Wednesday, December 7, 2011

In 2008, California voters were not told the truth about High-Speed Rail

There have been many omissions and commissions noted in the Proposition 1A and AB3034 legislation and are now coming to light.  That the voters were misled has become common knowledge in California.  The high-speed rail promoters sold their ballot measure with distortions, omissions and lies.

One of the lies, or, if you will, seriously misleading statements, regards whether subsidies would be required. Ostensibly, the law had made it quite clear that they were not allowed.  In order to come into being, the train would be obliged to be able to cover it's operating costs with fare-box receipts.

Well, it turns out that this is not entirely correct, and the legislation may be "confused."  Subsidies are disallowed, and this would also prohibit financial guarantees by the taxpayers (which would kick in if the operating costs were higher than the ticket sales).   That point is ignored when the rail authority also states that there could be no private investment -- which is demanded by the legislation -- WITHOUT those government guarantees.  Those guarantees would be required by any private investor in order to assure a. no losses of principle, and b. an interest return on the loan.  

Which means that the rail authority legislation writers (with the approval of the Legislature) tried to have it both ways.  They assured the voters that there would be private investors, and that there would be no government guarantees.  Those are mutually exclusive, or to say it plainly, those are lies.

All this information was incomplete in the legislation, but was indicated clearly in the 2008 business plan.  Oh, yes, also, the legislation -- AB3034 --  specified that a business plan was due in September, prior to the November elections. However, the rail authority successfully dragged its feet and did not release their completed business plan UNTIL AFTER THE ELECTION.  That also is illegal.

That is to say, the rail authority knew damn well that in order to obtain private investment, they would need what the law would not allow, guaranteed investment returns for such private investments. 

Completely misled, the voters voted, a. for assurance that there would be private investments to supplement federal and state funds, and b. that there would be no further tax-based state funds required of the taxpayers beyond the $9.95 billion bond issue, including no subsidies and therefore, investment guarantees. That was double-talk. It was lying.

Is that fraud, or not?  I suggest it is and that there should be an investigation, indictments, and perp. walks for all those involved in this fraud.

Bullet-train P.R.: Biggest scandal of all is hiding of key fact in 2008
Posted on December 6, 2011

The stories over the weekend about the heavy public relations spending by the California High-Speed Rail Authority have inspired fresh ire and dismay over the CHSRA. The coverage offers more evidence of the religious zealotry with which supporters pursue their boondoggle. After a half-dozen independent assessments trash the project, they remain convinced that their biggest problem is poor PR. Yet the far bigger PR scandal dates back to 2008 — when a crucial but devastating fact about the bullet train’s  business plan was held back from California voters until just after they’d narrowly given the OK to spend $9.95 billion in public funds on the project.

People who have followed the bullet train fiasco as it has unfolded are aware of the sharply critical independent evaluations of every facet of the project, and with the horrible public image the rail authority now has in Silicon Valley and the Central Valley because of the klutzy ways it has operated. They also have seen coverage of how the bullet train was promoted for years with myths about ridership, ticket cost, economic value, environmental benefits and so much more.

But what has never been emphasized nearly enough is that the boondoggle isn’t solely a familiar government scandal involving wasteful spending. Instead, it appears that the rail authority didn’t just exaggerate and oversell its project. The public record suggests that its execs and P.R. people may have actually broken a state law when they kept a crucial fact from voters in 2008.

This is from the Oct. 9, 2008, S.F. Chronicle:

A group opposing Proposition 1A, the high-speed rail bond measure, filed suit against the California High Speed Rail Authority on Wednesday for failing to release an updated business plan by a Sept. 1 deadline.

“A more clear violation of law is hard to imagine,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association said in a press release. His group filed the suit and is opposing the measure.

The suit seeks a court order mandating the report be produced “as required by law.”

But authority officials say that’s impossible – and that the association knows that.

Legislation signed by Gov. Arnold Schwarzenegger on Aug. 27 required the updated business plan but authority officials said they wouldn’t have money to work on it until the state passed a budget, and estimated it would take 45 days to complete. The budget was signed on Sept. 23 – 85 days late.  …

Authority spokeswoman Kris Deutschmann said most of the contents of the plan have already been made public, but they need to be compiled and updated – a process that will be completed within weeks. That could be before or after the Nov. 4 election, she said.

So the contents were known, and this missing of the deadline was of little import. Really? All Californians had heard was happy talk, especially a ballot description that was so ridiculous that it prompted a state appeals court to rule the Legislature could no longer draft ballot descriptions.

When the business plan finally was released — days after the election — it was full of happy talk. But it also had one paragraph that could have turned the election had it been widely publicized (the bolding is mine):

In the spring of 2008, the Authority issued a Request for Expressions of Interest (RFEI) as an effort to gauge private sector interest in participating in a P3 arrangement for the high-speed train project. Interest was strong, especially among construction firms, system and equipment providers, financial institutions and operators. 
However, most private firms responding made it clear that they would need both financial and political commitments from state officials that government would share the risks to their participation. The amount of private funding and timing of private sector participation will be a reflection of how risky the private sector perceives this project overall.

Shared risk equals commitment to provide public funding — i.e., taxpayer subsidies — should ridership or revenue come up short. That’s illegal under Proposition 1A. And that is what the business plan for the project contemplated all along — except voters weren’t told about it until days after giving their blessing (and $9.95 billion) to the project.

So while the current scandal over heavy PR costs plays out, the bigger picture must not be forgotten. The bullet train was built on dishonesty from the start, when voters were told they’d never have to give another dime to the project — even as train planners and executives knew taxpayers would have to “share risks” going forward to attract the billions in private investments needed for the project to come to fruition.

This fish didn’t just start rotting recently. It began rotting in 2008. Hence the current stench.

This entry was posted in Media watch, TMOAB (The Mother Of All Boondoggles) by cbreed99. Bookmark the permalink.

No comments: