Report raises questions about paying for high-speed rail

(The Associated Press circulated the following story by Steve Lawrence on June 5.)

SACRAMENTO, Calif. — California officials must reassure voters that the state won't be saddled with unexpected costs if they approve a nearly $10 billion bond measure to begin construction of a high-speed rail system, a Senate report said Thursday.

The project's chief planner, Mehdi Morshed, said that assurance should be provided by legislation the Assembly sent to the Senate last week. The bill would require detailed financial plans before construction of each segment of the 700-mile system could begin.

The project, estimated to cost about $40 billion altogether, would link Sacramento, the San Francisco Bay area, Fresno, Los Angeles, Irvine and San Diego with trains running at top speeds of 220 mph.

The bond measure will be on the November general election ballot. If voters approve, it will provide $9 billion for the high-speed rail project and another $950 million for conventional passenger trains that would feed into the high-speed rail stations.

Planners envision getting a combination of state, local government, federal and private money to build the system, which supporters say will be needed to supplement highways and airlines as California's population – now at 37.7 million – continues to grow.

The Senate report, issued by the Transportation and Housing Committee, lauded the project as “farsighted” but cautioned that private investment and federal funding were not guaranteed. Money from those sources is expected to cover about half the overall project cost.

“In the face of a massive state budget shortfall this year, it is essential that the (High-Speed Rail) Authority provide detailed assurances that California taxpayers will not be stuck with a massive bill in future years if voters approve the bond measure on the November ballot,” Sen. Alan Lowenthal, the Long Beach Democrat who chairs the committee, said in a statement.

Morshed, the authority's executive director, said a bill by Assemblywomen Cathleen Galgiani, D-Tracy, and Fiona Ma, D-San Francisco, should eliminate concerns raised by the report about uncovered costs.

“I'm not sure that their concern is any larger than the governor's concern, and this (bill) takes care of the governor's concern,” Morshed said.

In part, the bill would require the rail authority to prepare a detailed funding plan identifying the cost of each segment and how it would be paid for before issuing a construction contract for that portion of the line.

The measure passed the Assembly last week, 60-3, and is awaiting action in the Senate.

Consultants working with the authority say they've found considerable interest in Congress and the private sector to invest in high-speed rail.

In a letter attached to the report, the chairman of the authority's board, former Sen. Quentin Kopp, I-San Francisco, said companies that receive high-speed rail contracts would have to cover construction cost overruns themselves. He said he assumed they would take that possibility into account in structuring their bids.

“We have no authority to provide any guarantee that would commit state funds beyond those appropriated by the Legislature,” Kopp said in the letter to Lowenthal.

The report by the Senate committee said the project also faces several other risks, including obtaining rights-of-way for its tracks in crowded urban areas and meeting ridership and revenue projections. The authority is getting revised estimates for those.

Supporters say the cost of riding the rail line between Northern and Southern California would be about 50 percent to 70 percent of the cost of an airline ticket.

Morshed said the authority was working with railroads, commuter lines and local officials to work out right-of-way questions. He said a letter last month from Union Pacific to the authority saying it didn't want to share right-of-way space with the high-speed rail project was a “nonevent.”

“If the railroad says, “We don't want to sell right of way,' we can always buy adjacent land. Nothing new, nothing significant,” Morshed said.

Monday, June 9, 2008
bentley@ble-t.org

http://www.ble-t.org/pr/news/headline.asp?id=22462

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