[env-trinity] Governor’s train a better deal than his tunnels, Feds say

[Tom Stokely]

Also see http://valleyecon.blogspot.com/ 
http://www.centralvalleybusinesstimes.com/stories/001/?ID=32424

Governor’s train a better deal than his tunnels, Feds say 

STOCKTON 
April 10, 2017 2:13pm    
•  Treasury Department skips twin tunnels for its short list of major U.S. projects•  “It amazes me that anyone still believes public officials who say the tunnels can be built without substantial taxpayer funds” 
The controversial high-speed rail system that is one of Gov. Edmund Gerald Brown Jr.’s “legacies” he hopes to leave to Californians is actually a better deal for taxpayers than the governor’s other legacy project: massive twin water tunnels in the Delta, says a federal report.Both projects have lined up only a tiny fraction of their probable cost, although construction has started on the bullet train project in the Central Valley.In creating a list of significant transportation and water infrastructure projects that have been proposed but face challenges to completion, the U.S. Treasury Department has identified 40 transportation and water construction proposals, says economist Jeffrey Michael, director of the Center for Business and Policy Research at the University of the Pacific.He says the Treasury Department is looking for projects that would have high economic benefits relative to their costs. The high-profile tunnels project clearly hits all the screening criteria to have its benefits and costs evaluated for consideration for the list, Mr. Michael says. The screening criteria are:• Significant (defined as more than $300 million• Estimates of capital and operating costs, and a basis for estimating benefits• Completed a portion of environmental review• Could be at least partially completed within 10 years• Face a challenge to completion (technical, environmental, funding, etc.)Mr. Michael says that is a list of criteria that the governor’s proposed twin tunnels “passes with flying colors.”But wait. The Delta Tunnels are conspicuously absent from the final list of recommended projects, Mr. Michael notes.Why? Mr. Michael quotes from the Treasury Department report:"The study team selected those projects for the final list which had significant net national or regional economic benefits based either on estimates of costs and benefits that had already been calculated using acceptable methods or on interim project outputs that could be converted to estimates of costs and benefits. Projects in the final list were chosen based on their net economic benefits.... "“While I may have been the first, it is increasingly clear that I am not the only analyst to conclude that the [governor’s tunnels project] has a lousy benefit-cost ratio,” he says. Three California projects did make the final list of 40 recommended projects: The high-speed rail; HOV express lanes throughout the Bay Area freeway network, and Sutter Basin flood control improvements.“Yes, it is true that high-speed rail has stronger economic justification than the Delta tunnels, although its financial viability is equally questionable,” Mr. Michael says.However, Mr. Michael notes that the tunnels do make another list, this one by consultants for the Trump transition team. He says it looks at project financing, most notably its revenue potential for private investors, rather than its overall economic benefits and cost. The governor’s tunnels make this list of 50 priority projects, “but it is notable that the assessment finds that it needs a large taxpayer subsidy. The consultants estimate that user revenue is only sufficient to pay 50 percent of project costs, in sharp contrast to a decade of statements by the state and water contractors that they would pay 100 percent of the projects costs,” Mr. Michael says.The governor’s tunnels project has yet to issue a draft financial plan, Mr. Michael notes, “and they suppressed their own economic consultants assessment that the project required a large taxpayer subsidy.”If they are ever built, Mr. Brown’s two tunnels – each so tall and wide that light planes could fly through them without touching the walls – would suck comparatively clean water out of the Sacramento River before it could flow into the California Delta. This water would be piped underground for about 35 miles to the State Water Project and federal Central Valley Project for resale to growers in the San Joaquin Valley and urban users in Silicon Valley and Southern California.The governor’s tunnels proposal is essentially an underground version of his voter-rejected Peripheral Canal of the 1980s.Mr. Michael offers the list of the five California projects that made the transition team list, along with their estimated construction cost and the percentage of the costs that could be paid by facility users.• I-405 Improvements, $1.9 billion, 50 percent.• Veterans Health Research Institute, $1 billion, 90 percent.• Cadiz Water, $250 million, 100 percent.• Huntington Beach Desalinization plant, $350 million, 100 percent.• The governor’s tunnels, $15 billion, 50 percent.Mr. Michael points out that the tunnels’ economics “are much worse than desalination (frequently criticized for high costs) and it appears the transition consultants agree.”“It amazes me that anyone still believes public officials who say the tunnels can be built without substantial taxpayer funds. While it has taken a long time, the media and the public are slowly catching on. And now it appears that infrastructure consulting firms working for the federal government, who have a strong incentive to promote mega-infrastructure projects, recognize that the project cannot be financed as claimed by project proponents and that the overall economic justification is lacking,” Mr. Michael says.
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://www2.dcn.org/pipermail/env-trinity/attachments/20170412/a01e3208/attachment.html>