California's legislators have yet to fully digest the latest business plan from the California High-Speed Rail Authority, but the new document has already caused ripples of concern around the Peninsula and in Sacramento.
The new document is expected to be at the forefront of Thursday night's public hearing on the high-speed rail project in Palo Alto. The hearing, which will take place at 7 p.m. at City Hall, will be co-hosted by state Sens. Joe Simitian and Alan Lowenthal, both of whom had already expressed concerns about the high-speed-rail project at an informational hearing Tuesday.
At that meeting, both Simitian and Lowenthal questioned the rail authority's financial projections and asked high-speed-rail officials to release more details about their plans to solicit private funds. Simitian also quoted from a variety of newspaper editorials characterizing the high-speed-rail project as a "boondoggle" and demanded more accountability from the rail authority.
"This to me is as fundamental an issue as anything else," Simitian said at Tuesday's hearing. "There's no one being held accountable."
Both senators also pointed to a recent report from the Legislative Analyst's Office (LAO), which found a multitude of flaws in the rail authority's new business plan. The report noted that the rail authority's business plan "assumes some form of revenue guarantee from the public sector to attract private investment." It also pointed out that the state bond that voters approved for the project in 2008 expressly forbids public subsidies for the system's operations.
LAO's analysis also faults the plan for having an "uninformative timeline" and an inadequate discussion of project risks.
"The plan only superficially addresses many of the most significant risks of the project," Eric Thronson, an LAO analyst, told the Assembly Transportation Committee on Jan. 11. "These are wholly inadequate mitigation strategies that leave us with no understanding of how the authority is considering the threats to the project."
The project attracted great scrutiny on the Peninsula last year, when residents learned that high-speed trains would glide through their communities, possibly along elevated tracks. More than a dozen Peninsula residents and elected officials from Palo Alto, Menlo Park, Atherton and Burlingame attended the two public hearings in Sacramento in recent weeks to demand more information and criticize the current business plan.
Former Palo Alto Mayor Mike Cobb argued at the Assembly hearing that the rail authority's plan to get more than $4 billion in local funds for the project is unreasonable, given that cities like Palo Alto are already facing severe budget shortfalls.
Elizabeth Alexis, a Palo Alto resident who helped found a new organization called Californians Advocating Responsible Rail Design (CAARD), also attended the Jan. 11 meeting and criticized the rail authority's new pricing model, which pegs the price of a San Francisco-to-Los Angeles ticket at $105 -- almost twice as much as in the 2008 plan. Alexis, who is a financial analyst, was also skeptical about the rail authority's plan to use public funds to offer assurances to private investors.
"The revenues would go to private-equity investors while ordinary Californians would retain the risk that ridership falls short of forecasts," Alexis told the Assembly committee.
Nadia Naik, also a member of CAARD, encouraged the rail authority to adopt the collaborative "context sensitive solutions" approach to planning the train line's alignment throughout the state. The rail authority had already agreed to adopt the approach on the Peninsula.
At the Jan. 11 meeting, members of the state Assembly also said they were worried about the High-Speed Rail Authority's latest projections. Assemblywoman Joan Buchanan questioned the authority's assertion that the system would be profitable and its assumption that the state will receive billions of federal dollars annually for the project.
Assemblyman Roger Niello was even more blunt. He said he has "huge concerns" about the proposed project and the authority's plan to pay for it. The authority is banking on more than $10 billion in private funding; more than $17 billion in federal grants; and more than $4 billion in local grants to fund the project. That's in addition to the $9.95 billion California voters approved in November 2008, when they passed Proposition 1A.
Niello called the rail authority's plan for the new system a "romantic notion" that becomes increasingly troubling upon closer examination.
"I wake up from my romantic notion and I see something next to me that's not as attractive as it was when I was entertaining my romantic notions," Niello said.
The new business plan was released at a time of transition for the California High-Speed Rail Authority. Earlier this month, the authority announced that Mehdi Morshed, its executive director, will retire at the end of March and began its search for a new chief executive officer.
The rail authority had also hired a consultant to evaluate its operating structure, said Curt Pringle, chair of the High-Speed Rail Authority Board of Directors.
"We're preparing to demonstrate that we're ready to move forward from a planning, conceptualized agency to a development, construction agency," Pringle told the Assembly committee.