Recently, an article appeared in a publication called The Hill and, much to the dismay of Texas Central, it highlighted several (but not all) of the flaws with the Dallas Houston HSR. Texas Central was obviously not happy and a response appeared within days from Texas Central’s Holly Reed. Below are the “facts” being claimed by Texas Central and our responses to those claims.
Introductory claim by Ms. Reed: “As developers of this private project, Texas-based Texas Central fully supports an open conversation with all parties about the high-speed train.”
Nothing could be further from the truth. Texas Central will not release the following information: feasibility studies, ridership projections, fare estimates, data supporting construction cost estimates, construction schedule, parking plans, security plans, amount of land needed, business plans or models, current amount of available financing, source of financing, and expected income. The list goes on and on. Texas Central won’t present a representative to answer questions under oath. Texas Central redacts its legal arguments being used to hide information. Texas Central deftly avoids simple, point-blank questions at its “open” meetings. Texas Central files petitions with federal agencies seeking exemptions from railroad regulations, and doesn’t notify anyone. Texas Central also hides and deletes questions and comments from concerned citizens on all its social media channels.
For Ms. Reed to open her piece with this gross, blatant misrepresentation, while at the same time attacking the integrity of reporter Crystal Wright, is journalistic hypocrisy at its finest.
“Fact #1: As nearly every major newspaper in Texas has reported, the high-speed train will create 40,000 jobs for its four-year construction – in Texas, not Japan as the blogger stated.”
Newspapers are merely reporting the information Texas Central tells them. This does not make what Texas Central tells them any more fact than fiction.
In slide presentations, to the press, and before the Surface Transportation Board, Texas Central has claimed that the Project will create 40,000 jobs in Texas. Texas Central has also claimed that the the Project will spur billions in economic benefits and tax revenues to Texas. Ms. Reed makes similar claims in her attack piece. In support of these bold claims, Texas Central has repeatedly cited to a report created by Insight Research Corporation, a consulting firm based in Allen, Texas.
Multiple media outlets, including the Houston Press, have asked for a copy of this report. So has TAHSR, on multiple occasions. But Texas Central won’t release it. The question to Ms. Reed is, why won’t Texas Central just release the report, if it says what Texas Central claims it says? Why all the secrecy?
“Fact #2: Texas Central will comply with all existing state laws and regulations protecting property owners. Contrary to the blogger’s assertions, Texas Central’s recent filing to the Surface Transportation Board did not request that any landowner protections be changed or removed.”
Under Texas law, private property cannot be condemned unless there is a public use, a public purpose, and a public necessity for the project. Texas Central, a private, for-profit entity backed by Japanese money, has not proven any of these elements. Nor has Texas Central proven it is a railroad, or been granted approval to construct. Texas Central hasn’t even chosen a final route.
Yet, Texas Central has asked the Board, a federal agency, for permission to start condemnation proceedings now, through a no-notice, sneak attack petition for “clarification.” In it, Texas Central says it is willing to “accept the risk” that it “may acquire property rights in locations not ultimately identified as the final alignment.” In other words, Texas Central wants to condemn land and force landowners to hire an attorney and expensive appraiser even though it may turn out the land being condemned is not needed for the project. Given that Texas Central has asked the Board for this relief, which if granted would strip landowners of their ability to protect their private property rights in Texas state courts, how can Ms. Reed say with a straight face that Texas Central is not requesting a “change” or “removal” of “landowner protections”?
In addition, the legislative grant of eminent domain power in Texas is strictly construed in two regards. First, strict compliance with all statutory requirements is required. Second, in instances of doubt as to the scope of the power, the statute granting such power is “strictly construed in favor of the landowner.” Texas Central is asking the Board to ignore this Texas law, which is in place to protect Texans’ private property rights, just so it can meet undisclosed deadlines promised to its Japanese partners. Does Ms. Reed think this is fair?
“Fact #3: Texas Central, a private company, will not take taxpayer grants for construction or take any public money to subsidize its operations. And, under Texas law, it is illegal to bail out a private-sector company. Suggesting that taxpayers will be “left holding the tab” is simply false. All risk falls to the private investors in this project, not the state or taxpayers.”
Texas Central has been trying to wordsmith its way around this “private money only” issue for quite some time. Let’s consider each of Ms. Reed’s claims independently.
First, Ms. Reed claims Texas Central “will not take taxpayer grants for construction…” Well what about government-backed loans, which Texas Central has admitted on numerous occasions that it will aggressively seek? If Texas Central defaults on these loans, taxpayers will, in fact, be “left holding the tab,” despite Ms. Reed’s claims to the contrary.
Second, Ms. Reed claims Texas Central will not “take any public money to subsidize its operations.” But what about public money to subsidize construction? Why is she being coy?
Third, Ms. Reed claims “under Texas law, it is illegal to bail out a private sector company.” What about under federal law? Remember, Texas Central is asking the Board, a federal agency, to take jurisdiction over the project. And we all remember the federal government bailing out the big banks. If the Board takes jurisdiction over this project, the federal government (not the State of Texas) may well have to bail out this impending financial disaster too.
Finally, Ms. Reed claims, “all risk falls to the private investors in this project, not the state or taxpayers.” How can this be if Texas Central has admitted it will rely on government-backed loans? Taxpayers will be at risk.
If Texas Central wants to put in writing it will not seek government-backed loans for the construction or operation of its project, then it should just say so. And if it wants to claim only private investors will be at risk, show us proof all the necessary financing is in place, through private means. Otherwise, Ms. Reed and Texas Central should stop trying to be tricky with their words.
“Fact #4: As the STB filings clearly state, Texas Central has committed to the STB that it will not take possession of any property through condemnation proceedings until the final certification of a passenger route has been approved.”
Whether or not Texas Central takes possession of any property before construction is approved is beside the point. Ms. Reed purposely ignores the fact if Texas Central gets it way, landowners will be forced to hire attorneys and go to court to protect their property rights, even though their property may not be needed for the project. For obvious reasons, this is not the way it works in Texas, which is exactly why Texas Central is asking the Board to “clarify” this issue. In short, Texas Central wants the Board to change, not clarify, the way it works in Texas. This is clearly an abuse of the eminent domain process, plain and simple.
“Fact #5: Texas’ high-speed rail has been designed since its inception to maximize ridership, giving travelers a new transportation choice between two of the nation’s largest population and employment centers. The blogger’s claim that Texas Central “admitted that high-speed rail in the US is unprofitable,” is wrong or it wouldn’t be being building this privately funded system.”
It does not matter what Texas Central’s high-speed rail “has been designed” to do. What matters is whether there is sufficient ridership demand in the relevant market—travelers to and from Dallas and Houston. And on that point, Texas Central has yet to provide any evidence to back up its projections, while actively resisting TAHSR’s efforts to obtain this critical information. On the other hand, in its reply to Texas Central’s exemption petition, TAHSR completely shredded Texas Central’s fantasy four-million-a-year ridership projection, using objective, verifiable data and supporting evidence.
On a related note, Texas Central’s main Japanese partner paid for a 273-page feasibility study that analyzed the project’s feasibility and ridership demand. Of course, Texas Central won’t release this study to the public either.
Ms. Reed also claims Texas Central wouldn’t be building this project unless it was going to be profitable. If this is true, then why won’t Texas Central release its business plan, or show the public how it is that Texas Central plans on making money? As it stands, Texas Central doesn’t even know how much a ticket is going to cost.
The bottom line is Texas Central has not released any evidence explaining how it will be able to operate at a profit. In contrast, TAHSR showed through its own analysis and that of Dr. John Harding, Former Chief Scientist for the Federal Railroad Administration, that the project is going to be a complete financial failure, operating at a quarter-of-a-billion-dollar deficit per year.
With all due respect to Ms. Reed, where is Texas Central’s analysis? Where is its data? Where are its numbers?