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Friday, Mar 29 2013 11:00 PM

Report expresses concern about bullet-train funding

By CALIFORNIAN NEWS SERVICES

WASHINGTON -- California's high-speed rail project will face difficulty in obtaining nearly $40 billion still needed to complete its route, the news organization Politico reported Thursday, citing a new report.

A Government Accountability Office report distributed to lawmakers Thursday, said Politico, noted that the lack of a dedicated funding stream and the austere environment on Capitol Hill will be obstacles.

The GAO found that securing an additional $38.7 billion in federal money in the coming years "one of the biggest challenges to completing the project," Politico reported.

Separately, the Associated Press reported that the GAO gave generally good grades to the California High-Speed Rail Authority's business plan to build the $68 billion bullet train.

The GAO said the authority's ridership and revenue forecasts are reasonable. It could not assess whether the authority's projected costs are feasible, but says the California agency is following most of the GAO's best practices in making its predictions.

The AP report also noted that the biggest hurdle remains money.

Rail officials plan to start work this summer on the first stretch of track and have said they will not start other segments until funding is secured.

The High-Speed Intercity Passenger Rail Program delivered $3.3 billion to California, enough to get construction started on the line this June. But money has run dry since Republicans opposing the federal high-speed rail program took the House in 2011.

"Given that the HSIPR grant program has not received funding since 2010 and that the future funding proposals will likely be met with continued concern about the general level of federal spending, the largest block of expected money for the California project is uncertain," GAO concludes in the report, which was shared with Politico by a congressional source.

The GAO report was requested by House Majority Whip Kevin McCarthy, R-Bakersfield, who on Thursday reiterated his concerns about the rail project.

"The bottom line remains the same: The future of California High-Speed Rail relies on nearly $40 billion in additional federal funding. Apart from the questionable business plan, fluctuating cost estimates and lack of public support, the California High Speed Rail Authority's continued reliance on additional federal spending is naïve and misguided at best," McCarthy said in a statement.

McCarthy called the rail authority's plan "irresponsible and reckless."

High-Speed Rail Authority Chairman Dan Richard and CEO Jeff Morales have maintained that once public money has trains rolling, private money will follow.

The system's business plan relies on $13 billion from private companies, but the GAO report says the authority will need $25 billion more in public money to finish the initial operating segment from Merced to San Fernando in the south.

The state will then have to demonstrate that the 300-mile segment can operate profitably before it can expect private companies to open their wallets, Politico noted.

Funding uncertainty with a project of the magnitude of the planned train from San Francisco to Los Angeles is not unusual, GAO found.

GAO noted that hurdles presented by funding pricey fast train lines have been successfully vaulted the world over. In other words,

GAO also found that California has demonstrated a "strong economic case for the project" -- including job creation benefits and expanded job access to workers, Politico reported.

The GAO report comes as the bullet train project is beginning to face harsh criticism from some longtime backers of the project.

Among those raising objections is Quentin Kopp, a Bay Area high-speed rail trailblazer who for decades played a pivotal role in building public and political support for the system. Kopp chaired the state Senate transportation committee for years and co-wrote legislation that launched the bullet-train project. He later served as board chairman of the state agency overseeing construction of the system.

But in a recent legal declaration, filed in a civil suit seeking to halt the project, Kopp, a retired judge, said the project as now planned violates the law underpinning $9.95 billion in state financing approved by voters in 2008.

"They have just mangled this project," Kopp said. "They distorted it. We don't get a high-speed rail system. It is the great train robbery."

Richard, the rail project chairman, said deals to share sections of urban track with slower commuter rail systems and to send large investments to Southern California and Bay Area transit agencies were critical to securing broad statewide political support for the project, he said.

"It is one thing to sit back and criticize, and it is another thing to build something," Richard told the Times. "We have made tremendous progress."

Critics such as former World Bank executive William Grindley, however, say Richard is steamrolling those who are raising legitimate issues. They argue that the bullet train's operational efficiency risks being so compromised that the system will fail to attract ridership needed to avoid public subsidies.

In his declaration, Kopp says that the bullet train business plan approved last year by the authority violates several voter-imposed requirements, and the project "is no longer a genuine high-speed rail system."

Kopp also says current plans for a so-called blended system, in which bullet trains would share tracks with local commuter trains from Gilroy to San Francisco, is at odds with voter approvals. The plan was meant to quell opposition to bullet trains running through the wealthy communities of Silicon Valley. But Kopp maintains that it could slow bullet trains too much, violating a legal requirement that at least some trips between Los Angeles and San Francisco not exceed two hours and 40 minutes. And agreements to upgrade local rail systems also violate the law by diverting bullet-train bond money for other work not agreed to by voters, Kopp contends.

Richard said bullet trains around the world use blended systems and typically run at slower speeds in urban areas. And he noted that opinions by the attorney general and the state legislative counsel support the legality of the current plan.

Jim Mills, an early bullet-train booster as a former president pro tem of the state Senate and a former rail agency chief, said he also is increasingly convinced that the current project plan violates the 2008 ballot measure approved by voters.

Like Kopp, he expressed those concerns in a declaration filed in a Kings County lawsuit, which is scheduled for trial in late May.

Still, a powerful array of Democrats, including Gov. Jerry Brown, Rep. Nancy Pelosi of San Francisco, U.S. Sen. Dianne Feinstein of California and President Obama, are backing the current plan. And some legal observers doubt a trial judge would block a voter-approved project supported by the political establishment.

But critics note that polls show voter support has eroded since 2008. A recent statewide survey found 54 percent of likely voters now oppose the project.

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