High Cost Rail - Part 129 Mulling over Mullin

For the last post of the year, let's return to high-speed rail where the news is mixed.  On Monday the Daily Post ran a piece about Kevin Mullin authoring Assembly Bill 1889 to "alter the original ballot measure" that got our high-cost rail boondoggle started.  Wonder why it needs altering?  The piece notes that the original authorization listed the boondoggle at $33 billion and it is now projected to cost $64 billion.  Of course, the only people who think it could come in under $100 billion are the people who would be in line to get the $100 billion.  Here is my favorite provision of Mullin's bill

One (funding plan) provides for building a 119-mile test track from Madera to Shafter for $7.8 billion.  After the testing is completed, the rail authority said in its funding plan that it would explore other uses for the track, though they would not immediately include high-speed trains.

I've got an idea for another use to explore.  How about a remake of the Rockie and Bullwinkle Show with Kevin playing the part of Snidely Whiplash?  I think the bill is numbered appropriately.  It would have to be 1889 with robber barons everywhere for this railroad to make any sense.

I said the news was mixed so here is the good news part.  With Elaine Chao as incoming Transportation Secretary and California Rep. Kevin McCarthy as House Speaker, federal bucks for high-cost rail in California will be about as likely as a 10 year rainstorm.  McCarthy is fond of using the "boondoggle" term that originated here in B'game in reference to Gov. Brown's train fantasy.  Sounds like the makings of a Happy New Year to me.

Comments

[Handle Bard]

Madera to Shafter. Great. Mullin wants to spend ten times as much to connect two cow towns as it takes to electrify caltrain which will help thousands of people immediately. This is backscratching at its finest.

[pat giorni]

From Bond Buyer, a newspaper read by all the firms that will potentially buy HSR bonds....

California High-Speed Rail Opponents File Suit
By Keeley Webster
January 3, 2017

LOS ANGELES - A group that opposes California high-speed rail filed two lawsuits to try to halt the project just as the rail authority planned to seek approval to issue bonds.

The California High-Speed Rail Authority approved two funding plans on Dec. 13 that would clear the way for it to sell $3.2 billion in bonds for construction projects in the Central Valley and on the San Francisco Peninsula.

The high-speed rail board approved funding for two segments: $2.6 billion for a 119-mile leg connecting Fresno to Madera and $600 million to electrify a 55-mile stretch of existing Caltrain tracks in the San Jose Peninsula that will eventually connect with high-speed rail. The state needs the money to meet its obligation to match federal funding but had been tied up in litigation for several years.

The same day the rail board approved funding, the town of Atherton, Kings County, four individuals, and three non-profits represented by Attorney Stuart M. Flashman filed a lawsuit challenging the legality of issuing the bonds.

The lawsuit challenges the legality of Assembly Bill 1889, a bill approved by the state legislature last year that allows high-speed rail bonds to be spent to electrify the Caltrain tracks. That funding use fell outside the scope of what voters approved and only voters can change it, said Flashman, who also argued in the filing that the legislation is unconstitutional.

Flashman filed a second lawsuit Jan. 3 challenging the use of cap-and-trade money to support the project on behalf of the Transportation Solutions Defense and Education Fund, one of the litigants named in the December suit. That suit claims the California Air Resources Board violated the federal Environmental Quality Act and Assembly Bill 32, a state bill that sets emission reduction targets, by including the rail project as an emissions reduction project, because the project's construction will result in the release of more greenhouse gases than it will reduce.

"It is our view that litigation would not prevent the director of finance from approving the funding plans," said H.D. Palmer, a California Department of Finance spokesman. "Earlier litigation validated the sale of the bonds. The treasurer has a court order from the Third District Court of Appeals that he's safe to sell those bonds."

Palmer also said that the DOF isn't named in the suit filed by Flashman. He declined to speculate whether the groups would seek an injunction that would prevent Jeff Morales, the rail authority's director, from presenting the funding plans to the DOF. The DOF would need to approve the plans, before the Authority could ask the treasurer's office to sell bonds on its behalf.

"It appears unlikely a lawsuit would further stall the process, short of an injunction," Palmer said.

Though Flashman sent a letter to Michael Cohen, Director of Finance, in September saying Cohen would be named in a lawsuit challenging AB 1889 and seeking injunctive relief, only the rail authority is named in the suit. The lawsuit does seek an injunction to halt bond spending on the rail project.

"While it is true that the state can legally issue the bonds, the courts can block the state's ability to spend the proceeds if the law is struck down as unconstitutional," said David Schonbrunn, president of Transportation Solutions Defense and Education Fund.

The state typically holds two bond sales, one in the spring and one in the fall, to support a variety of infrastructure projects.

Voters approved nearly $10 billion in high-speed rail funding in 2008. The state treasurer's office initially sold about $1.1 billion in high-speed rail bonds but the bonds were encumbered for years as the project was tied up in court.

The plaintiffs in the biggest case lost in June and opted not to appeal, finally freeing up financing for the project.

"We have a different set of claims," Schonbrunn said. "The big issue here is the constitutionality of the legislature's rewriting of the bond measure."

In the earlier filing, the Court of Appeals also told litigants that the case was not "ripe" for litigation because the rail authority had not released its second funding plan - and now it has, Schonbrunn said.

"The Court of Appeal acknowledged that the bond measure created a financial straight jacket - the legislation attempts to shrug its way out of the straight jacket," he said.

Schonbrunn described his organization as rail advocates. He said they are opposing the project, because they fear the project will never be completed, the state will end up with stranded assets and that will mean the end for high speed rail.

"We have to kill this project, because if it doesn't get killed now, it will fail catastrophically and the public will forever be wary about rail projects," said Schonbrunn, who has been involved in efforts to halt the project since 2004.