Brian Yanity

California State Senate Committee on Transportation
State Capitol, Room 2209
Sacramento, CA 95814

March 30, 2021

RE: Appropriation of Proposition 1A Funds to the CHSRA

Good Day. My name is Steve Roberts and I am President of the Rail Passenger Association of California and Nevada (RailPAC). I want to thank you for the opportunity to view and comment on the Senate Transportation Committee’s oversight hearing on March 16, 2021 on California High-Speed Rail Authority’s Revised Draft 2020 Business Plan.

While the hearing provided a valuable update on the high-speed rail project, its challenges/risks and options for moving forward and I understand hearing comments are closed, members of RailPAC feel that there was a major omission that we want to bring to your attention. While the risks for CHSRA’s proposed path forward were presented to legislators, the risks associated with the alternatives outlined were not presented. In some cases these risks are substantial and exceed the risks for the plan outlined in the Authority’s 2020 Business Plan. As a result, Senators only have a full understanding of the benefits and risks of the proposed 2020 Business Plan, but do not have the same level of information on risks for the alternative options.

For example, Lou Thompson of the High-Speed Rail Peer Review Group suggested postponing the Proposition 1A appropriation decision by six-months. But that would put the decision out of the 21/22 State Fiscal Year budget cycle. The result would be, not a six-month delay, but a year’s delay,until the State Fiscal Year 22/23 cycle. As the Authority has noted,the cost of Covid-19 delays in 2020 has driven cost increases which combined with the Cap & Trade short-fall,sets up a cash flow crisis of unknown magnitude. Helen Kerstein, Principle Fiscal and Policy Analyst in the Legislative Analyst’s Office (LAO),felt that the Authority could manage any cash crisis associated with a delay in bond funding;but as we have seen this year, there is no certainty of that. Why take the risk and set-up such a scenario where perhaps work is slowed, bad relations are created with contractors and sub-contractors as a result of slow payments,and pre-construction work on other environmentally cleared segments is delayed? Shouldn’t the Authority’s management be totally focused on the 119-mile project completion instead of on managing a cash crisis that could have been avoided? These risks should have been highlighted to the Senators during the hearing.

A conundrum was also introduced when Mr. Thompson also suggested pausing until the Memorandum of Understanding between the Authority, the San Joaquin JPA and CalSTA could be finalized, so that with specific cost details could be provided. As a result of that pause, the Track & Signal Systems as well as equipment RFP would be deferred. Yet the track and equipment maintenance and lease costs represent the two biggest cost items in the MOU, which cannot be defined untilcontracts are undertaken. If Mr. Thompson’s recommendations are followed, the MOU would not be finalized, thus resulting in planning gridlock.

A risk factor not discussed in the recommended postponement of the Track & Signals Systems contract is the marketplace challenge presented by the fact that many of the track and signal components are long-lead time items, some specially built, in a market with a shrunken domestic supply chain.

In discussing the risk that there may be a shortfall in funds to complete the proposed Merced – Bakersfield Interim Operating Segment, the proposed option, delaying the project, in fact increases the risk, by adding costs due to construction cost inflation. This increased risk was not noted in the hearing.

Also noted,a risk for the Authority’s plan is the uncertainty over whether there would be sufficient revenues to pay maintenance and operating costs for use of the Merced – Bakersfield line. Yet,when the option of operating the existing seven round-trip San Joaquins over the HSR line was discussed, the risk of whether fewer and slower trains with no ACE connection could generate sufficient revenue to pay the Authority’s costs was not highlighted.

Regarding the diesel operation of seven daily round-trips,how does that fit with the environmental studies, all of which estimated large green-house gas (GHG) reductions as a result of very frequent electrified rail service with substantial trip time savings? Doesn’t this suggested diesel option undermine the whole environmental study process? The reversal of environmental commitments in a region where the American Lung Association’s 2016 State of the Air Report found that the San Joaquin Valley has the highest childhood asthma rates in the nation,would seem especially disingenuous. The electrification of the high-speed rail is designed to be a contributing mitigation effort for reaching GHG reduction commitments.

There was also discussion of the total cost of the remaining bonds (principle and interest). What was not noted is that,given current low interest rates, there is an opportunity to reap a substantial interest cost saving by selling the remaining Proposition 1A bonds this year rather than waiting several years.

Additionally, it was suggested that additional right-of-way planning and advanced project design (beyond the Authority’s current plan) be undertaken on the environmentally approved new segments of Phase I. While a very productive effort,this forward leaning initiative would be the first to be eliminated in SFY 21/22 if steady funding through the appropriation of Proposition 1A funds is not achieved and there is cash flow shortfall.

RailPAC feels that,when the risks of the alternative options to the Authority’s Revised 2020 Business Plan are considered, the appropriation of Proposition 1A funds to the Authority is the only proper course. RailPAC is a bi-state organization with membership throughout California and Nevada. RailPAC is a strong advocate for an expanded comprehensive public transportation network serving the entire state. RailPAC is an all-volunteer non-profit passenger rail advocacy group, founded in 1978.

Thank You for your consideration of the points that we raised in this letter.

Yours truly,
Steve Roberts
President Rail Passenger Association of California and Nevada

March 15, 2021

California State Senate Sub-Committee #5 -Transportation
State Capitol, Room 5019
Sacramento, CA 95814

Chairs Gonzalez, Durazo and Sub-Committee Members:

After review of the California High Speed Rail Authority Revised Draft 2020 California Business Plan,the Rail Passenger Association of California and Nevada (RailPAC) recommends that the Revised 2020 Business Plan be adopted. RailPAC also supports the appropriation of the remaining Proposition1A funds to complete the core 119-mile Central Valley segment. RailPAC feels it is critical to continue to focus on completing the rail line from Merced to Bakersfield and initiating the Interim Central Valley Operating Plan as the best strategy forward.

In order sustain and accelerate project momentum and avoid cash flow issues, it is critical that the remaining Proposition 1A funds be appropriated to finish the core 119-mile segment between Madera and Poplar Ave. This would eliminate a major current risk (COVID driven short-fall in Cap and Trade funds) while positioning California’s high speed rail project as the strongest candidate for additional Federal funds.

Ironically some of the project options proposed by others substantially increases project risk resulting in a high probability of an increase in costs due to delays. Suggestions that the Proposition 1A appropriation be postponed rests on the assumption that the cash flow shortfall can be mitigated. This is speculative and the recommendation increases risk. In addition, not providing a steady funding source prevents the agency from taking advantage of any opportunities to accelerate construction. This suggestion also assumes that the Biden Administration will favorably view projects that are not taking actions to best position themselves to leverage Federal investment.

Among the other postponements suggested,none creates a greater risk than the delay of the Track and Systems contract. First, the core 119-mile segment requires a track to meet ARRA requirements, second all of the core 119-mile designs for civil works will be completed by the time the Track and Systems contract is finalized, third the Track and Systems project will require many months of design and pre-construction activities all of which occur off-site without impacting civil construction. The fourth issue is extremely critical and the activity most impacted by any delay. Much of the Track and Systems components (such as rail, ties, signal components, etc.) are long-lead time items in an environment of a major federal infrastructure initiative where the capacity of the railroad supply industry is geared to lower, normal levels of railroad investment. Delay risks putting California’s HSR project behind the Northeast Corridor, Brightline, Texas Central and Chicago Hub passenger rail capacity projectsin acquiring track and signal components.

One of the key initiatives of the CHSRA Revised Draft 2020 Business Plan is to initially construct the Merced to Bakersfield operating segment as a single track line (with passing sidings). This is an example of focusing in on what is critical to start-up. A single-track rail line is adequate for systems and rail equipment testing. Given the Interim Operating Plan’s proposed service level (hourly service from Bakersfield and Merced 18 hours per day); a single track with passing sidings is sufficient. It is not until hourly service is added between Bakersfield and the Bay Area that a double-track railway will be required. During testing and subsequent interim operations additional segments of double track can be safely constructed. Amtrak totally reconstructs its Northeast Corridor tracks even as operations safely continue on adjacent tracks.

The CHSRA Revised Draft 2020 Business Plan presents a viable plan that substantially improves the California passenger rail network. The Interim Operating Plan brings true high-speed rail service to California sooner than any alternative option. It demonstrates the potential of high-speed rail while facilitating an improved and expanded ACE/San Joaquin/HSR network reaching all of California and delivering a broad integrated California transportation network with the high-speed rail service as its core link. This network also creates the most financially viable option for increasing service and reducing the required operating subsidy compared to the current standalone ACE and San Joaquin services.

The Rail Passenger Association of California and Nevada is a bi-state organization with membership throughout California and Nevada. RailPAC is a strong advocate for an expanded comprehensive public transportation network serving the entire state. RailPAC is an all-volunteer non-profit passenger rail advocacy group, founded in 1978. Thank you for this opportunity to provide input on this vital issue.

Yours truly,

Steve Roberts
President Rail Passenger Association of California and Nevada