The "new" business plan is due to be released November 3rd.
It should be a watershed moment, but whether it is or not remains to be seen. Just a few more days. By watershed moment, Simitian must mean that if the rail authority keeps jerking the state legislature around with more meaningless double talk, as we found in prior business plans, they can and will cut off their funding.
That's a huge step for the Democrats who have defended this disastrous project in the face of overwhelming evidence of its inherent fatal flaws. The rail authority has already telegraphed some of its intentions with a recent report anticipating the business plan in which they finally acknowledge that private investors won't touch this project with a ten foot pole.
Furthermore, the rail authority already knows that there will be no further federal funding to keep construction going, once started in the Central Valley. So, they're already working on Plan B, which is to lay track usable, not by high-speed rail, but by Amtrak. That's not acceptable according to the authorizing legislation. Will it be acceptable to Simitian and his committee?
Then, there's the question of those fudged ridership numbers. If they don't reduce them, since they were found flawed, will Simitian put on the brakes to this project? Those numbers are critical. They either justify construction of this train, or if too low, won't and the project must stop. The current number of forecast riders, 39 million annually, is what the rail authority defends even though they are demonstrably unacceptable.
There are a lot of discreet issues on the table that the business plan must account for and do so legitimately.
‘Watershed’ moment for rail
October 26, 2011, 03:36 AM By Bill Silverfarb Daily Journal staff
The California High-Speed Rail Authority will release an update to its often criticized and recently delayed business plan next week that will include new projections on construction costs, ridership and passenger fares.
The business plan, first released in 2008, has been called flawed by the rail authority’s detractors for containing lofty ridership projections and unrealistic cost estimates.
“This is a watershed moment for high-speed rail,” said state Sen. Joe Simitian, D-Palo Alto. “After three years, the public is expecting some good answers to some obvious questions like what is the cost and how will it be paid.”
Multiple sources, including the state’s Legislative Analyst’s Office, has pointed to flaws in the authority’s original business plan.
“It lacked credibility from beginning to end,” Assemblyman Jerry Hill, D-San Mateo, said about the 2008 business plan. “Every estimate has been off, way off.”
If the update to the business plan is unsatisfactory, Hill said, it might be time to drop support for the project.
“If the project has changed drastically in scope and magnitude, then voters may need to revisit it,” he said.
The 2008 business plan assumes the entire system will be completed by 2030 and initially called for a four-track system to be constructed from San Francisco to San Jose at a cost of roughly $4.2 billion.
Simitian and Assemblyman Rich Gordon, D-Menlo Park, however, have called for a “blended rail” approach on the Peninsula that will minimize cost and reduce property takings through eminent domain.
Simitian is not sure if the updated business plan will address the blended rail request, which also called for the rail authority to scrap plans for an environmental impact report for the full buildout of the system on the Peninsula, which originally called for constructing a four-track aerial viaduct, soaring 60 feet above ground.
The blended system calls for high-speed trains to mostly share Caltrain’s current two-track system, with the addition of about nine miles in passing tracks to be constructed, likely south of San Mateo.
The rail authority requested the state Attorney General’s Office to determine whether the blended rail request is legal, based on Proposition 1A, the voter-approved bond measure that got the project off the ground.
The Attorney General’s Office has yet to respond to that request, however, Simitian said.
U.S. Rep. Anna Eshoo, D-Palo Alto, joined Simitian and Gordon in their request for a blended system, saying it will get high-speed trains into San Francisco quicker and at less cost than the full buildout of the system.
“It is a level-headed approach” that will bring down costs dramatically for the Peninsula section of the project, Gordon told the Daily Journal yesterday.
The 2008 business plan estimated the capital costs of constructing the 800-mile system from Los Angeles to San Francisco to be roughly $33.6 billion but that number has since swelled to past $43 billion and new estimates calculate the overall cost to be more than $66 billion and climbing.
Hill is hoping to see a “credible cost estimate” in next week’s update to the business plan, which was supposed to be released earlier this month but pushed back to Nov. 1, two days before the rail authority’s next board meeting in Sacramento.
Whatever the cost, Gordon said, the plan needs to show the public how the project will be paid for.
“If the project cost is $100 billion then they need to identify how to pay for it,” Gordon said.
The business plan was required to be put in place by the state before voters decided whether to approve a bond measure to fund the project.
With the passage of Proposition 1A in November 2008, Californians pledged more than $9 billion in bond proceeds toward the project based on information in the initial business plan.
The 2008 business plan targeted up to $16 billion in support from federal sources, up to $3 billion in local financial support and up to $7.5 billion in private sector money.
With private investment, there will be a trade-off, Gordon said.
“There has been lots of talk about private investment,” Gordon said. “But how realistic is it to secure private funding? No private individual is going to give us free money.”
The plan estimated, with ticket fares priced at 50 percent of airfares, high-speed trains would carry about 55 million trips in 2030 and generate $2.4 billion in ticket revenue, $735 million of that coming directly from direct trips from Los Angeles to San Francisco. The plan estimates that 4.8 million passengers alone will use the system annually between San Francisco and San Jose that will generate about $54 million annually for the rail authority.
Operation and maintenance costs are estimated to be $1.3 billion annually by 2030, according to the 2008 business plan.
But the state’s Legislative Analyst’s Office has pointed out many inadequacies and flaws in the business plan and its subsequent updates since 2008.
The LAO found the business plan to be at “risk of not realizing the forecasted ridership, revenues or costs” and that “federal funding expectations are highly uncertain.”
A report by the University of California Berkeley Institute of Transportation Studies also slammed the business plan as being unreliable and impossible to predict whether the project will be successful or lead to severe revenue shortfalls.
If the new business plan is unsatisfactory, it could effect the Legislature’s willingness to support the project, Gordon said.
“The Legislature is going to have to make some funding decisions next year,” he said. “If the plan flawed, the Legislature will not be willing to open the purse strings.”
Gordon chairs the Budget Subcommittee on Resources and Transportation in the Assembly and plans to hold a special hearing on high-speed rail funding sometime in November after the updated business plan is released.
The Nov. 1 publication of the business plan will commence a 60-day public comment period, which includes public meetings to be scheduled in November and December.
The authority currently has access to about $6.3 billion, enough to construct the first phase of the project in the Central Valley, with construction expected to get under way next year.
The state Legislature must approve the plan by Jan. 1, 2012. The plan will include new projections on construction costs, ridership and passenger fares. In another report expected next month, the authority also is supposed to identify the sources of money to build the system.
The California High-Speed Rail Authority board meets 10 a.m., Thursday, Nov. 3, City Hall, Sacramento, 915 I St., Sacramento.
Bill Silverfarb can be reached by email: email@example.com or by phone: (650) 344-5200 ext. 106.