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California high-speed rail plan troubled, official warns

(The following story by Patrick McGreevy appeared on the Los Angeles Times website on April 30, 2010.)

LOS ANGELES, Calif. — California may not be able to complete a high-speed rail system, set to begin construction in 2012, because of poor planning and a lack of funding, the state auditor warned Thursday.

Auditor Elaine Howle reported that the authority overseeing the rail system could very likely fall billions of dollars short of what it needs to complete the project, even though California voters approved borrowing billions of dollars to help pay for it.

Howle wrote to Gov. Arnold Schwarzenegger and the Legislature to warn that construction of the system could face delays or might not be completed.

The California High-Speed Rail Authority is counting on up to $19 billion from the federal government but has a commitment for only $2.25 billion so far, Howle said. The federal funds are needed in addition to the $9 billion in borrowing approved by voters.

The authority is charged with building a system of bullet trains speeding at up to 220 mph between Southern and Northern California. Howle's report, which concluded that the authority's planning had been inadequate, also took aim at its goal of attracting private investment.

Investors typically seek government matching funds, and Howle wrote that the authority had yet to articulate how much that would cost and what government agencies would be called on to provide the money.

Her audit also questioned oversight of the money the authority does have. She said it was not properly monitoring its spending as required to make sure that no more than 2.5% went to administration. "Unless it tracks these funds and develops long-range plans for spending them, it risks running out of them prematurely,'' Howle said.

She recommended that the authority develop alternative plans in case the system has to be scaled back, and she said more needed to be done to address risks that might keep private investors from paying for much of the system.

Some of the recommendations were previously made by the state Legislative Analyst's Office and are already being acted on, according to Carrie Pourvahidi, interim executive director of the authority.

"We welcome additional oversight of California's high-speed train project," Pourvahidi said, adding that the authority is "refining our business plan to respond to questions about funding, risk management and ways to attract private investment.''

Friday, April 30, 2010

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