Spending for California’s bullet train divides state leaders as never before

Even after a decade of abrupt U-turns for California’s high-speed rail project, state leaders are now split like never before.

Gov. Gavin Newsom insists the state stick with his plan to use all of the remaining funds to build an operating segment in the San Joaquin Valley between Merced and Bakersfield.

But others, including Assembly Speaker Anthony Rendon (D-Lakewood), are calling for limiting that $20.5-billion blueprint and shifting a quarter of the investments to high-speed rail segments in Southern California and the Bay Area.

The argument boils down to where the money can do the most good, in terms of carrying more passengers, reducing greenhouse gases and generating political support to find an additional $60 billion to connect Los Angeles and San Francisco.

The fractures came into sharper focus this week at a testy Assembly Transportation Committee hearing in Fresno, where state rail officials argued with their own board members, legislators chided the California High-Speed Rail Authority’s highly paid consultants, and outside experts warned that the state was lurching from one plan to another without any long-term strategy for success.

“It is sad that we are having the discussion the way we are having it,” rail authority Chief Executive Brian Kelly said amid the debate at a standing-room-only hearing room in Fresno, about 100 feet from the future bullet train tracks.

Others said an open and spirited debate about the project is long overdue, particularly because it faces such a cascade of problems, including cost increases, schedule delays, battles with the Trump administration and questions about whether it can ever fulfill the mandate for a two-hour-and-40-minute ride between the state’s urban mega-centers.

“The problem I am seeing is how this discussion is being framed: us vs. them, all or nothing, in or out,” said Daniel Curtin, a rail authority board member and director of the California Conference of Carpenters. Curtin, who backs reallocating the funds, was appointed to the rail authority by former Assembly Speaker Toni Atkins (D-San Diego), now the Senate leader, who has declined to respond to questions about her current position on the project.

Under Newsom’s plan — which he reiterated to the Fresno Bee editorial board just a week before the hearing — the state rail authority would build a 171-mile segment that would run electrically powered trains between Bakersfield and Merced. The authority argues that it would demonstrate to voters and private investors that the state can actually build and operate a bullet train.

The plan adds 50 miles to the current 119 miles of construction contracts in the Central Valley and would present significant new challenges for the project. Even with the previous 119-mile goal, the rail authority had consistently missed targets to have that amount of track completed by 2022, as required under a federal grant deadline.

In response to a question at Tuesday’s hearing, Kelly said the authority will complete less than $50 million of construction work this month. But the spending rate to meet the 2022 deadline is at least $180 million a month, meaning the project is still struggling.

In an email Friday, Kelly said the authority “has not been shy in discussing” how challenges involving right-of-way procurement and third-party agreements have affected the project’s construction pace. “However, we are progressing on those fronts and we are seeing momentum in our construction activity,” he said.

The authority recently released a document with all of the approved delay claims and change orders that have been filed by its three construction teams on the 119 miles. The document lists more than 1,000 change orders over 266 pages. They range from $126 million, approved in August, to one for $1,376.03 approved in 2017.

In total, the authority has approved demands for about $810 million by its three major construction teams, and completion is at 54% of the job. Many of the changes stem from delays the authority caused by not having land for the contractors to build on.

Ron Tutor, chief executive of Tutor Perini, which is building the Fresno section of the rail structures, told investment analysts recently that he expects his contract will ultimately reach $2 billion, a 100% cost increase from its original price.

Separately, personnel turmoil continues at the authority, The Times learned Thursday. The agency in recent days removed Don Odell, director of real property, and Fred Arnold, a key consultant manager also handling land acquisition. Neither could be reached for comment.

Odell, an attorney who negotiated directly with farmers and their attorneys, was reportedly put on administrative leave. The moves follow several other changes of bullet train personnel in recent months.

The seeming disarray and turnover have left the project vulnerable to arguments that it must change direction.

Rendon began the debate this summer when he called for spending more money on the bullet train route from Burbank to Anaheim and in San Francisco. Assemblywoman Laura Friedman (D-Glendale) and Assemblyman Tom Daly (D-Anaheim) became outspoken proponents of that plan, writing an opinion piece that ran last week in the Orange County Register.

But Kelly argued strongly that the only way the state can have a bullet train system is with a “building-block approach.”

“We have never had all of the money we need to build it all,” he told the legislators. The alternative is to get some kind of service operating as soon as possible.

“One hundred seventy-one miles is not a chump-change route,” Kelly said at the hearing.

Opponents say the state should instead run modern 125-mph diesel trains through the San Joaquin Valley until the system is ready to connect with Los Angeles and San Francisco. Their plan to divert funding would also defer building a link from Wasco at the south end to Bakersfield and possibly from Madera to Merced at the north end.

The changes would save about $5 billion that could help build a tunnel under downtown San Francisco and track improvements on the future bullet train alignment from Burbank to Anaheim.

Friedman, a member of the Assembly Transportation Committee, argued Tuesday that investing money in the segments with the highest population density and the biggest need for improved rail service would result in the greatest ridership, rejecting the analysis of the rail authority’s German consulting firm Deutsche Bahn that showed the Central Valley was a better bet.

The firm’s “preliminary finding” said investments in Southern California would result in only “incremental” benefits, while those in the Central Valley would be “substantial.” Friedman wanted to know how the firm could reach that conclusion before it had conducted actual ridership model studies.

“You can’t have a preliminary finding when you don’t have ridership numbers,” she told Mark Evans, the Deutsche Bahn official who testified. “It shows me you don’t have a finding. I want to see a train with a lot of people on it.”

Under Newsom’s plan, the bullet train would terminate in Merced, where passengers could transfer to San Francisco on the Altamont Corridor Express, a diesel-powered commuter train.

Curtin argued that running 125-mph diesel trains in the Central Valley on the high-speed track would not require a change of train in Merced to continue to the Bay Area, resulting in a bigger passenger draw and a faster trip than having a somewhat faster electric train at 170 mph that would require a transfer. And until the line in the Central Valley is ready to hook up with electric trains traveling through mountain tunnels from San Francisco to Los Angeles, the investment does not make sense, he said.

But Kelly rejects that as a worst outcome: “What I think would be a tragedy is if you diverted the money to different places and you were left with incremental speed improvement on diesel service.”

Assemblyman Joaquin Arambula (D-Fresno), who chaired the meeting in the absence of Transportation Committee Chairman Jim Frazier, argued against Friedman, saying the Central Valley plan is consistent with the requirements of the bond act.

The current discussion sidesteps a much bigger problem facing the project: where it will get the money to build a completed system, said Louis Thompson, chairman of the state-appointed peer review panel. Creating a partial operating system in the Central Valley will make no sense if the state never connects it to Los Angeles and San Francisco, he said. That means it must now identify how it will pay the roughly $50-billion to $60-billion tab, assuming costs do not continue to rise.

And the risks keep going up every time the state lurches in a new direction, said Stacey Mortensen, the chief of both the ACE commuter train in the Bay Area and the San Joaquin service that is marketed by Amtrak.

Mortensen said she voted against the 2008 bond act because she was “worried that exactly this would happen.”

She added, “The project should not be such a roller coaster ride.”