“Contingent on sufficient, long-term funding,” CHSRA said, the plan “will achieve commercial success at the earliest possible stage, ensuring the system begins generating compelling economic return and maximizing the value of California’s investment.”
As part of the 2025 Supplemental Project Update Report’s “Letter from the CEO,” Ian Choudri wrote that over the past six months, CHSRA has “deliberated over input from stakeholders and the [California] Legislature and ha[s] systematically re-evaluated project design criteria requirements to right-size the program from the bottom up.” He noted that the Authority has “implemented difficult but necessary trade-off decisions to focus on the essential elements to deliver a high-quality, cost-effective rail system.” According to Choudri, the process included “[c]ompleting design reviews to minimize costs”; “[m]aking trade-off decisions for greater efficiency”; “[s]equencing construction and making funding go further”; and “[r]eviewing estimating methods for greater reliability (bottom-up).” (Download complete report below.)
In the 112-page report, CHSRA said that it has “$28.16 billion in capital funding, which includes an estimated $5.5 billion from Cap-and-Invest through 2030 and retention of federally awarded funds. The Governor’s Fiscal Year (FY) 2025 to 2026 budget proposal includes extending the Cap-and-Invest program through 2045 with at least $1.0 billion in annual funding for the Authority. This would provide at least $15 billion in additional funding for the program, bringing the Authority’s total capital funding to $43.16 billion … For purposes of this report, the Authority included the $4.0 billion in federal funding, currently the subject of litigation, as part of its total capital funding figures.”
This report proposes several potential scenarios to advance the high-speed rail program, including the work already under way in the Central Valley and beyond, to connect in the south to Northern Los Angeles County at Palmdale and in the north to the electrified Caltrain system via Gilroy. Cost estimates, funding needs, construction completion schedules, and ridership and revenue projections are included for each scenario:
- Scenario 1: Merced – Bakersfield (project under way): The Authority said it would complete, as required by statute, the 171-mile Merced – Bakersfield early operating segment. This segment is now estimated to cost $36.75 billion. “Through resequencing work, refining design criteria, and adopting innovative engineering methods, the Authority was able to offset $14.28 billion in cost increases, which is approximately a 30% cost-savings,” CHSRA reported. “Without the program reassessment, scope increases, inflation (bringing prices from 2022 to 2024) and added cost and contingency for the Central Valley would have increased the Merced – Bakersfield segment costs to approximately $51 billion. Despite these management improvements, there are new risks impacting cost estimates, including ongoing tariff and trade wars. … The 2024 Business Plan estimated the cost to deliver the Merced – Bakersfield segment at $35.3 billion at a confidence level of 65%. It’s important to note the 2024 Business Plan carried over numbers from the 2023 PUR [Project Update Report] without any updates.” The Authority said it is set to complete the 119-mile Central Valley Segment (CVS) currently under construction and the Merced and Bakersfield extensions “within the original schedule envelope and prior to 2033, with an updated revenue service start date of Jan. 1, 2032.” Recent ridership and revenue modeling, it said, shows 1.6 million to 2.2 million in ridership annually based on eight round-trips per day of high-speed rail only service. According to CHSRA, this service would generate passenger revenue of $39.28 million to $55.6 million; ancillary revenue (e.g., parking, retail, advertising, and broadband) is projected to be approximately $16 million to $34 million. The Authority noted, however, the operation and maintenance costs are forecasted to be between $120.6 million and $122.1 million annually. “These estimates indicate that this specific scenario would not achieve a positive profitable outcome as it would result in a recovery ratio of 45% to 74% annually,” CHSRA reported. “Based on these projections, the Merced – Bakersfield corridor operating as a stand-alone high-speed rail line with transfer connections to other rail services would not be able to cover its total operational expenses. The Authority will continue to explore contracting for service by a third-party, such as the San Joaquin Joint Powers Authority, which provides service in the Central Valley, as an alternative option. Assuming a baseline of at least $1.0 billion per year in Cap-and-Invest program funding through 2045, as contained in the Governor’s proposal, the Merced – Bakersfield segment will no longer have a budgetary funding gap. However, the Authority will need to work with the [POTUS 47] Administration and Legislature to solve the timing of future cash receipts with capital expenses to maintain its proposed schedule.”
- Scenario 2: Connecting San Francisco to Bakersfield (Gilroy – Bakersfield): This segment is estimated to cost $54.4 billion and would be operational by early 2038. CHSRA said it would sequence construction to leverage Central Valley infrastructure while extending the high-speed rail system north and west to Gilroy. “High-speed trains would continue to San Francisco, utilizing existing Caltrain infrastructure and a coordinated state solution to connect to the section from San Jose to Gilroy,” the Authority reported. “Construction can be started on this extension while work on the section from the Central Valley Wye to Bakersfield is under way. Direct high-speed rail service to San Francisco will have substantial ridership and revenue impact, providing the opportunity for commercial success, and based on feedback through industry engagement, would be a transformative opportunity to engage the private sector through potential public-private partnership (P3) delivery models.” The Gilroy – Bakersfield scenario includes building high-speed rail infrastructure to Gilroy and Bakersfield. This scenario would also rely on improvements between Gilroy and San Jose and on Caltrain electrification to run hourly through service to San Francisco, according to the Authority. The Gilroy – Bakersfield scenario is expected to attract ridership ranging from 8.71 million to 11.83 million, which would bring in $623.72 million to $882.93 million in passenger revenue each year; ancillary revenue is projected to be around $89 million to $196 million. Based on operating and maintenance costs of $419.19 million to $435.47 million, CHSRA said, the recovery ratio is estimated to be between 164% and 257%. “To help fund this segment, the state could re-sequence the Merced extension,” CHSRA reported. “These savings could be reallocated toward building the system to Gilroy.”
- Scenario 3: Connecting San Francisco to Los Angeles County via the Central Valley (Gilroy – Palmdale): The Gilroy – Palmdale scenario is estimated to cost $87.12 billion and would be operational in early 2038. “This scenario would increase the scale and impact of the system with a further extension of high-speed rail infrastructure to Palmdale,” CHSRA reported. “As with the second scenario, the Authority would leverage Central Valley infrastructure, extend the high-speed rail system to Gilroy, and rely on other improvements between Gilroy and San Francisco. Two hourly high-speed trains would operate from San Francisco to Palmdale, one as a limited-stop express. With the High Desert Corridor, one train per hour would continue to Victor Valley, where passengers could connect with Brightline West service to Rancho Cucamonga and Las Vegas. At Palmdale, trains could connect with a Metrolink/ Surfliner express service to Los Angeles and San Diego, transforming the system from a regional corridor into a truly statewide service.” With enhanced service and connectivity to both San Francisco and Los Angeles, CHSRA said modeling shows ridership would increase to 12.46 million to 17.94 million, “significantly increasing” passenger revenue to $1.1 billion to $1.6 billion annually; ancillary revenue is projected to be around $110 million to $254 million. The operating and maintenance costs would be between $602 million and $635 million, CHSRA said, resulting in a recovery ratio of 191% to 314%. “This revenue stream would be instrumental to the state’s efforts to fund and complete the full Phase 1 high-speed rail system,” the Authority noted. “To help fund this segment, the state could resequence the Merced extension. These savings could be reallocated toward building the system to Gilroy. In addition, there may also be opportunities to pursue mutually beneficial operational upgrades with existing rail operators—such as potential improvements along the Union Pacific corridor in the north and with Metrolink and LOSSAN services in Southern California—that could enhance current service for existing riders while creating infrastructure that the Authority could leverage in the future.”
CHSRA also generated financial outlooks for both Gilroy – Bakersfield and Gilroy – Palmdale that include construction of the full Merced extension. While ridership and revenue figures for each outlook are slightly higher, it noted, operating and maintenance costs increase more than revenue. With the delivery of the Merced extension under the Gilroy – Bakersfield scenario, the Authority reported that it expects ridership to range from 8.77 million to 11.91 million annually, which would result in similar passenger revenue of $626 million to $886 million; ancillary revenue is projected to be around $92 million to $202 million. Operation and maintenance costs, is said, increase to $441 million to $457 million, reducing the recovery ratio to between 157% and 246%. This segment is estimated to cost $58.1 billion and would be operational by early 2038. With the delivery of the Merced extension under the Gilroy – Palmdale scenario, the Authority said it expects ridership to range from 12.52 million to 18.02 million annually, resulting in similar passenger revenue of $1.1 billion to $1.6 billion; ancillary revenue is projected to be around $114 million to $260 million. According to CHSRA, the operation and maintenance costs increase to $625 million to $658 million, reducing the recovery ratio to between 186% to 304%. This segment is estimated to cost $90.85 billion and would be operational by early 2038.
The report outlines several opportunities for the State of California “to support the project, including stable, long-term funding, environmental streamlining, actions to address permitting and third-party coordination, and updates to state law to provide needed construction flexibility, among others,” according to CHSRA.
In the report’s conclusion, the Authority noted that it is “statutorily obligated to prioritize delivery of the Merced – Bakersfield segment and plans to do so unless otherwise directed by the Legislature.” Nonetheless, it said, “completing the Gilroy – Palmdale segment would provide statewide rail service to a majority of Californians and promises the highest return on investment for the state; and completing the Gilroy – Bakersfield scenario is a cost-effective way to achieve profitable commercial operations at the earliest possible opportunity with less additional funding needed.” The Gilroy – Bakersfield scenario, it said, ”would attract substantial ridership and generate positive net proceeds. A profitable operation could create considerable opportunities for engaging with the private sector through a P3 delivery model.”
With “more constrained state funding,” the Authority recommends the state “prioritize subsequent expansions to areas with greater population, ridership, and revenue potential—supporting long-term system sustainability.” CHSRA said its analysis “finds that extending the high-speed rail system northward to connect with the Bay Area offers comparative advantages—including strong origin-destination markets, significant potential to bolster ridership and revenue, and opportunities to capitalize on existing and planned infrastructure enhancements along the Caltrain corridor, including electrification, which has received substantial financial support from the Authority.” CHSRA efforts, it added, should “continue to build on strategic investments already made (Caltrain) while pursuing new, mutually beneficial opportunities with existing operators. This could include potential partnerships to advance Union Pacific corridor improvements in the north, as well as partnerships in Southern California with Metrolink and LOSSAN to support infrastructure upgrades that the Authority could utilize in the future. This approach benefits both the Authority and existing operators, along with the riders and communities they serve today, while laying the groundwork for future high-speed rail operations.”
“I see clearer now more than ever the potential for this transformational project, one that can reshape the state and our society for the better,” Ian Choudri said in the announcement of the report’s release. “I see a future—by 2038 to 2039—when operations are already connecting the Central Valley to population centers and innovation hubs, offering new career opportunities, economic mobility, affordable housing, and a cleaner environment. A system that is efficient, sustainable, and equitable. A system that connects us to each other and to the world around us.”
Further Reading:
- FRA Revokes California High-Speed Rail Funding, CHSRA Fires Back
- CAHSR: ‘Building a Dream’ to Nightmare?
- CHSR: USDOT Drives Another Coffin Nail
- New York Times Editorial: There Is a Liberal Answer to the Trump-Musk Wrecking Ball
- CHSRA to Release RFEI for Potential Public Private Partnerships
- CHSRA Provides 2025 Project Update Report
- Whither (Wither?) California High-Speed Rail (Reprise)
- Will Duffy Deep-Six CHSR?
- 2025 Passenger Rail Outlook: ‘Murphy Was an Optimist!’
