Surface Infrastructure

GAO reviewed the status of high-speed rail projects in the United States, focusing on plans for a high-speed rail link between Miami, Orlando, and Tampa. GAO found that because the Florida project is in the early stages of development, it faces uncertainties. It will be more than two years until enough information is available to comprehensively assess the project's cost, financing, ridership, and schedule. For example, the rail system's estimated cost--now pegged at between $6 billion and $8 billion--is uncertain because the project is only at a five-percent level of engineering design. At the same time, the ridership forecast relies on optimistic assumptions and could be overstated by 30 percent or more. To help pay for the Florida project's capital costs, the project's sponsors will seek a $2 billion federal loan from the Department of Transportation. Recipients of such funding must repay the assistance, in whole or part, from a dedicated revenue stream, such as tolls. Providing the Florida project with a $2 billion loan would constrain the Department's ability to fund other projects that are potential candidates for credit assistance. At least 11 other corridors in the Untied States are in various stages of developing high-speed rail projects. Unlike the Florida project, most of the other corridors have not determined their funding sources. Most of the corridors are in the early planning stages, but officials in Amtrak's Northeast corridor--between Washington, D.C., and Boston--have been upgrading their system for years, and officials in the Pacific Northwest corridor--between Vancouver, British Columbia, and Eugene, Oregon--have bought high-speed trains and plan to upgrade their tracks. Ten of the 11 corridor projects have preliminary cost estimates ranging from $315 million to $4 billion. In contrast, the California corridor project, which would use either very-high-speed or magnetic levitation technology, could cost as much as $29 billion.

GAO noted that: (1) because the Florida project is in the early phases of development, it faces uncertainties; (2) overall, it will be at least 2 more years before sufficient information is available to comprehensively assess the project's cost, financing, ridership, and schedule; (3) the project's current estimated cost ranges from $6 billion to $8 billion, however, the accuracy of the estimate is uncertain because the project is only at a 5-percent level of engineering design; (4) the finance plan, which relies heavily on debt, is incomplete, and the project's sponsors have secured only 5 percent of the estimated needed funding for the project; (5) the ridership forecast for the project relies on optimistic assumptions and could be overstated by 30 percent or more; (6) adjusting the forecast to reflect more conservative assumptions would reduce expected future system revenues and increase risks to the project's financial viability; (7) the project's ambitious schedule calls for the train to begin operating over a 320-mile route in 2005, but several factors will make it difficult to meet this schedule; (8) to help pay for the Florida project's capital costs, the project's sponsors will seek a $2 billion federal loan under the Department of Transportation's new Transportation Infrastructure Finance and Innovation Act program; (9) the Department anticipates issuing regulations and guidance for this program in April 1999 and has not yet funded any projects under the program; (10) under the Federal Credit Reform Act of 1990, the Department must consider a project's risk of default and estimate the cost to the federal government of the credit provided for each project funded through the program; (11) the Transportation Infrastructure Finance and Innovation Act provided a total of $530 million for fiscal years 1999 through 2003 to cover the costs of providing all selected projects with credit; (12) in order to cover the cost associated with a $2-billion loan to the Florida project, the Department may need to obligate over one-half of the program's $530 million; (13) providing the Florida project with a $2-billion federal loan would constrain the Department's ability to fund other projects that are potential candidates for credit assistance; (14) at least 11 other corridors in the United States are in various stages of developing high-speed rail projects; (15) unlike the Florida project, most of the other corridors have not determined their funding sources; and (16) these 10 projects have preliminary cost estimates ranging from $315 million to $4 billion.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Team: Phone: