The new business plan for California's proposed high-speed rail line drew sharp rebukes from Palo Alto's elected officials Thursday morning (Nov. 3), with various members of the City Council saying they remain puzzled by the ridership projections and financing plans proposed by the agency charged with building the line.
The plan, which the California High-Speed Rail Authority released Wednesday (Nov. 2), showed the estimated cost of the San Francisco-to-Los Angeles line rising to $98.5 billion. The timeline for the controversial project has also been stretched, with the projected date of completion moved from 2020 to 2033.
The council's Rail Committee on Thursday criticized the 230-page plan for not revising one of the most controversial aspects of the rail authority's previous analyses: the ridership projections for the proposed line. The rail authority's business plan claims that the new line would bring in operating profits even under the lowest-ridership scenario, a claim based on projections that have been widely disputed by state legislators, experts from the UC Berkeley's Institute for Transportation Studies and analysts from the Palo Alto-based watchdog group Californians Advocating Responsible Rail Design (CARRD).
Though the business plan slightly hedges its earlier projections by providing a range of numbers, the estimates and the methodology used to derive these numbers have not undergone any significant changes between the rail authority's 2009 business plan and the new document.
Councilwoman Nancy Shepherd called the rail authority's failure to revise the ridership data a "devastating blow" to her and to the rail watchdogs who have consistently dismissed the numbers as wildly inaccurate.
Councilman Pat Burt, who represents the city on the Peninsula Cities Consortium, said the new report has "the same sort of fundamental flaws that we saw three years ago and pointed out to the authority."
"Not only did they not correct the flaws that existed in the model, but when you apply the same model to the Initial Operating Segment, it grossly exacerbates the flaws that were already there," Burt said, referring to the proposed first segment of the rail line following the completion of the the Fresno to Bakersfield stretch.
The committee also voiced skepticism about the rail authority's plan to pay for the line. Though the project has received $3.4 billion in federal grants and state voters authorized $9.95 billion in bond proceeds for the line's construction, it remains unclear where the rest of the money would come from. The rail authority's business plan proposes a phased approach to construction that would allow the initial segment of the line to operate even if the authority fails to get more federal funding.
The authority's plan also relies on $11 billion in private investment (which would come in after the initial segment is constructed) and a "qualified tax credit bonds" program under which the federal government pays interest on bonds through tax credits. The problem with the latter proposal, as several committee members pointed out, is that this credit program currently doesn't exist. Councilman Larry Klein, who chairs the Rail Committee, likened the authority's plan to get tax credits from the federal government to getting an inheritance from an uncle one has never met.
The committee agreed that the city would need to further analyze the business plan and directed staff to come back with a scope of services for a consultant contract. The consultant's analysis should focus on the Peninsula section of the line, the committee decided.
Council members also agreed that Palo Alto should work with neighboring cities, including Menlo Park, Atherton and Mountain View, and with local watchdog groups on further analyzing the business plan. These include CARRD and area residents William Grindley, Alain Enthoven and Bill Warren, who have been analyzing the uncertainties behind the rail authority's financial projections.
"I'm skeptical about not using real earnest and accurate information," Shepherd said toward the end of Thursday's discussion. "Instead, it's looking like just another layer of a public-works project that wants to get done through a political system."