Business Update with Mark Lacter

High-speed rail

KPCC's business analyst Mark Lacter talks about the latest details on California's high-speed rail plan.

Steve Julian: On Tuesdays we talk about the latest business stories with Mark Lacter. Mark, does California's high-speed rail plan make economic sense?

Mark Lacter: You know that old saying in construction Steve: Good, fast and cheap - pick two? Well, I'm not sure they even have two when it comes to the bullet train.

Julian: At least there's 'fast'... in theory.

Lacter: Well, the project is going to take many decades to build, first of all, and the cost has already been jacked up from $40 billion or thereabouts to nearly $100 billion, and they haven't even broken ground. Gov. Brown says it won't cost nearly that much and that it'll actually be cheaper than having to build roads and airports in its place. But no one really has a clue on the price tag - other than it's going to be very high. The state auditor and Legislative Analysts Office have both raised a bunch of questions about funding, and given California's current fiscal problems, those are kind of hard to overlook.

Julian: All that aside, Mark, is it a good idea?

Lacter: That's the thing, whether in 30 or 40 years there's going to be a real need, not just a want, for high-speed rail between L.A. and San Francisco. Now, there's no question that a lot of construction jobs would open up if this thing went through - and along with those jobs could come economic development. So that’s good. There's also the argument about thinking big - that back in the 1950s, the state somehow found a way to build an efficient freeway system and the federal government built an interstate highway system that changed the face of the U.S. economy. That's a reasonable argument until you stop to think about how much easier it was in those days to complete public works projects like this.

Julian: Fewer hoops to jump through.

Lacter: You didn't have environmental regulations or legal challenges that could easily delay construction for years. A big difference. Look, the state's real transportation problems these days are within the large metro areas – L.A., Orange County, the Bay Area - and this project doesn't really address those issues. If anything, it takes away billions of dollars that would be better spent on smaller-scale projects closer to home. You just have to wonder about taking such an enormous bet on a single project.

Julian: So what transportation projects do make economic sense?

Lacter: Well, look at what's happening at LAX. The airport is going through a badly needed overhaul that includes expanding the Tom Bradley International Terminal. Here's an example of a project that was actually needed, not just wanted. The place is so short on space that they usually park the arriving planes well away from the terminal and passengers have to be bused into the airport - and then they first face long lines getting through Customs. It's a nightmare. The new facility will be twice the size of the existing terminal and nine of the 18 gates will be able to accommodate the Airbus A380 and the other over-sized aircraft that are used on international flights.

Julian: Anything that helps the morning commute?

Lacter: Maybe the biggest success story is one that doesn’t get much attention. It's called the Automated Traffic Surveillance & Control system, and at the heart of it are 18,000 magnetic sensors - they're embedded onto L.A. roads and they help adjust the timing of traffic lights when lanes are congested.

Julian: This is within the city itself?

Lacter: That’s right. It might not sound like much, but travel times drop by 15 percent near these signals, which isn't bad considering that they're just playing around with the lights. And there are hundreds of intersections that can be altered. The system actually got its start during the 1984 Olympics when there had been so much concern about gridlocked streets. It's already the largest system of its type in the country and city engineers are looking to fine-tune it even further. Just goes to show that there are innovative answers to the traffic problem that don't involve billion-dollar monster projects that might not even work all that well.

Julian: Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.


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