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CA's High-Speed Rail Authority needs loan to mitigate legal delays

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A State Assembly budget committee voted Wednesday to approve a loan for the High-Speed Rail Authority. 

The $26.2 million would cover operating costs for the agency that's building California’s bullet train while it seeks to resolve legal challenges over its use of voter-approved bonds. 

In 2008, Californians approved Proposition 1A, authorizing the state to issue $9 billion in bonds to build a bullet train that speeds riders from Los Angeles to San Francisco in  less than three hours.

But critics say the High-Speed Rail Authority’s latest plan for the project won’t provide that fast of a ride.  

“They are claiming that they can still meet the two hours and forty minutes, but they don’t have any evidence to show that,” said attorney Stu Flashman, who’s suing the state on behalf of various cities and environmental groups to stop the project. 

Last year the Authority revised its business and funding plans to bolster support for the project and cut costs that have ballooned in the years since voters approved Proposition 1A.     

The new $69 billion plan relies on a “blended approach” in which bullet trains share tracks with regional rail and commuter services.  Instead of paying to solely build dedicated lines, the authority pays to upgrade some existing tracks. 

“That’s going to have, more or less, slow speed rail at both ends and high speed rail in the middle — kind of a high speed sandwich,” Flashman said.  “Given how slow it’s going to be, they’re not going to get the ridership they’re claiming they can get.”

Without the ridership, Flashman maintains the state will need a subsidy — something Prop 1A doesn’t allow.

In an effort to assure bond investors that its plan complies with the proposition,  the agency filed a bond validation in Sacramento Superior Court last month, seeking an expedited legal process.

“The validation action consolidates lawsuits into one proceeding,” Rail Authority CEO Jeff Morales explained at Wednesday’s hearing, “so that we don’t have a set of serial suits that just indefinitely keep the debate going.” 

Whatever the judge decides will become the final word on how the bond money can be spent.  A decision could take years, and during that time the Authority can’t issue any state bonds for the project.  That’s why officials want to borrow from another state fund to cover operating costs in the next fiscal year.

Assembly Jim Patterson (R-Fresno) disliked the plan to make a loan that might never get paid back if the judge decides the new high-speed rail plan violates Proposition 1A.   

“This is a very significant matter,” Patterson said. “It cuts to the very heart of whether or not what the voters voted on is actually being implemented in the business plan.”

Democrats on the budget subcommittee approved the loan request.

Rob Wilcox, a spokesman for the Rail Authority, said the bond validation motion won’t prevent the project from moving forward.

The agency will spend nearly $3.5 billion in federal funds to build the first segment of track in the Central Valley.  The agency is reviewing bids for a bullet train track from Merced to Fresno and expects to break ground on the project this summer.

Wilcox also said $1 billion for local transit projects in Southern California and the San Francisco Bay Area can also be allocated to the project.