Public questions state’s high-speed rail hopes for private investment

A stream of critics confronted California High-Speed Rail Authority board members in Fresno on Tuesday, reading form-letter questions about the agency’s prospects for attracting private-sector investment in the state’s planned $68 billion bullet train system.

Ross Browning of Laton said Kings County-based Citizens for California High-Speed Rail Accountability orchestrated the person-by-person reading to draw attention to responses the authority received from 36 builders, manufacturers and financial companies to the agency’s query for interest in the development of an “initial operating segment” through the San Joaquin Valley to either Burbank or the Bay Area.

Browning was among about 20 people who read and presented variations of the form letters during a 2  1/2 -hour public-comment session of the rail board’s meeting at Fresno City Hall. Each person raised questions about a different company and its response to the state’s query. At least seven made a trip from Acton, in northern Los Angeles County, to read their versions of the letter and express concern about potential routes through their community.

“It has come to our attention that Japan Consortium responded to your request for private investment to fund the construction of the California High-Speed Train Project,” Browning said in his turn at the microphone. “Is it true that they advised you that they will not invest in your project because, (a) the initial operating sections, north and south, should be put into one large package with the design, build and maintenance separated, and (b) secured payments for the contract are not in place?”

The rail board typically doesn’t respond directly to questions or comments posed during the public comments, but authority board Chairman Dan Richard opted to answer the queries.

“Is it true that these companies have refused to invest? No, it’s not true,” Richard said. “That’s not the question we asked. We did not ask if they would invest … It’s a fair question for citizens to ask, but there’s a lot of confusion about what we asked and what was the response.”

Richard said the authority’s request for interest from the railroad and infrastructure industry was aimed at trying to determine whether an ongoing stream of income from California’s greenhouse-gas reduction program, better known as cap-and-trade, would be seen as sufficient by the private sector as a way to finance part of the construction, “and if not, what ideas would they give us to make financing more achievable?”

“Second, as we look at major construction, what is the best way to organize” potential contracts, he added. “What do they think would be the most efficient way to aggregate or divide (the contract packages). We got a lot of good information.”

Still, the responses received by the agency last month uniformly suggested that the project likely would not attract private-sector investments without a greater infusion of government money or a guaranteed return on investment – subsidies that are forbidden under state law.

The rail authority has about $3 billion in federal stimulus and transportation funds, as well as about $3 billion in matching funds from Proposition 1A, a 2008 high-speed rail bond measure. That money is committed to construction of about 130 miles of tracks in the Valley between Merced and Bakersfield. The cap-and-trade program has the potential to generate as much as $500 million more annually. But the agency estimates the cost to complete an operational segment to Burbank, in the San Fernando Valley, at about $31 billion. The cost for the full Phase 1 system, from San Francisco to Los Angeles and Anaheim, is pegged at about $68 billion.

There is no set date for when the first trains could start carrying passengers.

Also on Tuesday, the rail board received a progress report on work to evaluate route options for a Y-shaped junction near Chowchilla, where the main Valley line between Merced and Bakersfield would branch westward toward Los Banos, Gilroy and the Bay Area. What was once described as a “spaghetti bowl” of potential routes in and around the city has been reduced to three that are being studied in detail, said Diana Gomez, the authority’s Central Valley regional director.

Two of the options run east-west along the north side of Highway 152, at the edge of Chowchilla’s southernmost city limits. One calls for a northward branch along Road 13 west of the city, while the other would branch north along Road 19 to the east of Chowchilla. Both would roll trains through part of the area the city recently annexed with an eye toward industrial development. The third option would run east-west near Avenue 21, about two miles south of the city, with its northward branch at Road 13.

Engineers and rail authority staff aren’t likely to name a preferred or recommended option until early next year for detailed environmental study. But the alternatives each have their supporters and detractors.

Merced County farmer Kole Upton told the board that Preserve Our Heritage, a farmland preservation organization, supports the Highway 152/Road 19 alternative as least disruptive to agriculture. The city of Chowchilla opposes both Highway 152 options and supports the Avenue 21/Road 13 option. And Barbara Nelson of Fairmead, a small hamlet along Highway 99 between Chowchilla and Madera, said residents there favor the Avenue 21/Road 13 alternative because either of the Highway 152 options could bisect the town. “Fairmead is mostly people of color and low income,” said Nelson, who is president of Fairmead Community and Friends, “and (the Highway 152 routes) will have a big impact on our community.”

Gomez said the agency expects to recommend a preferred alternative to the rail board this winter and issue a draft environmental impact report in the spring. A final decision on the route and certification of the environmental impact report likely would not happen until sometime in 2017.

This story was originally published November 17, 2015 at 5:16 PM with the headline "Public questions state’s high-speed rail hopes for private investment."