The California High Speed Rail Authority is heaving a sigh of relief, as the Federal Railroad Administration announced its decision to give the Authority an extension on a $180 million payment.
As part of the grant agreement with the FRA, the Authority initially had until April to secure state matching funds for the California High Speed Rail project. However, with the legal setbacks that have faced the Authority in recent months, including a state court’s decision to deny the Authority’s use of nearly $10 billion in Prop1A bonds, it has remained unclear whether or not the Authority would be capable of making the $180 million payment on time. As a result, the FRA has extended the payment date until July 1.
Congressman Jeff Denham, who sits as chairman on the Transportation and Infrastructure Subcommittee on Railroads, Pipelines and Hazardous Materials and has been openly critical of the high speed rail project, says that the FRA is continuing to protect the Authority at the expense of taxpayers.
“The Federal Railroad Administration is protecting the Authority yet again and putting California taxpayers at greater risk,” said Denham. “It has long been clear that the Authority would be unable to provide the funds required in their grant agreement.”
Pointing out that the FRA changed the agreement in December 2012 to allow for a tapered match rather than the standard concurrent match, Rep. Denham says the FRA must stop making exceptions for the Authority and the California High Speed Rail Project.
“Now they’ve changed the agreement again. With billions in federal taxpayer dollars on the line, what changes are next from the FRA?” said Denham. “The American people, and California taxpayers, deserve to see their money used responsibly.”
With the changed grant agreement that occurred in 2012, the Authority was granted permission by the FRA to continue receiving federal funds without providing the previously required state match. Under the revised agreement, the Authority was required to provide the federal government its first payment of $180 million on April 1. By changing the due date for the first payment to July 1, Denham says the Authority is being allowed to avoid its obligations yet again.
“It’s obvious that the Authority is determined to build at any cost, despite their failure to get court approval and provide a business plan that passes muster,” said Denham. “That’s why I introduced legislation in January that would protect taxpayer dollars by suspending federal funding to the project.”
Denham’s legislation, the Responsible Rail and Deterring Deficiency Act, aims to suspend federal funding for the project until sufficient non-federal funds were available. Since federal funding on the project must be matched by state bonds, Sacramento Judge Michael Kenny’s ruling in November denying the Authority’s funding plan and prohibiting the use of nearly $10 billion in Prop1A bonds caused major setbacks for the project. The ruling left Denham and many other California lawmakers to believe that the Authority would not only be unable to meet the contributory match percentage for funding, but also incapable of completing the project according to the project’s schedule found in the initial agreement.
Issuing a request to the California Supreme Court to review the ruling made by Judge Kenny on the Prop1A bonds, Governor Jerry Brown has continued to fight for California’s first high speed rail project. As a result, the California Supreme Court ordered the state court decision to be reviewed in an appeal court, in an expedited process per Gov. Brown’s request.
Although opponents of the project have argued that state funds should have been secured and spent first before spending federal funds, as is the case with most federal-state matching fund programs, President Obama gave special permission to the Authority to spend federal funds first as all stimulus money must be spent by September 2017. While the Authority has yet to pay its first state-match payment per the agreement, more than $3 billion in federal money has been spent on the California High Speed Rail project to date. Should the Authority be unable to pay their share of the matching funds by the extended July 1, the federal government could withhold necessary funding for the state.
Despite all of the legal and financial setbacks the project has faced, the Authority has remained set on its timeline for completing the entire 520-mile system by 2028. Although court battles have caused serious delays, construction for the initial segment running from Merced to Fresno should begin by late spring or summer.