In a recent Monocle interview posted this past Sunday, Richard Tolmach of the California Rail Foundation gives the California High Speed Rail Project (CAHSR) a 50/50 chance of happening.

Weighing in its favor is the sheer size of the regional air market between the Bay Area and Southern California, the largest in the country. This makes the project attractive to investors. But the current route alignment sets it at a potentially insurmountable disadvantage to both auto and air travel.

“Over the last number of years, there has been some land speculation in various places, so the line goes via a slightly odd route that is 100 miles longer than the highway. So high-speed rail starts with a handicap,” explains Tolmach, in terms of being “competitive with the energy utilized [per trip] and with the cost of driving and air travel.”

“There is a 50 percent chance it won’t happen, because the CAHSR Authority will expend all of its planning money before they can package a project that’s workable.”

According to Tolmach, some Japanese and European companies (Kawasaki, Bombardier) are interested in bringing their own funding sources, subject to a significant project redesign that would make the capital costs more affordable and the overall system financially viable to operate.

Indeed, Tolmach’s assessment of the project’s main design flaw underscores the tension between the public mission of the high-speed rail project – to serve as an economic development tool that will connect the struggling Central Valley  to urban job markets – and the private imperative to maximize profit if the project is to attract a sufficient amount of capital to move forward.

In mid-June, when Curbed LA reported on a price chop at Dogtown Station, a 35-unit loft development at 700 Main Street in Venice, 17 units were still available. Today, that number has dropped to 12, an absorption rate of approximately one unit per month, which seems fairly typical for the market and product type.

But apparently not quick enough, because in the last week, the entry price has been lowered to $819,000 for a second-story flat of 1,383 sq. ft. (or $592 PSF).

I actually interviewed with the developer, Bob D’Elia, back in January 2008, as an internship-seeking graduate student. At the time, I had produced a mock pro forma for Dogtown Station, estimating its construction costs, revenue from condo sales, IRR, and presented it at the interview.

D’Elia was impressed by the accuracy of my estimate for sales revenues, $41.3 million, which took into account both pre-sales and the planned release of remaining units at escalating price points. With the development totaling 57,869 sellable sq. ft. (excluding common and outdoor areas), that translated into an average sale price of approximately $714 PSF. D’Elia would not verify the accuracy of my cost estimates but boasted of a project IRR in excess of 20%.

Overall, this newest price point, $819,000, represents a 17% decrease (on a PSF basis) from the early 2008 peak average…without counting the additional incentive of a 36-month lease on a new 2010 Toyota Prius with the purchase of any unit (valid until December 31st).

Dogtown Station has lowered its price and and is offering an additional buyer's incentive.

Assuming a 2010 Prius base sticker price of $23,370 with monthly  lease payments of $341, this incentive is worth around $13,000 by my calculations, meaning that the effective price PSF is closer to $583, or about 19% off the original ask. This percentage drop is, perhaps not coincidentally, in the zone of the developer’s originally projected IRR, which means that Dogtown Station may have hit rock bottom in terms of the price decreases its investors can absorb before erasing profit margins entirely.

Parking rates are going up in Santa Monica.

The City of Santa Monica just voted to raise parking fees at its public garages along the Promenade, after a  study concluded that “extra revenue is secondary to the money that City Hall and property owners would save if they don’t have to acquire land and build new garages. Instead, they need to better manage what exists,” according to the Santa Monica Daily Press.

This conclusion sounds practically ripped from the pages of Donald Shoup’s 800+ page tome, The High Cost of Free Parking. A professor of urban planning at UCLA, Shoup has inspired legions of fellowers, who have evidently invaded the ranks of city planning departments, particularly on the West Coast.

If you do not have the time to read Shoup’s book, simply memorize his most oft-repeated recommendation: to price public parking competitively with the hourly cost of private garages such that at any given time, 15% of the spaces are vacant and available for those most willing to pay.

Santa Monica’s decision to boost parking rates, rather than interpret its lack of peak-hour parking as a mandate to build additional garages, may be just the latest evidence of Shoup’s growing influence, at least in progressive circles.