While the Rail Authority’s CEO says they cannot come up with an updated business plan until later this year, Elizabeth Alexis, from Californians for Responsible Rail Design (CARRD) has studied construction costs and predicted $67 billion in capital cost numbers, a whopping $24 billion increase compared to the 2009 business plan ($43 billion) and double the original estimates of $33 billion estimated in the bond measure back in November 2008.
How did she do it? She did it by piecing together the Authorities own numbers from Alternative Analysis reports as well as Parson Brinckerhoff’s progress reports which offers the most conservative view of construction costs including omissions, inadequate numbers and offering least expensive system that can possibly be built.
There were several meetings involving State budget and transportation committees in the past 2 weeks. Those members continue to ask for better financial information and ridership numbers concerning the California High Speed Rail Project.
Peninsula Cities Consortium (PCC): February 4rd
At the PCC meeting, it was discovered that Bill Warren, one of the key authors of Financial Risks on HSR, provided a financial analysis producing a very similar capital cost number of over $60 billion. http://cc-hsr.org/assets/pdf/CHSR-Financial_Risks-101210-D.pdf See page 54.
Pat Burt, Chairman of PCC, commented that” you have two different analyses coming from different directions and wherever they meet on the track, it’s still a train wreck.”
Alexis said that we have to think of this project in a different way. She provided an analogy of someone who wants to remodel their house and suddenly is faced with the harsh reality of construction costs. “So you have to make choices. The kitchen stays, the bathrooms next but the fancy windows go.” She offers that If you have to build a smaller project, having really good capital costs and ridership numbers would help you prioritize which parts of the system you’ll do first, “what would go and what would stay.” She adds “moving ahead on the environmental work without good numbers is foolish.”
State Senate Hearings: February 1st
In the past year the Senate has been extremely critical of the lack of progress of the Rail Authority to deliver a revised business plan and answer criticisms about the ridership mode and the February 1st meeting Senate Subcommittee was no exception.
Senator Joe Simitian, Committee chair spoke to van Ark, “if you’re going to build a $43 billion system, you need a sound business plan before you start building. Senator Simitian gave his critical appraisal of various actions of the board which he and other legislators didn’t appreciate in this video.
CEO Van Ark promised a draft business plan at the earliest October 2011, in coordination with the request for approval of the funding plan for the first operable segment and for the sale of the bonds for the first construction site in the Central Valley. Senators, Lowenthal and Simitian, made it very clear to Van Ark; they would not make decisions without the business plan.
Ravi Mehta, representing Palo Alto, Atherton, Menlo Park and Pico Rivera made the following plea for the senators to withhold funding for the High Speed Rail project. http://www.youtube.com/watch?v=VemXTAjMABo
During the meeting, Elizabeth Alexis, econometrics expert, testified about the business plan and her new estimates that showed a very different capital cost picture than those in the flawed 2009 business plan.
Alexis also later in the meeting spoke about the ridership issue, she asked, “We continue to wonder why some of the issues that could be easily resolved by running a couple of scenarios [using the current ridership model], isn’t done. It’s urgent to get the answers.” She remains concerned about the Rail Authority’s appointed “ridership” peer review committee because they missed critical issues before.
Note: This ridership peer review group is different than the state mandated, independent Peer Review Committee whose members have various skills such as financing, engineering and transit experience and are appointed by various state agencies, not the rail authority. They report to the legislature.
The entire Senate meeting can be found on: http://www.calchannel.com/channel/viewvideo/1997
State Assembly Meetings: January 24th and 26th
The Assembly Transportation and Financial committees met with some newly elected faces serving on the committees. They appeared less forgiving of the High Speed Rail Project than in years past. They grilled CHSR’s representatives with pointed questions about the finances and the ridership numbers.
One example, Kevin Jeffries, Vice Chair of the Assembly’sTransportation Committee said, “ The report’s now out “The Train to No Where” http://www.cc-hsr.org/assets/pdf/atraintonowhere.pdf , there’s a lot of criticism out there.” He later says, “The criticisms are mounting and getting pretty severe about the credibility of assumptions of not only ridership, costs but everything else out there.” And finally Jeffries adds, “We’ll have to balance the very, very limited funds that we have available to carry out the mission of the state, and whether or not we use other funds to do your project – whether or not future federal funds arrive.” For full report on this and the Assembly Transportation Committee meeting see: http://glowbass.com/transportation-policy-in-san-francisco/california-assembly-committees-question-california-high-speed-train-project
California High Speed Rail Board Meeting: February 3rd
After this series of meetings, Van Ark appeared at the HSR Board Meeting, and in his CEO report, he appeared to be publicly unruffled as he described how the meeting went with the legislature. In fact, his demeanor and words appeared to be a total disconnect from the Senate and Assembly meetings as he told the board:
“We need to go back, it is not because we got pushback but because of the dynamics of the project. There are many aspects of the budget that need to be revised as we are relooking at re-prioritizing the sections within the alignment. We are to have more discussions with Caltrans and CalTrain and other partners of ours. We need to modify or adjust our budget for the May run of meetings and I believe that everything is fine, the meeting went fine. We have to go back for the second draft. It is not uncommon, it is quite normal process. We’ll up date you as the process continues.”
It was also confirmed at this meeting that both the San Jose to San Francisco route and the LA to Anaheim route would be put on the back burner since they were technically challenging and High Speed Rail would travel at reduced speeds. Van Ark said these segments could be phased in at a later date after proper study was completed. He emphasized that the environmental work would continue as if they were going to be part of a full build out in order to obtain CEQA (California Environmental Quality Act) and NEPA (National Environmental Protection Act) clearance.
The Rail Authority is reaching a critical juncture; they have many challenges ahead this year as they attempt to meet federal deadlines for stimulus funds for the Central Valley. It’s a very complicated process. They must meet all California Environmental Quality Act obligations; they must choose a “usable segment” in which the Authority must demonstrate it will be profitable and the segment is High Speed Rail “ready” in accordance with AB 3034. The central valley construction area is only a part of this “usable segment.” They must develop a funding plan and have it reviewed by the peer review committee, then onto a Joint Legislative Budget Committee and finally to the Director of Finance who review the recommendation before the bonds are allowed to be sold.
It appears they will also be required to produce a viable business plan with realistic numbers and a revised ridership forecast since both the senate and assembly are threatening withholding funding unless they are satisfied as to the viability of the project.
These state deadlines and less than adequate federal funds for future segments will provide a challenging year for the California High Speed Rail board.