Category Archives: Finances

U.S. House of Representatives Unanimously Passes Amendment Proposed by Congressman Jeff Denham to Nullify California High-Speed Rail Grant Agreement

Congressman Jeff Denham's District

Congressman Jeff Denham’s District

Citizens for California High-Speed Rail Accountability (CCHSRA) received a press release this morning (June 10, 2015) from the office of U.S. Representative Jeff Denham, who represents many residents of the Central Valley concerned about the financial waste, ill-conceived route alignment, and relentless property takings of California High-Speed Rail.

You may thank Congressman Denham via email by going to this website:

https://denham.house.gov/contact-me/email-me

Be especially sure to contact Congressman Denham if you live in his district. See the district map.


In a vote Tuesday evening (June 10, 2015), the U.S. House of Representatives unanimously passed Congressman Jeff Denham’s amendment to the Fiscal Year 2015-2016 Transportation, Housing and Urban Development appropriations bill nullifying the current grant agreement between the Federal Railroad Administration (FRA) and the California High-Speed Rail Authority.

“This amendment will finally hold California High-Speed Rail accountable for its finances,” said Rep. Denham. “The project is several decades behind schedule, nearly $70 billion over budget, and will not meet the speeds, travel times, or ridership levels promised to voters. No longer will they be able to accept a hamburger today for payment on Tuesday.”

Specifically, the amendment prohibits any appropriated federal funds from being used for high-speed rail in the state of California or for administering a grant agreement that includes a “tapered” match (described below).

When the Federal Railroad Administration initially awarded the Authority with nearly $3 billion in federal grant dollars under the federal stimulus package, it entered into a standard grant agreement with the Authority requiring a dollar-for-dollar match. This agreement stipulated that for every federal tax dollar spent, the Authority must spend a dollar from a non-federal source. California never came up with the money and subsequently missed payment deadline after payment deadline.

In order to avoid violating the Federal Deficiency Act, the Federal Railroad Administration quietly amended its grant agreement in December 2012 to allow for a tapered match – allowing federal dollars to be spent in advance of any matching dollars – despite having no assurances from the California High-Speed Rail Authority that the matching dollars would ever exist. The FRA’s Inspector General has subsequently criticized FRA for jeopardizing federal taxpayer dollars with this scheme. This amendment guarantees that the FRA must enter into an agreement that requires the Authority to match, dollar-for-dollar, federal tax dollars in current fiscal years.

See Text of Denham Amendment to Nullify the California High-Speed Rail Grant Agreement

Congressman Denham has repeatedly introduced legislation to stop the California High-Speed Rail Authority from continuing to waste billions in taxpayer dollars. In June 2012 and June 2014, he offered an amendment suspending federal funding for California High-Speed Rail. It passed each year. He also successfully added an amendment to the American Energy and Infrastructure Jobs Act (H.R. 7) in February 2012 ensuring that money in highway bills could not be spent on California High-Speed Rail. In January 2014, Rep. Denham introduced the Responsible Rail and Deterring Deficiency Act, which would suspend all federal funding to California High-Speed Rail.

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Encouragement: Our Next Steps in Pursuit of California High-Speed Rail Accountability

Frank Oliviera, co-chairman of Citizens for California High-Speed Rail Accountability, provides these encouraging words to all Californians (and Americans) concerned about how the most expensive endeavor in human history continues to advance in defiance of law.

Here Is Where We Are…

What is the Meaning of the October 15, 2014 California Supreme Court Decision?

On October 15, 2014, the California Supreme Court denied petitions asking the court to review a disappointing appellate court decision that sided with Governor Brown and the California High-Speed Rail Authority. This outcome is a setback but certainly not the end of the citizen campaign to ensure accountability for the California High-Speed Rail project.

The news media is mistaken when it echoes the triumphant claims of Governor Brown and the California High-Speed Rail Authority that this court decision is a major “go-ahead” for construction to start. It is not. This project is not inevitable and citizens on the side of the rule of law should not surrender to the interests pushing it.

The appellate court decision simply said that the trial court (the Sacramento County Superior Court judge) erred in rejecting the California High-Speed Rail Authority’s FIRST funding plan. The appellate court declared that the first funding plan was simply notification to the California legislature before the legislature appropriated money for the project. The appellate court also said that the Authority COULD NOT USE or SPEND Proposition 1A bond funds UNTIL it had gone through the rigorous requirements and procedures of a SECOND funding plan.

Without the ability to spend Proposition 1A bond funds, the Authority is still hindered in its plan to take land and direct its design-build contractor Tutor Perini/Zachary/Parsons to demolish buildings and prepare land and build bridges for actual rail construction in a few years. It will have to rely on limited revenue obtained through cap-and-trade taxes and other budget sources. It may also seek international government funding or perhaps even private investment.

It is also important to remember that the appellate court itself said that the Authority FIRST funding plan was defective and deficient. These problems still exist, and the Authority will have to overcome them before approving a second funding plan.

Therefore, there will be somewhat of a “repeat” of what has happened to date. Before borrowing and spending $8.5 billion authorized by Proposition 1A, the Authority has to prepare a detailed new second funding plan. This plan must meet requirements in state law to demonstrate adequate funding and environmental compliance. Then the California Director of Finance must approve the plan.

Our Next Steps to Ensure Accountability

Citizens will have an opportunity to file papers if there are legitimate legal reasons to oppose approval of the second funding plan by the California Director of Finance. If approval is granted for a defective and deficient plan, citizens can seek a writ of mandate from a court to stop the funding plan on the basis of its failure to comply with Proposition 1A. The appellate court said that citizens had the opportunity to do this when the ACTUAL SPENDING of the money is at issue.

Another Lawsuit Is Moving Toward Trial on Some Compelling Arguments

Meanwhile, a case is moving toward trial based on the California Code of Civil Procedure Section 526(a), a state law that gives taxpayers rights to defend their interests against injury. This lawsuit is separate, involves different issues, and is NOT AFFECTED by the appellate or supreme court decisions. A Sacramento County Superior Court judge has already rejected aggressive efforts to dismiss this lawsuit. Damaging evidence is being collected to introduce at the trial, which is expected to occur early in 2015.

If the people filing the lawsuit win on any of these four issues, the project may be stopped:

  1. Will the Authority be able to carry a passenger between San Francisco and Los Angeles in the 2 hours, 40 minutes required by law? (No.)
  2. Does the adoption of the “blended system” by the Authority violate Proposition 1A because California voters never approved it, and does those the blended plan make the goals of the High-Speed Rail system unachievable? (Yes.)
  3. Will the government need to subsidize operating costs – something forbidden expressly by Proposition 1A? (Yes.)
  4. Is the High-Speed Rail system financially and physically viable? (No.)

Once the evidence is determined, the court will establish a briefing schedule. The case will be briefed, argued, and then decided. The leaders of CCHSRA believe that the California High-Speed Rail Authority does not meet the requirements of Proposition 1A; in fact, the Authority CANNOT comply the requirements of Proposition 1A under its current business plan or under ANY plan.

Few people are willing to admit this stunning truth in public: Proposition 1A was a poorly-written law, and the state legislators who are routinely honored for writing it actually doomed the project through their incompetence.

There’s a Long List of Other, More Obscure Lawsuits Challenging the Project

As anyone can see from looking at the closed session agenda items of the board meetings of the California High-Speed Rail Authority, there are at least a dozen other major lawsuits originating from all over the State of California challenging the project. Some lawsuits contend that the Authority has violated environmental laws; a few challenge the constitutionality of the cap-and-trade taxes that are now a major source of funding for the project. In fact, the 2014 business plan for the California High-Speed Rail Authority is riddled with weaknesses, inadequacies, absudities, and failures to comply with the law.

Hundreds of private property owners in the San Joaquin Valley are prepared to go to court to force the state to legally justify the taking through eminent domain of homes, ranches, farmland, churches, and small businesses. On the Peninsula, numerous parties are ready to file a lawsuit challenging a Final Environmental Impact Report shortly to be approved for the electrification of the CalTrain commuter rail. This electrification of the CalTrain rails is a precursor to high-speed rail trains sharing track with CalTrain commuter trains at the northern “bookend” of the “blended plan.” If you don’t remember voting on this blended plan, your memory isn’t failing: it was developed AFTER voters approved Proposition 1A.

California High-Speed Rail Can’t Get Through the Tehachapi Mountains

New outrages and schemes come to light at every California High-Speed Rail Authority board meeting. Proving yet again the value of the First Amendment, the press is constantly exposing what Governor Brown, his appointees, and some powerful legislators don’t want the people to know.

The latest revelation is not a surprise to people who closely monitor the Authority, but nevertheless it is a stunning development.

The Authority’s own experts and consultants (contracted through the engineering firm of URS) issued a report in September 2013 saying that the grade going south over the Tehachapi Mountains (between Bakersfield and Los Angeles) was too steep and the route for the Bakersfield to Los Angeles project segment through Palmdale was therefore infeasible. The Authority was ridiculously assuming that the high-speed train would coast down from the mountains to the San Joaquin Valley at 220 miles per hour. Reportedly these consultants/experts found themselves looking for a new job after writing this report.

All along, Citizens for California High-Speed Rail Accountability has insisted that the Authority needs to choose a route along Interstate 5 through the Central Valley and through the Grapevine. Twice the Authority has rejected this alignment based on logic and instead chosen an alignment based on politics.

Expect this report to be important evidence in the trial about taxpayer standing.

Don’t Give Up, and Please Consider Ways to Support the Fight for Accountability

The backers of California High-Speed Rail as currently planned have corporate and political power as well as taxpayer money and public legal resources. Governor Brown is intent on getting the project underway. The financial industry is eager for the bonds to be sold to investors. Construction and transportation conglomerates and their unions want the work and the money, now. Meanwhile, a small but influential group of intellectuals and activists regard the train as the centerpiece of a utopian vision for America in the 21st Century.

A majority of Californians rightly see the project as foolish and misguided. Generally, the more people know about the high-speed rail project, the less they are to support it, at least as it stands now. Whenever you hear people talking about how “cool” the train will be, start by asking them if they know how much it will cost, how the state will get the money, where the train route will go, when the system will be completed, and how it will be secured.

Finally, please join our group of ordinary citizens in staying the course and fighting for accountability on every aspect of this project. If we persevere, I am confident that we will achieve our goal of accountability, but it will take time and money. Don’t be discouraged!

Please share this with any interested parties.

Citizens for California High-Speed Rail Accountability (CCHSRA) Express Support for Bill to Freeze Spending of Federal Funds While Courts Stop Bond Sales

On Monday, March 24, the California Assembly Transportation Committee held a hearing on Assembly Bill 1501, introduced by Assemblyman Jim Patterson of Fresno, that would have prevented the California High-Speed Rail Authority from spending federal grant money on the bullet train while the courts continue to prohibit the state from borrowing money by selling Prop 1A bonds. Assemblyman Patterson noted that the state would be bound to matching any of the federal funding spent on the high-speed rail project.

Aaron Fukuda, co-chairman of the CCHSRA, testified as a key witness in support of AB 1501. A second featured witness in support of AB 1501 was Diane Friend, Executive Director of the Kings County Farm Bureau. In addition, Alan Scott and Frank Oliveira of CCHSRA spoke during public comment in support of AB 1501, along with policy consultant and CCHSRA ally Kevin Dayton of Labor Issues Solutions, LLC.

A California High-Speed Rail Authority representative claimed that Cap and Trade auction allowances (described by some as “taxes”) would match the federal funding. Representatives of the California Labor Federation, the State Building and Construction Trades Council of California, and individual construction trade unions spoke in opposition to AB 1501, along with representatives of high-speed rail interests.

Assemblyman Patterson had hoped the committee would pass his bill to the Assembly Appropriations Committee in order to trigger a fiscal analysis. Instead, the Democrat majority on the committee rejected the bill on an 11-4 party-line vote.

Watch the video of the AB 1501 hearing (starts at 20:50).

Now on the Web: A Centralized Primary-Source Compilation for Reports and Litigation on California High-Speed Rail Finances

If you’re looking for primary source documents about California High-Speed Rail finances, take a look at a relatively new and simple web site: California High-Speed Rail Finance Reports (Calif HSR Fin Reports). It’s the self-declared “Home For Reports And Litigation On Aspects Of The California High Speed Rail’s Finances.”

According to the authors, “As a team of financial experts, with many years of diverse experience, we have reviewed and analyzed the financial aspects of the planned California High Speed Rail project, and have documented the financial risks of this project in a series of reports. We are proud to present our reports here.

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