Panel: California Legislature should postpone $98.5 billion high-speed rail plan

An artist's rendering of California's high speed rail.
An artist's rendering of California's high speed rail.
California High Speed Rail Authority

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The state-appointed California High-Speed Rail Peer Review Group says the Legislature should not authorize $2.7 billion in bonds to start building a new $98.5-billion high-speed rail project to build a bullet train from San Diego to San Francisco because the project isn't financially feasible.

The advisory panel doubts that the federal government will kick in $19 billion of the cost, or that cash-strapped local governments will be able to finance local rail enhancements. Those are two assumptions California High Speed Rail Authority made in a recently revised business plan for the project.

The peer review group says high-speed rail, as planned, is simply “not feasible,” and it recommended that lawmakers refuse to fund it.

In the report's conclusion, the panel says, "We cannot overemphasize the fact that moving ahead on the HSR project without credible sources of adequate funding, without a definitive business model, without a strategy to maximize the independent utility and value to the State, and without the appropriate management resources, represents an immense financial risk on the part of the State of California."

They add, "Pending review of the final Business Plan and absent a clearer picture of where future funding is going to come from, the Peer Review Group cannot at this time recommend that the Legislature approve the appropriation of bond proceeds for this project."

The report says that the plan isn't sound without any assurance of additional federal funding for many years and that the business plan is incomplete. The panel says they support high-speed rail but believes that the project should be delayed to reevaluate the overall goals, routes, financing and phasing of the project, members of the panel told the L.A. Times.

The report offers a variety of recommendations to improve both the funding and business plans, seeking to reduce the risk involved in the project and improve the financial feasibility.

The California High Speed Rail Authority responded sharply to the critique, saying that some of the panel's recommendations merit consideration but that overall the report is "deeply flawed, in some areas misleading and its conclusions are unfounded." The rail authority says that "many of the most egregious errors and unsupported assertions would have been avoided with even minimal consultation."

They argue that the panel doesn't understand how other rail systems have been constructed and how this plan is in line with those. The authority also says that the panel's recommendation to put the plan on hold would place $3.5 billion in funding at risk.

"Frankly, not only are these legal conclusions beyond the expertise of the authors, but attorneys at the state and federal government level and the legislative author of the bond measure, profoundly disagree," Thomas Fellenz, the Authority's chief counsel, said in a statement.

Voters authorized $9 billion in bonds for the project in 2008, but the Peer Review Group has to sign off on the feasibility and reasonableness of the plan before the state issues the bond, according to the L.A. Times. Public support for the project has also dropped, according to a recent poll. The panel includes some of the state's top transportation experts.

This story has been updated.