I've been saying that the high speed rail issue isn't going away.
This is what I received this evening from RailPAC, which is a
pro-high speed rail organization. David Crane is Schwarzenegger's
finance specialist. The Governor appointed him to the CHSRA to keep
him informed and keep control over this organization. Richard Silver
and Steven T. Jones are intensely pro high speed train. Let me say
this as loudly as I can:

IF YOU DON'T WANT THE HIGH SPEED TRAIN TO GO UP THE CALTRAIN CORRIDOR
(AS IT SURELY WILL), IT MUST BE STOPPED.

THE GOVERNOR WILL NEED TO HEAR FROM YOU.

THEY TALK ABOUT $40 BILLION.

IT WILL BE THREE TIMES THAT MUCH!!!!!

ULTIMATELY, THAT'S OUR MONEY THEY ARE EAGER TO GIVE AWAY FOR THE MOST
USELESS PROJECT IN CALIFORNIA'S HISTORY.

Martin
====================================
RailPAC Alert: Governor High Speed Rail
Stand

Below is a story that recently appeared in the San Francisco Bay
Guardian. It was sent to me by Jo Linda Thompson who has been almost
single handly leading the efforts in Sacramento on getting funding
for High Speed Rail. It is a fair account of just what is going on.

But she needs your help. I know that many of you have already
written or called you Assembymember or Senator asking them to support
High Speed Rail. But those of you that havn't need to make your call
or send your letter TODAY! And even if you already sent a letter
SEND ANOTHER.

This RailPAC e-mail list that you are on contains about 3,500 names.
If the members of the legislature recieved 3,500 letter and phone
calls there would be money for HSR.

Richard Silver, Executive Director
RailPassenger Association of California

Published Thursday, April 26, 2007, by the San Francisco Bay Guardian

Arnold's dishonest rail stand

By Steven T. Jones

Why can't Gov. Arnold Schwarzenegger or his proxies explain their
opposition to high-speed rail? They try, as they must. After all,
this is a green project lauded across the ideological spectrum and
around the world for its potential to prevent global warming, dirty
air, and clogged freeways and airports.

But all the answers Arnold's people give are illogical, unresponsive,
or contradicted by the experts. In the end, it appears the
Schwarzenegger administration is simply unwilling to support high-
speed rail or to level with the public about why. Legislators and
other Democrats say they're solidly behind the project, something
that will be tested this weekend in San Diego when the state party
convention considers a resolution of support authored by longtime
party activist Jane Morrison of San Francisco.

"It's very timely because the governor is trying to cut the budget
[for the California High Speed Rail Authority] back to $1 million and
delay the bond measure," Morrison told the Guardian. "I think this is
a terribly important project."

As I worked on my recent article on this topic, it was maddening
to try to get a straight answer out of David Crane (the San Francisco
venture capitalist that Schwarzenegger appointed to the CHSRA board)
or the governor's flacks.

Crane's position is that you have to have a comprehensive financing
plan identifying private capital sources before moving forward. Other
sources close to the project, as well as another prominent venture
capitalist that I consulted, all told me that the public commitment,
in the form of approving the $10 billion bond in the fall of 2008,
had to happen before the private sector would get involved.

So I asked him repeatedly (as the governor's flacks lingered on the
phone line) why he and CHSRA couldn't put together that plan over the
next year and a half and still do the bond measure as scheduled. It
was a question he wouldn't answer, instead becoming increasing angry
that I wasn't yielding to his expertise. He even accused me of
misrepresenting what Quentin Kopp and Mehdi Morshed of CHSRA had told
me and then called them up to get them all riled up (apparently
misrepresenting to them what I had said). But Kopp and Morshed each
liked my article and said I had quoted them accurately.

Yet at the next CHSRA meeting, which was focused largely on Crane's
demand for a more detailed financial strategy, there was a
presentation by Lehman Bros that seems to validate my questions and
discredit Crane's answers.

"The funding of a high-speed train system in California will require
a combination of private and public sources; however, public sources,
including federal, state and local, will be essential in early
development," read one of eight Powerpoint slides, which
Schwarzenegger spokesperson Sabrina Lockhart forwarded me.

Another of those slides contradicted something that she had told me,
which is that the high speed rail bond would squeeze out other
important bond issues, for prisons, freeways and the like.

"The $9.95 B in GO Bonds already scheduled for the 2008 ballot are
affordable under the Administration's current debt ratio limit," one
slide read. "The Governor projects $100 B in bonds to be issued
through FY 2015-16; HST bonds could be issued without exceeding a
debt ratio of 6.5%."

So I asked her again why the bond measure needed to be delayed and
why, if the financial plan that Crane wants is so pressing, the
governor is proposing to give this agency just $1.2 million this
year, thus ensuring that none of the preparatory work would get done.
"The Governor wants to be sure we have clear road map for the entire
financing of the project -- that is what taxpayers would expect
before we mortgage $10 billion. The discussion about issuing a bond
for 25% of the system cost is a distraction from what's really
required at this stage, which is a credible plan for financing the
planned $40b system," Lockhart wrote me in an e-mail, twice, ignoring
the other questions I was asking and points I was making.

One of those points was Morshed's belief that a $10 billion bond,
with matching private funds (which shouldn't be difficult to get
considering the project is expected to pay for itself twice over)
and some federal transportation money, would be enough to complete
the San Francisco to Los Angeles link.

The other point dealt with a recent report on the subject by the
Legislative Analyst's Office, the nonpartisan state office charged
with cutting through budgetary bullshit in the Capitol. Its report
concluded that it's "time to bite the bullet for the bullet train,"
noting that the governor's approach makes no sense.

"The administration proposes to indefinitely postpone submitting the
high-speed rail bond measure to the voters. This would essentially
end the project unless another source of funding is provided. The
budget, however, requests $1.2 million to support the continued
operation of HRSA during 2007-08. This amount does not include
funding for the authority to continue to contract for work related
to the development of a high-speed rail system."

In other words, Schwarzenegger wants to waste millions of dollars
in taxpayer money (on top of the $47.4 million spent so far on the
project) just so he doesn't have to be honest with the public about
his apparent opposition to high-speed rail.

"If the Legislature decides that the project should proceed, it
should provide funding for HSRA to continue its system development
work in 2007-08. Otherwise, there is no reason to continue funding
the authority. In that case, we recommend deleting the $1.2 million
from the budget and enacting legislation to disband the authority,"
the LAO concluded.

Indeed, the governor's stall tactic won't work for long. While
Morshed was careful to tell me that Crane was asking "constructive
and reasonable" questions about how the project will be funded
(perhaps deferring to a guy who is essentially one of his bosses?),
Morshed also said, "We can answer those questions in a fairly timely
fashion."

So in the next few months, once those questions are answered and
everyone else is ready to move forward with the bond issue, will
our supposedly "green" governor still stand in the way of the most
significant environmental project that the state is proposing?

Posted by San Francisco Bay Guardian on April 26, 2007

Comments (1)

I asked for and received a response to my post from Lockhart. Here
it is, followed by my response to her:

David Crane said to direct you to the comments he made at the meeting
at which that presentation was made. There he made the same point he
made on the call with you that the first required step towards
successfully constructing the system is a credible plan for its
financing. Also, we can't speak for federal and local authorities,
but the state has demonstrated very strong and early support for the
system through its expenditure to date of over $40 million on pre-
development costs."

We're not sure we understand your question because one's ability to
afford something doesn't necessarily mean one should purchase that
something, but in any event, Crane has never made any remarks about
bond capacity and his position has always been that discussion about
issuance of a bond for financing 25% of the system is premature and
a distraction from what's really required at this stage, which is a
credible plan for financing the system. Nothing could be more
damaging to the HSR's prospects than to ask voters to approve a
$10b expenditure without first gaining comfort from financial
experts and the HSR Commission that the other $30b will be there
to actually complete the system.

Steven T. Jones wrote:

Nothing that you said in this e-mail addresses what I wrote in my
last post or the original article. It doesn't address why you believe
the bond measure must be delayed, or why a financial plan can't be
developed beforehand, or why you want to slash the budget of an
agency that you want to do more work now. It doesn't address the
conclusions in the Lehman Bros or LAO reports. Instead, it simply
repeats your same discredited talking point about a bond issue that
would fund 25 percent of the project, when you know full well that
this is a phased project and this bond measure (along with the
private match that has always been a factor in this, well before
Crane got involved) is likely to pay for the first phase (LA-SF).
Why can't you just be honest with me and the public?

See what's free at <http://www.aol.com?ncid=AOLAOF00020000000503>AOL.com.

-- 
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Martin Engel
1621 Stone Pine Lane
Menlo Park, CA 94025
650:323-1670
martinengel@earthlink.net
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