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Experts warn of risks, 'no plan B' for bullet train

MTC photoWill Kempton (right), chairman of the peer review group, with former Gov. Arnold Schwarzenegger

A panel of rail experts has urged state lawmakers to seize their “last available opportunity” to straighten out California’s bullet train project before construction begins next year.

In a July 1 letter, the experts warned that the multibillion-dollar project is proceeding despite outdated cost and revenue estimates and big uncertainties about federal funding.

The California High-Speed Rail Authority, the agency in charge of the project, has pegged the cost of building the 800-mile link between Northern and Southern California at $45 billion. But those estimates are more than two years old, wrote the experts, who are members of an advisory panel called the California High-Speed Rail Peer Review Group.

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“The actual cost of the project is still unknown with any degree of confidence, but the cost is ‘trending upward’ (and) an update is urgently needed,” the group wrote.

Construction is set to begin on a $4.47 billion segment in the Central Valley next year, financed by federal stimulus money and proceeds from the sale of state rail bonds.

But the billions in federal aid needed to complete the project “may well not exist in the foreseeable future,” the experts wrote.

As a result, California faces “the clear risk that whatever is started will not be finished and whatever is finished may have only limited utility,” they wrote. The letter was signed by the group's chairman, former Caltrans Director Will Kempton. It was addressed to state Sen. Alan Lowenthal, D-Long Beach, chairman of the Senate Select Committee on High-Speed Rail.

In May, Lowenthal asked the experts to review a controversial report by the state Legislative Analyst’s Office that expressed grave concerns about the bullet train’s management and finances.

In their letter, the experts endorsed many of the legislative analyst’s criticisms. They urged lawmakers to hold the rail authority to an October deadline for producing a business plan that addresses in detail how the state actually would pay to build and operate the system.

The rail authority “should not initiate any obligations for construction” until the Legislature and governor review the business plan and decide what to do, the experts said. That’s the last opportunity lawmakers will have “to assess and influence the overall plans for the project,” the group wrote.

In a downbeat passage, the experts noted that “there are no risk-free mega-projects.” Then they ticked off a series of “manifest risks” inherent in the bullet train plan:

Final route selection is incomplete and local opposition emerges when any route approaches finalization; construction costs and schedules are uncertain and subject to upward pressure; demand estimates are in dispute and subject to a significant range of uncertainty that could produce outcomes ranging from financial profit to economic pain. ...

In plain language, there are significant gaps and problems with Plan A, and there is no Plan B.

Proponents say the bullet train is the cheapest and most environmentally friendly way to provide for California’s future transportation needs. Former lawmaker and rail authority President Quentin Kopp says it would cost twice as much to build more freeways and airports to serve the state’s burgeoning population, which some demographers say will exceed 50 million in 25 years.

But as California Watch and the Orange County Register have reported, the project is proceeding despite repeated warnings that it may be tens of billions of dollars short of the money needed to build and run the system.

Recently, state Treasurer Bill Lockyer said it was important for the governor and Legislature to address the project’s “unanswered questions” before the planned sale of $9.95 billion in state rail bonds begins next year.

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