Tuesday, January 3, 2012

Yet another body-blow to the California High-Speed Rail Authority

The good news about California's high-speed rail just never stops.  Here's more news from the legally required and government appointed Peer Review Committee, which has oversight responsibility (but not authority) over the project.  

They just issued a report today and don't like the the financial picture for this train; it doesn't add up.  They don't want the project to be funded any longer until and unless this financial future for the project is made clear. And, we already know that's not possible.

The question I keep asking is, where is the tipping point?  At what time, with how many critical and negative reports, will enough legislator/decision-makers have no choice but to say enough -- stop?  

The rail authority's peer review committee has commented previously about the progress of the rail authority and was surprisingly sharply critical at that time.  Now, with a draft of the most recent business plan and funding plan in hand, the committee asks that the project no longer be funded by the state; that is, it should be shut down. 

This comes on the heels of revelations in the papers that all those job promises were false; that there will be far, far fewer jobs created by this project than the rail authority wishes us to believe.  

Then, there's the matter of the legal requirement of "independent utility" which means that what the rail authority intends to build first in the Central Valley -- a set of tracks not suitable for high-speed rail -- can be used by Amtrak's passenger rail service. 

It turns out that Amtrak hadn't been consulted about this and believes it is not in their interest to use those tracks. Therefore, we all are the butt-end of more of the rail authority's fabrications.  That is, they intend to build around 100 miles of useless train tracks for the princely sum of over $6 billion. That's not what we voted for or what we want.  They don't care.

Then, there's the matter of actual construction cost forecasts which, at last calculation by the rail authority in their draft business plan, jumped to $100 billion, almost three times as much as the voters were promised in 2008 when they voted for the rail authority's bond measure. Some believe, including me, that it will actually be far more expensive than that if indeed they ever get this project built.

In short, lies piled up upon lies. When the bond measure passed in 2008, almost no print media opposed high-speed rail in California.  Since then, there have been State Senate reports, Legislative Analysts' Office reports, Inspector General's reports, State auditor reports and now the next iteration of the Peer Review Committee report.  All critical. 

The LAO office recommended shutting the project down some months ago. Now, the print media have caught up with the truth about the project. And more papers, daily, are presenting their editorial positions in opposition to the project, calling for its termination.

One tiny, little, other matter.  After the '08 elections, the rail authority no longer argued the facts, such as they are, but relied on the stand-by of, "the voters have spoken, they want this train."  For the rail guys, nothing else needed to be said.  Well, that's completely turned around now since a recent Field Poll determined that a clear state majority of the voters no longer support this train and if they had another opportunity, would vote against it.

There still are critical "hold-outs."  The State Governor, for one.  The hon. Perez and Steinberg, respectively leaders of the Assembly and the Senate, both Democrats, for another.  Needless to say, the Obama Administration and its minions, like Ray LaHood also are desperate for this project to proceed, at least through the November presidential elections.

How much more do they need to know before they too realize that, no matter how you bend it,  two plus two equals four?

My colleagues are all exited about this new Peer Review report.  Being an irascible, cantankerous curmudgeon, I'm not.  I'll get exited when the state legislature decides to cut the funding off, and obliges the Governor to go along with it.  That's when my green light will go on. Until then, it stays red.

Here is the conclusion to the Peer Review Committee Report:
In this report, we have discussed a number of considerations under which the Funding Plan and the Business Plan can be improved. Some of these suggestions can also reduce project risk and improve financial feasibility. We do not discuss a number of additional comments on the draft 2012 Business Plan that have less bearing on the feasibility of the project or the reasonableness of going ahead. 
With this said, we cannot overemphasize the fact that moving ahead on the HSR project without credible sources of adequate funding, without a definitive business model, without a strategy to maximize the independent utility and value to the State, and without the appropriate management resources, represents an immense financial risk on the part of the State of California. 
Until a final version of the 2010 Business Plan is received, we cannot make a final judgment on the Funding Plan. Therefore, pending review of the final Business Plan and absent a clearer picture of where future funding is going to come from, the Peer Review Group cannot at this time recommend that the Legislature approve the appropriation of bond proceeds for this project. 
If you should have questions regarding the Group's comments, please do not hesitate to contact me. 
Will Kempton Chairman California High-Speed Rail Peer Review Group 


Panel: High Speed Rail Plans Not Fully Cooked
January 3, 2012, 2:54 pm • Posted by John Myers

A panel of independent reviewers says that without more certainty on funding and operations, any start to construction of a high speed rail system "represents an immense financial risk to the state of California."

The new report is further proof that 2012 will be the most important year yet in the debate over the ambitious but costly bullet train system.

The report was issued Tuesday by the California High Speed Rail Peer Review Group, a panel of experts created by legislative action in 2008 to take an independent look at the ultimate plans crafted by the state's High Speed Rail Authority.

And while the group admits that it still doesn't have the information to render a final judgment, it doesn't seem to like what it's seen.

"Absent a clearer picture of where future funding is going to come from, the Peer Review Group cannot at this time recommend that the Legislature approve the appropriation of bond proceeds for this project," says the eight page report signed by panel chairman Will Kempton.

The report takes aim at both what's known and what's not known -- which means it will no doubt offer fodder for both critics and skeptics around the Capitol.

For starters, the peer panel points out the high risk to beginning construction in the Central Valley, a portion of track it says would not be electrified and no "independent" functionality if the entire north-to-south system fails to materialize.

The panel also rejects comparisons with major infrastructure projects from the past, like the U.S. interstate highway system or airports. "These programs were supported by authorizing legislation that had a dedicated funding source primarily dependent on user fees," they write.

From there, they raise additional concerns about the chances of finding the total amount needed, now pegged at about $98 billion:

The fact that the [high speed rail authority's] funding plan fails to identify any long term funding commitments is a fundamental flaw in the program. Without committed funds, a mega-project of this nature could be forced to halt construction for many years before additional funding could be obtained.

The panel is also critical of the number of decisions being made by the state-run authority and not left to the future actual operators of the train system; the ridership projections, which it calls "unverifiable"; and the estimates of the actual costs, which include complicated and costly blending with existing urban light rail systems.

On that final concern, the panel notes that the high-seed rail draft business plan offers no high/low range for the initial construction segment in the Central Valley, just a flat $6 billion estimate. "Given that there has been no construction experience at all, and considering the fact that the route is not yet fully defined, this appears unreasonable in itself."

Again, it's important to note the caveat -- namely, that the panel says a finalized business plan from the California High Speed Rail Authority will help answer some of the big questions. But with critics of the project now coming at it from all directions -- cost, feasibility, planning, routing, and more -- the new report will no doubt stir the simmering pot of questions about whether the Legislature should sign off on selling state bonds, bonds which will ultimately be paid back by the taxpayers through the state's general fund.

Update 3:49 p.m. Statement from Roelof van Ark, CEO of the High Speed Rail Authority" "It is unfortunate that the Peer Review Committee has delivered a report to the Legislature that is deeply flawed in its understanding of the Authority's program... As someone involved in many of the successful high speed rail programs internationally, I can say that the recommendations of this Committee simply do not reflect a real world view of what it takes to bring such projects to fruition."

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