The California High-Speed Rail Authority released a new business plan that lays their foundation for an economically viable high speed rail system. Their plan boasts an initial employment boost of 100,000 jobs in the next five years, and is said to generate another 1 million jobs moving forward.

The new business plan describes a phased approach to construction that will allow the Authority to adapt to changing financial conditions as it moves forward, segment by segment. The first segment is planned to run between Bakersfield and Fresno.

Fresno Mayor Ashley Swearengin released a statement saying that, “Starting construction in the Central Valley makes good sense economically, environmentally and practically. It allows us to stretch every public dollar we have the fullest, and it allows the greatest flexibility as the project moves toward connecting major population centers.”

The plan also updates cost estimates, ridership figures and funding expectations to reflect current economic realities. New numbers have the annual ridership reaching as high as 43.9 million passengers, each paying between $52 and $123 each.

The result is a fiscally sound project that will attract and drive private investment, generate strong revenues and operate without any public subsidies, just as other high speed rail networks do throughout the world. 

“We have carefully constructed a business plan that is mindful of the economic and budgetary constraints facing both the state and the nation,” said Authority Board Chairman Thomas J. Umberg. “It will deliver to California and Californians a cost-effective, efficient, and sensible alternative to more highways and increased airport congestion.” 

The funding for the first piece of the rail plan, which will serve as the “backbone” of the system, has already been identified through federal funds and the voter-approved Proposition 1A. This initial Central Valley section is expected to create 100,000 jobs in the next five years. 

Board members, including new gubernatorial appointees Dan Richard and Mike Rossi, brought a seasoned business perspective to developing the plan, which outlines the future of the largest infrastructure project underway in the United States.  

“Our role was to incorporate a business perspective into the plan to prove that it is financially viable,” Richard said. “What we present today is the culmination of a lot of sweat and hard work to ensure that taxpayers are getting the best bang for the buck.” 

Part of the business plan was the High Speed Rail Authority’s sell: even at $90+ billion, it is still a bargain to update an infrastructure that would be stretched by our projected population growth. 60 million people are expected to live in the state by mid-century, and the Authority estimates say that without high speed rail California will need as much as $171 billion to meet its transportation needs.  That means an additional 2,300 lane-miles of highways, 4 runways, and 115 airline gates will need to be built. 

Each segment of the construction project will have its own value and independent utility, and depending upon the availability of funding, each segment will complement the previous one while augmenting existing local and regional rail networks in a cooperative and coordinated fashion. Regional rail systems in Los Angeles and San Francisco have been receptive to the idea of blending existing services with the new system. 

Additionally, no public operating subsidy will be necessary for the rail system. Like successful systems around the world, California’s high speed rail system will initially be built with public sector funds and when the system is operational ridership will drive revenues that, in turn, will attract further private-sector investment. 

To protect the taxpayers’ investment, the economic assumptions including inflation, cost of materials and ridership projections, included in this plan are realistic and conservative. The ridership projections have been rigorously tested by a peer-review panel of international experts. 

The new business plan is available online on the High-Speed Rail Authority’s website. The public will have 60 days to comment and help shape the final plan, which will be completed and provided to the Legislature in January 2012.