Panel raises concerns about bullet train

A sweeping independent assessment of the state's proposed $43-billion high-speed train is delivering a sober warning that financial, planning and staffing challenges must be swiftly addressed if the project is to succeed.

Among the alarms sounded by a special voter-created bullet train watchdog panel are the grim fiscal realities facing recession-ravaged federal, state and local governments.

With the "deteriorating budget climate" for public agencies and the small likelihood of a new large federal funding program, "there is an air of unreality about a plan that includes $17 [billion] to $19 billion in 'free' federal funding from programs that do not yet exist," the California High-Speed Rail Peer Review Group wrote.

The "same can be said of the expectation of large local and state funding," added the panel of transportation, financial and high-speed rail construction experts in their first major assessment for lawmakers and state rail executives.

The 20-page critique comes just as the High-Speed Rail Authority has reached a major milestone. Last week, the authority's board voted to commit $4.15 billion - including almost all of a recent federal economic stimulus grant - to build an initial 65-mile segment in the Central Valley. That leg would run between two small towns north and south of Fresno and is scheduled to begin construction in 2012. Nearly $10 billion in state support was approved by voters in 2008, based on plans to connect San Francisco and Southern California with trains running at up to 220 mph.

The chairman of the review panel, Will Kempton, said the report is intended to offer "constructive input" to legislators and officials guiding the project. "I think the group wants a successful outcome," said Kempton, chief executive officer of the Orange County Transportation Authority.

The six-member panel was appointed by the state's elected controller and treasurer, as well as cabinet members of Gov. Arnold Schwarzenegger, a strong bullet train backer. Among the findings:

-- The authority's small staff, which is struggling to manage dozens of engineering, management and public relations contractors, is "totally inadequate to oversee a project of this magnitude."

-- The "lack of a clear financial plan is a critical concern," and confusion about possible on-going taxpayer subsidies for the project must be resolved.

-- Fixes are essential to the reliability of ridership and operating revenue forecasts. Criticisms by experts at UC Berkeley and elsewhere "have raised sufficient concerns [about the model] so as to call into question the project's fundamental basis for going forward."

-- The authority must immediately focus on a business model for the project, including the extent to which public and/or private entities will design, build, finance and operate the system.

The authority's deputy executive officer, Jeffrey Barker, welcomed the group's report, saying it is "a clear call to lawmakers to support the project by providing the authority the resources necessary."

Most of the project challenges had been previously identified by auditors and analysts, he said. Still, the review "should be a wake-up call that a commitment of ongoing federal support for the project is still crucial to its future," he said.

Sen. Alan Lowenthal, (D- Long Beach), chairman of his chamber's transportation committee, said the report validates issues raised repeatedly by lawmakers. The authority has "been in denial," he said. "These are very serious concerns. I think it's a convergence of another group saying there are unanswered questions that need to be addressed."

The project may need to be slowed down and carefully reassessed, Lowenthal said, adding he is planning hearings on the report in coming weeks. "We need to make sure we make the right decisions. This is the largest, most complex project ever done in the state."