Thursday, November 06, 2008

Approved: California High-Speed Rail (Prop 1A)

Californian voters have approved Proposition 1A (Yes: 5,072,778/52.1%, No: 4,661,366/47.9%) giving the go-ahead on the proposed High-Speed Train System linking all major cities in California.

The Proposition 1A authorizes the state to sell $9.95 billion in general obligation bonds to fund (1) pre-construction activities and construction of a high-speed passenger train system in California, and (2) capital improvements to passenger rail systems that expand capacity, improve safety, or enable train riders to connect to the high-speed train system. General obligation bonds are backed by the state, meaning that the state is required to pay the principal and interest costs on these bonds.This measure will cost the state about $19.4 billion, assuming 30 years to pay off both principal ($9.95 billion) and interest ($9.5 billion) of the bonds, which is equivalent of payments of about $647 million per year.

When constructed, additional unknown costs, probably in excess of $1 billion a year, to operate and maintain a high-speed train system. The costs would be partially, and potentially fully, offset by passenger fare revenues, depending on ridership.