Monday, June 20, 2011

"California HSR officials contend with"-- richly deserved -- "criticism."

Here's an article about the criticism of high-speed rail in California. You already know the bias since it's from Progressive Railroading.  However, none of the critics are identified or quoted.  Actually, the only person quoted in this article is Jeff Barker who is paid to promote the CHSRA, for which he works, and the HSR project.

Our article author neglected to cite the criticisms themselves and we only hear how Jeff defends and justifies the ongoing challenges of the rail authority. 

To be fair and balanced, the author could have quoted the language of the Legislative Analyst's Office, the State Auditor, the State Inspector General, or even the rail authority's own peer review committee (which Chairman Pringle shut up by stating their relationship would be continuous and ongoing; that is, not a qualitative performance review.)  Those have been major sources of the criticism with which HSR officials have had to contend. 

This is like not having the Prosecutor at a trial by jury.  We only hear the Defense attorney's summation.

That means we will have to respond paragraph by paragraph to the construction of the situation as provided by our friend Jeff and the author of this article who interviewed him.

June 2011    
California HSR officials contend with criticism

As the U.S. Department of Transportation (USDOT) addresses high-speed rail program funding, uncertainty and criticism at a national level, many states are dealing with the issues at a local level as they work to advance planning and construction on various projects. And no state has been on the receiving end of more funding — and more critiques and complaints — than California.  [The author is telling us here, in case we should miss it, that California is the most worthy of all states, having been blessed with more funds than any other state by the Transportation Department.  Could it be that this is a very Democratic state?]

When the USDOT redirected Florida’s high-speed funds in May, the department awarded $300 million to the California High Speed Rail Authority (CHSRA), bringing the total federal commitment to California’s HSR project to $3.5 billion. CHSRA is matching the funds with state dollars, raising the total money available for the project to $6.3 billion.
[Two times $3.5 billion is seven billion. Why only $6.3 billion with the match? Is the rail authority holding back $700 million of state bond funds for any reason? Is there a back-up plan?]

CHSRA will use most of the funds to launch construction on the backbone of the 800-mile system in the Central Valley between Bakersfield and Fresno. Launching construction in the Central Valley makes the best use of the money that’s available for HSR construction, and meets the requirements attached with the stimulus dollars, authority officials believe. [We've forgotten that the FRA selected the CV as the start against the wishes of the CHSRA Board, since that's where Democratic Congressman Jim Costa's district is, and we do know that this project is about distributing federal pork. If it hadn't been for those additional stimulus dollars, Costa could have lost his seat to a Republican.]

CHSRA has gotten a lot of flak for its choice because the Central Valley is much more sparsely populated than other metropolitan areas. However, at this point, the Central Valley segment was the only one that made sense, says CHSRA Deputy Director Jeff Barker.

“If you put a couple billion [dollars] into a system between San Francisco and San Jose, you have regional commuter rail — which, by the way, already exists there,” he says. [And indeed, Jeff, no further passenger rail service is therefore needed on that section. Running HSR on an already existing commuter rail service is sheer redundancy.]

“People ask why we don’t build L.A. to Anaheim? Well, it’s only 30 miles and then you’re not building high-speed rail. You’ve got a small commuter-rail line that people won’t ride in great numbers, that’s not profitable and not long enough to reach high speeds.”
[If it doesn't do what Barker is describing, then what's the point about going to Anaheim at all? This train has always been advertised as a HSR connection between SF and LA.  Anaheim got into the picture only through political maneuvering.  It's a spur of 30 miles and has no bearing on the main route.  It's even off the eventual route to San Diego.  There's no transportation reason for it. Can you spell P.O.R.K.?]

Instead, CHSRA will focus on building nearly 150 miles of initial track, then extending it to 200 or 250 miles as more funding becomes available. Once the first segment is complete, CHSRA can build the line out to the north and south to connect with other major metropolitan areas. [So, they are going to begin to build HSR where very few people are, and wait for further funding in order to build it where lots of people are. And, if no further funding is available? The newly built and useless Central Valley HSR corridor will be the biggest White Elephant in this Circus!]

“You’ll never have high-speed rail in California if you can’t connect north to south and in order to do that, you need that huge piece of infrastructure through the Central Valley,” says Barker. [He is speaking in tautologies. Another way of saying what he's quoted  here is, "we can't connect north to south unless we connect north to south." Jeff is nothing if not logical and rhetorically skilled.]

For CHSRA officials, it has been (and will continue to be) key to stick to their plans and not succumb to local pressures to build the system in a different location — and to take the time to make sure it’s done right.  [Whatever they do, the rail authority must not listen to the people of California when they register concerns about the train; that would screw up all their careful plans, which they are improvising constantly. By the way, what does "done right" actually mean?]

“People have an urge to see something now. But it’s going to take more money and more time, and it will require people to be patient and keep the larger vision in mind,” says Barker. “We’re trying to resist the pressure to show some immediate results because anything immediate and short term is not going to support high-speed rail overall.”  [Nobody is asking for "immediate results." Nobody.  Some of us are asking for no results at all. And, saying this will take as long to build as the Pyramids suggests that, with or without funds, this HSR bureaucracy is carving out a position for itself that will be around forever. The CHSRA intends to be a permanent fixture in Sacramento.]

Private eyes
But for CHSRA to achieve its larger vision, the authority will need tens of billions of dollars in additional funding — federal dollars included. The uncertainty surrounding the near- and long-term prospects for federal funding don’t affect CHSRA’s “day to day,” but it could impact the private sector’s willingness to pony up funds to help California build its sprawling system, says Barker. [Until now, we were re-assured that private lenders were standing in line trying to give away their money to build this train.  Now it turns out that unless the federal government pays for the whole thing and guarantees investment returns, "it could impact the willingness" of those generous private lenders.]

“It’s a little bit ironic because there are a lot of people, especially in Congress, saying they want private-sector participation, but private firms right now are seeing volatility and political strife, and that’s not an environment in which the private sector will want to participate,” he says. [What's that?  "volatility and political strife" is the problem that keeps private lenders away?  I thought it was the lack of a state revenue guarantee for those lenders.]

That’s why it’ll be critical for Congress to create a program to fund high-speed rail on an ongoing basis. And as long as the private sector is confident the federal government will pony up more funds for HSR development, there are plenty of firms interested in securing a stake in California’s project. [Jeff likes the expression "pony up." Unless the federal government ponies up, the private lenders won't. In other words, we taxpayers are on the hook for re-paying the interest and principal on all those loans which the government must guarantee. That's a very crooked card game.]

In March, CHSRA issued a request for expressions of interest, seeking feedback from private companies that wanted to participate in any and all aspects of the state’s HSR project. The authority received more than 1,000 responses, about two dozen of which said they were interested in helping to finance the system, Barker says. [Wow, Jeff. 24 out of 1,000 say they are interested in financing the system?  What are the other 976 interested in?  And, what kind of a deal did those 24 ask for?  Government guarantees? The fact is that all the HSR related industries in the world are licking their chops over the anticipated billions of dollars. I would be really worried about offers to finance the system, as Jeff says.]

During the past several weeks, CHSRA has been meeting with some of the companies to discuss financing specifics.

“We’re probably going to do an RFQ in summer and that would be the beginning of the procurement process, so we want to make sure that when we do go to bid, we do it in a way that works for people and allows the most companies possible to bid and compete,” says Barker. “We want to know what conditions would make this most palatable to them, seeing how large of a bid package companies can handle to determine if we should bid out all $6 billion or break it into much smaller pieces.”

[You will note, whenever your read California HSR articles about going out for contract bids and financing the system with private investors, the two are always intertwined.  Why is that?  My understanding is that a construction contract requires that the government cover the costs of the contract.  Indeed, that is required in the authorizing legislation. The required funds must be in hand before construction can begin. 

I would want a very sharp eyed accountant to look at any contractual relationship where the construction company or manufacturer of required materials also lends the government capital to cover the costs of such contracts. I can imagine a contract whereby the government of California owes billions of dollars annually to some Chinese or French corporation, forever.]  

CHSRA plans to begin seeking bids in early 2012.

by Angela Cotey, associate editor

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