LA lawmakers push to lift High-Speed Rail’s $500M cap on work outside Central Valley
AI-generated summary reviewed by our newsroom.
- LA legislator seeks to remove $500M spending cap on work outside Central Valley route.
- Change aims to attract private investors to accelerate and expand high-speed rail.
- Bill is one of several legislative requests by Rail Authority.
A state bill introduced by a Los Angeles legislator seeks to undo a 2022 state rule that bars the California High-Speed Rail Authority from spending more than $500 million on most work outside its initial Central Valley route.
State Sen. Henry Stern, D-Los Angeles, says his Senate Bill 1411 is intended to unlock the rail authority’s ability to land private investors — which could pour money into the project faster than its annual allocations from the state.
“This isn’t about L.A. grabbing money from the Valley,” Stern said Friday in a phone interview.
Stern’s bill comes as the rail authority is finalizing a private sector deal the agency says will allow it to build faster so it can begin to generate funds for the project through ridership and the commercialization of its properties.
Rail Authority CEO Ian Choudri told The Bee last year the agency aims to finalize a deal with an investment group by this summer. He added that private sector investment is more likely to materialize if the system can extend beyond the 171-mile initial segment between Merced and Bakersfield.
Though that route is expected to operate at a financial loss, it was prioritized for initial service by the 2022 state law that Stern’s bill is looking to change.
The bill’s introduction also follows months of lobbying by Merced officials who last year were caught off guard by a rail authority report that suggested building the initial route without a Merced station. The agency said bypassing Merced would save costs and accelerate the project’s timeline of extending to the Bay Area and Los Angeles.
A rail authority spokesperson told The Bee last month “there are no plans to defer the Merced station.”
The agency did not respond to a request for comment Friday.
The high-speed rail project has grown controversial since California voters in 2008 approved $9.95 billion in bonds for a train that would connect the state’s major metro areas at a total cost of about $45 billion. Today, after years of delays and cost increases, the project aims to complete the Central Valley route by 2032 at an estimated cost of $34.76 billion.
The rail authority has said its costs could increase and progress could slow if state lawmakers don’t approve a series of proposals, including those in Stern’s bill.
CA bill would remove high-speed rail spending cap outside Central Valley
Seeking to advance Gov. Gavin Newsom’s 2019 directive to prioritize construction in the Central Valley, state legislators in 2022 passed a law, SB 198, to cap the rail authority’s spending on the project beyond the Valley segment.
Specifically, the law prohibits the rail authority from using money it receives from California’s Greenhouse Gas Reduction Fund, the project’s main source of ongoing funds, on work outside its Merced-to-Bakersfield route. The pollution reduction fund is fed by revenue from the state’s Cap-and-Invest program, which generates public dollars from companies that buy credits at state auctions to offset their greenhouse gas emission.
The law says the spending restriction will last until 2030 or until the Central Valley route is fully paid for, whichever comes first.
SB 198 allows the rail authority to spend outside the Central Valley for “additional activities, not to cumulatively exceed ($500 million), that maximize the efficiency of delivering the project.”
Stern’s SB 1411, introduced in late February, would scrape the “not to cumulatively exceed ($500 million)” language from the 2022 law. That would allow the rail authority to use any otherwise authorized amount from its pollution reduction fund allocation on any work that helps advance California high-speed rail more efficiently, Stern said.
High-speed rail has used Cap-and-Invest dollars for more than 10 years. After the federal government rescinded $4 billion in grants from California project last summer, the state extended its Cap-and-Invest commitment with a $1 billion annual allocation through 2045 for high-speed rail.
L.A. legislator says high-speed rail bill not about ‘diverting money’
Stern said making high-speed rail spending more flexible would “draw in the private capital we so desperately need.”
“It’s not so much about diverting money to a particular project first,” he said.
He said he believes the private financing strategy would eventually create more money for rail across the state, including in the Central Valley. Private investors will be more willing to put their money into rail if they know they will get a return in San Jose or downtown Los Angeles, Stern added.
“That actually bolsters the overall financial viability of the whole portfolio,” he said.
Stern said extending the project from the Central Valley into the Los Angeles County city of Palmdale is not his specific motivation, though he added “there’s a lot of private interest” in the future segment between Los Angeles and Anaheim.
“But I don’t know what goes first and second,” he said, adding that should be decided based on the rail authority’s expertise and what the private sector is able to finance.
“We have to really fight against our instincts as politicians to fight for our own project and our own area if we are going to truly get this all done,” he said.
