Experts Criticize High-Speed Rail Financial Plan

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The group of transportation and financial engineers and managers headed by former Caltrans chief Will Kempton said the state's plan to attract funds from both the public and private sectors seems unlikely. Bullet train planners are gambling they're wrong and voted last week to spend $4.15 billion to start construction in the Central Valley in 2012 while hoping to secure an additional $30 billion this decade to complete the full line.

"The lack of a clear financial plan is a critical concern," the report says. "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."

It says the same can be said for the expectation of billions in local funding, that the sale of $9 billion in voter-approved bonds "might only be possible, if at all, at unusually high interest rates" and that the state has "only limited credibility with private investors." Those funding sources need to jell for the state to finish the line and start running trains running between San Francisco and Anaheim by 2020.

The panel also pointed out the unpredictability of the total cost for the project, which has already soared $9 billion in the past two years.

"Estimates of the total cost of the system are highly uncertain and, if our experience is any guide, more likely to go up than down," the report says.

In an interview Monday, Kempton highlighted the need for the authority to craft a "business model."

Should the line be completely public like a transit system, or privatized?

"We think it'll be some combination of the two," said Kempton, now the CEO of the Orange County Transportation Authority.

Kempton said the report was meant as "constructive input," noting that the goal is to ensure a successful project.

The six experts issued the 19-page report for the California High-Speed Rail Authority and legislative leaders with the warning that the system would be a "daunting task under the best of circumstances." But they say it will only be tougher as governments and companies cut spending.

"I think that they're saying 'slow down,' " said state Sen. Alan Lowenthal, D-Long Beach, chairman of the Senate Transportation and Housing Committee, which will hold a hearing on the report soon. "They recognize the authority has not produced a business plan that will pass muster. There's no workable financing plan. And these are people who support the (project)."

In a written response, the rail authority thanked the group for its feedback, and interpreted the findings as a "clear call to lawmakers" to provide the agency with more funding.

The group urges the authority to craft new plans that address criticisms made in several reports since January. The Legislative Analyst's Office, the state auditor, the UC Berkeley Institute of Transportation Studies and the state inspector general all concluded that the project was on a dangerous path with uncertain financing.