The California High-Speed Rail Authority's
Lawmakers pressed HSR officials on a funding gap and for specifics about $2 billion in cost-savings in the business plan, including proposals to move train stations in Bakersfield and Merced from downtown to the outskirts of town and reducing some lines to single-track from double-track.
Voters approved $9.95 billion in general obligation bonds in 2008 for the high-speed rail, then estimated to cost $33 billion with a 2020 completion date. Now, the cost has
HSR Chief of Staff Mark Tollefson touted $14 million in immediate savings in the Central Valley and the 16,000 jobs created. He also said the completion in early February of the southern railhead facility in Kern County, a central logistics hub for storing and delivering materials, will make it possible for the rail authority to begin laying track in the Central Valley by year-end. The authority issued a $3.5 billion request for proposal seeking a track builder that it expects to award this summer.
The authority has heard from 30 potential private investors and expects to award contracts this spring, Tollefson said.
Non-partisan Legislative Analyst's Office analyst Helen Kerstein and HSR Inspector General Ben Belnap warned of major financial and oversight challenges.
Kerstein said the savings based on design changes could bring trade-offs and lawmakers would need to modify Senate Bill 198, a state law mandating downtown stations and dual tracks.
Committee Chair Lori Wilson, D-Suisun City, cautioned against making design changes to the point that the state doesn't get the project it wants.
Despite $1 billion in annual funding from the state's cap-and-invest program through 2045, the authority still faces a $4.5 billion gap for the under-construction $37 billion Merced-to-Bakersfield segment.
Transportation Secretary Sean Duffy
Kerstein also cautioned
"The California Air Resources Board can adopt changes to the cap-and-invest program that can affect revenues," Kerstein said. "For example, some changes the board is currently considering could reduce (Greenhouse Gas Reduction Fund) revenues markedly, which highlights the possibility that GGRF may not be adequate to support $1 billion annually for HSRA every year."
The state could ameliorate that by offering guarantees it won't change the cap-and-invest program in a way that would impair the rail authority's income from the program, she said.
As for seeking financing through private investors, that has the "potential to be a relatively expensive approach, as the P3 would need to be compensated for access to its equity and any risk it absorbs," she said. "Ensuring the state gets the lowest price in P3 procurements is also difficult, as the agreements can be complex and firms do not directly compete on price."
Wilson told authority members they need to keep the transportation committee informed if they have funding gaps, so lawmakers can determine if they need to inject additional funding or make legislative changes to allow for cost-saving design changes. She also noted the rail authority needs to get buy-in for any changes from city leaders along the route.
The polls highlighted during public comments showed a majority of the public still wants this project completed, Wilson said, but "we need to do it in the most efficient manner possible."
