China, and Europe, and we work very closely with a number of those transit agencies, as well as with the International Union of Railways (UIC).

For example, a number of leaders in San Jose recently took a trip to Rotterdam in the Netherlands, and briefed us on a tremendous number of things they’d learned about station design, station area development, and integrating multiple train services.

We also have a lot to learn from Japan about safety. Japan has run high-speed trains for a half-century without ever having a fatality—even during the terrible earthquake and tsunami in Fukushima. Their earthquake protection is second to none, and since we’re building in a seismically active area, that technology is going to be crucial for us.

Japan has also done amazing things in terms of customer interface, like ticketless gates and electronic ticketing at stations. Also, they have excelled in the trade-off between operations and capital needs: Their stations have fewer platforms than would otherwise be needed, because they’ve invested so much in reducing trains’ dwell time at the station.

These are all important lessons. Whether for safety, station design, commercial operations, or operational considerations, we spend a lot of time looking at successful models around the world. 

Let’s close with the project’s cost. Are there any developments on the financing front? 

We’re not there yet, but we have made big strides in the past year toward being able to do financing, which will accelerate the program.

First and foremost, solving the political problem will help us solve the financing problem. The recent action by the California Legislature to extend the cap-and-trade program for 10 years was a major boost to our ability to finance.

The bedrock of financing is certainty. Whether you’re a business, a government, or whatever, if you’re going to ask other people to loan you money, you’ve got to provide them with a sense of stability in terms of repayment. Once we have that, we’ll be able to tap into a number of financing programs, both public and private.

What satisfaction do you receive from serving in this capacity?

It’s certainly not the money! I work for a governor who is a notorious cheapskate, but I’m rich in psychic income from this project.

When I was at BART, we built the extension to the San Francisco Airport. In my private-sector work, I’ve been involved in building energy facilities. Leaving something behind for the future just brings me enormous satisfaction.

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© 2017 The Planning Report | David Abel, Publisher, ABL, Inc.