Critique of HSR's 2020 business plan

From Citizens for California High-Speed Rail Accountability:

Dear California High-Speed Rail Authority Board Members:

First, we praise the Authority for including a checklist in the Business Plan (pages 146-149) of how the plan fulfills statutory requirements. Past Authority business plans failed to include content that complied with California law. 

Our organization would have sued the Authority in 2014 for failing to follow the law with its Business Plan for that year, except there was no obvious way to get meaningful and timely rectification of the omissions through the judicial branch. The California legislature should have declined to accept those old business plans and referred them back to the Authority for improvement with compliance.

Generally, the Authority’s 2020 Business Plan is much improved in content from earlier plans. We understand the challenges and frustrations of explaining a project that was sold to voters under false pretenses through Proposition 1A.

We agree with the Peer Review Committee findings that the 2020 Business Plan neglected to report adequately on the challenges and controversies concerning the pivotal federal matching grants awarded for the first operating segment of this project (in the San Joaquin Valley). 

We suspect the litigation regarding that federal funding will soon become moot, as the Biden Administration is likely to withdraw the 2019 position of the Trump Administration that the Authority has not fulfilled the requirements of those grants. 

Regrettably, we believe the 2019 position of the Trump Administration was bluntly accurate.

We agree with the Peer Review Committee findings that the 2020 Business Plan neglects to outline how the Authority will obtain funding to continue construction on the “Initial Operating Segment” aka “Interim Operating Segment.” Below, we make a prediction about the likely solution to be implemented – a solution not mentioned in the Business Plan.

The Business Plan also neglects to report adequately on how the project has strayed from the “requirement” or “tenets” of Proposition 1A provisions. It does not list what California voters were told in the State of California Official Voting Guide when 53% of them voted in November 2008 to authorize the state to borrow $9.95 million via bond sales to investors to fund this project. 

Pages 120 and 121 address this deviance from Proposition 1A, but only in the context of describing the status of the litigation and not the substance of the litigation.

On page 93, the Authority claims it is fulfilling “what the voters intended when they approved Proposition 1A in 2008 to initiate the construction of a high-speed train system that connects San Francisco to Los Angeles and Anaheim and links the state’s major population centers.” 

What the voters intended – and what the Proposition 1A ballot measure listed – is now either decades away from happening, purely speculative, or impossible to fulfill using the planned technology. Ballot arguments against Proposition 1A were much more accurate. We suggest removing the claim that voter intent is being fulfilled.

On page 99, the Authority acknowledges but discounts public comments pointing out there is no true private investment in the system (as required in Proposition 1A). 

Actually, the summary of arguments against private investment at the time are among the most credible points in the Business Plan: lack of certainty (or more accurately, confidence) in both the timing and level of returns from the investment, including uncertainty in project advancement, lack of a definition of project configuration, and credible cost estimates that reflect realities on the ground.

The Business Plan also neglects to report adequately on deviations from the contract for Construction Package 1 (CP-1) that the Authority awarded with great acclaim in 2013. Many cynical predictions made at the time of that contract award have come true.

The Business Plan neglects to address the history of federal and state audits and how the Authority has attempted (or not attempted) to respond to reasonable and thoughtful criticism within audit requests and audit findings.

It is noteworthy how many times the Business Plan highlights the number of construction trade workers (“labor jobs” for “skilled craft unions” aka “keeping men and women working to complete Central Valley construction”) on the project. Obviously this is the most easily measurable performance aspect of the project to date. It also appeals to an interest group that has been among the most dedicated supporters of the project at the state legislature.

While we appreciate employment opportunities in the San Joaquin Valley, we note that the voters who supported Proposition 1A generally saw this project as an attractive intercity high-speed travel option, and not so much as a government program to create jobs through public contracts. 

A comparative analysis of the cost per job and the resulting material benefits would likely show that California High-Speed Rail was not the best choice among many options to spur economic development and job creation in the San Joaquin Valley.

The 2020 Business Plan does not introduce what will likely be the political solution to the Authority’s challenges with funding and compliance: a statewide ballot measure that repeals many of the conditions in Proposition 1A and ensures a steady stream of tax revenue and bond proceeds through the completion of Phase 1.

At this point, CCHSRA assumes that if the Initial Operating Segment is completed several years from now, it will serve our communities as a dedicated Amtrak San Joaquin alignment with trains powered by diesel engines. This outcome could have been achieved in ways much less disruptive and destructive to our region.

Sincerely,

Citizens for California High-Speed Rail Accountability

See also Scott Wiener: Dumb or dishonest? and The "costliest infrastructure project in human history." and High-Speed rail: The shame of the Democratic Party.