ALAMEDA, Calif. — California’s plans for a bond-financed high-speed passenger train system are in critics’ crosshairs following the release last week of a critical report by the state auditor.
The project “risks delays or an incomplete system because of inadequate planning, weak oversight, and lax contract management,” says the title of the report from the office of auditor Elaine Howle.
The California High-Speed Rail Authority was created in 1996 to plan a high-speed passenger train system to link the Los Angeles and San Francisco Bay regions. Its importance multiplied in 2008, when state voters approved a $9.95 billion general obligation bond measure designed to be a significant down payment toward turning those plans into reality.
The transition from a likable concept to a real-world project has resulted in not-entirely-unpredictable challenges to the authority from more active “not in my backyard” opposition in communities where the trains would run into the difficulties caused by a rapidly increasing workload.
The audit report pinpoints financing as the most vexing challenge faced by planners. The 2008 ballot measure always envisioned the bond issue — of which $9 billion is earmarked for the bullet train system — as a down payment.
In its most recent business plan, the High-Speed Rail Authority projects a capital cost of $45 billion in year-of-expenditure dollars for the build-out of its San Francisco-Anaheim line, which has a planned 2020 opening date. Those plans include $17 billion to $19 billion in federal funding, and $12 billion in private investment, in addition to the state bond funds.
In January, Washington awarded California a $2.25 billion grant from the American Recovery and Reinvestment Act’s high-speed rail program. The auditor’s report singles out federal funding shortfalls as the program’s biggest flaw, because the business plan only incorporates $4.7 billion in targeted federal funds, including this year’s $2.25 billion award.
“The program risks significant delays without more well-developed plans for obtaining or replacing federal funds,” the audit report said.
The authority, in its formal response to the audit, signed by chairman Curt Pringle, took particular exception to its title.
“The report’s inflammatory title is overly aggressive considering that the contents of the audit’s findings are not equally scathing,” Pringle’s letter said.
Advocate Robert Cruickshank, chair of Californians For High Speed Rail, said the auditor’s finance analysis is flawed.
“It’s fundamentally inaccurate in some key ways,” he said. “Most infrastructure projects are planned and moved forward without full federal funding nailed down. That’s what you need to do to win federal funding.”
Even if federal funds fall short, California taxpayers are protected, he added, because the language of the bond measure prevents the sale of the debt until the state receives matching funds. As of April 1, according to the state treasurer’s office, only about $250 million in debt from the $9.95 billion bond measure had been issued.
The entire plan remains in the planning and environmental review process. The authority, in its most recent business plan and in an addendum to that plan approved in April, noted that it has divided the Anaheim-San Francisco route into seven planning segments, with efforts focused on the four segments furthest along in the planning process, because they were approved as part of its $2.25 billion ARRA grant.
The authority estimated planning for the 30-mile Los Angeles-Anaheim segment to be 61% of the way toward the formal record of decision/notice of decision required to receive federal funds, with the three other fast-tracked segments about a third of the way through the process.
The state auditor also had more specific criticisms of the authority, noting in particular a need to improve its oversight and administrative controls.
For example, the report notes that the authority lacks systems to comply with state limits on the use of bond funds to pay for administration, and that it does not generally ensure that invoices reflect work performed by contractors, who are responsible for the vast majority of its spending.
“We believe the audit process has identified areas where the authority can improve its administrative processes and project oversight,” Pringle wrote in the rail agency’s formal response. He added that many of the findings reflect those made earlier by the state’s Legislative Analyst’s Office, and that the authority has already begun taking steps to address them.
“They have a challenge because when the initiative was approved, the $10 billion bond that was approved in November 2008, the authority had a very small staff, a bare-bones staff,” Cruickshank said.
The authority Thursday announced the choice of a new executive director, Roelof van Ark, previously senior vice president for North America for Alstom Transport, a builder and operator of trains and transport systems. He replaces Mehdi Morshed, who retired after serving as director since 1998.
As the planning process geared up, “not in my backyard” opposition began ramping up from some potential future neighbors of the line, notably in the wealthy San Francisco Peninsula communities between San Jose and San Francisco.
Two of those communities, Menlo Park and Atherton, were plaintiffs in a suit challenging some of the environmental impact documents, which has forced the authority to revisit some of those reports.
Cruickshank believes that the challenge is one that can, and should be, met head on. “The NIMBYs are a small group of people; 60% of people in the Palo Alto and Menlo Park area voted for high-speed rail,” he said. “The challenge is to motivate that 60%.”