California’s judicial branch coming through for California taxpayers. Via the Los Angeles Daily News:
A judge’s decision this week to block the state’s access to billions of dollars in bonds it needs to build a bullet train also threatens the only other pot of money California has to finance the project — $3.3 billion from Uncle Sam.
Just a few days ago, the state’s High-Speed Rail Authority believed it had $8.6 billion in state bond proceeds and $3.3 billion in federal money to begin construction this spring on the rail line’s first stretch of track in the Central Valley.
But now the authority’s ability to spend any of those crucial funds to push the controversial bullet train project forward is highly uncertain.
“The rulings raise so many questions about whether this project still makes financial sense,” said Joe Nation, a public finance professor at Stanford University who called it a “moment of truth” for California.
“This could turn into a real nightmare,” he added.
Even before Monday’s stunning rulings by Sacramento Superior Court Judge Michael Kenny, the project had been mocked as a “train to nowhere” because the state had only enough funding to build about 120 miles of track, from the Fresno-Madera area to the northern outskirts of Bakersfield.
The $8.6 billion in voter-approved state bonds and the $3.3 billion in federal funds represent less than one-fifth of the money needed for the $68.4 billion project. But because of Monday’s rulings and the possibility that federal funding could be pulled back, the money “in hand” could ultimately become pocket change.
The state has already spent more than $700 million on engineering and planning costs from bonds approved by California voters in 2008. But according to an agreement the state signed with the Federal Railroad Administration, the federal government can yank the $3.3 billion it has committed to the project and even force the state to repay $397 million in federal money spent on planning, engineering and administrative costs.
What exactly did they get for $700 million? At the very least, $700 million should buy you a a snazzy website that works 80 percent of the time. . .
AEI’s James Pethokoukis wrote on the above news, “Obama’s bullet train dream just derailed in California.” Let’s hope so.
But even with funding in doubt, this hasn’t stopped California from shopping for new trains. The shopping trip is complicated, however, because there are certain buy-American and buy-Californian provisions attached to the funding and none of the manufacturers, as of yet, are in California, let alone America. Via the Fresno Bee:
California has yet to break ground on its controversial high-speed train system, and legal challenges remain in the path of construction.
But that’s not stopping the California High-Speed Rail Authority, in conjunction with Amtrak, from shopping around for the best deal on multimillion-dollar trains to roll on their proposed high-speed lines — in California between San Francisco and Los Angeles through the San Joaquin Valley, and Amtrak’s Acela service between Boston and Washington, D.C.
Together, the two agencies are preparing to ask for bids in coming weeks from manufacturers to build between 50 and 60 train sets capable of carrying passengers at speeds up to 220 mph.
From a 34-acre plant in southeast Sacramento, Siemens Industry is one of a handful of multinational companies with an eye on the prize — a contract for “rolling stock” potentially worth $2 billion or more.
Siemens, headquartered in Germany, is one of the key players in the worldwide high-speed rail market. Others include France’s Alstom, Canada’s Bombardier, Spain’s Talgo, Italy’s AnsaldoBreda, Japan’s Hitachi and Nippon Sharyo and Korea’s Hyundai Rotem.
But none of those companies — and no U.S. firms — are building that kind of train in America.
That’s because there are no “high-speed” rail systems, typically defined as 155 mph or faster, operating in the U.S. The closest thing to it, Amtrak’s Acela, runs at a maximum speed of 150 mph for short distances but has an average speed that is closer to 75 mph.
“There are no North American manufacturers of high-speed rail equipment,” said Frank Vacca, chief program manager for the California High-Speed Rail Authority and former chief engineer for Amtrak. “The market for these train sets is in the European and Asian markets” where high-speed trains have been running for decades. Consequently, that is where they are built.
[. . .]
“Buy America” rules on the project will require that whatever company wins the train contract to build them in the U.S., and mostly with American-made parts.
For California’s share of the order, “Buy California” guidelines are also expected to come into play, Vacca said. That could potentially give Siemens a big leg up on its competitors because it already has a manufacturing plant in the state.
Vacca said some companies have plants in the U.S. where they build commuter-rail cars, including sites in Nebraska, Indiana, Wisconsin and New York. “Others don’t have any plants.”
“Our Buy California rule is going to be strongly encouraged so these trains are, at a bare minimum, going to have to be assembled here in California,” Vacca said. “Those that don’t have plants here, we’re going to very strongly suggest that they build a manufacturing plant here in California.”
To sum things up: California has spent $700 million so far and doesn’t have the a) the money to move forward or b) anyone to buy trains from even if it did have the money to move forward.