Another Critical Report on High-Speed Rail

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The California High-Speed Rail Authority has come under fire once again — this time from a panel of outside experts who say there is not even a basic business plan in place for the $43 billion rail system.

In the latest in a series of critical audits and reports, the six-member Peer Review Group also faulted the Rail Authority for inadequate ridership estimates, failure to plan for financing the project and other issues.

The criticisms echoed complaints about the project that state auditors and others have leveled for the past 18 months. But they carried added weight because the group is composed of professionals within the transportation field, including those familiar with high-speed rail operations.

The Peer Review Group is mandated by state law and was established after the high-speed rail program was approved by voters.

It is required to “evaluate the [rail] authority’s funding plans and prepare its independent judgment as to the feasibility and reasonableness of the plans, appropriateness of assumptions, analyses and estimates, and any other observations or evaluations it deems necessary.”

It’s supposed to have eight members, but so far only six have been appointed. The chairman is former CalTrans Director Will Kempton, who since last year has been chief executive officer of the Orange County Transportation Authority.

The Peer Review Group, when all members are appointed, will have two members with experience building or running high-speed trains in Europe or Asia, another member who knows high-speed rail engineering and construction, and others with expertise in project financing, environmental planning and California passenger train service.

The members are appointed by the state treasurer; the controller; the director of finance; and the secretary of business, transportation and housing.

The Nov. 18 peer review report was sent to legislative leaders, and a copy was made available to Voice of OC, although it hasn’t yet been publicly released.

The report said the current state staff levels are “totally inadequate” to oversee the main project contractor, Parsons Brinckerhoff and all of its subcontractors. Parsons Brinckerhoff has a $199 million contract to manage the project through 2013.

But, the report said, there’s no way to know how many state workers to hire until the project has an overall business plan. Such plans could range from the state managing the entire project to turning its operations entirely over to a private company, or something in between.

In addition, there’s no financial plan for building the system. Voters approved the project in 2008 on the condition that, when it is finished, no taxpayer money will be used to subsidize its operations. Ultimately, it will run 800 miles from San Diego to Sacramento. The initial phase will stretch from Anaheim to San Francisco.

Officials have said they will get millions from the federal government to help with construction and form partnerships with private companies to augment construction costs. But there is no firm plan for doing it, and the poor economy and political issues — particularly Republican opposition in Congress to high-speed rail — are obstacles that a financial plan would have to overcome.

“The lack of a clear financial plan is a critical concern,” said the peer report, adding that “there is an air of unreality about a plan that includes $17 to $19 billion in ‘free’ Federal funding from programs that do not yet exist.”

The report went on to say that “the project, as of now, has only limited credibility with private investors.”

To make sure that estimates of how many people actually will ride the trains are accurate, the report said it was important to fix current faulty ridership estimates as quickly as possible.

“This does not mean,” the report said, “that completely reliable estimates will ever be possible.”

It also suggested that the Rail Authority set risk categories for ridership demand and “if the demand estimates are grossly optimistic [not an unknown result] then there could be an actual demand level below which the system should not have been built at all.”



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