CHSRA Board Approves Blended Plan, Bond Sales

Posted on 19 March 2013

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By Robert Cruickshank

The California High Speed Rail Authority board met Monday and took action on two rather significant items.

First, the board voted to approve the Memorandum of Understanding with Caltrain that allows the "blended plan" to move forward. Approval had been delayed earlier this month when Lynn Schenk voiced her concern that the "blended plan" wasn't workable and fell short of the Prop 1A guidelines. Other longtime HSR supporters welcomed the MOU and the "blended plan":

Bay Area Council CEO & President Jim Wunderman: "Caltrain serves one of the most economically productive corridors in California and the nation, and one of the busiest and most congested commuter corridors in the Bay Area region. The new MOU between Caltrain and the high speed rail authority is another important step forward for the modernization of the Caltrain corridor. Modernizing this vital transportation system will boost ridership and remove thousands of cars a day from Highway 101. Most importantly, it will keep this unparalleled corridor of innovation and prosperity functioning for employers, workers, and residents, so that it will remain the place where 'the next big thing' is born."

SAMCEDA CEO Rosanne Foust: "The new MOU between Caltrain and the CHSRA can move both projects forward by providing funding and clear principles for implementation. The MOU also addresses key concerns expressed by Peninsula communities about the blended system, including assurances that it will be primarily two tracks substantially within the current JPB right-of-way. It Is also important to us that the MOU expresses respect for the interests of local stakeholders, and that Caltrain will mutually agree with CHSRA on final project design and construction plans for the blended system."

Friends of Caltrain Adina Levin: "We are very pleased that Caltrain and High Speed Rail are updating their agreement with support for the blended system. We expect that this MOU will launch the close collaboration that will be needed to design, fund, and operate a blended system that supports our San Francisco Peninsula community transit needs and long distance travel for the state."

I've heard that there might be a legal challenge to the MOU, claiming that it violates Prop 1A. We'll see what happens, and while I am very deeply sympathetic to Schenk and her concerns, ultimately I agree with those quoted above that this is a good path forward.

Yesterday the Authority board also voted to approve the sale of $8.6 billion in bonds.

Officials say they will try to sell $2.6 billion of the bonds as the state rushes to begin construction in July...

Contractors have submitted bids to design and build the first $1.8 billion, 30-mile stretch of track.

Lawmakers appropriated the initial $2.6 billion last year along with another $1.1 billion in non-high speed rail bonds. They would have to act again to appropriate the remainder of the $8.6 billion, [Dan] Richard said.

So this authorization is a step, but the legislature will still have to appropriate the money. Of interest is the method by which the $2.6 billion in bonds will be repaid:

Interest payments on the entire amount would cost the state an estimated $700 million a year for 35 years, but the debt payments of about $175 million a year on the initial $2.6 billion would come from fees paid by commercial truckers, not from the state's general fund, Richard said. He said it is not clear if the overweight fees on truckers would cover the entire amount.

While I wouldn't mind if the money did come from the general fund, it's even better than it's not, meaning HSR can be built without causing impacts to the general fund that would be grist for flawed but potentially effective attacks on the project. I'm all for finding creative ways to fund the project, as long as those ways are sustainable, and in this case they appear to be so.

Robert Cruickshank writes on California politics at Calitics and California High Speed Rail Blog. This article was originally published at California High Speed Rail Blog.

Good idea, but it's too expensive.