Monday, December 12, 2011

Looking at financial, political, and legal issues of California High-Speed Rail, by Dan Walters

Dan Walters, who has no tolerance for political shenanigans, has been on the HSR case in California for a very long time. Given his state-wide influence and being based in the state capital, Sacramento, I'm assuming that most elected officials on both sides of the aisle pay attention to what he has to say.

Here's he's pointing out the domains of challenge for HSR; financial, political and legal.  I would suggest that the third of this triage is the consequence of the first two.  The rail authority has been playing fast and loose from the beginning, manipulating the public with endless dissembling, distortions, and disregard for the truth. 

We have frequently discussed the financial dilemma of HSR in California: it costs too much to develop and operate, will require subsidies which are legally forbidden, won't carry the inflated number of riders and therefore insufficient fare-box receipts, no predictable source of funding from Washington, and no further capital development funds from the other hoped-for sources, local, state and private. 

The train's operation will not generate surplus revenues and will cost somebody -- the state?? -- subsidy dollars forever.  The bond issue funds, it turns out, will, when all spent, cost California over a billion dollars annually.  That's the financial picture and it's not pretty.

The political picture is, shall we say, gloomy at best.  Even HSR's Democratic friends are going to be leaving the burning barn soon enough. The project was purely political from the outset.  There was never an honest intention to confront the realities of public mass transit in this state.  It was always about politics and money.

And then, lawsuits.  There have been several suits, including some that the court found were not "ripe," or, shall we say, were premature.  Now there is one lawsuit that strikes at the heart of the problem.  What the CHSRA intends to build is, allegedly, illegal.

That is, they want to build a section of track that is not allowed within the authorizing language of the legislation (it's not for high-speed trains!!!). So, the lawsuit asks that the court rule on this, and deny the rail authority the bond issue funding that they claim they are entitled to.

There will be other lawsuits as well.  There's more than enough blame to go around.  Blame that on HSR arrogance and having been squeezed between a rock and a hard place.  The people hired to build the train are managed by non-technical politicians who have their own agendas, these often conflicting with the engineering common sense and HSR experience of the contracting construction specialists who must give the client what they want. Everyone wants to save this project to save their own jobs and their political careers.

This project is so conflicted, with so many agendas, that it has been doomed from the start.  And that's why the basic premise of this blog is that this project is not actually about transportation, transit, or trains, including high-speed trains.  It's about all the politics and ulterior motives, all driven by the possible availability of massive funds, that energizes most of the supporters.

Therefore, terms like White Elephant, Boondoggle, political pork, and earmarks have been liberally applied with considerable accuracy.

Dan Walters: Legal traps could stop California's high-speed rail project

The California High-Speed Rail Authority has an obvious financial problem as it seeks to build a statewide bullet train system.

Its latest "business plan" says that it would cost nearly $100 billion to build the backbone of the system, but so far it has only $9 billion in state bonds and a little more than $3 billion in federal money.

The CHSRA also has a political problem.

The Legislature, which first proposed the bullet train bond to voters, is turning sour on its prospects, which means that it may not give the agency any more bond money to spend.

Meanwhile, the latest Field Poll says that voters are now strongly inclined to derail the bullet train.

Finally, the CHSRA has a knotty legal problem.

To make the project more palatable to voters, the Legislature included restrictions and guarantees in the 2008 bond ballot measure, such as a ban on operating subsidies and requirements that financing be lined up and environmental clearances obtained before construction begins.

The ballot measure's fine print is now fodder for lawsuits and criticism from the Legislature's budget analyst.

As laid out in the business plan, the analyst says the project – especially construction of a 130-mile test segment in the San Joaquin Valley – may be illegal.

"Proposition 1A identifies certain requirements that must be met prior to requesting an appropriation of bond proceeds for construction," the analyst's office says in a report to the Legislature. "These include identifying for a corridor, or a usable segment thereof, all sources of committed funds, the anticipated time of receipt of those funds, and completing all project-level environmental clearances for that segment.

"Our review finds that the funding plan only identifies committed funding for the ICS (San Joaquin Valley segment), which is not a usable segment, and therefore does not meet the requirements of Proposition 1A. In addition, the HSRA has not yet completed all environmental clearances for any usable segment and will not likely receive all of these approvals prior to the expected 2012 date of initiating construction."

Meanwhile, Kings County, through which that track would run, has filed suit alleging that the bond issue requires construction of "an electrified system" and the initial segment would lack electrification, thus making it usable by conventional diesel trains.

That "independent utility," as it's called, is a requirement of the federal grant, but appears to run counter to the bond issue's requirement.

The suit alleges other violations of Proposition 1A, the 2008 bond measure, including the "usable segment" issue raised by the legislative analyst.

Dan Richard, a member of the CHSRA, said that the legal objections are invalid, but as they proliferate, they may prove that a ballot measure written to ease construction of the bullet train actually made it impossible to build.

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