Monday, April 15, 2013

Blog Post Assignment #2- Jason Davies

Jason Davies
Finance 180
April 15, 2013

A recent issue concerning the Central Valley has been the increased discussion of constructing a High Speed Rail through Fresno and some surrounding areas including Madera, Fowler, and Hanford. The High Speed Rail is an initiative being pursued by the State of California to increase transportation infrastructure throughout the state. Voters have approved $10 billion worth of bonds to fund the project and Senator Jerry Brown believes that it will take an additional $55 billion to complete the project. This has some Californians’ strongly disagreeing with the project; however, we are also seeing strong supporters for the initiative as well. In this blog post, we will investigating both the pro’s and con’s of the project, from both the local and state viewpoints and then finally making a decision on whether or not the High Speed Rail will be beneficial to not only Fresno but California as a whole.
            The vision of the High Speed Rail is to provide travelers throughout the state a more efficient travel experience by providing a cheaper, faster, and more convenient way of using public transportation. If the HSR does end up being built, there will be over 800 miles of track ranging from as far north as Sacramento to as far south as San Diego, with up to a proposed 24 stations in between. The train can cover up to 220 miles per hour and get you from Los Angeles to San Francisco in less than two hours and forty minutes. The biggest impact the HSR will have in the area of real estate will be the revitalization of communities where stations will be built. You will also be able to see an influx of development in the surrounding areas. This could be a huge advantage for communities throughout the state, including Fresno. One proposed station is said to be in downtown Fresno, a place locals know has deteriorated significantly throughout the years. However, more recently, Downtown has seen an increase in spending and a concentrated effort to clean up the area. If the station is approved, Fresno could see a return of Downtown as a Central Business District and a shift back southwards from the more current, popular area of Northwest Fresno. Also, as a result of this growth, there will also be a growth in the job market. The California High Speed Rail Authority estimates that 100,000 jobs will be created each year of the project and as many as 450,000 jobs will be created as a result of economic development throughout the regions. The HSR will be self-sustaining itself over the life of the project because it will rely on so many different components of real estate activity i.e. lenders, developers, investors, contractors, suppliers, and the list only continues.
            The HSR will also have a huge effect on pollution and the environment. The California High Speed Rail Authority estimates that over 12.7 million barrels of oil will be saved after construction. They also estimate that greenhouse gas emissions will be reduced by 12 billion pounds a year. In a state where environmental control and standards reform has been at the forefront of political campaigns ever since the Energy Crisis, this makes the High Speed Rail a very attractive investment as well as an issue that many people can relate to.
            However, although there are several benefits that may result in the project, there are also several factors that may prove to its downfall. In order for the State of California to complete the project, it will have to exercise its right of eminent domain. According to a recent article in the Fresno Bee, a total of 356 parcels of land will be needed to complete the project, all of which they plan to have acquired by September of this year. After the most recent bid that has been placed, it was calculated that the cost from Avenue 17 in Madera to American Avenue in Fresno will be $35.2 million-per-mile, an absurdly high number. The original cost of the project was $6 billion but recently, Governor Jerry Brown believes it will take $68 billion to complete the project. On April 11th, Gov. Brown was in China trying to drum up investment and capital from foreign investors to reach this amount. The reason Gov. Brown is seeking this investment is because Republicans in Washington have recently threatened to cut-off funding for the project, stating it is unnecessary and too costly compared to the original amount of $10 billion worth of bonds that were initially approved to fund the project.  There is also a large amount of logistics that will need to be moved in order to meet the projects requirements, including moving a 2.5-mile stretch of Highway 99, a bridge over the San Joaquin river, and a tunnel under Belmont Avenue.
            This project has not been without some resistance from both California government agencies and locals. There are currently two legal actions being pursued and are currently pending in courts of law here in California. There is a case being heard Friday, filed by Farm Bureau agencies of Madera and Merced counties, the Chowchilla Water District and several other local organizations, that alleges the High Speed Rail Authority violated the California Environmental Quality Act in May of 2012. The second case was brought on by Kings Country and two local farmers who allege the rail authority’s plans are illegal under Proposition 1, the bond measure that funded the project and was passed in 2008.
            As you can, there are massive implications from the proposed construction of the High Speed Rail. It is clear that the construction will create things such as jobs and new developments that are vital to any economy. However, to what extent and what price are the people of California willing to take in order to receive the benefits? Outsourcing the investments may prove down the line to be more of a burden than a necessity that Gov. Brown believes it is now. At some point, Californians’ will be forced to make a decision, a decision that will have a huge effect on the future of the state and of Fresno.

Works Cited

"Project Vision and Scope." California High-Speed Rail Authority., n.d. Web. 15 Apr. 2013.

Sheehan, Tim. "High-speed Rail Bid Comes in Low." Fresno Bee 13 Apr. 2013, A1 sec.: A1+. Print.

Sheehan, Tim. "Rare Fresno High-speed Rail Board Meeting Packs Conference Room." High Speed Rail- N.p., 18 Mar. 2013. Web. 14 Apr. 2013.

York, Anthony. "Brown Wants China Aboard California's High-speed Rail Project." Los Angeles Times. Los Angeles Times, 11 Apr. 2013. Web. 14 Apr. 2013.

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