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Government & Politics

POLITIFACT: Have Costs Dropped 'Several Hundred Million Dollars' For California’s Bullet Train?

CAHSR-train.jpg
California High-Speed Rail Authority
/
file photo

Questions about high costs have dogged California’s high-speed rail project for years.

Now, leaders of the controversial bullet train network say some expenses are, in fact, trending downward. That led Capital Public Radio’s PolitiFact reporter Chris Nichols to check out the facts.

In recent weeks, the California High-Speed Rail Authority has faced criticism that it concealed higher cost estimates. Those estimates, if correct, could add $8 billion to the project’s $68 billion price tag.

Top executives at the authority, including CEO Jeff Morales, have said in subsequent letters and interviews that the figures in question were preliminary forecasts and that the $68 billion budget remains on track.

Morales took this a step further to say the rail authority is actually seeing some costs drop.

Morales said this at a press conference in Madera in late October, as construction crews worked on an early stretch of the railway.

Morales: "The actual (construction) contracts that we’ve awarded to date have come in several hundred million dollars below estimates. That’s the reality of where we are in the program."

For a project that’s so expensive, ‘hundreds of millions of dollars’ is a measly sum, at least in the big picture.

But because the CEO’s claim about costs dropping goes against the bullet train’s financial history, we decided to dig out the construction contracts, and do a fact check. A spokeswoman for the authority clarified that the Morales was referring to the project’s first two construction agreements, signed in 2013 and earlier this year.

Contract documents show the winning bids were a combined $480 million below the authority’s lowest estimates. That qualifies as “several hundred million,” which supports Morales’ statement.

However, that doesn’t mean costs will stay low.

Jan Whittington: "There’s always going to be something that either the project manager or the contractors themselves did not foresee in design that they encounter during construction.”

That’s Jan Whittington, a professor at the University of Washington who studies the financing of large-scale infrastructure projects across the globe.

Crews could hit harder rock than expected, find an endangered species or unstable soil along the route, all adding to the cost.

Whittington:" You don’t know how much it costs until they finish constructing it and it’s begun operating."

Steve Boilard heads Sacramento State’s Center for California Studies. He said Morales may technically be right about costs going down now. But he said he’s skeptical that will have any long-term significance, given the project’s huge funding shortfall.

Steve Boilard: "Still, with an overall cost of $68 billion, it just means that the hole that we’re in and having to find money, maybe is going to be a little bit less.”

In conclusion, the rail authority CEO worded his claim about costs coming down very carefully. He qualified it with phrases like “to date,” and “below cost estimates” that were generated by the authority itself.

For now, the authority’s documents back him up.

Yet, there’s context missing. Any implied cost savings is tenuous, at best.

As a result, we rate Morales’ claim Mostly True.

You can read full versions of all our fact checks at politifactcalifornia.com.

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