Sacramento Superior Court Judge Michael Kenny has ruled that California’s High Speed Rail Authority cannot access the $9 billion in bonds that voters had approved for the HSR project back in 2008. While the ruling doesn’t kill HSR in California outright, it does drive a significant stake, or sharp tie, through the project’s pocketbook. From the LA Times:
Kenny ruled that the state does not have a valid financing plan, which was required under the 2008 bond measure, Proposition 1A. The measure included provisions intended to ensure the state did not start the project if it did not have all of the necessary funds to complete a self-supporting, initial operating segment.
The state rail agency created a funding plan, but it was an estimated $25 billion short of the amount needed to complete a first working section of the line.
Kenny ruled that the state must rescind the plan and create a new one, a difficult task because the state High-Speed Rail Authority hasn’t identified sources of additional revenue to allocate to the project.
In addition, Kenny ruled officials “made critical errors in approving the sale of the bonds” and declined to legally validate their sale but did refuse to grant a request to stop California’s HSR project in its tracks or cancel construction contracts which have already been issued.
The state has argued it can use federal grant funds, which are not subject to the conditions of Proposition 1A, to start construction. But eventually the state will have to match federal grant funds. Without access to bond funds, the legislature would have to appropriate money from a different source.
The ruling doesn’t only threaten California’s High Speed Rail project but also the 1.4 mile extension of Caltrain from Forth and King to San Francisco’s new Transbay Transit Center, a billion-dollar-plus project which would have to be funded by the City and Caltrain if the dollars for HSR fall short.