Wednesday, March 31, 2010

The possibility of High Speed Rail in Colorado…

I read the “High Speed Rail Feasibility Study; Executive Summary” and believe it was thorough and offered a great argument for Colorado citizens to consider. There are always major concerns with a project of this size and scope but these were the three major concerns I would want addressed:

• Federal involvement
• Funding
• Passenger Commitment

As I read the price tag I understand the instinct to involve federal dollars but why should New Yorkers pay for our high speed rail? Why would the federal government be involved beyond any right of way issues concerning federal land? There is no constitutional authority or responsibility of the federal government to support this project. If we are going to determine this is the right thing to do, then we in Colorado should do it. If we can’t figure out a way to pay for it, we should not do it.

Funding $21 Billion dollars is not an easy task but it is a 5 phase approach. The first phase (DIA to Denver to Colorado Springs) is approximately a $3.3 billion investment. It is also the most travelled route, and according to the study, will start generating operating revenue upon completion. This could be used toward reducing the need for debt for the additional 4 phases. Funding should be through the issuance of state bonds and a bidding process for operating the rail by a private entity should include payment back to the bond holders and a “dividend” to the tax payers of Colorado into a fund (preferably a private education fund) determined by the people through the legislature. If this is a viable and profitable project, the bonds would be paid back by the revenue collected from operations. We should have private corporations bid for the operations and include the amount of “dividend” they would be willing to pay for the contract to operate the railway corporation. The process would need to be designed to open up the operation of the railway to competitive bids every 5 years. Otherwise it could become a temptation for unscrupulous politicians and corrupt contractors. If private companies believe it can turn a profit, are willing to put their money where their mouth is, and the right safeguards are put in place, I could be convinced to ask the taxpayers to be collateral for the project.

The feasibility study makes the assumption that passengers will utilize the system at the necessary volume to support the investment; at 35₵ a mile. The fares are reasonable but not cheap. The service and convenience will need to be top notch to maintain passenger commitment to utilize the railway. We all know that people are fickle, and in order to meet financial projections the railway will have to operate with a strong profit incentive. We cannot expect a government bureaucracy to run anything of this magnitude efficiently. We can’t create another post office scenario. We need “stock” holders running the railway with an incentive to make money. Once the bonds have been paid back, the private corporation would need to be Colorado based and pay a continuing “dividend” to the taxpayers of Colorado. I don’t have details of the financial arrangement, but any framework needs to include ownership by the private sector with a commitment to the citizens of Colorado. The ownership, as in a stock held company needs to be able to make a profit and pay dividends. In the feasibility it must also be proven that private companies believe it is worth the effort to be involved with this project.

I believe in the free market system and would prefer a private company invest in the project because they believed it was a viably profitable enterprise. But I understand that taking on a project like this is a huge risk in the private sector. With the amount of land acquisition and regulation whirling around this project I would never put my personal money into it without certain guarantees.

A project of this size and scope is an opportunity and a risk for the state. That is why it needs free enterprise incentives tied to the operation and ongoing maintenance of the system. If the citizens of Colorado supported this measure at the conceptual level, I would work to create the details necessary to enable the public to benefit from the private sectors ingenuity and efficiency.

I know we could live very nicely not having high speed rail in Colorado as well. I love my car and the freedom it provides but I drive to DIA enough to know if I could get there in the same time, in comfort, have a drink in the bar car, and do some work on my laptop, for a comparable price to driving, without a subsidy from the tax payer, I could be convinced. It is worthy of consideration at the state level but the deals off if we need to include the federal government.

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