LOS ANGELES — The director of California's Department of Finance has signed off on the High-Speed Rail Authority's business plan for the Central Valley, enabling the rail authority to move ahead on plans to issue $1.12 billion in bonds.
DOF Director Michael Cohen sent a letter to the Authority on Friday approving the request to spend $2.6 billion on the Central Valley segment of the $64 billion project.
Cohen's decision allows the authority to ask the state treasurer's office to sell a portion of the $9.9 billion in bonds approved by voters in 2008 for the bullet train. Only $1.5 billion of the bond money has been issued by the treasurer so far.
Gov. Jerry Brown's budget proposal released in January assumed a sale of $1.12 billion for the 29-mile Central Valley segment of the project in the spring and that more could be sold in the fall as needed, said H.D. Palmer, a Department of Finance spokesman.
Under the bond act, the Department of Finance is required to certify to the Authority that the financial plan is likely to succeed, Palmer said. The Authority released its financial plan on Jan. 3.
Cohen deferred a decision on funding for the San Francisco to San Jose Peninsula segment since the federal government has postponed a decision on matching federal grants for electrification of the existing Caltrain commuter rail system there until the president's 2018 budget is released.
The $1.98 billion cost for that portion includes high speed rail stations in San Jose and San Francisco, the cost for the electrified rail and money for trains.
"The Federal Transit Administration deferring the execution of the grant agreement to provide Core Capacity funding leaves a significant gap in the project's financing plan," Cohen wrote in the letter to Jeff Morales, the rail authority's chief executive officer. "Absent this federal decision, the Peninsula funding plan would likely have been successfully implemented as proposed."
Cohen asked that the Authority inform him when federal funding is secured, so he can "make a final determination expeditiously."
California Republicans sent a letter to Transportation Secretary Elaine Chao on Jan. 24 urging her to block federal aid to the rail project pointing to reported cost overruns. Democrats sent their own letter a week letter saying that the benefits of electrifying Caltrain's rail line goes beyond benefits to the rail project.