Edit: Even the news article hints at 5 inch floppy disks...which makes 1998 make absolutely no sense to me at least.
https://abc7news.com/san-francisco-train-system-has-been-run....
My family's first PC in 1987 had a hard disk. The Wikipedia quote they provide lines up with that, and provides a more authoritative point of when it was introduced.
And yeah, the "5 inch floppy" quote paired with a photo of a diskette. God only knows what actual hardware the system uses. But point being … the journalist doesn't seem to have found out.
And of course we can get into the discussion of cost: floppies are way cheaper than hard drives, especially for the presumably-small amounts of data that are needed for such a control system. A 500MB hard drive was probably overkill.
I am of course speculating, but I don't know why we should assume that the engineers working on the project originally made a silly decision. They almost certainly weighed the available options to deliver the project within the defined constraints of the system.