ALAMEDA, Calif. – California Treasurer Bill Lockyer raised eyebrows this week by questioning the viability of some segments of the state’s proposed high-speed passenger train system.

Investment bankers don’t view the main Los Angeles-to-San Francisco trunk of the proposed system as financially viable, Lockyer said during an interview with the San Diego Union-Tribune’s editorial board.

“I hear from the world of Wall Street investment bankers about what they think makes sense,” he said. “And almost universally, they’re convinced that no one can finance the routes from L.A. to the Bay Area — that it just will never work economically.”

California voters approved a $10 billion bond measure in 2008 to finance the high-speed rail system, of which $9 billion is earmarked for the high-speed train system. The GO bonds are described as a down payment to attract federal grants and private investment to the project, which has the ultimate goal of building a Japanese-style bullet train system linking Los Angeles, the Bay Area, Sacramento, and San Diego.

The California High Speed Rail Authority estimates the cost of the initial San Francisco-to-Anaheim line at $45 billion. The estimate includes $17 billion to $19 billion in federal funding, up to $12 billion in private investment made through public-private partnerships, and up to $5 billion in local funding.

Lockyer said he would be hard pressed to bring the high-speed rail bonds to market at this point in time.

“I would be reticent to try to go to market to issue bonds to finance the state’s share,” he told the newspaper.

Lockyer said investment bankers view smaller segments of the line as viable investment options.

“There are segments of the line that you could run sensibly, principally L.A. to San Diego,” Lockyer said.

The treasurer’s comments were not a blanket condemnation of the high-speed rail project, his spokesman, Tom Dresslar, said Thursday.

“The point he was trying to make – and I don’t think anyone would disagree with this, not at the High Speed Rail Authority, not in [Gov. Arnold Schwarzenegger’s] administration – is that high-speed rail is not market-ready at this point in time,” Dresslar said.

The bond measure voters approved for high-speed rail requires that at least half the construction cost of each segment come from other sources, such as private investment or the federal government.

That condition cannot be met at this point.

“He wasn’t saying he’s not going to sell the bonds should that come,” Dresslar said.

The San Diego Union-Tribune ran an editorial Tuesday, after Lockyer’s visit to the paper, that concluded the high-speed rail proposal was a bad idea and investors would not purchase the initial GO bonds needed to finance it.

“The U-T’s editorial page got it wrong,” said Rachel Wall, spokeswoman for the rail authority. As California GO bonds are backed by the state’s full faith and credit, investors’ willingness to buy them is not related to the projects they finance, she said.

It’s too early to talk about the project’s appeal to private infrastructure investors, she added.

“We still have a minimum of 14 months of environmental assessment to complete, she said. “So, no, we’re not far enough along that we’re even seeking private investment.”

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