The Hamilton Report – Purpose: To inform the public of activities of the California High-Speed Rail Authority and to confirm the project’s development is in conformance with the taxpayers’ bond measure voted for in November 4, 2008. This website has no affiliation with any political party and is personally funded by the author.
History: The California High-Speed Rail ballot measure passed in November 4, 2008 by a margin of 52.7%. See the write up at Ballotpedia. The public was promised a high-speed rail system throughout the state delivered in two parts. Part 1 would be constructed from the San Francisco Transbay Terminal to the Los Angeles Union Station and Anaheim. The cost for the first phase was estimated to cost between $32.7 and $33.6 billion dollars according to the 2008 business plan. Part 2 included Sacramento and San Diego and would be funded later from profits of the first segment and other federal, state and private investor funds. See the 2008 business plan, all 25 pages of it. Back then, Judge Quentin Kopp was Chairman. Now read what the Judge has to say about the project in a court document.
Financing the building of the line originally was to come from primarily 3 sources, state bond funds, federal grant funds and private investment in a rough 1/3 ratio each. Though it was a requirement of the Authority to publish a business plan prior to the vote, they did not. They published the report in November but after the vote.
The train was to run an express service from end to end in 2 hours and forty minutes. The number one requirement is to build a system that runs without an operational subsidy. So basically the costs to run the train is to come from the sale of tickets. The high-speed train system is usually considered a deluxe train attracting those of above average income. It’s for long distance travel so the idea that this train will take cars off the road is a fantasy since it is not supposed to address local travel. People who ride high-speed trains are predominately air travelers.
The Authority has touted for years that high-speed rail is profitable. Here’s a new report about the Spanish system, which I have ridden several times. It’s never been crowded when I’ve been on it. People call it the fast train but more take the local because of price. Read: “Not one AVE high-speed rail line is turning a profit, says new study.”
Many things have changed in the past few years. Originally the system was supposed to be operational by 2020, federal funds never materialized in the quantity the Rail Authority predicted and desperately needs. American Recovery and Reconstruction Act (ARRA) funding of approximately $3.3 billion dollars must to be used by end of September 2017. According to legal affidavit by Authority personnel, the actual spending is supposed to stop six month’s prior to allow for proper processing and review of the bills. The Authority has another $800,000 without an end date and must also be matched but at a 30% level unlike the 50% match the Authority volunteered for the Feds to get the most ARRA funds.
California state bond funds of which there was $9.950 billion, $9 billion is for the high-speed rail and the remaining $950 million is dedicated for connectivity improvement for other transportation systems to link the high-speed rail train – most of the connectivity funds have been spent. Less than a billion in bond funds for the high-speed rail planning and environmental work have been spent but construction money is the problem and must be matched at a 50% level in order to be accessed.
Most importantly the state cannot get access to the Prop 1A funds of approximately $1.7 billion for the Central Valley since they have not completed the environmental work for the entire segment nor do they have the funds for the entire segment. They are required by Prop 1A to do what is called a second funding plan. Right before construction there are many boxes to tick off before construction dollars can be spent. The entire first segment called the Initial Operating Segment goes from Madera to the San Fernando Valley. A conservative estimate of cost is $31 billion and the Authority has $6 billion but that includes $1.7 billion in Prop 1A funds which they cannot access. The environmental work for the entire segment is not finished as well. They do have access to what is called State cap-and-trade dollars, they were awarded 25% of all cap-and-trade revenues which many environmentalists frowned on. The goal of AB 32 is to reduce greenhouse gases by 2020 and the first leg of the train will not be built for many years beyond that. There are two lawsuits challenging cap-and-trade, one by the Pacific Legal Foundation which believes these funds represent an illegal tax. It lost first round of court and expect the appeal next year. Next is TRANSDEF’s case which is suing based on the High-Speed Rail Project’s inability to qualify for such funds. They do not yet have a court date but will shortly. The simple and easy to understand case can be found here.
No one knows for sure how much the proceeds of the cap-and-trade auctions will be, but even if they received $1 billion a year, they still have a massive short fall. The current deadline of December 31, 2020 must be extended for High-Speed Rail to continue to get their share. (Check the date on the ARB)
So the problem is how can they get anything built? There is literally little time left. Back in May 2012 Ralph Vartabedian published a superb article: “Rail requires high-speed spending”
Here’s a quote from the article now 3½ years ago:
“The bullet train track through the Central Valley would cost $6 billion and have to be completed by September 2017, or else potentially lose some of its federal funding. It would mean spending as much as $3.5 million every calendar day, holidays and weekends included — the fastest rate of transportation construction known in U.S. history, according to industry and academic experts.”
Frankly they don’t even have $6 billion since as explained earlier they can’t access the Prop 1A funds and what they propose isn’t legal. There is no such thing as an ICS Initial Construction Segment in Prop 1A. There is only an IOS, initial operating segment that is nearly 300 miles.
They currently are using some federal funds and cap-and-trade dollars to do some preliminary construction work in the Central Valley but they are very behind in property acquisition and building. Most importantly the time is ticking on the Federal ARRA fund dollars.
Here is the October Board Meeting accounting of the Request of Interest from Private investors. In short, this is the third try since 2008 and they still have no promise of funding. Pay particular attention to the painfully honest remarks mid-way through the YouTube video of Michael Rossi, the finance guy. California High Speed Rail, Board Meeting Oct 6 2015, Agenda Item #3
Biography: Kathy Hamilton is an investigative journalist and activist focused on the California High-Speed Rail Project.
Since 2010, she has written more than 350 articles on the subject and has attended or watched hundreds of local, state and federal meetings.
She has worked for a top accounting firm at a Senior Manager level focused on international mobility and worked at Director and Vice President levels for corporate relocation companies for over 20 years. She holds a bachelors degree in business and a real estate brokers license.
In the past Kathy has written for the Examiner.com and also writes for Calwatchdog who usually puts this tag on her articles:
“Kathy Hamilton is the Ralph Nader of high-speed rail, continually uncovering hidden aspects of the project and revealing them to the public. She started writing in order to tell local communities how the project affects them and her reach grew statewide. She is a board member of the Community Coalition on High-Speed Rail; has testified at government hearings; has provided public testimony and court declarations on public records act requests; has given public testimony; and has provided transcripts for the validation of court cases.”