Transcription:
Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.
Michael Scarchilli (00:06):
Hi everyone and welcome to The Bond Buyer Podcast, your essential resource for insights into everything municipal finance. I’m Michael Scarchilli, Editor-in-Chief of The Bond Buyer, and today we’re diving into the future of high-speed rail in the United States. In this episode, Caitlyn Devitt, our senior infrastructure reporter, is joined by Eric Goldwyn, program director at the Marron Institute of Urban Management at NYU. Eric and his team recently released a report outlining how the U.S. can improve the delivery of high-speed rail projects with discussions ranging from the successes of Brightline in Florida to the challenges of the California high-speed rail project. Eric lays out a roadmap for the country’s potential rail network and highlights key policy recommendations. We’ll explore the federal commitment needed for a national high-speed rail network, the importance of setting technical standards, fostering expertise in the U.S., and ensuring projects are managed efficiently from planning through execution. So without further ado, let’s jump into this fascinating discussion.
Caitlin Devitt (01:11):
Hello Eric. Thanks for joining us.
Eric Goldwyn (01:13):
Thank you.
Caitlin Devitt (01:15):
The report is titled How to Approve Domestic High-Speed Rail Project Delivery, very workmanlike title. And actually it’s a really nice report. It lays out sort of a clear, and I think achievable path to national high-speed rail system with five recommendations, five pretty common sense recommendations. And it looks like you interviewed a bunch of people. You base a report on interviews with 66 experts, and it comes at an interesting moment right now in high-speed rail. So we have Bright Line in Florida, which is up and running, even though not technically high speed, right. Express inner city,
Eric Goldwyn (02:03):
I’ll take it.
Caitlin Devitt (02:04):
Yeah, you do high speeded at 155 miles per hour
Eric Goldwyn (02:08):
Yeah, it’s an arbitrary thing in some sense. So UIC, which is the sort of international high-speed rail clearing house for the people that maintain standards and data and things like that, they define true high-speed rail at 155 miles per hour. So just for the sake of consistency, that’s the speed that we used. And some people will say true high speed is really 220 miles per hour or 185 miles per hour. They’re different sort of things, but as an academic you just want to be able to point to some source and be like, they said it, so it must be true.
Caitlin Devitt (02:52):
Yeah, I’ve always heard higher numbers, but like you said, so we have Bright Line Florida, which is up and running and by all accounts popular, although it’s hard to sort of say with their revenue targets, we have Bright Line West, which broke ground this spring. We have of course California high speed, super struggling project way over budget. I want to talk about it and behind schedule, way behind schedule over budget, behind Schedule Texas Central, which has also been on a long time struggling but now might have New Life as Amtrak last year said that they might get involved. And then other fledgling ones like Cascadia on the Pacific Northwest.
Eric Goldwyn (03:31):
Yeah,
Caitlin Devitt (03:32):
Okay. So your first, and what seems to be most important recommendation is you want a commitment. You think we need a commitment from the federal government. So here we are, we have Amtrak Joe in office, and also Pete Buttigieg, secretary Transportation has said several times that the development of a national high-speed network is a priority. They’ve given, I think $8 billion in grants to the various projects, but you seem to be talking about something more, right? More of a vision, dependable revenue. Tell me about that.
Eric Goldwyn (04:11):
Sure. Well, so the first thing I should say is the sort of unofficial title to our report is Build the Damn Train
Caitlin Devitt (04:17):
Michigan.
Eric Goldwyn (04:19):
Right, exactly. There you go. A little shout out to Gretchen, but to your point about the first recommendation, so the history of Amtrak and Inner City Rail in this country is that eventually funding comes through oftentimes. So in the report there’s some reference to I think to date in continuous dollars, Amtrak has received over $125 billion from the federal government, which is not insignificant certainly, but the thing is they have to come hat in hand every year to get that allocation. So if you’re trying to plan and say, okay, it takes more than a year to build something, so I have a five-year plan, a 10-year plan, whatever the plan is, you want to put a number on that and you want to have a schedule. And if you’re not certain that you’ll be able to get money for that 10-year period, I think the theory has been what’s the point of planning? And so where that has left us is we have a whole host of legacy roots that have existed for over a hundred years in some cases. And instead of adding on or building off of those lines and those roots, we just sort of keep doing the same old, and maybe we add a little bit here or add a little bit there on rights of way that already existed. I’m thinking of the Easter connecting up to Brunswick, Maine from Boston.
(05:59):
And so without a commitment, you just can’t do the planning, you can’t have the vision. And there have been visions, right? There have been high-speed rail plans. I think ’97 was one, 2009 there was another one, two. And while those have been exciting individual moments, we’ve not been able to carry through that momentum. I think when you read a little bit, if you read people who were writing in 1997 or even in 2000, they all were like, we’re about to do this. We’re about to have national high-speed rail, we’re going to have this network, it’s going to be amazing. And it’s 2024 and we don’t have that. And I’ve spoken to some of those people who were just like, I really thought it was going to happen, and now I don’t think it’s ever going to happen. They’ve been, they’re pretty negative about it.
(06:54):
But I think the thing that has always been missing is that federal commitment. Now that’s sort of an easy thing to say, and I mean I don’t think it’s controversial. I don’t think anyone would disagree that it would be helpful to getting a national network up and running. But one of the things that I thought was interesting in doing some of the research is that when you look at other new networks that have been developed, and this is sort of the canal system, the railroad system, the highway system, it didn’t start with the federal government building them and paying for them. It started with either states paying for them or private actors or a combination of the two. And then as those networks developed, the federal government got involved after it was sort of demonstrated that this was sort of a viable thing in all those cases.
(07:46):
And so I think what’s exciting about this moment versus 1997, let’s say, or 2009, is that Bright Line in Florida is exciting, right? They have built something. Is it true high speed rail? No, but who cares? It’s the first new intercity passenger rail in a hundred years. I think that’s the headline that I read over and over again. And it’s true they have debt, you guys are into the bonds, but they do have riders and they do have revenue, and I think ridership continues to increase. Now whether or not they will be able to cover the capital expense and operating expense mean that it’s not a thing that happens frequently. I can only think of two examples in history on the high-speed rail side where the capital works and the operating have been covered by fare box revenue, and that’s the Teka Ocean K, and then the Paris, Leon, TGB.
(08:48):
So that’s two. We have two exciting examples. And so I think the reality is is okay, there is this desire and then obviously you have California high speed rail that’s also, that’s building its project, you have success on the northeast corridor, which is seeing ridership, I think now have surpass pre-COVID numbers interest in Texas Central, which is sort of is it going to happen? Not going to happen. Who knows? I don’t know. Cascadia as you alluded to, Brightline West. So you have some stuff bubbling up that is not fully independent of federal involvement. As you noted, they’ve, some of those projects have received federal dollars, but they are being advanced in a way that if they are to make it to revenue service, it’s possible that the federal government at US DOT will say, okay, we know we can’t wait any longer.
(09:43):
We need to get involved and get invested and create policy to encourage this technology. And there’s a bill that has been introduced in Congress by Seth Moulton and Suzanne DelBene, the high-speed rail bill, and I’m sure they have a better name than I just said, although based on the title of our paper, I do know good names. So I think there’s interest. What we don’t see though is sort of that bipartisan support. And I think when you look internationally, what was so telling was that it was never controversial sort of to pursue high-speed rail. The controversy was do we build it in this location or in that location? And I think here in the US the controversy is do we do this at all? And until we get more alignment, I think it will be hard. But as I learned in doing some of the research and talking to people, the 2000 2004 Republican party platform did say they wanted to build national high-speed rail. Obviously we’re far ways away from that, but that’s exciting.
Caitlin Devitt (11:01):
It could return. Yeah, I mean it’s sort of depressing to talk about it or talk about these past moments where it seems like we’ve been there and you to lay out this path there. And then is it even politically achievable? The Republicans go hard after California project and it comes up all the time, every time Blue Judge comes from Congress, anytime there’s any sort of congressional hearing on it. But they don’t do that with Bright Line last from comments that they make, at least from at hearings and stuff. They sort of praise it and they’re praising it in contrast to what they see with the California, which they’ve even, I think they’re investigating it now formally and there’s all this sort of thing. So there’s really, it’s about, I think the public money, the federal money that’s going there and the way it’s being done in California that is kind of particularly sort of hot right now for the Republicans, I think.
Eric Goldwyn (12:01):
Absolutely. And in their state legislature, I think a legislator introduced a bill saying, no more money for this project until they start building more stuff. I dunno all the details, but absolutely it comes up in Ted Cruz and maybe it was a member of the house, they both called for an inquiry into California high-speed rail a couple of months ago.
Caitlin Devitt (12:25):
Both of them did. Yeah, Kruz and then Graves, I think German.
Eric Goldwyn (12:28):
Oh, branch, right,
Caitlin Devitt (12:29):
House
Eric Goldwyn (12:30):
Transportations.
Caitlin Devitt (12:31):
Okay. That’s interesting what you say about there could be all these different projects and then the feds could kind of be behind saying, oh, this is really something that’s starting to take off. But that gets to your second recommendation, which is the need for standards because as you point out now you have all these different, the Texas Central one want to see this Japanese technology.
Eric Goldwyn (12:51):
That’s right.
Caitlin Devitt (12:51):
California is different from Bright Line West. And the interesting example I thought from your paper was talking about how in the late 1800s, the South had to actually either widen or narrow their tracks by three inches to accommodate the north. So talk about that idea of the need, it sounds dry, but the need for technical standards so that we can do if we want to do a national network so that all these things can operate.
Eric Goldwyn (13:21):
Yeah, I mean, so I think that last word you use is the key, right? If you don’t have interoperability, what that means is that you have to get off one train and get onto another train or load things from one train to another train, which introduces delay and not a single seat ride. And so if you do have interoperability, meaning you have uniform rail signal systems rolling, stock platform heights, things, ballast, things that are, I agree with you are dry, but if you have uniformity like our highway network for instance, even the font is the same on all the highway signs, the colors, it’s all the same because there’s a uniform standard.
(14:08):
These standards allow us to scale much more quickly and it allows things to work together. And so my concern with California High Rail and Bright Line West is that there’s a project called the High Desert Corridor that wants to connect the two of them, which is great, that’s fantastic. But if they are running on different tracks, have different rolling stock, have different signals, have different whatever, you won’t be able to take a one seat ride from say, San Francisco to Las Vegas. But if you did have interoperability, right, you would now be able to take a one seat ride from San Francisco to LA amazing San Francisco to Las Vegas, amazing, Las Vegas to LA, fantastic. All the points in between. And it’s like then you have a network. And a network is where things get exciting. It’s where you have just more possibilities and more trip choices.
(15:09):
And I mean, I’m from New York and our subway is amazing, not because there’s one station on one end and one all the way on the other end, but it allows all these other stations to be accessed, all these other parts of the city to be accessed just within that network. So in the report, it’s very hard to visualize how exciting standards are. So we use the different rail gauges from Japan, European standard and the American standard, and they all are a little bit different. And in talking to engineers working on some of these projects, they said, we just don’t know if Japanese rolling stock can operate over American freight rail. It’s never been done before. And you can model it out and you think it might work, but until we test it, which is not so easy to do, you have to build the new trains, you have to lay down the new track, you have to spend a lot of money to do that testing.
(16:10):
We just don’t know. And I think the other side of it is we’re very much advocating for just copying what is already out there. We’re not advocating for developing anything new. High speed has existed for decades at this point, so let’s just do what someone does somewhere else. There’s no need to reinvent the wheel. And I think when you look at California high Speed Rail, Texas Central and Bright Line West, those teams all, well, not Texas Central, I guess they all had to study and come up with their own standards based on existing international standards. And that’s time, effort, and money that it would be better used just saying, okay, the Europeans do it this way. That’s good enough for us, it’s safe, it’s whatever. Let’s go with that. Or in the case of Texas Central, the Japanese do it this way, all they talk about is they’ve never had a fatality on their system.
(17:08):
So let’s go with that. I think just lock into a good standard. The Japanese is a good standard. The European is a good standard. There are high speed rail engineers who know more about this than I do certainly, and they could just say, yes, this is good for these reasons, it’s bad for those reasons, and I think that would be the best way forward. Right now we’ve kept it open so that no one is limited. And I think the risk there is that some of the standards that have been selected for some of the projects have also maintained a certain openness rather than committing to, okay, we’re going to go the European route or we’re going to go the Japanese route, or whatever it is. And that has just delayed picking signals, delayed picking, rolling stock, some of the items like switches, so the trains can go from track to track.
(18:08):
No one in America makes switches apparently that can operate at high speed. And so there’s also this manufacturing pipeline issue of can you even procure some of these items domestically? And if you can’t, you have to think about, okay, well how can we get them quick enough? How do we get our buy America waivers quick enough so that we can be open in time and bright line West more so than, well, let’s leave Texas Central more than California. Israel is under the gun because they’re taking out debt and they have to pay back money. Whereas California and Israel is a more traditional sort of public enterprise that maybe money isn’t so meaning to them,
Caitlin Devitt (18:53):
Right? Right. They’ve taken out debt for sure for California, but just in a different
Eric Goldwyn (18:56):
Yes, yes, yes, that’s right.
Caitlin Devitt (18:58):
It’s not tied directly to the project,
Eric Goldwyn (18:59):
No, like
Caitlin Devitt (19:00):
It is. But speaking of that’s your third, I feel like you’re doing these very seamless.
Eric Goldwyn (19:06):
It’s very
Caitlin Devitt (19:07):
Seamless. Moves into the next recommendation
Eric Goldwyn (19:08):
Thought I thought we thought a lot about the recommendations,
Caitlin Devitt (19:11):
Which is to kind of foster work at universities or foster study at universities and grow the links between universities and industry to sort of, I guess foster a industry, high-speed industry in the U.S. And when Wes Eden’s a Fortress, CEO, which owns Brightline, and Brightline West had their groundbreaking this spring, as I’m sure he talked a lot about that and about how he thought that this was sort of going to be the start of a US high-speed rail manufacturing industry, sort of like the car industry and that he was very excited about, and he talked about different places in the country, but that was sort of interesting. He talked about it in that same way. So that seems like something that you guys think is really important also to foster in-house U.S. experts in this and be able to get them to staff and get them to talk about, get them to go to the agencies and engineers and all that.
Eric Goldwyn (20:20):
So West Eden is not in this category, but a lot of high-speed rail enthusiasts and rail enthusiasts, they want to make the analogy that what we can do for high-speed Rail is what we can do is what the automobile, we can follow that path that the automobile followed. And I mean obviously I am sympathetic, I am pro high-speed rail and pro rail in general, but the reality is that it’s very different. We started building roads in this country in really the 1890s, 1900s, and the Highway Act doesn’t come along until the 1950s and people start buying cars in the 1900s, 1910s, 1920s, and it’s the most sought after item. It’s very popular. Now, rail travel is not that, right? It’s not. As we look maybe at the very narrow line Florida case in just a half mile of that corridor, yes, then rail travel is booming in this country.
(21:25):
But I do think there’s some lessons there. And I think what I’ve seen in some of my other research on the transit side, I’ve done a lot of research on transit, is that once you sort of build up some of that muscle in how you design this stuff, how you build this stuff, then you can start to innovate. So in my earlier comment about standards, I said, just copy. Just copy what’s out there. And this is true with the different items. Just get the Alston rolling stock, get the Siemens rolling stock. Don’t do anything fancy. But once we have a critical mass of services, then we can apply our ingenuity and engineering expertise to maybe it’ll go a little bit faster, maybe we can save on the energy inputs or I don’t know, whatever it is engineers do, then you can start to get creative and sort of advance the industry.
(22:27):
I think right now we’re not in the position to be at the forefront. We are in the back and we should just say, okay, let’s do whatever the person ahead of us is doing. And once we sort of master that, then we can start to leapfrog ahead and sort of pioneer some new thing. And I think the only way that you do that, so if you look at the Chinese example, they have a university just for high-speed rail engineering that doesn’t exist here. It produces thousands of engineers every year in the us. So I’m a professor at New York University and we don’t have any real engineering program. And without that then how do you expect to produce the people that go into the field? And it’s not just that, it also, it builds that constituency of people who are advocating for the policy outcome. So if you have experts who can design, build, construct the thing that we want ICE B real in this instance, that’s great, but then you also now have a constituency of people who are advocating for it and talking to their elected officials and saying, Hey, we really need to start getting serious about high-speed rail.
(23:46):
When you look at the history of pretty much any sort of municipal service that is administered from education to police to fire in the 19th century, that’s basically what happened. They were pretty haphazard and sort of amateurs doing that. And then by the 1870s, 1880s, 1890s, and by 1900, you had sort of schools educating teachers and you had a whole constituency advocating for, okay, we need a board of education that is separate from city councils and we need a curriculum. And they started to sort of shape all this stuff. And I think we’re not so close to that with high-speed rail, but we should be moving in that direction certainly. Oh, sorry.
Caitlin Devitt (24:32):
No, I’m sorry. Go ahead.
Eric Goldwyn (24:34):
The other thing about all it that I always find, so again, I’ve done a lot of research on the cost drivers of transit projects and both that and this, one thing that I find so confusing is these projects tend to be the single most expensive project in a city’s history on the transit side, California speed rail right now is a budget over a hundred billion I that’s around 150 billion. I mean, maybe there’s something else going on in California. I mean, I don’t know, I’m not expert certainly, but that’s got to be one of the biggest linear infrastructure projects in the country, if not the world, on a per dollar basis. And people care, but only care in terms of it’s a punching bag. I mean, we should care more about how do we make that project succeed? What do we need to do to clear away the obstacles? What do we need to do to get the best people working on that job? To me, it’s just a lost opportunity
Caitlin Devitt (25:38):
And it goes into your fourth recommendation or I don’t know, I’ve lost track. I think it’s fourth recommendation’s about management, the agency procurement risk. And it reminds me of this report that came out, an academic report that, I don’t know, it was written last year, but it was presented at Brookings Municipal Finance this summer. So I saw it there where it was about state dots and it was about we need more in-house expertise at the state DOT level. And that the manager project manager makes a huge difference in the delivery of that project. But anyway, so tell us a little bit about the fourth recommendation about procurement and risks and management.
Eric Goldwyn (26:25):
So the fourth recommendation sort of smushes a bunch of things together, but I mean you’ve distilled it nicely. The main point is when you have a lack of expertise doing something, you logically turn to people who have more expertise. So in this instance, there can be consultants, but before you hire a consultant, you also need to know what you want. And I think the struggle that we have is we don’t do a great job sort of defining our projects because we don’t necessarily know what it is that we want because it’s not something that we’ve necessarily done before. And so the consultants come in and they will say, okay, let’s do it like this. And the state entity will say, okay, let’s do it. And then they’ll start designing things and coming up with plans and this and that, and then something runs a foul of something that you didn’t tell the consultants about.
(27:18):
And so then it’s like, actually you need to start all over again and avoid that thing and look at this thing instead. So now your consultant is sort of looking at a million different things and is sort of betwixt in between and doesn’t have that clarity of vision. And when that starts happening, projects just sort of spin out of control. Obviously if you’re redoing your design and engineering work over and over again, you’re not advancing the project because you’re not moving forward. And then the time of consultants is not cheap. They’re expensive, they’re an expensive resource, and so you have to pay them for all the work you’re not using and then hopefully work you will use. And so right now, since we don’t have a track record of developing this stuff, we have people running these authorities who come from roadways or from government or from some other thing that someone thinks the board of directors of these, which are usually elected officials or someone who’s been nominated by a governor who have never dealt these projects as well, you’re putting someone in power who you think is well versed, but you don’t know they’ve never done it, and you don’t know anything yourself about these things.
(28:38):
So it’s not good is I guess the technical way of saying, and again, I look at a lot of transit stuff and when you look at transit agencies and you look at who is leading capital construction or transit agencies, very infrequently do you get someone who has built a light rail, built a heavy rail, oftentimes you do get someone from a state or city DOT, or you get someone who has worked in the agency but was in a different department and you’re like, hopefully they’ll be able to figure it out. Again, these are massive projects that cost billions of dollars. And the idea of hiring someone who’s never done it before to lead it seems crazy to me. It’s not to say that someone who’s never done it before can’t do it, that they’re bad people. What I would do if it were my money and I were hiring someone, I’d get someone who’d built the project in a place that was really good and be like, now train all these people beneath you and then that will, on the next project, that person can be in charge.
(29:52):
So that’s a big part of it is sort of up that in-house expertise, again, we saw a lot of this in our transit research where agencies were just ill-equipped to lead these projects. The other thing that we talk a lot about is procurement in this recommendation and procurement is, if you follow infrastructure stuff is a very hot topic. And I think a big part of that is sort of the traditional model of what’s known as design bid build where you procure a design from a designer and then you bid that design out and contractors bid on it and then you build it, right? So there’s separation between the designer and the builder.
(30:40):
That model has not worked so well in the US last let’s say 40 years. We’ve seen our costs increase, we’ve seen schedules delayed. So there’s been a lot of emphasis on what’s known as alternative procurements, thinking that that’s where the problems are. And so what I’m arguing in our conversation is that the problem is really upstream of that. It’s the in-house expertise that the procurement piece is a bit of a red herring. With that said, we do recommend that you do sort of follow design bid build or some modification of a design build procurement, but at the heart of what we’re saying is the agency has to own the project and know what the project is. And so my defense of my critique would be in a design bid build where you don’t know what you’re doing, you’re procuring designs that you’re not vetting appropriately internally, and then you’re putting those out on into the marketplace and so you’re going to get screwed no matter what. And so here what you see internationally is you, they use consultants, but they know what they want. I’m thinking of IFF in Spain, which they do all the high speeded rail stuff there.
(32:01):
They have subject matter experts managing their consultants, defining the project, and they take those designs and they put those out to bid for contractors, and then they know, they know what it is that they’re trying to do and it works out. I mean, sometimes there are problems of course. So we also talk about what’s known as design build. And so in a design build procurement, you sort of are combining that design phase with the build phase. So you bring on someone earlier on to finish the design work, and in theory, that entity is thinking about, okay, these access to these materials, we know how to use these machines, so we’re going to come up with a design that is best suited to our means and methods of construction, and so we’re going to design the best or easiest, whatever the right way of thinking about is thing to construct. And that will gain some efficiency there. Now, if you look at the history of design build procurements in the us, there are a number of bridge projects, a number of transit projects I can think of. It really has not worked very well in terms of getting costs down or even getting schedule improved. I’m thinking of the Cuomo Bridge in New York.
(33:25):
I think that’s one that jumps to my mind. I still think it has a billion dollars in claims unsettled. So what drives a lot of this procurement issue is this idea that the public sector wants to avoid risk, right? They don’t want to deal with the change orders saying, well, the design you gave us was crappy, so we had to make these changes and now you have to pay us for that. So they, they’re saying, okay, you just deal with all of it and we’ll pay you one contract and just wash our hands of it. The issue there is that for certain, there’s just no way to get rid of risk. Geological risk is not something the private sector should have to carry.
(34:10):
We should pay for the geological explorations to understand what’s going on with the earth so that when a project breaks ground, it will be successful or we know what it’s going to encounter. Instead, what happens is we try to get the private sector to take on all this risk and guarantee a price really early on in the process. And that has not worked well. And the movement currently is what’s known as progressive design build, where they want to bring on the designers even earlier in the process because the designers, the design builders I should say, are complaining that even at the 30% design threshold, they’re already locked into too many things they don’t want to be locked into. I would argue that it’d be better for the public sector to be more expert, procure, more mature designs, and then go to the market with something more and well, I’ll stop there, but I’ve led you into the further recommendation.
Caitlin Devitt (35:12):
Yeah, you have. It’s interesting, but it’s true. It’s like this fantasy of not have to pay for of shifting risks and not having to pay it. It’s just sort of a fantasy it either way you’re going to pay, it’s going to be
Eric Goldwyn (35:29):
Going to charge. They charge you for that risk. It’s not like,
Caitlin Devitt (35:32):
Or you’re not going to get any bids. It’s just going to be
Eric Goldwyn (35:35):
Absolutely. Yes.
Caitlin Devitt (35:36):
Yeah. So on the final thing then you talk about separating planning from environmental review and permitting and the importance. And again, all of ’em, this is really, to me it seems really common sense, but explain why. Are you talking there about why public agencies often shoot for hitting grant standards or federal standards before at the expense maybe of planning? But anyway, talk about that separation between planning environmental.
Eric Goldwyn (36:11):
So I’m going to follow the thread that we were just discussing. So the big thing that happens with these public projects is that you want to get federal money. So if you want to get a grant, you design your project to satisfy all those requirements. Construction is not the most important thing, right? Getting in the case of California speed, bright line 3 billion I think was what they just got recently. Same thing is true with transit projects here in New York. Second Avenue, subway just got over three and a half billion dollars. You design your project to get through that process, and that makes some sense, I’m sure to listeners. But what you don’t do as a result of that is you don’t think about the constructability challenges. And so what that means is that if we look at California high speed rails, for example, the first contract that they put out to market, which is known as CP one, they had gone through their environmental process, they didn’t get all the properties for the right of way.
(37:22):
That’s a different issue. But on the constructability side, they didn’t deal with the existing utilities at all. They thought that they could figure that out after they got the money. And while they sort of figured out it costs them hundreds of millions of dollars, I think in 2018, it was estimated that it was 400 million additional dollars just in utility relocations, and that was off the base of I think 60 or 70 million. So big blowout there. And the thing is, is that in order to get federal money, you need to get through your environmental review. And so that can be an environmental impact statement and environmental assessment depending on the intrusiveness of the project. And so California has, they did do the EIS environmental impact statement that is, and wouldn’t, relocating utilities really doesn’t create that much of an impact. So when you’re going through your environmental impacts about noise or pollution or wildlife habitats, you’re thinking about that stuff. But where you put the at t wires or powering down the power utility and moving at 10 feet left or right, you don’t really actually have to deal with that stuff.
(38:42):
And so when you get into construction, you fine, you’ve mitigated, you’ve figured out all the things about the habitats of the different creatures, and you’re like, okay, our train won’t be a visual eyesore. We’ve sorted that out, but now we need to get at and t to move its lines or pack bell or whatever the thing is in California. And they’re really slow in moving it, and we’ve tendered this contract and they can’t do any of their construction because they haven’t moved the thing. And now we’re just waiting and oh, wouldn’t, they’re not going to move it. So now I’m going to pay my contractor to move it, and so I need to pay them a bunch of extra money. And so the very long-winded story I’m trying to tell is that if you focused on planning a constructable project, one that thinks through and has a plan for all of these very obvious things that you encounter in construction such as utility relocation, you have a better chance.
(39:45):
And so in the report we talk about, federal Railroad Administration has created a new program called Corridor id. And what I like about this program is that it gives you a bunch of money for over three phases. And in the first phase you do a hundred percent of the money. And that’s essentially to help you write contracts to hire a consultant. And then in the second phase, you do what’s known as a service delivery plan. And in the service delivery plan, you’re identifying all the infrastructure that you’re going to need to build or relocate or move or whatever. And so you’re doing some of that planning work absent the pressure of getting through the environmental impact statement, you haven’t started that process just yet. And then in the final phase, then yes, you start working on your preliminary design and getting into the environmental assessment, what I think would be great is if we did have more time and more money spent on getting the project and not getting it through all the different hoops it has to get through. And this can dovetail with permitting reform ideas or whatever it is. But I mean, ultimately my interest, and I think what everyone’s interest would likely be is we want to plan good projects that the minute they get the money, they can go out into construction and not encounter a million different obstacles and
Caitlin Devitt (41:15):
Not see a lot of change orders or whatever
Eric Goldwyn (41:17):
Where they’re paying for it.
Caitlin Devitt (41:17):
Yeah,
Eric Goldwyn (41:18):
Sure. Yeah, absolutely. But just delay, I mean, a lot of it is just the, I mean, which ended up with change orders as well, but I think the worst thing that can happen in a construction project is you tender a contract to your contractor and immediately you’re trying to resolve some problem. And now they’re not doing any construction. You have to pay them and they’ve brought people to the work site, they’ve rented, or you’re at least paying for the different machinery and all that kind of stuff. And so now you’re idling all of these things and paying for them, and it’s just the least productive use of time and money. So you want to make sure that you have your project in a position where it can succeed. And in California Speed rail, the argument has always been that those early contracts were rushed out the door because there was federal money that was going to disappear if they didn’t spend it. And I think at first blush, one could say, okay, that makes sense. But upon a deeper reflection, one would think that you could just talk to the U-S-D-O-T or the FRA and say, Hey, we’re not really ready right now, and if you give us six months or whatever, we’ll have a better project for you. We’d like to still have this access to billion dollars and let’s figure out a way. And I think it would probably be okay right
Caitlin Devitt (42:54):
Now. Then every public entity in the US would be doing that about every single thing
Eric Goldwyn (43:00):
That’s possibly true. But right now here in New York, we just, the governor put a pause on congestion pricing. Oh, she did. Which has put a delay on money. So the congestion pricing money was supposed to be used to help pay for phase one, a second AM subway, and that’s put a pause on that. And the U-S-D-O-T didn’t just take back three and a half billion dollars they gave us. They signed the agreement, everything. They said, okay, we will work with you. We’ll try to make
Caitlin Devitt (43:28):
This happen. No, yeah, that second, that’s a very interesting thing that which is how many
Eric Goldwyn (43:33):
HighSpeed Rail projects are there, right? It’s not like there’s thousands of them, right? It’s like at the time there was one of them, so it’s like, let’s work on it.
Caitlin Devitt (43:41):
And I’ve seen, I’ve listened in on those meetings or the board meetings and they say that we had to do this because we were so scared that we were going to lose the money, especially a long time ago. So let me ask you this just to say with the California, to use an example from your last recommendation with the consultants, I think you have in there, the ratio of internal staff to consultants at California Authority was just crazy out of whack in the beginning. And now it seems like, I don’t even know if they’ve reversed it or,
Eric Goldwyn (44:10):
So
Caitlin Devitt (44:10):
My question is California High speed Rail, have they made a lot of these mistakes? It feels like they have, and as you’ve studied it, are they making some corrections?
Eric Goldwyn (44:23):
Yeah, so there was a 2018 I think auditor’s report of California High Bureau that gives a lot of a deeper look into what was going on in that project. And absolutely a lot of the mistakes or things that we’ve talked about were things that they’ve experienced. But yeah, I think they’ve learned from a lot of their mistakes as well. And Brian Kelly is now the outgoing CEO recognized that yeah, there was an imbalance between consultants versus agency staff and that the agency needed to own more of the projects. And so I’m going to get the numbers a little bit wrong here, but I think they’re up to about 500 full-time staff from around 200 full-time staff with, I think it was like 200 full-time staff and 500 consultants, and now it’s like 500 full-time staff. And I’m not, is I sure what the right number of consultants is?
(45:16):
But I would argue that even with 500 full-time staff, that might sound like a lot, but for the initial operating segment, I think is roughly supposed to be 30 billion. That sounds like not enough people. We did a case study in our transit work in Italy about their transit, and there’s this entity called Metropolitan and Milne, and they sort of plan design, do the construction management for all their subways, and they do sewer projects in Milan, and they are now starting to do some public housing stuff, but they have like 1500 people on staff. It’s much larger. And I promise you their budget is not anything close to $150 billion. And when we talk to people abroad who build these projects, it’s like you need to have a lot of people to manage the construction, manage the contractors, and it’s very tedious, but there’s just no other way to do it. Going back to that whole thing about risk, you can’t just offload all, it’s not like AI where you just type in, how do I build high-speed rail and it spits out the answer, and you don’t have to do anything else. You actually have to work with it step by step.
(46:31):
And so I think California Street Rail, I think they have learned a lot, but I think there are also a lot of things that are not that agency’s fault that they just have no control over. And so in the recommendation five, a big thing that we talk about is permitting. And so right now there’s this moment in the US where everyone, not everyone, but people who focus on this stuff are really interested in nepa, which is sort the environmental permitting process. And in order to get federal funding, you need to get through your environmental review of nepa. And while I think that’s interesting, we could talk about permitting reform there. I think on the local level, what is missed is that these municipalities have a tremendous amount of power because when I want to do construction in the city of pick your city, and I’m not the city, I need to get the city to give me a permit to shut down a street, or I need to get that utility company to give me a permit to power down.
(47:32):
It’s the power utility, let’s say. And that process is not a standardized thing. It’s different everywhere. And so what we see with California high speed rail for instance, is that they’re paying for a whole bunch of things that are sort of adjacent to the project. I’m being generous when I say adjacent in order to get that approval. And I think in transit, we see this all the time as well, is that these agencies, they just don’t have anyone who has their back. The governor of California has said, let’s build California, let’s build high-speed rail. But he’s not telling the city of Shafter or the city of San Jose or the city of whatever, stop jerking them around. Let’s go. We need to keep moving. And in the report, there’s this example of California high-speed rail agreeing to build great separations. So that’s allowing the train to pass over the roadways without intersecting with traffic, which is a great thing of course for the parallel BNSF, right of way.
(48:41):
So I have to emphasize the word parallel. It’s not the California has right of way is not crossing it, but California Israel agreed to pay, their estimate was about $300 million, the sixth grade separations in the city of Shafter, and they ended up getting a federal grant for about $200 million. But the city of Shafter sued California high speed rail in 2014, I believe. And then they resolved the lawsuit in 2018. And that lawsuit, just like you couldn’t get through your process because you were stuck up, you were stuck up, hung up with in litigation where the threat of litigation, so you couldn’t get through C and your NEPA boom. Anyhow, so what I’m trying to get to is that governors and state legislatures need to say, okay, this is the most expensive project in our state’s history or in our city’s history or in whatever it is, or top 10 whatever.
(49:43):
And as a result, this is a priority and local plans need to sort of adapt to these state or national priorities. And that’s what happens with HighSpeed Rail and every other country in the world where I’ve been able to figure this out. So I talk to people in Spain, I talk to people in France, I talked to people in Italy about this, and all of them said that once the plan is approved, local plans adapt to the high-speed rail plan. So that means now if I’m running through Shafter and Shafter was planning to do something where I’m going to build my high-speed right of way, they’re no longer doing that, right? The high-speed rail line takes priority. If you look at our neighbors to the north in Canada, Toronto and Montreal, they’ve done something about this issue where they’ve given either more authority to the agency, so Metrolinx in Toronto to give them master permitting authority within their right of way.
(50:42):
And then in Montreal, what they did that I thought was very interesting is they put just strict time limits on how long this process can take. And I think that ultimately I would be very happy with the time limits. I think anything we can do to make this process just more predictable would be really helpful. And I think operationalizing time is sort of fundamental to that. And I think in terms of the private sector’s involvement, everyone always talks about the average nepa, that’s the environmental review process takes four and a half years. But for transportation projects, I believe a professor at Stanford, Michael Benin, wrote a paper that said it takes nine years for an average transportation project. And if you look at California, it’s real. Some of them took 10 or 11 years. Now when I talk to infrastructure investor type people, they’re like, I’m looking to get my payout in seven years.
(51:39):
And so it’s like, well, you’re not even done with environmental. And so they’re like, yeah, I would never invest in a project like that. I think where West Edens and Brightline West where they’ve excelled is that they tried, I was on a panel with Mike Ger from Brightline. He said, we’re trying to solve a simpler problem instead of California High. We all running through all these cities and dealing with all of these challenges. We’re running on the median of a highway. We have the state of California and state of Nevada supporting us. And they’ve simplified that process. And so I think optimizing for simplifying that process is not the direction we should be going in. I think we should be optimizing for building the best projects where they need to go. But if one doesn’t have the ability to achieve that, it makes a whole lot of sense to then do what Bright Line West is doing and saying, Hey, we’re going to take,
Caitlin Devitt (52:39):
You’re going right down. And that’s the only route. Yeah,
Eric Goldwyn (52:42):
Gone. The path of least resistance,
Caitlin Devitt (52:44):
Kind of a confined corridor right in the middle of the live 15. I mean, it’s why China was able to do stuff so quickly because they are not, of course, worrying about local governments and about permitting or eminent domain, which has been a big issue with Texas Central.
Eric Goldwyn (53:01):
It certainly has been.
Caitlin Devitt (53:03):
But anyway, or I could talk to you about this for another hour, but we have to wrap it up. So just tell me, are you working anything else in this? I thought I saw somewhere that you might be doing something on the Northeast now you got something coming out
Eric Goldwyn (53:18):
We’re doing. So this report was sort of national in scope. We have a report that is going to look more granularly at the Northeast corridor at specific investments. We’re going to do some timetabling, so the schedule piece of it, we’re also looking at a report about electrification of intercity passenger rail, which is a necessity for high-speed rail, and is I think maybe the most exciting thing going on in transportation right now. Caltrain just electrified 51 miles of its right of way, and without even traveling at a higher top speed, they anticipate 20% travel time savings just because the trains accelerate faster. I mean, it’s an amazing technology way better than diesel trains. And because there’s such a small amount of electric passenger rail in the us, we’re trying to come up with a way to sort of jumpstart that process. So yeah, we’re working on some of those things. We’re also working on a project about a light rail in New York, the Inbo Express and the land use implications of that project. We have a couple other things in our bag that we’re hoping to get done by the end of this year
Caitlin Devitt (54:39):
By end of the, okay, well, you guys do really great work. This is a really cool report. We’ll link to it. We encourage everybody to go check it out. And we checked out your website, transit cost.com.
Eric Goldwyn (54:50):
That’s it. That’s it.
Caitlin Devitt (54:52):
Very,
Eric Goldwyn (54:52):
Very memorable.
Caitlin Devitt (54:54):
Thank you so much for your time, Eric. I appreciate it. And we’ll be looking for what you got coming out next.
Eric Goldwyn (54:59):
Alright, thank you very much.
Michael Scarchilli (55:01):
We hope you enjoyed this episode. A big thank you to Eric Goldwin for joining us and sharing his valuable insights into the current and future state of high-speed rail in the U.S. Here are a few takeaways from today’s conversation. One, the federal government’s commitment is critical. High-speed rail projects need long-term dependable funding to ensure successful planning and delivery across the country. Two, establishing uniform technical standards will be essential to creating a cohesive national high-speed rail network, allowing for greater interoperability between systems. And three, investing in building U.S. expertise and improving project management, particularly around procurement and risk management, can help drive down costs and improve project timelines. Thanks again for listening to this Bond Buyer podcast. This episode was produced by The Bond Buyer. If you enjoyed this episode, please hit like and subscribe on your favorite podcast player and please rate us, review us and subscribe to our content at www.bondbuyer.com/subscribe. Until next time, I’m Michael Scarchilli signing off.