The business plan, which the rail authority released last month, has been criticized over the past two weeks by lawmakers from both chambers of the California Legislature. At a Senate informational hearing on Tuesday, Sens. Joe Simitian and Alan Lowenthal questioned the rail authority's financial projections and asked high-speed-rail officials to release more details about their plans to solicit private funds. Last week, the state Assembly Transportation Committee had expressed similar concerns.
At Tuesday's meeting, Simitian asked rail authorities for more information about how the new system would be funded. He also quoted from a variety of newspaper editorials characterizing the high-speed-rail project as a "boondoggle" and demanded more accountability from the rail authority.
"This to me is as fundamental an issue as anything else," Simitian said. "There's no one being held accountable."
Both Simitian and Lowenthal pointed to a recent report from the Legislative Analyst's Office (LAO), which found a multitude of flaws in the rail authority's new business plan. The report noted that the rail authority's business plan "assumes some form of revenue guarantee from the public sector to attract private investment." It also pointed out that the state bond that voters approved for the project in 2008 expressly forbids public subsidies for the system's operations.
The LAO report stated that the new business plan is more informative than the 2008 version. But analysts also faulted the plan for having an "uninformative timeline," and an inadequate discussion of project risks.
"We find there are significant issues still inadequately addressed in this business plan," Eric Thronson, an LAO analyst, said at the Tuesday hearing. "The plan's discussion of risk is incomplete and inappropriate for a project of this magnitude."
The new business plan was released at a time of major transition for the California High-Speed Rail Authority. Earlier this month, the authority announced that Mehdi Morshed, its executive director, will retire at the end of March, and began its search for a new chief executive officer. The rail authority had also hired a consultant to evaluate its operating structure, said Curt Pringle, chair of the High-Speed Rail Authority Board of Directors.
In the coming weeks, the agency plans to reorganize its leadership structure and hire new staff. The new structure would include a high-ranking official charged with risk management, Pringle told the Senate committee at this week's hearing.
The project has attracted great scrutiny on the Peninsula last year, when residents learned that high-speed trains would glide through their communities, possibly along elevated tracks. More than a dozen residents and elected officials from Palo Alto, Menlo Park, Atherton and Burlingame attended Tuesday's Senate hearing and a similar one in the Assembly on Jan. 11, to demand more information and criticize the current business plan.
Elizabeth Alexis, a Palo Alto resident who co-founded the grassroots group Californians Advocating Responsible Rail Design (CAARD), attended both Sacramento meetings and publicly criticized the rail authority's plan to have a private company operate the system once it's built.
Former Palo Alto Mayor Mike Cobb argued at the Jan. 11 hearing that the rail authority's plan to get more than $4 billion in local funds for the project is unreasonable, given that cities such as Palo Alto are already facing severe budget shortfalls.
Assembly members shared residents' concerns about the rail authority's plans to pay for the system.
Assemblywoman Joan Buchanan questioned the high-speed rail's assertion that the system would be profitable and its projection that the state will receive billions of federal dollars for the project.
Assemblyman Roger Niello was even more blunt. He said he has "huge concerns" about the proposed high-speed-rail project and the authority's plan to pay for it. The authority is banking on more than $10 billion in private funding; more than $17 billion in federal grants; and more than $4 billion in local grants to fund the project. That's in addition to the $9.95 billion California voters approved in November 2008, when they passed Proposition 1A.
Niello called the rail authority's plan for the new system a notion that becomes increasingly troubling upon closer examination.
"I wake up from my romantic notion and I see something next to me that's not as attractive as it was when I was entertaining my romantic notion," Niello said.