Hillel AronBy now, everyone knows that the second season of HBO's True Detective takes place in a town loosely based on the California city of Vernon, that little industrial town just to the south of downtown L.A. with a population of 112. But tucked inside the show's dense story lies another mini-plot plucked from reality: a scheme to make miiiiiiillions off of California's high-speed rail line, the nation's first, which just broke ground early this year.
Could such a plan actually work?
Vince Vaughn (in a truly wretched performance) plays Frank Semyon, a gangster trying to go straight, who owns a casino and a bunch of land near the Red Line. That is, until he sold that land to buy a bunch of other land near the state's high-speed rail corridor.
At a big meeting in front of what we can only assume are investors, Semyon lays it all out for us:
“So everybody knows that Proposition 1 has passed. And next year construction will start on a $68 billion high-speed rail up Central California. Undeveloped valley adjacent to the rail and the coastal highway has been purchased by several holding companies anticipating a commercial development that will be in line for hundreds of millions in federal grants. And… the feds… have guaranteed cost overages.”
There's actually a lot that's right here. California voters passed Proposition 1A in 2008, which directed the government to start borrowing money in order to build an 800-mile-long high-speed railroad, or bullet train, connecting Los Angeles and San Francisco. No one really knows how much it will cost, but the best guess is in fact $68 billion for Phase 1. So far, so good.
The land Semyon is talking about – “undeveloped valley adjacent to the rail and the coastal highway” – doesn't sound like anything that actually exists. The current high-speed rail route slices through the middle of California, kind of near the I-5 and far from the coastal highway, the 101. But let's forgive that, since this is a fictional universe.
The central question is, can you make money from commercial development along the high-speed rail route? According to USC public policy professor Lisa Schweitzer, the answer is a resounding yes.
“Whenever you invest in infrastructure, it always adds value to land,” she says. “The people who are really going to win are the people who are going to develop.”
A lot of the land near the bullet train line could actually go down in value. How would you like it if a 220 mph train hurtled past your house every 15 minutes? But the land near the railway stations is prime real estate to a developer.
Now, it's a very real question just what kind of development there will be near the stations. Gov. Jerry Brown and other high-speed rail boosters are advocating “transit-oriented development” – essentially tall, mixed-use buildings with retail space on the bottom and apartments on top. For example, there's a pretty lofty plan to turn San Francisco's Transbay Terminal into the futuristic-looking Transbay Transit Center, complete with a 5.4-acre rooftop public park.
But most of the station-adjacent projects will be far more mundane. Think parking lots and car-rental companies. High-speed rail, after all, isn't all that different from an airplane. After you leave the train, you still have to get around wherever you've arrived.
Credit: True Detective
But yes, Semyon's plan is a sound one: Buy land near the bullet train stations. Assuming he knows where the stations are going to be.
USC's Schweitzer says there are certainly businesspeople “lining up” to do similar deals right now.
So what about the development being “in line for hundreds of millions in federal grants”? And the feds guaranteeing cost overages (murmur, murmur, murmur)?
Total nonsense.
Yes, the feds did give California $3.8 billion in stimulus money for its rail project. But that was for building the actual rail line. Federal money for development would be absurd. You could imagine that a local government would give a tax break to some developer for building retail space or, more likely, hotels, as L.A. did with hotels downtown.
But the feds have bigger fish to fry than seeing a new Holiday Inn go up in Lancaster.
And guaranteeing cost overages?
“No way,” Schweitzer says. “They’re not going to guarantee overages to landowners. No one does that. Not even local governments, unless it’s by graft.”
OK, so True Detective's high-speed rail plot is a little ridiculous. But it still draws heavily on reality. For example, Schweitzer says that for years, high-speed rail advocates have been talking about casino owners privately developing high-speed rail routes straight to their casinos.
In fact, there's a possibility that private developers could build a high-speed rail line from Las Vegas to Los Angeles, connecting to the publicly owned high-speed rail in either Palmdale or Burbank.
Having casino owner Frank Semyon so hot to trot on high-speed rail may be a nod to reality.
“Clearly, whoever’s writing this show has been paying attention,” Schweitzer says. “That casino owner high-speed rail story has been around for a while.”
By the by, we reached out to the California High-Speed Rail Authority for comment. Turns out none of them are watching the show.
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