News

High-speed rail CEO grilled over 'trust' issues

State Senators Joe Simitian and Alan Lowenthal frustrated by High-Speed Rail Authority's lagging response to critical audits

The California High-Speed Rail Authority has failed to honor its earlier promises and is quickly losing the public's and the Legislation's trust, members of a state Senate subcommittee said Thursday during a contentious hearing on the rail project.

State Sen. Joe Simitian, D-Palo Alto, and State Sen. Alan Lowenthal, D-Long Beach, scheduled the meeting to discuss the authority's responses to a critical report that State Auditor Elaine Howle released in April and to a study from UC Berkeley's Institute of Transportation Studies that found the rail authority's ridership projections unreliable. They learned that the rail authority has addressed fewer than half of Howle's recommendations and is just now starting to address the scathing report from ITS.

"It's hard to express my frustration adequately in terms of where we are today on these issues," Simitian said, "It seems we were having the same conversation a year ago, if not two years ago."

Howle, who testified at the Thursday meeting, said her agency was disappointed in the authority's response to her audit. Most of the authority's responses are still "pending," she told the authority.

"We'd expect more progress in the six-month response," Howle told the senators.

Rail CEO Roelof van Ark told the two legislators and Howle that his agency's response has been severely hampered by the state's 100-day budget impasse, which was finally resolved in early October. The authority is now hiring new auditors and a new financial analyst to address Howle's concerns.

Van Ark also said that he just formed a new peer-review group to update the ridership projections. He also said the authority is preparing a new business plan.

"We can only start with some of this work when we get the budget," van Ark said.

Howle's audit -- titled "High-Speed Rail Authority: It Risks Delays or an Incomplete System Because of Inadequate Planning, Weak Oversight, and Lax Contract Management" -- found that the rail authority has failed to keep track of its contractors' work and has no plan in place for paying for funding the $43 billion project. Auditors reviewed 22 invoices and found errors or discrepancies in 20 of them.

Simitian acknowledged that the rail authority has a short staff, but noted that the agency "found a way to spend millions of dollars on other things." He also brought up the recent findings by the Legislative Counsel Bureau that two members of the rail authority's board of directors could be serving in violation of a state law that governs conflicts of interest and recent findings by the Los Angeles Times that rail authority board members had failed to properly document their trips abroad.

Van Ark did not address those issues Thursday, but provided the legislators with a Power Point presentation geared toward showing that high-speed rail could work in California -- a point that neither senator had ever disputed.

"I raised concerns about incompatible offices and about potential conflicts and your response is, 'Could we have more money sooner?'" Simitian told van Ark. "I am flabbergasted -- and it takes a lot to flabbergast me."

Simitian and Lowenthal have persistently called for more transparency and more robust business plans from the rail authority. On May 24, they inserted a provision in the state budget calling for the authority to return in February with an improved business plan. At that hearing, rail authority officials publicly pledged to honor the February deadline.

Simitian said he had spoken to van Ark after the May meeting and was assured by van Ark that the authority would not oppose this provision.

"Mr. van Ark looked me in the eye and said, 'I'm prepared to live with this budget language,'" Simitian said.

Simitian said he received a letter from van Ark on Oct. 7 stating that he is "no longer prepared to honor the language in the budget." The next day, Gov. Arnold Schwarzenegger vetoed the budget provision.

"I was advised by sources that this veto was a direct result of a request from folks at the High-Speed Rail Authority to veto the language that was openly committed to in a public hearing," Simitian said.

"At that point, it becomes that much harder to work on the basis of trust and expectation of good faith," he added.

Lowenthal also said he was disappointed with the rail authority's response and its changing projections. He noted that the project approved by California voters in 2008 carried a $33 billion estimate, which ballooned to $43 billion last year. The projections for a ticket price shot up from about $55 in the initial environmental documents to more than $100 in the most recent business plans.

"Numbers just change," Lowenthal told van Ark. "It just left us with a sinking feeling that we don't know what to trust and whom to trust."

Comments

Like this comment
Posted by geoff
a resident of Greenmeadow
on Nov 5, 2010 at 11:06 am

'Rope-a-dope' aptly describes High-Speed Rail Authority strategy.

It is turning out that all of us, including legislators, are the dopes.

Talk about destroying legislators' trust...van Ark tells them what they want to hear, then goes behind their backs and stiffs them. Buy a clue, boys, we are all 'being had.'

Stop funding this HSR monster before it destroys the peninsula on its way to San Francisco.


Like this comment
Posted by Barbara
a resident of Barron Park
on Nov 5, 2010 at 11:20 am

State Sen. Alan Lowenthal, D-Long Beach, said "he was disappointed with the rail authority's response and its changing projections. He noted that the HSR project approved by California voters in 2008 carried a $33 billion estimate, which ballooned to $43 billion last year. The ticket price projections shot up from about $55, in the initial environmental documents, to more than $100 in the most recent business plans."

Fast climbing cost estimates are warning signals that HSR is out of control and is careening toward demolishing California's already weak financial house of cards.

Legislators must stop this high-speed train wreck before it is too late.


Like this comment
Posted by Douglas Moran
a resident of Barron Park
on Nov 5, 2010 at 6:41 pm

Douglas Moran is a registered user.

One critical question should have been asked of the CAHSRA:

Whereas the long foreseen takeover of the House of Representatives by the Republicans has occurred. And whereas the Congressional Republicans have long been hostile to the HSR program, for economic, political and ideological reasons, and have talked openly and emphatically about not only ending the program but taking back funding allocations that have not been spent. And whereas Congressional Republicans have an established history of directing funding away from California.

Question: What have you done and what are you planning to do to ensure that California isn't stuck with a white elephant if federal funding disappears?


Like this comment
Posted by Tristan
a resident of Menlo Park
on Nov 5, 2010 at 8:05 pm

Here's a great example of what HSR will bring to us. Enjoy while you can.
Web Link
This was presented at the Morgan Hill HSR meeting Nov 3.


Like this comment
Posted by NONIMBYS
a resident of Charleston Meadows
on Nov 5, 2010 at 8:59 pm

[Post removed by Palo Alto Online staff.]


Like this comment
Posted by wary traveler
a resident of Another Palo Alto neighborhood
on Nov 5, 2010 at 10:36 pm

"Question: What have you done and what are you planning to do to ensure that California isn't stuck with a white elephant if federal funding disappears?"

The HSRA is required to answer that question as part of their Business Plan (still inadequate after all these years) and in response to the State Auditor's report which calls for alternative funding scenarios. It falls under Risk Analysis, which they haven't addressed yet. It's mind boggling that they've been allowed to continue unchecked for so long.


Like this comment
Posted by Jim
a resident of Adobe-Meadow
on Nov 5, 2010 at 10:45 pm

It's about time Sacramento became more critical of HSR. For the life of me I can't figure out why they are dragging their collective ***es about. It's time to stop the nonsense before Diridon et al can waste billions more of our tax dollars. I say buy them tickets to their high speed rail country of choice, get them a rail pass, and good riddance.

Many might find this editorial of note:

Web Link

this blog post: Web Link

and this: Web Link

poor Diridon, all teary eyed that he could not screw the peninsula first.


Like this comment
Posted by Jim Rather
a resident of Charleston Gardens
on Nov 6, 2010 at 1:17 am

[Post removed by Palo Alto Online staff.]


Like this comment
Posted by Paul Losch
a resident of Community Center
on Nov 6, 2010 at 11:17 am

Simitian and Lowenthal need to say "enough is enough," and use their positions to kill this beast.

The incoming GOP Chair of the US House of Representatives is skeptical of numerous HSR proposals around the country, including California's.

There was a good article in the last Newsweek magazine by economist Robert Samuelson about how HSR does not pencil out. He clearly is looking at this from a vantage point that is not to be considered NIMBY.

I for one am losing what little remaining patience I have around this debacle. The voters got bamboozled in the 2008 reerendum. People started to question what they had approved shortly thereafter, and have not only had legitimate questions go unswered, but also have objective, professional groups find major flaws in numerous aspects of this project.

Add to that an incompetent and arrogant leadership in CHSRA, and this is a recipe for disaster.

What more do we need by way of information before this project gets shut down?


Like this comment
Posted by HSR Critic
a resident of Another Palo Alto neighborhood
on Nov 6, 2010 at 12:32 pm

Our beloved outgoing Gov just vetoed a HSR oversight bill. We'll see what the new legislature & governor will do.


Like this comment
Posted by ODB
a resident of Old Palo Alto
on Nov 7, 2010 at 6:02 pm

- Rising cost projections

- Rising ticket prices

- Changing ridership projections

- Changing the route (to Monterey highway because the UPRR right of way isn't available)

- Still deciding where the peninsula depot will be

- Requiring that parking structures be built (paid for by whom?)

These are all changes that took place AFTER the November 2008 election. If you want proof that voters were snookered, there it is.

Anyone who thinks HSR will come in for less than -double- the current projection of $42 billion is dreaming. The so-called authority clearly hasn't got its act together and is making a lot of it up as it goes along. Somebody other than Kopp, Diridon or Van Ark needs to take Governor Brown aside and educate him that CA HSR, which is run by crooks IMO, would be an economic disaster for the state no matter how enamored one is of the concept of high-speed rail.


Sorry, but further commenting on this topic has been closed.

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