California High-Speed Rail Future Funding of the California High Speed Rail in the Current Financial, Economic, and Political Environment

Introduction The “greatest infrastructure project, not only in the history of California, but the nation” ~ Governor Jerry Brown Purpose: Support the 6th largest economy in the world Bring economic growth Provide affordable housing and greater mobility Highlights: 800 miles of track 24 proposed stations Construction dates: 2013-2029 Proposed budget: $64 billion

Initial Construction Section Length: 130-mile long stretch connecting Madera to Bakersfield Initial costs: $6 billion Construction time: 4 years (2013-2017) New construction period: 11 years (2013-2024) New estimates for costs: $16 billion

Phase 1 Initial Operating Section(IOS) North – Madera to San Francisco IOS South – Bakersfield to San Fernando Valley Expected costs: $42 billion Initial construction time: 6 years (2015- 2021) Delay in construction time due to ICS delay: 2022-2028

Phase 2 Phase 2 North – Merced to Sacramento Phase 2 South – Los Angeles to San Diego Expected costs: $16 billion Expected construction time: 10 years (2019- 2029) Change due to ICS: 2026-2036

Special Projects Central Valley Wye Connects ICS, Phase 1, and Phase 2 Towards Merced Central Valley Wye Located in Chowchilla Connects ICS, Phase 1, and Phase 2 Funded within the total $64 billion-dollar budget Towards Gilroy Towards Fresno

Additional Improvements Tasked with creating one cohesive rail unit throughout California Allow for easy transfers between HSR, regional, and city wide forms of transportation Stations, platforms, train, etc. Costs included in the original planning budget of $64 billion.

Cap-and-Trade Funding Total Funding as of Dec. 2017 for ICS Initial Funding Federal Funding Funding for the ICS American Recovery and Reinvestment Act - $2.5 billion High-Speed Intercity Passenger Rail Program Federal Grant - $930 million State Funding Proposition 1A (the CA High- Speed Rail Act of 2008) $9.95 billion in bonds $3.2 billion flagged for the ICS Cap-and-Trade Funding Cap-and-trade fund allocation 25% of the annual action proceeds directed towards the project $1.6 billion for the ICS (through 12/2017) Total Funding as of Dec. 2017 for ICS $8.23 billion Beyond the $6 billion originally planned for the project Not enough accounting for the ICS increases

Time & Costs Last number in April 2017

Cost projections for Phase 1 Original Time Frame – 2015 to 2021 Original cost – $42 billion Cost projections for Phase 1 *change in years of construction based on 7-year delay from ICS **inflation rate of 2.5% found based on expected inflation rate from 2017-2022

Cost projections for Phase 2 Original Time Frame – 2019 to 2029 Original cost – $16 billion Cost projections for Phase 2 *change in years of construction based on 7 year delay from ICS **inflation rate of 2.5% found based on expected inflation rate from 2017-2022

Funding Model Centralized funding model Funds from various sources gathered at state level Allocated as part of Governor’s budget Distributed according to CA High-Speed Rail Authority’s priorities Distributed and reviewed monthly Looking forward Continuing with centralized funding model Focusing on federal grants and cap-and-trade funding *gathered from Micah Flores, Information Officer I, at CA High-Speed Rail Authority headquarters in Sacramento, CA

Federal and State Funding Federal Funding State Funding Past funding $650 million set aside under Obama Administration for In February 2017, President Trump, at the urging of CA GOP, blocked the pegged money After 4-months of negotiation, money was reallocated to CA HSR To be distributed over a 5-year period Uncertainty and added risk Proposition 1A $9.95 billion in bonds received $9.5 billion in interest payments $1 received; $1.95 paid in principle and interest Nearly 2-to-1 ratio Costly means of funding Currently on a 30-year payback period $19.45 billion to payback

Voter Sentiment Stratified Sampling of major newspaper in 7 heavily impacted regions in California Media reports show View points of citizens View points being presented to, and projected on citizens

Voter Sentiment

Uncertainty of Cap-and-Trade Funding To extend the cap-and-trade structure by 10-years, Governor Brown allowed Republican party to put forth a constitutional amendment gaining further control of funds Scenario planning for effect of loss of cap-and-trade funding

–Jim Steer UK high-speed rail research group Private Investment CA HSR Authority hopes this capital infrastructure project brings private investments Largely depending on operational sections of the CA HSR leading to revenues Foreign Investment Exploring since early planning phases Gained “ideas” but not funds Regaining investment dependable on revenues from operation “operating profits are unlikely to be enough to repay massive construction costs” –Jim Steer UK high-speed rail research group

Conclusion Estimated costs range from $84 billion to $329 billion for conservative to radical scenarios Collected approximately $8.23 billion for the ICS Expected funding between $20 and $28 billion dollars Deficit between $55 billion and $292 billion dollars Federal grants and cap-and-trade funding are least expensive Uncertainty in obtaining both Bonds are effective way of gaining large sums of money Very costly to the state and general support of the project is decreasing Private investment are needed Depends heavily on the completion of the project and revenues

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