Palo Alto city officials and residents aren't alone in their concern about a "lack of transparency" and oversight in the state's quest to build a $40 billion high-speed rail system.

A state Senate subcommittee Thursday expressed concerns about the structure and business plan of the California High Speed Rail Authority -- the agency charged with building the $40 billion rail line between San Francisco and Los Angeles.

The Senate's budget subcommittee, which includes senators Joe Simitian (D-Palo Alto), John J. Benoit (R-Bermuda Dunes) and Alan S. Lowenthal (D-Long Beach), heard a request from the rail agency for about $130 million in bond funding.

Simitian said the community's message was "loud and clear." The subcommittee agreed to hold off on authorizing the funds and urged rail-authority officials to expand their outreach efforts.

The senators heard from about 30 concerned Peninsula residents who made a morning trek to Sacramento to lobby for more oversight and transparency.

"What we really asked for is for them to change the structure of who is running this," Palo Alto Vice Mayor Jack Morton, one of the speakers, said.

"It's quite clear that the high-speed rail staff is insensitive to the community and has no ability to be responsible for the funds," he said.

Simitian said the nature of the rail authority has changed over the past few months from a small study group advocating a high-speed rail line to an organization actually building the line. Now is the time to consider changes that would bring more oversight and more community outreach to the process, he said.

"We deferred action in part to ensure that before the funds are authorized for the coming year that we see a stepped-up program for outreach and oversight," Simitian told the Weekly.

The Thursday hearing came about six weeks after the state Legislative Analyst's Office released its review of the rail agency's business plan for the proposed 300-mile line and found many details missing. The March 17 analyst report said the authority's business plan failed to disclose expected service levels, assumed train capacity, ways in which funds would be secured, the schedule for completing design and environmental clearance and other critically important factors.

The analyst report said the structure of the rail agency is unusual in that contractors are providing both the technical work and the oversight. Typically, state employees are in charge of managing large infrastructure projects, not contractors.

"The philosophy of the (rail authority) has been that it should avoid developing a large permanent organizational staff because the project is a one-time endeavor, requires highly specialized skills, and will require limited on-going support," the report stated.

"On the basis of this approach to project management, the (authority) is relying upon outside consultants to provide both technical and managerial services."

The report also mentioned a letter that Quentin Kopp, chair of the rail authority's Board of Directors, sent to U.S. Sen. Dianne Feinstein, listing elements of the high-speed rail project that could qualify for federal funding.

The list of projects – which has since been revised -- was not discussed with stakeholders in the area, the analysts' report states. The rail authority's board plans to review and tentatively approve the list at its May 7 meeting.

"There has been no public review process for determining the list and there does not appear to have been a collaborative technical review process among the stakeholder agencies," the analyst report states.

"Because of the lack of a transparent, inclusive process for selecting projects, the reasons for including some ready-to-go projects and excluding others are unclear," it said.

California voters approved Proposition 1A last November, which provides $9.95 billion in bonds for the rail project.

But while many residents still support the concept, a group of Palo Alto residents and officials have grown worried in recent months about the project's potential impact on their neighborhoods.

Hundreds have attended community and council meetings to raise alarms about the potential of an elevated wall splitting the city, and to express concerns about the possibility of having portions of their property's seized through eminent domain.

Palo Alto Councilman Pat Burt emphasized the eminent domain issue at Monday's council meeting, calling it the "elephant in the room."

Councilwoman Yoriko Kishimoto, who organized a coalition of Peninsula cities that meets weekly to discuss high-speed rail issues, said city officials are now discussing a variety of proposals they'd like Sacramento legislators to consider.

The coalition, which met Friday morning, wants the rail authority to use the "Context Sensitive Solutions" developed by the Federal Highway Administration in designing the new rail line. The method emphasizes stakeholder involvement and design elements that integrate the project with the surrounding communities.

Kishimoto said the coalition also plans to request that the rail authority conduct an economic analysis for the various design alternatives concurrently with its environmental review of the options.

"We don't want to go through all the environmental analysis only to find at the very end of the two-year process that the tunnel is not feasible," Kishimoto said.