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If the proposed California HSR project is built for $40 billion, as claimed by Al, the cost to finance the project (capital and interest) over 30 years, assuming a weighted average cost of capital of 5 per cent, which may be low, will be $178.7 billion.  Few projects of this magnitude come in on time and within budget, so the actual cost of the project could be considerably higher. Amtrak has an unamortized investment in right-of-way and property of $8.4 billion.  It also has $4.4 billion of accumulated depreciation on the books.  Although the financial statements don't show how much of this investment was for the Northeast Corridor, it is probably fair to say that 75 per cent of it is worn by the NEC.  This means that Amtrak's cost to upgrade the NEC was in the neighborhood of $9.6 billion, which squares with several other estimates that I have seen. Although the NEC covers its operating costs and contributes something to the fixed costs, the fare box does not cover the fixed (capital) costs of the NEC.  To cover the total costs of the NEC, Amtrak would have to raise its NEC fares well above the cost of flying or driving. The California HSR project, which could cost 18.6 times the cost to upgrade the NEC, will probably never cover its operating costs and its capital costs.  It will probably require large government subsidies forever.   It will be a perpetual drag on California and federal governments.  Those who are enthusiastic about the California HSR project might want to keep a few points in mind.  California has a $41 billion budget shortfall.  In 2008, California's venture capitalists invested more than half of their resources outside of California, whereas before hand they had invested more than 50 per cent in California.  What is the reason?  The business community is turning sour on California because of high taxes.  How sour?  Colorado has launched a series of ads inviting California businesses to relocate to Colorado where the tax burden is lower.  Apparently they are getting a significant number of takers.
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