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This week, the California Legislative Analyst’s Office (LAO) presented a report to Assembly Transportation Committee Chair Bonnie Lowenthal on the California High-Speed Rail Authority’s (CHSRA) draft 2012 business and funding plans.

The good news: The draft business plan largely meets statutory requirements. The bad news: The funding plan does not meet key statutory requirements and LAO has identified several “major issues” that should be considered by the state Legislature.

Despite the business plan meeting most statutory requirements, it’s unclear whether it meets a few, LAO said. Specifically, CHSRA has not provided a detailed project chronology that identifies the dates when it expects to complete the environmental reviews, and when it expects to begin and complete construction on each segment of Phase 1. There also appear to be fewer operating and planning scenarios that are used to forecast ridership, revenue, and operating and maintenance costs than are required, according to LAO.

Meanwhile, CHSRA’s funding plan only identifies committed funding for the initial construction segment and the authority has not completed all environmental clearances for any usable segment of the corridor, nor is it expected to receive environmental approvals prior to the expected 2012 construction date, LAO said in the report. Proposition 1A, the measure approved by California voters in November 2008, requires that CHSRA identify a corridor (or a usable segment thereof) and all sources of committed funding and the anticipated time of receipt of those funds, as well as complete all project-level environmental clearances for that segment before bonds can be released.  

Other issues with CHSRA’s business and financial plans that the LAO believes should be considered by the Legislature are listed below.

• The possible future sources of funding necessary to complete Phase 1 that are identified in the draft business plan are “highly speculative,” according to LAO. In addition, Congress has zeroed out funding for high-speed rail projects in 2012 and, as a result, “it is highly uncertain if funding to complete the high-speed rail system will ever materialize,” the agency said.

• The draft business plan compares the estimated $99 billion to $118 billion cost of constructing high-speed rail with an estimated $170 billion cost of adding equivalent capacity to airports and highways. However, the state would not spend $170 billion to address growth in intercity transportation demand, LAO said. In addition, CHSRA says the high-speed system will have capacity to carry 116 million passengers per year, but their highest ridership forecast is about 44 million passengers per year — about 40 percent less than capacity.

• As California’s population increases, the state will need to continue to invest in existing infrastructure, urban transit and roads to accommodate increased travel demands. “In light of this, the Legislature should consider where to invest limited state resources,” LAO said.

• LAO’s preliminary review of the economic analysis included in the draft business plan shows the analysis “may be complete and imbalanced, and therefore portrays the project more favorably than may be warranted,” the agency said. For example, the economic analysis does not estimate economic loss resulting from negative impacts to businesses resulting from right-of-way acquisitions and rail construction activities, or increases in urban traffic congestion near stations.

• CHSRA has not demonstrated that the benefits of the independent operational utility for the initial construction segment in the Central Valley will exceed the costs. And because there is no additional near-term federal support for high-speed rail, it’s likely that the Central Valley segment is all that might ever be built, LAO said.