California High Speed Rail: Media Piling-on Continues, as Does the Project

Last week, the media reported, once again, that the California High Speed Rail (HSR) project is in its death throes.

The latest batch of articles are based on a Nov. 25 decision by Superior Court Judge Michael Kenny. The judge ordered the California HSR Authority to revise a 2011 funding plan before it issues state bonds under Prop. 1A, the 2008 measure that set California’s HSR project going. The ruling also green-lighted work on the Central Valley portion of the project.

What does that really mean?

“All you have to do is front-load the federal money. Spend the $3.4 billion from the Feds,” explained Rod Diridon, Executive Director of the Mineta Transportation Institute and Chair Emeritus of the California HSR Authority board, referring to stimulus spending that’s available from Washington. “Then you spend the state part later.”

Plaintiffs include John Tos and Aaron Fukuda, Central Valley landowners in the way of the tracks. It’s one of many suits pending. The Authority tried an omnibus lawsuit, where it essentially sued itself as a defense against the many different legal actions lining up to stop the bonds. Judge Kenny didn’t go for it. “All the judge said is the Authority can’t have blanket validation of the bonds,” said Diridon.

There was a third “key setback,” as the Los Angeles Times describes them. On Dec. 5, the Surface Transportation Board of the US Department of Transportation rejected an application from the California HSR Authority to expedite review of the entire 114 mile Central Valley portion of the project.

The sticking point is a five-mile section of the 29-mile Madera-to-Fresno segment. Under the worst-case scenario, sources close to the bid said the Authority will renegotiate a $511 million agreement with Tutor-Perini, the construction contractor, to work around it. Meanwhile, Dan Richard, the project chairman, said they will comply with the orders and construction will start as soon as next month.

When it was placed on the ballot, Prop. 1A was the only way to give the project a serious financial and political shove forward, by taking it directly to the voters. Still, it was for a $9.95 billion bond issue; a downpayment on the project. The costs for even the earliest incarnations for California HSR were more than three times that much.

It’s a different state now. The Legislative Analyst's Office is projecting $10 billion budget surpluses by 2018.

“When I ran for governor in California the first time,” said Jerry Brown at a HSR event, “California's private wealth, together, was about $350 billion. Now it's almost $2 trillion.” France, Japan and Germany built modern rail networks with much less wealth. In other words, many are saying Prop. 1A is less important now. And, for future segments, maybe Washington doesn’t matter either. Sacramento may vie to do this on its own, through carbon offsets, the transportation budget, and perhaps through a “franchise bid.” Under this idea, explained Diridon, an Asian or European railway consortium pays to link, for example, Los Angeles with the Central Valley. In exchange, they would collect all the profits from HSR operations for a period of several decades.

Bottom line, construction on a segment from at least Madera to south of Fresno will move forward. After that, more segments will be built. There will be more legal battles. The political winds will, no doubt, generate stops and starts. But despite all the doom-and-gloom reporting, California HSR isn’t dead. However, given the many challenges, by the time the first train runs from Los Angeles to San Francisco in less than three hours, everyone reading this may be.