High-speed Rail

Wednesday, Jul 18 2012 10:16 AM

High-speed rail must wait for its $8 billion to start construction

BY TIM SHEEHAN The Fresno Bee

Earlier this month, the state Assembly and Senate approved legislation that gave the financial green light to California's proposed high-speed train system and the initial construction in the central San Joaquin Valley -- much to the consternation of opponents in the valley and up and down the state.

But the approval did not result in an instantaneous check to the California High-Speed Rail Authority for $8 billion and change (a little over $4.6 billion from Proposition 1A, the high-speed rail bond approved by voters in 2008, and almost $3.4 billion in federal transportation and stimulus money).

So how quickly could money from Prop. 1A, the $9.9 billion bond measure, get into the rail authority's bank account? Probably not before this fall, according to the California State Treasurer's office.

What's more, would-be bondholders won't be buying "high-speed rail bonds," but a pool of bonds for a slew of other state construction work that will include high-speed rail, said Tom Dresslar, director of communications for state Treasurer Bill Lockyer.

"There's not going to be a 'high-speed rail' bond sale," Dresslar said. "It's a whole basket of general obligation bonds that may include the high-speed rail at any particular time. ... It's in there with school construction, highways, levees, housing, water, the whole gamut of infrastructure projects."

Bonds are sold according to a schedule that will be determined by the state Department of Finance, part of Gov. Jerry Brown's administration. The administration will work with the state departments, figure out priorities, determine how much cash needs to be raised through bond sales and when it will be needed, Dresslar said.

"When they get that figured out, they come to the Treasurer and say, 'Sell X amount of bonds,' and we go out and sell the bonds," he said. The money is then allocated according to the administration's priorities. Bond sales are typically held twice a year, in the fall and in the spring.

It seems that selling bonds in pools rather than as purpose-specific sales is likely to insulate politically sensitive projects like high-speed rail.

"The question always comes up, what's the demand going to be for high-speed rail bonds, with all the controversy surrounding the project," Dresslar said. "But when we go to market, the high-speed rail bond is just another general obligation bond, subject to the same market forces that all the other general obligation bonds are subject to."

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