One of the Lawsuits Against the California High-Speed Rail Authority: by Mark Powell

You better read this, slowly and carefully.  It explains a lot of what the rail authority intends to do, and why it's illegal. These are Mark's words, taken verbatim from his web-site, not mine.  It means that there is still some hope that justice will prevail.  I hope that he's right.

See: http://againstcaliforniahsr.com/

Martin

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FARMER’S LAWSUIT AGAINST RAIL AUTHORITY AND LAWLESS STATE GOVERNMENT MOVES FORWARD

POSTED ON OCTOBER 8, 2012 BY MARK

“We cannot expect people to have respect for law and order until we teach respect to those we have entrusted to enforce those laws.”    Hunter S. Thompson

Following the appropriation of rail bonds by the state legislature this past July, the California High Speed Rail Authority (CHSRA) began adding highly paid executives to its staff and embarked on a spending spree to advance the rail project.  Against the formidable forces of the state stand two Kings County farmers, their lawyer, and the Law.

CHSRA was chartered in 1996 [Note 1] and tasked with “preparation of a high-speed intercity rail plan similar to California’s former freeway plan and designate an entity with stable and predictable funding sources to implement the plan “[emphasis added].  In spite of failing at this task for 16 years, the Authority now seeks to begin construction early next year in what the farmers’ lawsuit contends is in violation of the voter approved Proposition 1A ( “the Law”).

The farmers’ lawsuit, moving forward in the Superior Court of Sacramento with a trial scheduled for mid-2013, contends CHSRA, Governor Brown, and other state officials have acted lawlessly in their actions leading up to the appropriation of the rail bonds this past July and seeks to constrain the state and its officers to acting within the law when they write the required updated funding plan prior to actual release of the rail bonds.

The gist of the farmers lawsuit is that Proposition 1A requires (1) the high speed rail system be built in usable high speed rail segments “suitable and ready for high speed train operation” [Note 2 ], and (2) a certified funding plan be written showing commitments for all funds needed to complete the usable segment and a schedule for receipt of those funds [Note 3 ].  Furthermore, Proposition 1A makes no provision for funding the partial construction of a usable segment.  Yet that is exactly what the state and its agencies are planning to do in the Central Valley.

The farmers’ complaints concern the two funding plans mandated by Proposition 1A.  The first funding plan was a requirement needed to obtain “appropriation” of bond proceeds into the state budget [Note 4].  The second funding plan, with criteria very similar to the first plan, is required prior to “committing” any bond proceeds to begin construction activities [Note 5]. The plaintiffs’ case makes the following points regarding the lawlessness of a planned expenditure of $6.1 billion to build 130 miles of non-electrified track though the Central Valley.

Funding Plan Deficiencies

• “The absence of electrification, HSR-compatible signaling, and any electric trains whatsoever, means that the Authority cannot possibly make the MANDATORY CERTIFICATION (in its funding plans) that the 130 miles of Central Valley track will be suitable and ready for high speed train operation “.

• “Proposition 1A does not permit the building of a “partial” usable segment; nor does it permit a “phased approach”, that is, building first a 130 mile conventional rail system, with a HSR system to follow at a later time; such a “phased” system is not permitted under Proposition 1A; yet plaintiffs allege that this is exactly what defendants intend to approve, authorize, and illegally expend bond funds upon” when they approve the second funding plan.

• “In its April, 2012 Revised Business Plan, the Authority describes its version of its “usable segment” (the Initial Operating Segment or IOS) as running from Merced to the San Fernando Valley, a distance of about 300 miles.  The “first part” of that so-called usable segment is the 130 mile conventional rail portion from south of Merced to north of Bakersfield [Note 6], and the intent of defendants is that $6.1 billion will be spent on that conventional rail section (which is not itself a usable segment).”

• “For the usable segment identified by the Authority, running from Merced to the San Fernando Valley, the defendants have no funding committed or available to ensure completion of that segment.  The defendants indicate that the entire 300 mile section from Merced to the Los Angeles Basin (San Fernando Valley) will cost an ADDITIONAL $20 BILLION*, on top of the $6.1 Billion for the 130 miles of conventional rail that will initially be built within the 300 mile segment.”

*The number is misstated in the lawsuit on the low side.  The actual number is $25.3 BILLION. [Note 7]

• “Plaintiffs allege that there is no funding committed, available, or in place, for that entire 300 mile segment.  There is no private funding, no further federal funding, and no state funding that is, or can be, committed to this entire 300 mile segment.” [Note 8]

• “The ‘adequate funding’ requirements of Proposition 1A, perhaps the most important of all the restrictions, will therefore be violated if funding is permitted for the 130 mile project from the proceeds of Proposition 1A, and the entire 300 mile Central Valley project is therefore ineligible for Prop.1A funding, due to the lack of the additional $20 Billion in funding needed to complete the last 170 miles.”  [Note 9] [Note 10].

• “Plaintiffs further allege that the allegations of this paragraph concerning inadequate funding and violations of Proposition 1A are supported by numerous studied analyses by respected state agencies, including the LAO [Note 11] and the State Auditor’s Office [Note 12], and by the Peer Review Committee.”  [Note 13]

To all this the state counters that the 130 miles will be usable by Amtrak.  In an even flimsier justification, the Legislative Counsel advised democratic State Senators Simitian, Lowenthal and DeSaulnier  that the 130 miles of track might be deemed suitable and ready for high speed rail service because the only component being built , the rail component, is being built to high speed track specifications.  In other words, it will be suitable and ready when electrification is added, trains are purchased and it is finished. [Note 14] All three senators read this opinion and then voted against appropriation of the rail bonds.

Environmental Clearance Deficiencies

• “Plaintiffs allege that it was ILLEGAL for the Authority to approve (the first) Funding Plan in advance of required environmental approvals [Note 15] and certifications and that it was ILLEGAL for the authority to submit said Funding Plan to the Legislature, and that it would be illegal for defendants to authorize or approve any funding for the Central Valley project from Proposition 1A bond funds.  The Central Valley project is accordingly INELIGIBLE for Proposition 1A bond funding/financing.”

Travel Time of 2 Hours 40 Minutes from LA to SF

• “Plaintiffs allege that documents from defendant Authority (recently produced pursuant to a public records request) indicate that the trip will take a minimum of three hours (express) and longer with local stops.  Defendant Authority has further indicated that it has no written documentation whatsoever to support their claim that the trip will be made in 2 hours, 40 minutes.”

• This is in clear violation of Proposition 1A [Note 16] and precludes funding of the Central Valley project from Proposition 1A bond funds.  The Central Valley project is accordingly INELIGIBLE to receive Proposition 1A bond funding by reason of this violation.”

Illegal Expenditures are Already Occurring

• “The Authority has already begun sending Requests for Proposals (RFP’s) to contractors/subcontractors in order to obtain bids from such entities for the CONSTRUCTION of the first portion of the Central Valley Project; more than $900,000 of public funds has already been spent by the Authority in connection with preparation of those RFPs.  These RFPs are directly related to CONSTRUCTION work on the Central Valley project to be bid on and performed, and are thereby capital expenses for construction-related work . Such construction-related expenditures  are an illegal expenditure of Proposition 1A funds that has ALREADY OCCURRED.”  Such Proposition 1A funds cannot be committed or expended until the second funding plan has been issued and approved. [Note 17]

• “In connection with its construction program, the Authority has committed/obligated itself to reimburse, in an amount up to $2 million each, the bidding costs of any qualified contractor which is unsuccessful in its bid for the contract. Alternatively, in the event the Authority cancels that RFP, each qualified bidder will be reimbursed its costs in preparing its bid up to $2 million each. Defendant Authority has made an IRREVOCABLE FINANCIAL COMMITMENT of Proposition 1A bond funds. Again, this type of commitment cannot legally be made until after the second funding plan is approved.”

An Important Item Missing from the Farmers’ Lawsuit

In the spring of 2007 the Authority began deliberating over how to break up the statewide high speed rail system into manageable pieces so that a Business Plan and Funding Plan could be developed.  At their May 2007 meeting the Authority approved as Phase 1 by a 5 to 2 vote the San Francisco to Los Angeles/Anaheim section of the statewide system.  The meeting minutes and supporting documents , still available on the Authority’s website, reveal the reasons for this choice.  Then Executive Director Morshed recommended this first phase selection because this segment would (1) be most likely to attract outside investment (for the completion of the statewide system linking to Sacramento and San Diego); (2) have an operating surplus; and (3) would be long enough to develop a train system that could travel at high speeds. [Note 18]

In other May 2007 documents the San Francisco to Los Angeles/Anaheim segment is referred to as the “starter segment”  or the “backbone” of the statewide system.   Never is there a reference to developing a Funding Plan or Business Plan for a sub-section of this segment.  The Authority’s documents speak of funding being an issue and certainly they would have liked to have been able to start with a smaller “starter segment”, but anything smaller would evidently not have met Mr. Morshed’s three criteria, all of which are mandated by the law.  Any reasonable person reading the May 2007 Meeting Minutes on Project Phasing and the supporting documents leading up to that meeting; the May 2007 Phasing Plan [Note 19], Financing Plan Report [Note 20], and Financing Plan Presentation [Note 21] can only conclude that the Authority envisioned the entire San Francisco to Los Angeles/Anaheim “starter segment” as the first “usable segment”  meeting the requirements of the Law.  If one is still not convinced of this fact, then additional evidence is found in the 2008 Business Plan [Note 22] that presented one financing plan for the starter segment and concluded with these words.

“This Business Plan demonstrates how the system’s backbone link (Los Angeles/Anaheim to San Francisco) can be financed.”

With almost no funds to build its “starter segment”  the Authority now has the audacity to (1) label the 130 mile Central Valley non-electrified Amtrak segment the “backbone” of the system; (2) claim that a future segment that extends the “backbone” north to  Merced and south to San Fernando via a Metrolink connection will generate an operating surplus; and (3)  assert that private investors will line up to fund completion of the “starter segment”….San Francisco to Los Angeles/Anaheim.

The Authority’s claims about their project seem to mutate to match their level of funds and become more outrageous with each new plan.  One can only  hope that the Law will be upheld and the project halted until the legally required funding plan materializes.

Footnotes supporting  statements made in this article are listed below and can be linked to by clicking on the Notes contained in the article itself.

Note 1:  Senate Bill 1420, the High Speed Rail Act, dated January 23, 1996

http://www.leginfo.ca.gov/pub/95-96/bill/sen/sb_1401-1450/sb_1420_bill_960924_chaptered.html

Note 2: Assembly Bill 3034, the Safe Reliable High Speed Passenger Train Bond Act for the 21st Century, paragraph 2704.08 (c)(2)(H)

http://www.leginfo.ca.gov/pub/07-08/bill/asm/ab_3001-3050/ab_3034_bill_20080826_chaptered.html

Note 3:  Assembly Bill 3034, the Safe Reliable High Speed Passenger Train Bond Act for the 21st Century, paragraph 2704.08 (c)(2)(D)

http://www.leginfo.ca.gov/pub/07-08/bill/asm/ab_3001-3050/ab_3034_bill_20080826_chaptered.html

Note 4:  Assembly Bill 3034, the Safe Reliable High Speed Passenger Train Bond Act for the 21st Century, paragraph 2704.08 (c)(1)

http://www.leginfo.ca.gov/pub/07-08/bill/asm/ab_3001-3050/ab_3034_bill_20080826_chaptered.html

Note 5:  Assembly Bill 3034, the Safe Reliable High Speed Passenger Train Bond Act for the 21st Century, paragraph 2704.08 (d)(1)

http://www.leginfo.ca.gov/pub/07-08/bill/asm/ab_3001-3050/ab_3034_bill_20080826_chaptered.html

Note 6:  April 2012 Revised Business Plan, Executive Summary page 14, Exhibit ES-4 “Construction Schedule”

http://www.cahighspeedrail.ca.gov/assets/0/152/431/1a6251d7-36ab-4fec-ba8c-00e266dadec7.pdf

Note 7:  April 2012 Revised Business Plan, page 7-15, Exhibit 7-10, “Sources and Uses for Completing the IOS”

http://www.cahighspeedrail.ca.gov/assets/0/152/431/1a6251d7-36ab-4fec-ba8c-00e266dadec7.pdf

Note 8:  Parsons Brinkerhoff Transportation Update, June 29,2012

http://www.pbtransportationupdate.com/legislation/fy13_budget_and_appropriations.aspx

Note 9: Assembly Bill 3034, the Safe Reliable High Speed Passenger Train Bond Act for the 21st Century, paragraph 2704.08(c )(1)

http://www.leginfo.ca.gov/pub/07-08/bill/asm/ab_3001-3050/ab_3034_bill_20080826_chaptered.html

Note 10: Assembly Bill 3034, the Safe Reliable High Speed Passenger Train Bond Act for the 21st Century, paragraph 2704.08(c )(2)(D)

http://www.leginfo.ca.gov/pub/07-08/bill/asm/ab_3001-3050/ab_3034_bill_20080826_chaptered.html

Note 11:  May 2012 LAO (Legislative Analyst Office) Report entitled High Speed Rail Is At a Critical Juncture

http://www.lao.ca.gov/reports/2011/trns/high_speed_rail/high_speed_rail_051011.pdf

Note 12: January 2012 State Auditor Report in High Speed Rail

http://www.bsa.ca.gov/pdfs/reports/2011-504.pdf

Note 13 2012 High Speed Rail Peer Review Group Report

http://www.calhsr.com/wp-content/uploads/2010/10/CHSR-Peer-Review-Group-Comments-on-CHSRA-2010-Funding-Plan-2.pdf

Note 14:  Legislative Counsel’s Opinion, page 15

http://www.calhsr.com/wp-content/uploads/2012/07/Leg-Counsel-Opinion-on-April-2012-CHSRA-Business-Plan.pdf

Note 15:  Legislative Counsel’s Opinion, page 16

http://www.calhsr.com/wp-content/uploads/2012/07/Leg-Counsel-Opinion-on-April-2012-CHSRA-Business-Plan.pdf

Note 16: Assembly Bill 3034, the Safe Reliable High Speed Passenger Train Bond Act for the 21st Century, paragraph 2704.09(b)(1)

http://www.leginfo.ca.gov/pub/07-08/bill/asm/ab_3001-3050/ab_3034_bill_20080826_chaptered.html

Note 17:  Assembly Bill 3034, the Safe Reliable High Speed Passenger Train Bond Act for the 21st Century, paragraph 2704.08(d)(1)

http://www.leginfo.ca.gov/pub/07-08/bill/asm/ab_3001-3050/ab_3034_bill_20080826_chaptered.html

Note 18:  May 2007 Authority Board Meeting Notes, page 4, “Project Phasing”

http://www.cahighspeedrail.ca.gov/assets/0/152/198/4cfc4b61-80b2-4175-b183-d5f37681fc71.pdf

Note 19: May 2007 Phasing Plan

http://www.cahighspeedrail.ca.gov/assets/0/152/198/2acb3224-b100-4c29-8d52-3048dad58785.pdf

Note 20:  May 2007 Financing Plan Report

http://www.cahighspeedrail.ca.gov/assets/0/152/198/c2cf594e-7f42-4aea-8065-9f015c5e06e1.pdf

Note 21:  May 2007 Financing Plan Presentation

http://www.cahighspeedrail.ca.gov/assets/0/152/198/5fd3c83d-8387-432e-8d23-1d662008a764.pdf

Note 22: 2008  Business Plan, page 21, section entitled Finance Plan

http://www.cahighspeedrail.ca.gov/assets/0/152/198/c4889c87-be35-4869-8cb9-1f32416dca8a.pdf

And Now, A Word From Your High-Speed Rail Opponent

You haven't heard from me since June. I'll be frank here.  I've given up hope that this project will ever be terminated.  Therefore, with or without funds, it will continue to hang over the heads of every tax-paying Californian forever.

As you know if you've been tracking political events in the papers, the Democratic Administration and Legislature have voted to extract funds from the intended state municipal bonds to pay for a part of the initial construction in the Central Valley, as well as remain eligible to receive the $3.3 billion from the FRA. 

I should point out what is now obvious: This will have nothing to do with high-speed rail.  It will have everything to do with the pumping of cash through the state economy.  With that cash, they will lay some track.

In order to do so, they will "take" -- a legal term -- properties, public and private, for the right of way.  Farms, dairies, manufacturing facilities, homes, as well as schools and other municipal structures that are in their way will be taken through eminent domain.  These tracks -- we don't know how much they can lay until their funds run out -- will be useful only if Amtrak wants to use them.  A big IF.

Let me reiterate: This is not high-speed rail. There may never be a high-speed rail system as now promised.  In short, they will do a vast amount of damage, including economic damage, to lay some useless track. Did I mention that all this is budgeted at around $6 billion? Did I also  mention that every tax payer in America will be dinged for this cost?

But, wait; there's more.  They will also acquire and spend another billion to electrify Caltrain on the Bay Area Peninsula and build out the Metrolink transit system in the Los Angeles Basin. While that is intended as regional commuter rail upgrades, it is also being labelled high-speed rail to be eligible for federal and state dollars. 

As I've said thousands of times, we are being scammed.  This is a political boondoggle. I'm not against spending money on infrastructure.  I think it's a necessity and a good idea.  However, I am deeply opposed to what our state government is doing to us with this project which we don't need. The basic premise of this blog is: It's not about the train; it's about the money.

As a life-long Democrat, I really hate to put it in these terms.  I believe that the Democrats are supporting this project for all the wrong reasons, and the Republicans are opposing it for all (or at least many) wrong reasons.  Transportation, or transit, has nothing to do with their positions.

I believe in government social safety nets. I believe in infrastructure repair and maintenance. I believe in affordable public mass transit. I believe that the government has a role in creating an appropriate economic environment that provides opportunities for jobs.

But, I firmly believe that this high-speed rail project in California reeks of political corruption and that the state does not need a train this costly -- vastly over $100 billion, that can only be afforded to be used by the affluent.  

The people of California have been lied to and continue to be lied to about this project and the incredible waste and harm it will inflict on all of us.  These funds will line the pockets of contractors large and small.  They will grease political wheels both of Unions and corporate interests. 

And, California being among the bluest of states, will see that this project and it's fumbling bureaucracy remain in office well into eternity.

There's certainly not much more that can be said about all this.  Therefore,  the rest is silence.

California State Legislature Assemblywoman Diane Harkey

Quick Background: Assemblywoman Harkey, and State Senator Doug LaMalfa, have been the most outspoken critical legislators in Sacramento, proposing several pieces of legisation with the intention of terminating the California High-Speed Rail Project. 

Being in the Republican minority (in both Houses), their voices falls on deaf ears among the majority Democrats who, pressured by Governor Jerry Brown, continue to support a project that has lost majority support among the voters, and continues to be exposed as totally mismanaged and fraudulent, as well as illegal on many counts. 

Here are Ms. Harkey's responses to an article that recently appeared in several northern California newspapers. What the Assemblywoman is doing here is providing a context for the high-speed rail project, and that is the state's deplorable economy.  

The Democratic "folk wisdom" holds that projects such as HSR will pump resources, especially from outside of the state such as the DOT's promise of $3.3 billion, into the state economy, thereby reducing deficit and debt, as well as creating jobs.  That could very well be the case if those dollars were devoted to infrastructure repair and upgrades, including urban and regional public mass transit reorganization and improvement.

However, for a project of such low merit -- so unnecessary and so dazzlingly expensive -- all the available dollars will only scratch the surface of those enormous costs of this project, which will go unfinished.  And that results in an enormous waste which will accomplish none of the purported goals and intentions. 

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The Other Side - Rebuttal to High-Speed Rail: By The Numbers

As Published in the San Jose Mercury News and Contra Costa Times on 06/08/2012

By Assemblywoman Diane Harkey

June 11, 2012

The article states, "Plans for a high-speed rail system snaking up the spine of California have the project pegged as the state's costliest ever. Lots of numbers follow a price tag that big." However, the numbers have a few caveats and are questionable as noted below:

$69 billion: Project's projected cost over decades. This number is fairy dust to make the plan more palatable.  The new business plan states that for full build out it would require $91.5 billion and that is without the LA to Anaheim route which was recently added and definitely will include eminent domain and other issues.

$91.4 billion: Proposed 2012-13 state budget. Don't forget that the budget is minus the realignment funds of $5-6 billion that were part of the General Fund prior to 2011-12 budget (the "catch and release" program for state prisoners). As an aside, CCPOA (the prison guards) are hiring more people not less at the state level, even though the prison count is down due to realignment or relieving overcrowding issues by sending state prisoners to the county jails.

$15.7 billion: Estimated state budget deficit. This figure does not include the state's structural budget deficit of $35 billion that is cash flow fudging via borrowing and deferring school funding as well as internal borrowing from over 700 state accounts.  In addition, our long term bond debt of $90 billion has grown from $57 billion since 2007.  Our bankers are demanding trigger cuts because we have nowhere left to go for current cash flow.  We borrowed $6-7 billion in Revenue Anticipation Notes (short-term bonds) that must show 1.8 x cash flow coverage plus be paid off annually before renewing.  This is why the triggers were demanded, not because the Legislature or the Governor is volunteering to reduce state spending.

$36 million: Project's projected 2012-13 budget cost. What will it be next year? If we build a stranded project and wait for a few years to continue will the strip in the Central Valley pay for itself? Elusive cap and trade revenues cannot be used as by law they are to be used to reduce greenhouse gas (GHG) emissions by 2020. The revised 4th business plan calls for build-out by 2038. In the meantime, and if the ridership is less than projected, high-speed rail will be a net GHG emitter.

$750 million: Annual amount, on average, that the project could cost the state budget over 30 years.   Assumes we will only be indebted for the $9.95 voter approved bond debt.  What if we need to borrow more or ridership is not what the plan assumes? The Legislative Analyst claims we could see operating costs of $1 billion or more per year.

11,000: Number of public school teachers' current salaries that amount could pay a year - more with operating costs.

$3.3 billion: Federal grants tagged for project's construction - earmarked for the Central Valley and must be spent by September 2017, and matched by state funds of $2.7 billion.  Estimates are that the state will have to burn through $3.5 million per day (holidays and weekends included) to meet the Fed deadline. Is it worth nuking CEQA and setting a precedent?  Why not ask the President to give us a break on the $10 billion we owe for unemployment insurance that will eventually increase the premium on remaining employers? 

$3.7 billion: Amount Gov. Jerry Brown is asking lawmakers to spend in state bonds to start the overall project.  I believe the number is $2.7 billion. [Plus another billion for the "bookends."]

$1.3 billion: Amount of debt payments, including interest, the state would be on the hook for if the project got the ax today.  So we need to continue until build out? What would the cost be if we had to access unconventional debt, if we can't get bonds because we are tapped out as we are today? Does anyone really believe the rest of the nation will pick up the tab for California to build a train? 

$9.5 billion: State taxpayer burden if funding dries up after first segment of track is built. This assumes that the CHSRA can access all of the debt for Phase 1. Bond restrictions require not more than 50% of the cost for each corridor or useable segment thereof  to be Prop 1A bond money, so where are the remaking funds coming from? Also does this figure account for the loss to the state in jobs and human services for the Central Valley Agricultural community, and other businesses that will be decimated during construction?

$22.5 billion: Amount in debt the state would be responsible for if entire project is built. If there is one thing we can all agree upon it is that the CHSRA lacks credibility at this juncture.  Why should we accept these numbers when we don't have an accurate ridership study, true cost analysis or future funding sources lined up?

$42 billion: Highest amount of additional federal funding being hoped for. This lacks credibility.

$13 billion: Amount of private investments being hoped for.  Which we will not see if we begin in the Central Valley.

520: Length, in miles, of line from San Francisco to Los Angeles as originally approved by voters. Voters approved 800 miles from San Francisco to San Diego, for a cost of $45 billion.

We don't need no edukatin'. We have got high-speed rail comin'.

http://youtu.be/c_tjVAsTlUc

•The California budget is a zero-sum game. Every dollar spent on HSR is not available for education.

•Education produces the state's "seed corn" for its economy. Lousy Education = Lousy Economy.

•Any macro-economist will tell you that the most important natural resource a nation or state can have is its educated population.  Without that, it's a third-world nation.   

•There are open jobs available in California but an insufficiently qualified work-force to fill those jobs.  What's missing? Education.  There are no new jobs for the un-educated or under-educated, un-trained or under-trained.

•This state once had the best -- the very best -- public education system in the US, from pre-K to graduate school.  That education system provided the brain-power/labor-force for Silicon Valley.  Silicon Valley has been California's economic engine.  You don't need to read the rest of this syllogism; you already know it. 

•Governor Brown is telling all the voters in California who put him into office, "Screw your future!  I'm only interested in the next four quarters."  That's his "hard decision." 

•The HSR advocates have it backwards. They contend that a high-speed train will stimulate a dynamic economy. A high-speed rail system will not create a dynamic economy.  Only an already dynamic economy can afford the luxury of a high-speed train.  See Spain as the latest failed economy with a high-speed train. 

•Silicon Valley is a great example of a dynamic economy.  Any "Silicon Valley" is only possible with a highly educated population. Therefore. . . . 

Release of California Rail Bonds may be ruled illegal: by Mark Powell

http://againstcaliforniahsr.com/cost-high-speed-rail-california-hsr/california-rail-bonds-funding-plan-business-plan

RELEASE OF CALIFORNIA RAIL BONDS MAY BE RULED ILLEGAL

POSTED ON JUNE 6, 2012 

BY MARK POWELL

An Argument Against the California Legislature’s Release of $2.7 Billion in Proposition 1A Rail Bonds

As a safeguard against what might be termed a “stranded investment”, the Californian High Speed Rail Authority is required to submit to the legislature (and other parties) a “detailed funding plan for the corridor or usable segment thereof”, for which they are seeking state bond funds [Note 1].

AB 3034 section 2704.01 paragraphs (d) through (g) define important terms:

(d) “High-speed train” means a passenger train capable of sustained revenue operating speeds of at least 200 miles per hour where conditions permit those speeds.

(e) “High-speed train system” means a system with high-speed trains and includes, but is not limited to, the following components: right-of-way, track, power system, rolling stock, stations, and

associated facilities.

(f) “Corridor” means a portion of the high-speed train system as described in Section 2704.04.

(g) “Usable segment” means a portion of a corridor that includes at least two stations.

In their Draft 1012 Business Plan released in November 2011 the Authority proposed building an “Initial Construction Segment” (ICS) in the Central Valley using roughly $3.3 billion in federal funds and $2.7 billion in state rail bonds.  The proposed ICS was not to be electrified and there was to be no high-speed rolling stock.  In other words, it would not be ready for high-speed train service when completed. Opponents of high-speed rail saw the ICS as not meeting the requirements of a “usable segment” and the Authority seemed to implicitly agree with their opponents when releasing the Revised 2012 Business Plan the following April.  That plan deleted all references to an “Initial Construction Segment” and deleted the acronym ICS from the list of acronyms.  Instead the new plan referred to building “the First Construction of the Initial Operating Segment” in the Central Valley.

The Authority does have an adequate funding plan for their “First Construction of the Initial Operating Segment”.  It is guaranteed to be adequate because it involves building non-electrified track from approximately 1 mile north of Madera (probably on the BNSF alignment) south towards Bakersfield until they run out of money [Note 2]. However, it will be argued by opponents of HSR that the Authority needs a complete funding plan for its proposed Initial Operating Segment (IOS) extending from Merced to San Fernando (the first “useable segment”) and it will be argued that the current plan which relies on $21 billion in yet unauthorized federal support [Note 3], or Cap and Trade Funds as a “backstop” [Note 4] to the hoped for federal support, is certainly not adequate.  The opponent’s argument for the funding plan’s inadequacy is bolstered by the fact that neither the US Senate or House of Representatives has budgeted any funds for HSR for the foreseeable future and the California Legislative Analyst’s Office is on record stating that use of Cap and Trade fees would be inappropriate for a variety of reasons.

The federal government also seems concerned with making a stranded investment and federal grant wording  tries to protect federal taxpayers by stipulating that whatever is built with federal funds must have  “operational independence” [ Note 5]. Federal grant FR-HSR-0009-10-01-00 and its four subsequent amendments along with Federal grant FR-HSR-0118-12-01-00 [Note 6] provide funding for what they refer to as “the Project”.   The grant agreements define the Project as stretching south from approximately 1 mile north of Madera towards Bakersfield and the grant agreements mandate that $108 million of the federal grants be kept in an “Interim Use Reserve” to be used to connect the new stretch of track with existing rail infrastructure so that it would have “operational independence” if funds were not forthcoming to complete the Initial Operating Section (from Merced to San Fernando).  This requirement for an Interim Use Reserve seems to argue that not even the federal government sees the Authority has having a credible funding plan to complete the Initial Operating Segment.

A closer look at Proposition 1A funding plan requirements as well as federal funding plan requirements sheds more light on the weakness of the Authority’s funding plan.

Per Section 2704.08(c)(2) the funding plan required by Prop 1A for a “corridor” or “usable segment” is to certify to the following:

(A) The corridor, or usable segment thereof, in which the authority is proposing to invest bond proceeds.

(B) A description of the expected terms and conditions associated with any lease agreement or franchise agreement proposed to be entered into by the authority and any other party for the construction or operation of passenger train service along the corridor or usable segment thereof.

(C) The estimated full cost of constructing the corridor or usable segment thereof, including an estimate of cost escalation during construction and appropriate reserves for contingencies.

(D) The sources of all funds to be invested in the corridor, or usable segment thereof, and the anticipated time of receipt of those funds based on expected commitments, authorizations, agreements,

allocations, or other means.

(E) The projected ridership and operating revenue estimate based on projected high-speed passenger train operations on the corridor or usable segment.

(F) All known or foreseeable risks associated with the construction and operation of high-speed passenger train service along the corridor or usable segment thereof and the process and actions the authority will undertake to manage those risks.

(G) Construction of the corridor or usable segment thereof can be completed as proposed in the plan.

(H) The corridor or usable segment thereof would be suitable and ready for high-speed train operation.

(I) One or more passenger service providers can begin using the tracks or stations for passenger train service.

(J) The planned passenger service by the authority in the corridor or usable segment thereof will not require a local, state, or federal operating subsidy.

(K) The authority has completed all necessary project level environmental clearances necessary to proceed to construction.

Opponents will argue that a funding plan can only apply to a project that completes a “corridor” or “useable segment” (A) that will be “suitable and ready for high-speed train operation” (H).  The Initial Operating Segment from Merced to San Fernando could possibly meet these requirements, but the “First Construction of the Initial Operating Segment” or the “Project”, as this work is termed in the Federal Grants, cannot.  It can be argued that the current funding plan is lacking in other areas, but these two seem most critical.

In short, the executive branch of the federal government is anxious to give the Authority funds needed to build the Central Valley “Project”.  However, the law behind Proposition 1A, AB 3034, seems to dis-allow using bond proceeds for construction of the Project as defined in the Grant Agreements.  It can be argued that AB 3034 only allows for using bond proceeds to build a “corridor” or “useable segment” such as the complete Initial Operating Segment (Merced to San Fernando) and it can be argued the Authority’s funding plan for this work is grossly inadequate.

The California Legislature appears ready to release rail bonds to begin construction of “the Project” in the Central Valley in spite of the non-compliance of the Authority’s funding plan with the legislature’s own law, AB 3034.  These same lawmakers have skirted laws in the past. [Note 8] Specifically, AB 3034 mandated a grossly prejudicial wording for the November 2008 rail bond initiative ballot Title and Summary and disallowed the Attorney General’s Office from doing its duty to correct the prejudicial language as called for by the Political Reform Act of 1974.   The Attorney General in 2008, now our Governor and chief proponent of high speed rail, conspired with the legislature and allowed the lawlessness to proceed.  However, a suit was brought after the passage of “the Safe, Reliable, High-Speed Passenger Train Bond Act for the 21st Century” and the court ruled [Note 9] that the legislature did not have the right to disregard the law and dictate the Ballot Title and Summary for Proposition 1A.  Californians who now, knowing the truth about high-speed rail, oppose it by a strong margin [Note 10] can only hope that someone steps forward and successfully challenges the Legislature’s next act of lawlessness – release of the rail bonds in spite of a grossly adequate funding plan.

Factual statements made in this article are footnoted below and can be accessed by clicking on the link embedded in the article:

Note 1:  Assembly Bill 3034, section 2704.08.(c) (1)

http://www.leginfo.ca.gov/pub/07-08/bill/asm/ab_3001-3050/ab_3034_bill_20080826_chaptered.html

Note 2:  Grant Agreement FR-HSR-0118-12-01-00, Attachment 3, pages 11-12

http://www.cahighspeedrail.ca.gov/assets/0/152/281/a332a850-d7a6-4fda-8db4-bcfd28e47417.pdf

Note 3:  Revised 2012 Business Plan, Exhibit 7-10

http://www.cahighspeedrail.ca.gov/assets/0/152/431/3e11f55d-2ce4-42af-a734-a119f4c1f673.pdf

Note 4:  Revised 2012 Business Plan, page 7-1

http://www.cahighspeedrail.ca.gov/assets/0/152/431/3e11f55d-2ce4-42af-a734-a119f4c1f673.pdf

Note 5:  Federal grant FR-HSR-0009-10-01-00 as amended, Attachment 3A, Background and Key Assumptions section

http://www.cahighspeedrail.ca.gov/assets/0/152/281/985fcbd5-c406-4270-a7a8-ddcbd2b8854c.pdf

Note 6: Federal grant FR-HSR-0009-10-01-00 and its four subsequent amendments along with Federal Grant FR-HSR-0118-12-01-00

http://www.cahighspeedrail.ca.gov/funding.aspx

Note 8:  High Speed Railroading of the Public article

http://againstcaliforniahsr.com/uncategorized/high-speed-railroading-of-the-public

Note 9:  Howard Jarvis Taxpayers Association versus Bowen

http://www.leagle.com/xmlResult.aspx?xmldoc=In%20CACO%2020110127037.xml&docbase=CSLWAR3-2007-CURR

Note 10:  USC Dornsife/Los Angeles Times survey taken June 2, 2012

http://articles.latimes.com/2012/jun/02/local/la-me-0603-bullet-poll-20120604

CNN Video on the California High-Speed Rail Debacle

http://www.cnn.com/video/?hpt=hp_c1#/video/bestoftv/2012/05/30/ac-griffin-california-high-speed-rail.cnn

Bottom Line?  It's not about the train; it's about the money!   Your money!

Is it not yet clear to everyone in the United States that this project must be terminated?

It is not too late. Wait much longer and enormous permanent damage will be done to California.

The project, if it continues, will cost well above the various projected costs. All such projects do.

There will be very few, if any benefits to the people of California, except for the handful who stand to profit handsomely from the project.  This has been proven many times over.

The voters of this state have been, and continue to be, lied to by the rail project promoters. The project is in their self-interest.

The Governor and the Legislature will do nothing to prevent the $3.3 billion federal dollars from reaching California. That is their only interest in this project. 

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Kofi Annan is the former head of the United Nations and currently the envoy for the United Nations and the Arab League. He met with the Dictator of Syria who has been killing women and children to negotiate a truce and peace settlement. He has been unsuccessful.  This is what he had to say in an interview upon returning from Syria:

“I know it is stressful, there are lots of fears and threats, but people can find ways and means of making their feelings known, of getting the message around that we do not accept this; this is enough, no more violence, no more,” he said. “You can play a role in a way that perhaps you cannot imagine, but people and the population do have lots of power, and working together can do a lot.”

http://www.nytimes.com/2012/05/30/world/middleeast/kofi-annan-meets-with-bashar-al-assad.html?_r=1&ref=todayspaper

Our point here is not to compare the brutal violence and horrors of Syria with the high-speed rail project. 

Our point here is to take Mr. Annan's words about public protests and apply those to our high-speed rail situation in California.  

The must be a major public protest to stop the project.  When enough of our voters and tax-payers raise their voices in opposition to the train, it will come to an end.

Fellow Democrats, drop High-Speed Rail or you will deserve to lose this election

http://www.cnn.com/2012/05/08/opinion/carville-democrats-could-lose/index.html?hpt=hp_bn7

Carville is a guy to take very seriously. What does what he says have to do with HSR? Everything. If my fellow Democrats were really smart, they would dump this vision, this program and California's project like a hot potato.

HSR is not about or for "the rest of us." Most of those of us struggling in this economy with mortgage payments, debts, and insecure jobs or no jobs, don't give a damn about building this train for the rich.  We can't afford a vacation to Disneyland.  We don't commute between San Francisco and Los Angeles. High-Speed Rail is a project for other people, not us. We are never going to be spending the premium costs of these most expensive train tickets available. . . . . that is, if this project is actually ever completed.

Which now seems most unlikely. Yeah, it will start and they will spend as much of the $6 billion that they can, but after that, can you see $100 billion -- or anything like that much -- becoming available to be spent on a train that runs no farther than 400 miles north and south within California?

The project is, more than ever, a major political manipulation.  The Union bosses who are the actual decision-makers are using this project for the same propaganda purposes as the elected officials they seek to influence.  The regular Union guys who show up at meetings and hearings are paid to show up; they need the money.  Mostly it's Union/ Democratic Party member collusion.  The Union rank-and-file are getting screwed in this so-called deal.

We are driving fewer miles on the road.  We are not waiting to ride high-speed rail instead. The point is we are travelling less. It costs to travel, even if the transit costs themselves were low -- which on costly HSR they certainly aren't. And it will cost when you get to wherever you are going. Travel, as we all know, isn't getting any less expensive.

Lower income people aren't about to give up their cars, trucks or SUVs.  That's a luxury for politically correct upper middle class people. Lower income people -- if that's where Democratic Party sympathies lie -- will not be riding high-speed rail.

Which is to say that the Democratic Party support for this train is highly contradictory and runs totally against Democratic Party ideology.  And for that, the Party will be punished this November.

The Democratic agenda totally ignores the on-the-ground realities behind high-speed rail. HSR is not public mass transit; it's no more "green" than other current transit modalities. And these modalities, like driving and flying, are being upgraded rapidly to be far more economical and fuel efficient. The outcomes of this trend are already visible in reduced national gasoline consumption.

It ought to be clear by now that there is no altruistic agenda behind the Democratic support for  HSR.  Our Party leaders are not doing us any favors.

The project in California, as advocated by the Governor and the Legislature, is totally self-serving, and on many levels, including career and resume benefits, profits, power, and political control.  As we like to say on this blog, it's not about the train at all; it's about the process.  And that means, getting and spending huge amounts of money.

I never thought I would think or say it, but my Democratic representatives deserve to lose this election if they don't relinquish this shameless charade.