A crowd of 300 packed into the Palo Alto City Council Chambers Tuesday afternoon to learn about the newly released business plan. Although there was a heavy union presence including a staged rally outside City Hall, they were quiet during the comment period except for one panel member and a handful of representatives. Their message was we need jobs, proceed with the project. However, testimony was approximately 5 to 1 in opposition of the plan, aligning closely with a San Jose Mercury news poll this week that suggested 83% would “scrap the project.”
The Assembly Budget Committee #3 was represented by Chairman Rich Gordon from the Peninsula and Assemblymember David Valadao from the Central Valley. Assemblymember Jerry Hill was also part of the panel although not a member of the budget committee. The purpose of the meeting was to hear testimony concerning the November 1, 2011 released business plan from the Rail Authority, and to hear from the public. This is one of many hearings planned across the state.
The High Speed Rail Authority -- primarily CEO Van Ark and Authority board member Dan Richard -- gave a 30 minute presentation. http://www.youtube.com/watch?v=BsYrs3WzjLw Assemblymember Valadao questioned them at several points during the meeting. Here are five minutes of exchanges. http://www.youtube.com/watch?v=wskY8oeCtM8
A balanced panel then represented speakers coming from business, finance, public advocacy, the peer review group and labor. Each gave a 5 minute presentation.
The Legislative Analyst Office, the non-partisan group that advises the Legislature, reported that they have not yet finished a review of the 230 page business plan, although they did methodically list a litany of concerns:
- The “currently identified funding is highly problematic.” “According to the draft business plan, between $24.6 to $31.6 billion is needed for the first usable segment of approximately 300 miles of high-speed train service.” They also say that “future funding sources are speculative and lack a firm commitment or assurance as appears to be required by Prop 1A.”http://www.lao.ca.gov/handouts/transportation/2011/2012_HSRA_Business_Plan_11_15_11.pdf
- Another concern is that the economic impact analysis appears incomplete and imbalanced. This portrays the project “more favorably than it may warrant.” They site as an example that “jobs and economic activity will be lost as businesses in right-of-way are impacted by construction.”
- Concerns that the blended system that integrates high speed and regional/local rail systems may not conform to design and operational criteria specified in Proposition 1A.
- Lack of details about the Initial Construction Segment. For example, the plan lacks complete capital costs, cost of connecting to Amtrak, and an estimate of net benefits to the state from the construction of this segment.
- Concerns about the comparison of $99 billion cost of building high-speed rail with the $170 billion cost of building highways and airports with equivalent capacity. Concerns because it assumes the maximum capacity of high-speed rail and ignores the existing capacity or future demands for regional travel throughout the state.
The public was up next and spoke and spoke for about 2 hours. Speakers came from far and wide. The Central Valley showed up in force, displaying their hospitality by handing out bags of fruit grown from their prime farm lands and produce orchards, which are first on the High Speed Rail Authority’s chopping block.
Bakersfield was well represented and articulated the destruction that would occur to homes, businesses, schools, and city property. The proposed route through downtown Bakersfield is on a path to destroy 8 houses of worship.
Several major themes emerged: where’s the money coming from, how can we afford this, this isn’t what the voters voted for, poor route planning, blended or phased planning, not listening to the public or government representatives, the need for jobs and the questionable job creation numbers, the need or lack of need for high-speed rail, violations of 1A in several areas and the big issue of ridership.
The issue of ridership continues to be at the forefront because it determines the size, scope, routing and provides an indication of program profitability. The current model being used for this 2012 Business Plan was created by Cambridge Systematics (CS) in 2007. The contract with CS was owned by Metropolitan Transportation Commission (MTC) and has been under fire for two years. This is the same model which the University of California at Berkeley, Institute of Technology (ITS) concluded was unfit for public policy making. They stated that the model could not predict if the HSR project would be a big success or a big failure. Unfortunately, the Legislature did not require the Rail Authority to start a new model with an independent source such as the ITS group, despite the imploring of CARRD and other groups. Equally unfortunate, the Legislature did not protest the formation of an internal ridership panel under the direct supervision of CEO van Ark.
A new model is being studied now at the cost of $4 million dollars by the very people who created the first model and who received the work without a competitive bidding process. As one speaker noted, the public can have no confidence in numbers that have not been independently vetted.
Notable quotes:
Aaron Fukuda,Citizens for High Speed Rail Accountability (CC-HSR
In 2010 numbers, Agriculture was a $1.7 billion business in Kings County. $556 million was dairy. Fukuda gives the example of the Machado Dairy which is predicted to lose 83 acres and that in turn will require the reduction of the number of cows- 8 cows per acre and the loss of $4500 per year per cow. Fukuda gives the example of what that means in milk production for just one cow, in fact,“the most prolific milk producing cow the world has ever known, No. 289, lived in this county for 19 years and gave 54,070 gallons of milk.” The result will be a $1.8 million dollar loss in income. Kings County in turn will lose $6.5 million dollars. “Rushing to make this project shovel ready to capture $3 billion will cost us much more in the mistakes the Authority will occur and has occurred.” http://www.youtube.com/watch?v=FE3Dsd59x4k
William Grindley: Mr. Grindley, also part of the panel, gave evidence that “all the high speed rail programs in the world” don’t make a profit, as commonly quoted by the Authority and project supporters. He showed off his Lego-building abilities as he demonstrated the effect on the state’s finances if the project is built. He outlined proof that the HSR system in California cannot work without a subsidy, which is against the law. Watch his amusingly yet informative presentation on YouTube: http://www.youtube.com/watch?v=3nP8X0ccLbU (5 min). And later HSR Authority Board Member Rossi's response to the question of Operating Profits. http://www.youtube.com/watch?v=fcJLkAOv2CU
Ted Crocker from Burlingamestated this wasn’t what he voted for. It was not supposed to be a “pay as you go program.” He asked a very pointed question to the committee members, “What is the limit of the program costs that must be spent before the Legislature is willing to call it quits.”
David Schonbrunn- President of the Transportation Solutions Defense and Education Fund (TRANSDEF): Mr. Schonbrunn says the “authority’s funding plan does not conform to 1A, the emperor has no clothes” [] He also stated that the Authority does not have funding for a usable segment. “Planning based on engineering rather than politics” can bring about a better project. They advise defunding the Authority, canceling its contracts and putting the contract out to bid to private companies immediately.
Elizabeth Alexis, Panel Member:A Co-founder of Californians Advocating Responsible Rail Design (CARRD), Ms. Alexis spoke to the Legislature about their choices with this project. Instead of an up or down vote on this funding, she offered a third alternative, take another year to analyze the data so that you can “make an honest assessment.” http://www.youtube.com/watch?v=-C4VHcqXpHQ (4 minutes)
Will Kempton- Chairman of the Peer Review Group: The panel hasn't met yet to discuss the business plan. He sees improvements but has many concerns. http://www.youtube.com/watch?v=K2pty49oD1U
Nadia Naik (CARRD)spoke about the ridership panel.
- The panel of 5 experts was selected by the Authority.
- TWOpanel members were the original reviewers of the model before, and so in essence they are reviewing their work again.
- There has been no public disclosure of any potential conflicts between the members of the Panel and the consultants on this project.
- Panel members are paid up to $400 an hour for the next two years – once you are getting paid at that rate; you are part of the team.
- They have signed confidentiality agreements so they can only talk to the Authority.
- They have never had a public meeting.
- The Panel was NOT directed to answer the critical question of “is this the right model for what we need.” Instead, they were told “the model has been an appropriate tool”– in other words, they were given the answer.
Rita Wespi (CARRD)presented the legislative committee with a 17 point checklist in deciding whether “To Fund or Not to Fund” and challenged them to find one they could check off. “You – Democrats in particular – will be under a lot of pressure to do the right thing for California. You’ll be caught between the political pressures of the Governor who is asking that you fund this project, and your constituents who’ve lost faith in what was promised in 2008. The fear of losing 3 billion dollars of federal money is wagging this 98 billion dollar dog.”
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