Wednesday, April 18, 2012

Can the California High-Speed Rail Authority be sued for "breach of contract fiduciary duty?"

My colleagues are very concerned that the Chairman of the CHSRA, Dan Richard, lies.  He keeps insisting that the train, once it operates between San Francisco and Los Angeles, can make that trip in 180 minutes. Indeed, this is a legal requirement as stated in the authorizing legislation, Proposition 1A and AB3034.

What if, in 2040, when the train is finally, actually operating, it can't make that time, but will take six hours instead?  Who will still be alive to send to jail over this? In other words, who gives a damn?  Certainly Dan Richard and the CHSRA don't.  They are lying about this as about everything else.


What they can't lie about is the money.  They don't have it and they won't get it. And, of course, they won't admit it. But, it has become crystal clear that the many billions necessary to built even a skimpy, bare-bones version of what they promised and the voters voted for, will not be available. 

They have many cute ways of saying this in their Business Plan, "By implementing the program in phases, work can be matched to available funding."  Translation: Spend if you got it. There won't be any more.

Let me put this as bluntly as I can. High-Speed Rail in California, as has been described for over a decade, will not be built, not now, not ever. Even though the federal government; that is, this Administration, has provided what it called "seed money" to build this train, it remains an "unfunded mandate."  That means, the government wants the train build, but won't and can't pay for it.

That brings us to the bottom line. The rail authority, the state governor, and the Legislature must know what I am saying. This train will never be built because there will never be the money to build it.

So, what's going on? Lots of lying to keep what money there is, flowing.  The Governor wants the federal dollars in the promised amount of $3.3 billion.  He also wants to tap into the Proposition 1A state bond funds for as much as he can get away with.  That's it. That's what this project is really all about.

The rail authority says that all big projects have to start one small piece at a time.  But don't worry, the money will keep on coming, only later.  PULEEZE!

It's not about building a high-speed train.  When Chairman Dan Richard talks nonsense such as that this project will solve California's future transportation needs, it's OK to laugh at him for such snake oil.  He doesn't actually mean it.  He's supposed to pretend that this train project is the panacea everyone in California has been waiting for. 

Meanwhile, what he and his boss, the Governor, are waiting for is the money.

You Can’t Build High Speed Rail with No Money

By Joel Fox
Editor of Fox & Hounds and President of the Small Business Action Committee

Wednesday, April 18th, 2012

The Legislative Analyst’s “concern” that funding is not available for the High Speed Rail (HSR) comes at the same time that the federal government – a source counted on for HSR funds — appears to be turning against the High Speed Rail.

Yesterday, the subcommittee on Transportation under the Appropriations Committee of the United States Senate put a hold on HSR federal funds for the 2013 fiscal year. Ken Orski, editor and publisher of Innovation News Briefs, which follows transportation issues on Capitol Hill, says the full committee usually follows the sub committee’s recommendations.

Orski stated,  “The Democrat-controlled Senate Transportation Appropriations Subcommittee, which usually marches in lock step with the White House, has disallowed all of the Administration’s FY 2013 request for high speed rail ($4 billion).  

Of the total $1.75 billion federal rail budget, the Senate Subcommittee has allocated  $1.45 billion for Amtrak and $100 million for the High Performance Passenger Rail grant program to assist  with the improvement of existing intercity services  and multi-state planning initiatives.  

The House appropriators, of course, have never intended to vote any money for HSR in FY 2013, but the Senate action puts an end to any hopes that a House-Senate conference might provide even a token amount for high-speed rail in the FY 2013 federal budget.”

So where is the money going to come from for California’s High Speed Rail project?

The new HSR plan says two-thirds of the revenue will come from the Feds. With a Senate Subcommittee taking a similar attitude as the Republican controlled House that seems unlikely.

Private funding? That was part of the original plan. However, private funders want to feel there is a chance to make a profit. If you consider the High Speed Rail Committee’s constantly shape-shifting proposal as a poorly conceived business plan, investors would be foolish to take the risk.

Could HSR pay largely for itself with ridership fees? The estimates on ridership on the HSR have been laughable from the beginning – and that’s being kind.

What about the governor’s plan to use fees generated by the greenhouse gases law, AB 32, for subsidizing the HSR?

Such a move is legally questionable. If such a move were attempted a lawsuit over taxes, fees, and the voters right of approval would probably be filed. The idea may also violate the dictates of AB 32. The Legislative Analyst noted that the HSR effect on greenhouse gases would take an extremely long time and would not be within the required timeline required by AB 32 for greenhouse gas reduction.

If all these funding alternatives fail that leaves the taxpayers.

In 2008 when the HSR bond was on the ballot, voters were told the project would cost $33-billion; that private funds would rush to the project; that annual ridership would equal the population of a number of states – all promises that now appear false.

Polling indicates the voters have changed their minds about supporting HSR.

The taxpayers should not be on the hook for this project. While the legislature is likely to postpone the decision on the HSR to study the facts, legislators should also consider Senator Doug LaMalfa’s proposal to give the voters another chance to vote on the idea.

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