California has tons of empty land for new cities or to expand existing small cities, but you need to build an economy in the area to support it.

I know Merced has seen a lot of development recently due to the construction of UC Merced, providing the farming community with a secondary economic engine. There has also been a shift in gravity of the Bay Area south to San Jose due to the greater available land.

HSR should help smaller cities grow, as it provides Central Valley cities links to economically productive areas.