Two new headaches for beleaguered bullet train project

The California High-Speed Rail Authority – the agency in charge of building the state’s bullet train system – has already faced a tough year, with Gov. Gavin Newsom signaling in February that he’s not confident the full system can ever be built. But now the rail authority has two new public relations headaches on its hands.

In the Central Valley, farmers were already upset over state use of eminent domain to seize their property for construction of the project’s first segment – a 110-mile route from Bakersfield to Merced projected to cost $12.2 billion. But a recent report in the Los Angeles Times documented how slow the rail authority was in paying for seized land and in refunding farmers for the cost of the train project’s effects on their businesses.

The Times’ story focused on a kiwi farmer who lost 70 acres of land to the project more than a year ago and who since has gone unpaid for $250,000 incurred in “relocating wells, removing trees, building a road and other expenses.” It also noted farmers who had been owed $1.9 million and $630,000 for three years, and two others owed $500,000 and $150,000, though for shorter periods of time.

State officials questioned by the Times had no explanation for the delays beyond saying the project was complex in its legal and engineering challenges.

A follow-up story by Fox News emphasized why the delayed payments are particularly upsetting to many Central Valley residents. Not only is there a chance the initial segment between Bakersfield and Merced will never be completed because the state doesn’t have enough funds, there is a good chance that even if the segment is finished, some of the property that has been seized won’t be used for the project. That’s because even now – more than five years after the administration of Gov. Jerry Brown decided to start the bullet train’s construction in the Central Valley – authority officials still haven’t agreed on the exact details of the final route.

“The property owners are very frustrated that the High-Speed Rail Authority [doesn’t] seem to know what they actually need,” Sacramento attorney Mark Wasser said. “We have farmers who the authority has come back four times to change where they want to take.” Wasser has more than 70 clients affected by the rail authority’s Central Valley project.

Audit warnings validated by ethics probe

Meanwhile, state audits which have long warned that it is problematic for the rail authority to rely so heavily on outside consultants have been vindicated with what appears to be evidence of a conflict-of-interest scandal.

Recently, the authority’s deputy chief operating officer – Roy Hill – was suspended pending an investigation by the state Fair Political Practices Commission. Hill is a top executive with the WSP consulting firm employed by the authority. Evidence suggests that Hill approved a $51 million increase in a bullet-train contract held by the Spanish firm Dragados despite his apparent ownership of more than $100,000 in stock in Jacobs Engineering, a multibillion-dollar multinational corporation that is providing key services to Dragados on the California project.

The FPPC approved the request of Assemblyman Jim Patterson, R-Fresno, to investigate Hill, his actions and his personal economic interests.

“This is such a deep conflict that it calls into question whether the entire High-Speed Rail Authority and the contractors they have put together are involved in a massive corruption,” Patterson told Fresno TV station KMJ.

The rail authority says it will cooperate with the FPPC probe.

Hill has not yet commented publicly on the matter.

This article was originally published by CalWatchdog.com

Don’t Derail the Bullet Train Derailment


Gov. Jerry Brown, Anne GustEven before California’s High Speed Rail bond proposal appeared on the ballot in November 2008, the Howard Jarvis Taxpayers Association commissioned a study in conjunction with the Reason Foundation because of deep concerns about the project’s viability. The study, published in September 2008, just prior to the election, confirmed our worst fears. Specifically, the executive summary of the nearly 200-page document warned:

“The CHSRA plans as currently proposed are likely to have very little relationship to what would eventually be built due to questionable ridership projections and cost assumptions, overly optimistic projections of ridership diversion from other modes of transport, insufficient attention to potential speed restrictions and safety issues and discounting of potential community or political opposition. Further, the system’s environmental benefits have been grossly exaggerated, especially with respect to reduction of greenhouse gas emissions that have been associated with climate change.”

In the ensuing decade, it became increasingly clear that every negative prediction about the project came to be realized. Even initial advocates of the project, including a former chairman of the High Speed Rail Authority, turned against the costly boondoggle.

The capstone of criticism came at the end of 2018 when California’s own state auditor issued a scathing report excoriating the project’s mismanagement, waste and lack of transparency. To understand just how damning the HSR audit was, just consider the subtitle: “Flawed Decision Making and Poor Contract Management Have Contributed to Billions in Cost Overruns and Delays in the System’s Construction.”

To read the entire column, please click here.

Void in Leadership Continues for California High-Speed Rail


High Speed RailFour months after then-California High Speed Rail Authority Chief Executive Jeff Morales told authority board members he was moving on and two months after Morales made his decision public, the agency overseeing the state’s $64 billion bullet train project hasn’t settled on his successor.

In 2012, four months after Chief Executive Roelof van Ark abruptly left following two stormy years, Morales already had the job. This time around, the same speedy selection process seemed likely. The RT&S transportation industry website reported after Morales’ decision was announced in April that the board was likely to have his replacement approved before Morales’ final day of June 2.

But the CHSRA board met in closed session on the succession issue on May 10 and June 14 without reaching a decision. The rail agency’s number two job – deputy chief executive – has also been vacant since Dennis Trujillo left in December.

The empty slots atop the CHSRA power structure come at a critical time.

According to a federal report prepared under the Obama administration, the state’s high-speed rail project is already seven years behind schedule and on its way to having a 50 percent cost overrun on the $6.4 billion, 118-mile first segment now being built in the Central Valley.

The project also continues to face legal challenges which argue that it violates the terms of Proposition 1A, the 2008 ballot measure providing $9.95 billion in bond seed money for the project. The rail authority has won most recent judgments. But opponents remain confident they eventually will prevail because of a 2014 state appellate court ruling that held the project still was subject to a financial “straitjacket” that would require it to show short- and long-term financial viability without public subsidies before the project could significantly proceed. The project’s struggle to attract private investment shows that at least in the private sector, there are many doubts that the bullet train could operate successfully without such subsidies.

Obama administration rules could haunt project

But the election of Donald Trump as president in November also has led to a huge new headache for CHSRA. All 14 California House Republicans have urged Transportation Secretary Elaine Chao to reverse Obama administration actions that loosened federal rules to give California access to about $3 billion in federal dollars for the project.

Rep. Jeff Dunman, R-Turlock, and his colleagues have focused their harshest fire on a 2012 decision that gave the state the go-ahead to spend about $200 million in federal funds but not have matching state spending. The decision went against longstanding Washington precedent.

Withdrawing all federal funding could also be justified by citing the Obama administration’s 2009 regulations for projects that were to be paid for or partly paid for with money from the economic stimulus bill passed a month after President Obama took office. The Federal Railroad Administration rules said projects that didn’t demonstrate “reasonableness of financial estimates” and “quality of planning process” would get no funding.

That’s the same agency which recently concluded the project was seven years behind schedule and on course for a 50 percent cost overrun on its initial segment

The California High Speed Rail Authority board’s next meeting is July 18 in Sacramento.

This article was originally published by CalWatchdog.com

California’s Bullet Train Could Be a High-Speed Fail Without Federal Funding

As reported by L.A. Weekly:

Two weeks ago, President Donald Trump made what might be considered his first real move to screw over California, by delaying a $637 million grant, long thought to have been a lock, to pay for electrifying a Bay Area train route. That’s bad news for Caltrain, which will have to stick to diesel gas for the time being. But it’s also bad news for California Gov. Jerry Brown’s pet project, the bullet train, which plans to share that section of track. The delay has been interpreted, by some, to be an act of political retribution, to get back at California for, oh, take your pick — not voting for Trump, for having so many “sanctuary cities,” for declaring itself the vanguard of the resistance, and so on.

Lisa Marie Alley, a spokeswoman for the California High Speed Rail Authority, downplayed the significance of the grant delay.

“I would not characterize it as a big blow whatsoever,” she said. “It’s something that is not good. The bigger question is, to the Republican administration, why would you hurt something that is creating jobs, creating a system that’s better for the environment and providing a valuable service for the Bay Area?”

The worrying thing for supporters of the bullet train, which aims to connect San Francisco and Los Angeles by the year 2029 for the not-so-low price of $68 billion (and that estimate is probably low), is if the Trump administration is willing to delay a fairly uncontroversial grant, can the nation’s largest infrastructure project currently under construction expect any help at all …

Click here to read the full article

Senators share their doubts about bullet train financing with rail officials


As reported by the Los Angeles Times:

California’s plan to pay for construction of the $64-billion bullet train has many unanswered questions and shaky assumptions, senators from across the state told rail officials Monday.

“We want you to beef up your financing package,” Sen. Jim Beall (D-San Jose), a longtime supporter of the high-speed project, said at a hearing of the Senate Transportation and Housing Committee, which he chairs.

Republican lawmakers were even tougher. “I think the financing is shaky here,” said Sen. Jim Nielsen (R-Gerber). “It seems like it is careening down the tracks.”

The committee was responding to a draft business plan the California High-Speed Rail Authority released in February. The authority said …

Click here to read the full article

High-Speed Rail Needs More Oversight, Audit


high speed rail trainThe Jan. 27, 2016, Assembly Budget Subcommittee hearing labeled “Oversight of High Speed Rail” turned out to be anything but a hearing on oversight.  (Video of Hearing)

The hearing, prompted by pressure from Republicans when an explosive LA Times article reported the Authority had failed to include and ignored cost increases predicted by its prime contractor, Parsons Binkerhoff (PB), while the 2014 business plan was developed and published.

The cost increase predicted by the PB report was about $9 billion, a 31 percent increase for the Merced to Burbank segment.  The report also showed an overall increase of about 5 percent for the whole Phase I of the project, with a net increase of about $3.5 billion to the baseline project for the San Francisco to Los Angeles segment.  Indeed the 2014 business plan, simply incorporated the 2012 business plan cost estimate of $68 billion. 

Reading the staff report prepared for the hearing, it was easy to predict the result of the hearing. The staff report included “cut and paste” excerpts from the Authority’s business plan, but no such excerpts from the LA Times’ article.  The only speakers were to be from the Authority, Dan Richard (Chair) and Jeff Morales (CEO).  From the Authority’s Peer Review Group Lou Thompson appeared.

Thus the whole hearing was setup to be a “white wash” of the issues the Times’ article raised.

Richard spent about 10 minutes telling the world (again) how well run and open the Authority has been in carrying out this project.

Then Morales gave his input, essentially seeking to discredit the Times’ article by claiming the PB report included going all the way to Burbank whereas the comparison cost routing would stop at Sylmar (about 16 miles shorter in distance). Morales claimed about $4.5 billion of the cost difference was due to the PB report extending the segment to Burbank. Claiming this extension would cost $4.5 billion to go only 16 miles on level surface when a corridor like the San Fernando road could be used, is simply not believable. The other $4.5 billion of the PB projected cost increase was simply discarded by the Authority by claiming elimination of elevated structures in the PB estimate with building on berms would save this $4.5 billion.

This brings up the question of why pay PB to produce cost estimates, when the Authority can just claim we will build the segment differently and substitute our own costs? All of this testimony from Morales came without his producing any data for his testimony, since all of this is labeled “DRAFT.”

The Authority surely needs more oversight. Lou Thompson echoed this need in his testimony. The Authority resists additional oversight with all its might.

Morales had written the Chair of the Joint Legislative Audit Committee a letter in which he was opposed to the approval of an audit of the Authority proposed by Senator Andy Vidak.

Let me give you a personal example for this need.

I commented on the need for an audit of the Authority previously. Since that article was published, additional information has appeared.

The reply from the Authority on Sept. 18, 2015, to my public record request of Sept 8th 2015, stated:

The June 30 Funding Contribution Plan (FCP) is expected to be posted in the near future.When it is available, it will be posted to the following website:  http://www.hsr.ca.gov/About/Funding_Finance/funding_agreements.html

The June 30 FCP was indeed finally posted on Jan. 21, 2016. That is about 4.5 months after my request. But what is really interesting is an inspection of the FCP reveals it was produced on July 28, 2015 (see the properties snapshot of the FCP) the FCP was available well before my initial request. Public Record Requests are mandated by law to be filled within 10 days, not 4.5 months later.

Los Angeles Times reporter, Ralph Vartabedian, has authored another article since the Jan. 27 committee hearing. It explains a lot.

The High Speed Rail project is the largest such endeavor in the nation. It needs more oversight and it needs an audit from the non-partisan State Auditor now. It is time for the Democratic  legislative leadership and the Authority to stop denying such an audit.

esident of Menlo Park and Founder of DERAIL, a grassroots effort against the California high-speed rail project.

Originally published by Fox and Hounds Daily

Audit the California High Speed Rail Authority


high speed rail trainThe California High Speed Rail Authority once again opposes oversight of its actions. On Tuesday the Joint Legislative Audit Committee held a hearing on the request by state Senator Andy Vidak to have the State Auditor conduct an audit of the Authority’s activities.

The Committee, on a strictly party line vote, denied the request. The request was triggered by the explosive Sunday, Oct 25th L.A. Times article, which disclosed a previously undisclosed report by the Authority’s contractor, Parson Brinkerhoff (PB).  The report projected a $9 billion increase in construction costs of the initial Merced to Burbank segment. (The article also disclosed from interviews with experts, that time lines, and budget targets would not be met.) 

The Times article, authored by Ralph Vartabedian, noted the cost increase report was delivered months before the 2014 business plan was released. The 2014 business plan did not include the projected $9 billion cost increase and instead continued to use cost projections from the 2012 business plan.

The first responses from the Authority to the Times article were: We don’t know about such a report, followed then by a blunt statement from Authority Chair Dan Richard, stating the article was “bunk.”

The Authority’s often-restated position is that the Authority is the most transparent of public agencies. Yet its actions reveal a completely different picture.

The Times article, was followed by numerous Freedom of Information act requests, which belatedly forced the Authority to release the report. The report was in the form a PowerPoint presentation, and was presented several months before the 2014 Business Plan was released.

Assemblywoman Toni Atkins then announced that a hearing would be held on the issues raised in the article. The hearing is now set to take place on Jan 27th.  Indeed the argument used by Democrats at the JLAC hearing to deny the audit was that an audit by the State Auditor was unnecessary and would be redundant to what would be revealed at the Legislative hearing.

But there is a whole world of difference between an audit conducted by the non-partisan State Auditor, and any legislative hearing being conducted by a Democratic controlled committee. Indeed, already announced by Atkins was that subpoenas would not be issued by the committee conducting the hearing.

Transparency and oversight in the Authority’s view, have many restrictions. The Authority denies many public record requests using one excuse or another. Many times disclosure comes only after immense pressure is exerted on the Authority. This was certainly the case which finally caused the release of the Powerpoint report disclosed in the LA Times article. This was also the case regarding final disclosure last year to the public, of the responses from private investors to the Authority’s request for Expressions of Interest in the project. (None of the finally revealed 36 responses indicated any willingness to invest.)

The Authority, throughout its existence, has used many tactics to avoid oversight. During 2010 to 2012, when the state Senate Housing and Transportation committee was led by Democrats, Senators Alan Lowenthal and Joe Simitian, numerous hearings were held and on many occasions the committee had to fight very hard to obtain needed information.

Last year the Authority managed to get the Legislature to remove the Authority’s obligation to report twice yearly and instead only reporting once every 2 years; removing one more level of oversight.

During the JLAC hearing on Tuesday, the State Auditor, Elaine Howle, presented her plan for the audit. She disclosed the audit would take about 2,100 hours and would need 5 months to complete. Considering the Authority has now spent almost $2 billion, the cost of this modest audit was hardly a consideration. Nevertheless, the Democrat-controlled committee rejected the request.

The Authority has stopped releasing the Funding Contribution Plans. These reports are mandated by the funding agreement between the Authority and the Federal Railway Administration (FRA). The reports are due quarterly within 30 days after the end of a quarter. The last report disclosed was the March 2015 report. Thus, as of this date, the June and Sept. 2015 reports are delinquent, and at the end of this month, the Dec. 2015 report will also be past due. These are the key reports showing how the Authority is performing on its project. Apparently the FRA has quit worrying about the Authority’s compliance with the funding agreement. The FRA has thus far not replied to my Freedom of Information request concerning the missing Funding Contribution Plans.

A just released poll from the Stanford University Hoover Institution reported “53 percent of Californians would vote for a ballot measure ending high-speed rail and using the unspent money on water-storage projects.” (poll details) The poll also reveals only 20 percent strongly approve, whereas 33 percent strongly disapprove of the California HSR project.

esident of Menlo Park and Founder of DERAIL, a grassroots effort against the California high-speed rail project.

This piece was originally published by Fox and Hounds Daily

Why Aren’t Unions Fighting California’s Bullet Train Boondoggle?


Photo courtesy of Jon Curnow, flickr

Photo courtesy of Jon Curnow, flickr

Back in 2008, voters in California approved Prop. 1, a statewide initiative to spend “$9 billion for building a new high-speed railroad between San Francisco and Los Angeles.”

Total cost, $9.5 billion. Remember that?

Quoting further from the original initiative’s ballot language:

Bond Costs. The costs of these bonds would depend on interest rates in effect at the time they are sold and the time period over which they are repaid. The state would make principal and interest payments from the state’s General Fund over a period of about 30 years. If the bonds are sold at an average interest rate of 5 percent, the cost would be about $19.4 billion to pay off both principal ($9.95 billion) and interest ($9.5 billion). The average repayment for principal and interest would be about $647 million per year. Operating Costs. When constructed, the high-speed rail system will incur unknown ongoing maintenance and operation costs, probably in excess of $1 billion a year. Depending on the level of ridership, these costs would be at least partially offset by revenue from fares paid by passengers.” (ref. UC Hastings Scholarship Repository, Propositions, California Ballot Propositions and Ballot Initiatives)

Over time, fantasy always yields to reality.

The most recent reputable estimate of high-speed rail costs come from an in-depth special report published last month by the Los Angeles Times, entitled “$68-billion California bullet train project likely to overshoot budget and deadline targets.”

The title of that special report says it all. California’s high-speed rail was sold to voters for an amount that is at least seven times less than our most recent estimate of costs, and if the author of the LA Times special report is to be believed, it is very unlikely this project will come in for a total cost under $100 billion.

High-speed rail was sold to voters back in 2008 in roughly the same way pension benefit enhancements were sold to naive politicians back around 1999. In both cases, the decision makers were told it would cost next to nothing. Isn’t this called fraud? To sell a good or service to a consumer at a given price, then come back and demand ten times as much money?

Payments on these construction costs will be paid from the California state general fund, and based on a $100 billion total cost and a 5.0 percent interest rate, that comes out to $166 per year per California resident. Not that much? Unimpressed? Put another way, based on roughly 6 million taxpaying households in California (about half of California’s 12 million households pay no taxes; their sales tax burden is largely offset by the earned income tax credit), construction of this train will cost $1,084 per taxpaying household per year.

Do you want to pay $1,000 per year for a project that will not alleviate California’s transportation challenges one bit? A project that will lose money forever? A project that will use up massive amounts of capital that could be deployed to achieve literally dozens of other huge and vitally needed infrastructure objectives?

This is where California’s labor leadership, by continuing to support high-speed rail as a centerpiece project, are showing how out of touch they truly are with the average working family. Because they are unwilling to fight for major infrastructure investments that would improve the quality of life and lower the cost of living for all Californians; improvements to existing rail, upgraded roads, state-of-the art natural gas and 5th generation nuclear power stations, reservoirs and aquifer storage projects, upgraded sewage treatment plants to produce potable water, and much, much more. If California’s labor leaders care about all workers, they will find the vision and courage to fight for these useful amenities, instead of promoting high speed rail.

20151123-UW-HSR

High Speed Rail CEO Jeff Morales made $477,760 in 2014

A legitimate role for government spending is to make strategic investments that reduce costs for basic necessities. That is what makes a nation prosperous. That is a proper use of public funds. Artificially inflating the costs for energy, water and transportation – which is the current policy of California’s government, abetted by big labor in this state – is a crime against the people of California.

 *   *   *

Ed Ring is the executive director of the California Policy Center.

Embarrassing Details Threaten to Derail High-Speed Rail

A new special report conducted by the Los Angeles Times has thrown very cold water on the California High Speed Rail Authority’s plans for bringing a bullet train to the Golden State.

Through an in-depth investigation, the paper revealed embarrassing details of the train’s lurching progress toward an apparent morass of spiraling costs, spooked investors and — worst of all — an engineering disaster in the making.

Heads in the sand

In one particularly galling example of misfeasance, when California’s main project management contractor, Parsons Brinckerhoff, raised the alarm years ago, it was simply ignored by the authority’s top brass. A document obtained by the Times revealed that Parsons Brinckerhoff had briefed state officials on the spiraling cost projections in October of 2013. “But the state used a lower cost estimate when it issued its 2014 business plan four months later,” noted the Times. “Jeff Morales, the rail authority chief executive, said he was not aware of the Parsons Brinckerhoff projection. A spokeswoman for the authority declined to discuss the differences in the estimates.”

Opposition to California’s high-speed rail project has been strong since Gov. Jerry Brown first threw his weight firmly behind the idea. Critics have predictably held up the Times report as proof that they saw its failures coming from a figurative mile away. As the Reason Foundation suggested as early as 2008, “cost overruns were likely, state and federal funding would not be sufficient to cover the costs of the project, the state would have to spend more money, and private investors would not be making up the difference,” as Scott Shackford noted at Reason.com.

A policy earthquake

The challenges revealed by the report go far beyond those objections, however, raising the specter of dangerous environmental damage done virtually blind. “It will be the most ambitious tunneling project in U.S. history. Crews will have to cross the tectonic boundary that separates the North American and Pacific plates, boring through rock formations and earthquake faults, some of which are not mapped,” the San Francisco Chronicle noted. James Monsees, “one of the world’s top tunneling experts and an author of the federal manual on highway tunneling,” said the plan was unrealistic. “Faults are notorious for causing trouble,” he cautioned.

That trouble could well become calamitous — especially given California’s propensity for large earthquakes affecting populations centers. As the Los Angeles Times added:

“A 2012 report by Parsons Brinckerhoff, obtained by The Times, warned the rail authority that the ‘seismotectonic complexity … may be unprecedented’ and that the rail route would be crossing faults classified as ‘hazardous.’”

But the tunnel trouble arose from the authority’s inability to surmount public criticism to easier, more direct routes. “The original plan was to build the train route up along the 14 Freeway, but a host of nearby residents from Pacoima to Acton, many freaked out about a high-walled train corridor cutting through their towns,” according to Curbed Los Angeles. “Angry citizens in San Fernando even interrupted an informational meeting in on the rail project to protest its dangers to the local economy and the ‘death wall’ that would split the town in two along the route.”

That led the authority toward the current, disparaged tunneling plan — and, last month, a request for “permission to test-drill deep beneath the Angeles National Forest to determine the feasibility of digging a rail tunnel through the rugged San Gabriel Mountains near Santa Clarita,” as the San Gabriel Valley Tribune noted. Among officials, the fear of another public outcry has yet to abate. “In what only can be described as an unusual process, the U.S. Forest Service is asking the public for their thoughts on whether to allow the rail authority to proceed with its tunnel study,” the Tribune added.

Originally published by CalWatchdog.com

VIDEO: California’s high-speed rail to come in well above $68B budget?


“Taxifornia” author James Lacy discusses concerns about California’s high-speed rail project with Fox Business’ Stuart Varney including cost overruns and tunneling through the San Gabriel and Tehachapi Mountains.