Senate Transportation Committee

Thank you. Thank you. public comment. We'll hear that at the end. Once we've heard all the witnesses and their testimony on the panels, we'll have that public comment period. And for those who wish to comment on the topic on today's agenda, which is the high-speed rail and its 2026 draft business plan, you'll have one minute per person. For those that are hearing that for the first time, it's not a me-too public hearing but one minute per person when that time comes we will be timing folks and I'll keep you to the one minute. I also want to announce that all hearing materials including the agenda background and handouts are posted and can be accessed on the Senate Transportation's Committee webpage. I want to first thank all of our panelists for taking the time to testify today and I want to thank all our committee members for attending and participating in the hearing today And I know people will be coming in as the committee hearing moves forward. The point of today's informational hearing, as I noted, is to review the California High-Speed Rail Authority's 2026 draft business plan and discuss the next steps for the project. Two years ago, this committee held a hearing on the 2024 business plan, and since then the authority has gone through major changes, including a new CEO. Welcome. our new executive staff and a bottoms-up review of the project. Also, a shift in the initial operating segment, scope, changes in the Central Valley, a loss of key federal funds, and a renewed search for private funding and value capture opportunities. Many of those changes are igniting renewed interest and excitement about the project's future. However, many are causing concern and controversy, so today is an opportunity to hear more about that. As one of the committees responsible for the oversight of the authority and the project, we plan to dive into some of those issues today. As many of you know, I'm excited about the authority's plans to encourage private investment in the project. I've long believed that there are significant development opportunities along the alignment with station communities being the focal point, but beyond that as well. I encouraged by the recent actions of the authority to bring on private partners and develop options for ancillary revenue generation and i look forward to hearing more details about those plans today and after today as well however there are concerns about the lack of safeguards and protection for the state and local governments as the authority pursues pursues potential private borrowing and p3 financing options we look forward to the testimony of the lao to help us better understand those risks and options for the legislature to consider. Additionally, the authorities propose major adjustments to the Merced to Bakersfield segment as currently defined in law, specifically moving the locations of Merced and Bakersfield stations, having only a portion of the alignment be double-tracked. I've met with Merced officials. I've heard their concerns. Certainly, as chair of the committee, I've met with the CEO and heard on some what I consider to be good explanation of those concerns, good answers to those questions, and I hope there's an opportunity for those to be well presented today. Although these changes present opportunities for completing the first usable segment of high-speed rail, they do raise questions, as they noted, and we would encourage folks to get those questions answered today. On the financial side, the project has recently secured an ongoing $1 billion annual appropriation from Cap & Invest. However, the project also recently lost $4 billion in federal one-time funds. The 2026 draft business plan forecasts that the authority will have the funds to complete the Merced-Bakersfield segment. However, questions remain about aligning cash flow with the projected schedule. Beyond the Central Valley, there is still not an absolutely clear path to connections to Silicon Valley or Los Angeles, especially in terms of the need to secure funding. and I know the CEO and others have been vocal about that. Additionally, the cost and schedule estimates in the draft business plan reflect conditions that have not occurred yet, such as approval of the scope changes and successful passage of numerous legislative proposals. Hopefully, we can parse much of that out today in the couple of hours that we've allocated for this committee hearing. Finally, I'd like to acknowledge the initial review of the draft business plan by the Inspector General, who we thank for being here today. He noted that it is missing statutorily required elements and that if those emissions are not addressed, the draft business plan will not be compliant. We want to hear more about that. And, of course, we'd like to hear from High Speed Rail Authorities Administration as to their feelings about the OIG's assertion and how that compliance can be brought to bear. Also, he notes that it will mask the true cost and timeline for completing the project's initial operating segment. I look forward to the authority's attention to these concerns, the committee's attention to these concerns, and how the final business plan will reflect them. So today we'll hear from the authority and our respected oversight partners from the LAO and the Inspector General's office. That's really the bottom line. I will now ask our vice chair if he's here yet. He's not. I had a nice spot for him in my notes to offer some opening remarks. I'm sure Senator Strickland is here later. We'll hear from him. Now, let's get to our first presenters, panel one. Ian Chaudhry, CEO of the California High-Speed Rail Authority. Mark Tolson, Chief of Staff of the California High-Speed Rail Authority. I'd like to welcome both of you here and welcome you as soon as you're ready to make your opening presentations. And we would ordinarily keep those to five to seven minutes We understand I just asked you to cover a lot of ground so we do our best to accommodate you Thank you

Thank you, Mr. Chaudhary. Mr. Tolson, were you going to make remarks yourself or you're here just in support?

Okay, thank you. Thank you. Appreciate that. We'll come back to the committee for questions at this time and or comments. Anybody? Yes, yes, Senator. Go ahead.

And then within California transit agencies, how they operate in the regional rail, how they operate and how we are thinking differently. One, metro systems in general, they either feel that they don't have the jurisdictional powers to go and commercialize on the real estate like the airports, The airports are a very good example in the U.S. of how concessions work and how the property of the land they own, how they can capitalize by any way possible, they can generate revenue, and they're always profitable. They have gate fees for airlines that they use for generating revenue. Then they have concessions all across terminals. We don't do that. And the reason could be, and I have to look into it, why a system like BART or the one that you are talking about, Lausanne or Metrolink, cannot generate those kind of revenues. What you mentioned about Europe and Japan, what's different? High-speed rail systems are part of their rail program, and so that includes regional, intercity, and high-speed all together combined. And in their approach, and this is I'm going to refer to Italy, France, Spain, and Japan in general, they do take fair box recovery ratios very similar to us, which is ranging between 35% to 45%. But they're always profitable, and they expand their system as they go forward. And the reason of that is it's not the fair box that is going to give them the revenues. it is all the ancillary revenues that they are generating from the system. And what is that? Commercial development on their land. If the nation of Japan decided that they will build high-speed rail and they will build five-star hotels on the station grounds or they will put a convention center in place or they will have concessions with a lot of different merchants, then that's a decision made within their laws, and they are doing it, and they are generating over 160 to 170 percent of their operational costs. What they do with the rest of it is they put it back into the system. Currently, what we are doing at High Speed Rail is looking at that model. And for us, at the state level, with a program that goes about 860 miles long when we combine phase one and two, there is a lot of opportunity for us to capitalize and value capture. So that's the difference in the way we are looking at it. I believe that the local systems like metros and subways, they were set from the past to not have those opportunities given to them. And I think that's just because it's not in the statute for them to go do those developments. I think we should open up as well for them.

So you're saying you do feel you have the tools to make that happen?

Okay, so the status of the economic development effort right now is that you are, what's the exact status?

Senator Grayson.

Yes, it's a bigger question. So we do have private sector's interest now. We never had it before. What we do now, they are engaged. they have submitted their proposals, and we are reviewing that. And there are two parts of our strategy. One, we are looking at infrastructure, private sector financing against a state backstop, which is a state funding commitment. And then second is energy, which is we are required to put renewable clean energy grid in our system. So we are also looking at public-private partnership with those folks who do business related to renewal and clean energy. Both sides of those activities, we have received a lot of interest from the private sector. The real question is that we are trying to work on and resolve is like when we have $1 billion a year cap and invest appropriations done, thanks to you all, and then now we are saying how do we bring that cash forward instead of building a billion a year until 2045 because the value of that dollar goes down as we move forward. So that is a tool or instrument that we need to advance cash through bonds or through some other ways. That is under discussion. We are not there yet on that. Now, private sector does financing against funding commitment or collateral that is available at the state level. IN ORDER FOR THEM TO DO THAT, WE NEED TO SHOW THEM HOW QUICK WE CAN PAY THEM BACK TO BRING THE INTEREST RATE DOWN. AT THIS STAGE, WE HAVE SEEN THAT THEY ARE VERY, VERY INTERESTED THANKS TO THE BILLION A YEAR TO 2045 THAT HELPS US IN BUILDING MERCET TO BAKERSFIELD BUT WE NEED TO GET BEYOND THAT AND SO WE NEED TO GET THEM billion a year till 2045 That helps us in building Merced to Bakersfield but we need to get beyond that and so we need to get them excited about building outside of that and we are debating and discussing and deliberating with our colleagues in the administration to see how we can do that.

Vice Chair Strickland, by the way, I had an opening. I know you were moving around from place to place here, but no problem. I just wanted you to know we were hoping for some comments from you as vice chair, and I'm sure you have questions and things you want to talk about in addition to your overall duties here.

Thank you.

Yeah, thank you, Senator. One of the things that, as CEO Chowdhury mentioned, you know, we want to continue to work with communities around how we actually execute on that. Really what we're looking at is, you know, taking some of those global best practices to recognize that a high-speed rail system, a station, does produce additional development in those communities. So what we're looking to do is share in that opportunity for that growth. So there are existing tools available to us, EIFDs, a lot of variations to that. So we would like to continue to work with communities to see how those tools could be utilized or if there are changes needed to those tools.

So our biggest challenge has been on this project has been the utilities in the way. And we don't have any jurisdictional authority over any of these companies. And we are asking to have that given to us because without that, this program has significantly suffered in the past. Cost overruns are very simple. they happen because of either we are having acquisition of land that got delayed because of the court cases that we couldn't resolve because we didn't see the date in court for years or it is because a utility company that we are dealing with and these are big ones these are for companies who are either electrical or communications If they don move their lines out of the way in a timely manner and we have fully mobilized our contractors to go build, it's very simple that those contractors are not going to be working there for the good of their heart. They are going to be billing us every day until that is gone. We don't have those jurisdictional powers. We are asking. We asked it last year. We're asking it again. We do need that in order to put some certainty in the schedule and the cost.

So we are not asking about moving funds from Merced to Bakersfield because we have the funds to build for what we have currently planned, Merced to Bakersfield. What we are asking is once we have private investors on board, they should be able to look at what the full high-speed rail system phase one is, which is L.A. to San Francisco. So the high-speed rail system is not Merced to Bakersfield. It is L.A. to San Francisco. That's why we say, can we unlock the private financier's ability to look at the schemes of San Francisco to San Jose to Gilroy, and on the other end, look at L.A. Union Station going to Anaheim, Burbank, and coming to Palmdale, instead of us constantly going from inside out, bring it from outside in from both sides, and build the Merced Bakersfield at the same time. That is commercially viable. And not only that I'm saying it, I've built some of these projects in Europe, but I can tell you private sector is telling us that every day.

The system maintains the same speed is built to high speed standards is built to the speeds speeds that are high And what is that standard I sorry I don mean to interrupt but what is the standard of high So which is the over 200 mile per hour. I mean, systems in Europe run at 185. We have decided to go above 200. The entire European system today is at 185. because they have tested it at 200 and they thought after 10 years of using it that it is cost prohibitive to maintain and operate. But we have decided to go at 200 plus. That's the infrastructure that we are building. As it comes to double track or where you put the sidings, the system will run at the speeds that are high speed. And if we choose that infrastructure should be built just in time for when you need it, don't overbuild. That's part of our strategy is to say double track, meaning passing loops where the trains do not come. In Merced Bakersfield, we'll be running six to eight trains a day. There is not a chance that you cannot run and have a siding that the other train passes. That's what the double track does. If we build the entire system double track, we're not going to be using it. And here's what happens, what I said at the beginning. You will build infrastructure that you will have it sit there and maintain it, but not use it. And so what we are doing is right sequence these things. And as we connect further and send more trains, then put more track, build more longer platforms. This is how Europeans have done. They expanded the system. Running the train first is our top priority, building tracks enough to do that, building it to the high speed itself. Yes, that's what we're doing. And we are building enough tracks that give us the service that we need.

I don't know. We are not the sponsor of or we didn't ask for any bill to change any of our transparency that we have currently. I mean, we get audited 14, 20 to 14 times a year between the local, state, internal and federal. How many audits do we get, Jamie? Can you talk about that?

That's what I'm asking.

For you guys. Again, the legislature is the legislature, and you're telling me right now you're not supporting it again. You're new to this, but I would say that any measure that moves forward that lacks accountability and transparency, I'm asking you as the head now, and I'm glad that you're here, would you be open and willing to continue with any kind of changeover of this size or any kind of transparency when we're spending money, the taxpayers' money?

Okay. And, Senator, you made a comment about, like, you know, we build in Central Valley. And, you know, it was, yeah, this was a decision made way before. Way before you, I know. Way before in the sense like, you know, there was different consideration at the time. But, you know, if you look at the European systems and the rest of the world, it starts where the best value to the public goes as fast as we can. If Central Valley was decided because there was environmental challenges there, I believe that that was the decision at the time was with that thought process. Maybe nothing else. I think a big part of the cost overruns is it's not different than doing any business in California. And I just wanted this committee to understand, and I know where you're going because Italy and Europe and Japan, they don't have these kind of cumbersome rules that they have here in term permitting here in California. And in California, a lot of your plan does not comply with a host of authored bills that are here in the legislature that you're going to be asking the legislature to waive if I'm understanding correctly. And I think, quite frankly, it should have been done at the very beginning. The other question, and again, I don't want to dominate the time, Mr. Chairman, but just last question. I know you're going to private money. how long will it take if things go smoothly and we get the $200 million, which I don't see as happening? I actually think I don't believe this will be built as proposed to people in California. I've been on record saying that. I do want success, though.

Well, currently as we projected, and I think our current businessman projects about $126, $130 billion, $126 billion in total for Phase I.

Right.

I believe it's under three hours.

That is calculated on an average somewhere between $68 to $84, depending on how do you use the system. Those models are done based on the economy of the state.

Sure. I mean the private sector financing is there are two ways to pay them back One is purely availability payments You pay them back over time They get the concession 40 50 60 years concession and they run the system. We, as a state, define what the tariff should be, what the fare box, what the ticket should be, and then they do the ancillary revenue generations. Now, there are two ways you pay them back. Availability payment is they advance the cash and you pay them back over time, which is pretty much like normal P3 financing. The one that we are going after that we think is more valuable to the taxpayers is revenue risk. So we want them to take the revenue risk in terms of when they commercialize the assets, when they generate the revenue, the money have two places to go, back to the taxpayers or pay the loan.

And so we are keeping both options open. And I mean, we can put that back to the program through these private investors or pay them back. And if you pay them back, it's better because then you're not asking for more appropriations because they are paying themselves out of the payment plan. So we have both options on the table at this point.

Thank you.

Temporarily?

Hi. I had a question for you. I recall hearing something about the federal government potentially removing their match or some portion of what they were intending upon paying towards this project. Could you give us an update of I kind of saw that in passing, frankly. So if you could give us an update of are there any federal funds that we're hoping to utilize now and going forward? And what the status are those funds still real? or in fact did the president withdraw them And any other things that you could share with us regarding that Sure Last year yes we were challenged with two major grants that were already committed

And do you see us being able to get that back, or how are you backfilling that?

I don't understand what you mean.

So am I hearing you correctly that you're banking on if there's a new administration in a couple of years that they would restore the $4 billion that was originally promised?

Last question. What was the reason given for withdrawing the funds?

Thank you.

and for all your work to move forward this critically important project for the future of California You know I think a lot of times it sad to me that the sort of PR propaganda campaign against this project has sort of sunk in to some extent although the recent polling shows the voters still support this after everything, all the propaganda about, quote, unquote, the train to nowhere, as if L.A., San Francisco, San Jose, and Fresno are nowhere, and all the other pieces of propaganda against the project, whether it's Elon Musk and the Hyperloop scam. It's a complete scam, but they used that for years. And just propaganda after propaganda after just, you know, I won't use any curse words. And the voters still get it. And the voters understand that we do not have a true statewide rail system in California. No offense to Amtrak. Amtrak's great. But when it takes twice as long to get from the Bay Area to L.A. via train as it does by car, that's not a true statewide rail system. And it is, to me, embarrassing and harmful that California does not have a true statewide rail system. And so all of these debates about what exact speed is it, to me, is beside the point. It's fast, and it will create a true statewide rail system for California. And every time anyone goes to Europe or Asia or any of the other parts of the world that spend way higher percentage of GDP on rail than the U.S. does, The U.S. is so far behind in terms of percentage of GDP dedicated to rail, behind countries, I think, like India, not only the wealthiest of the wealthy countries. We underinvest in rail in this country, and so we need this system, and we need it yesterday. And it really is sad to me that it's become, in some ways, a partisan issue and that Trump keeps targeting it. It's this benefits everyone and it's good for economic development and quality of life in addition to climate action and reducing traffic and reducing pressure on our airport. So we need to get it done. And I know we will get it done. And I know we will get it done. I want to just know and you talked about the permitting issues. I actually, as you know, had a bill last year, as the chair knows as well, to deal with the permitting issue. And when we look at high-speed rail, in some ways it is a poster child for how California sometimes cannot get out of its own way in terms of delivering projects that many people, majority of people agree we need. We see it with housing all the time. We see it in a lot of clean energy, that Texas and Florida produce more clean energy than California. And it's true with high-speed rail. And the fact that you could have a project, a project that is approved, is being built, is not fully funded, but has the funding to move forward. And then you have this project that's been approved and has funding, and everyone and their brother has a veto over it. Every city or town, no matter how big or small, every water district, every school district, every community college district, every utility district, every sewer district, every mosquito abatement district, every utility, every cable company, every telecom company, if it touches the geography of any political jurisdiction, if you need to move one minor wire from Comcast PG&E, the whole thing can get shut down. You've had to demobilize contractors because of this, because there's a minor encroachment permit or Comcast needs to move a cable that could be done like in a day and no one's responding. And to me, it's horrifying that that's like government at its absolute worst. And that's why our bill would have created at least a shot clock to say they have a certain amount of time. And if they don't respond, then you can just move forward and do the work yourself. And what happened, the chair remembers this, it was like an absolute, like, orgy of opposition. I mean, just this, like, just descending of everyone, like, really showing what the problem was, the cities and the special districts and the telecom and cable companies and the utilities and PG&E, and PG&E, of course, has this way of sort of upending everything, and they were doing it again here. And it was like everything, it was missing the forest for the trees. And that's why I really think that, and so we ended up, our bill got eaten alive. It just got chopped down, chopped down, chopped down. It's not a criticism of anyone. It's just the way sometimes things work in this building, and then ultimately died. And I really do believe that this is a governor issue. The administration needs to put its full muscle behind permitting reform for high-speed rail and for other regional transit systems. We shouldn't have these multi-jurisdictional projects get held up like this. So we took a good run at it last year. It got torn apart. I hope it can happen because it's important for this project and other projects. I also think that a P3, I think, to me, makes a lot of sense for this project, and I hope that that can be explored and happen. And the last thing I want to say is for high-speed railroads to really be truly all that it can be, it needs to truly go from downtown L.A. to downtown San Francisco. And that means the portal. And that means what we used to call the downtown extension, extending for rail from for Caltrain and high speed rail all the way to the transit center, which has been built, is open, is wonderful, and it needs the train to come there. And we are working very hard to make sure we have the funding for that. I know there was supposed to be a commitment of five hundred and fifty million dollars from high speed rail to the portal project. I think it's really important for that to happen, and I want to encourage you and urge you in the strongest possible terms to have the authority recommit to that $550 million for the portal. Thank you.

I spoke with you last year about the permitting issue. Now I can tell you the numbers of what happens if this is not resolved. And so with all the bottom-up estimates that we did and the cost optimizations and realigning and right-sizing the project, it clear to me that if we don solve these uncertainties in the schedule and cost meaning we keep bringing contractors in and subjecting them to the same challenges the results are not going to be any different It's just madness that we keep doing it because here is what happens. One year of delay in construction is 79% of the overall cost. Escalation, inflation, I'm not even talking about commodities. I'm not talking about steel, copper, aluminum, none of that. That goes up 200, 300 percent in 10 years. This is 79 percent straight by year inflation escalation combined on a project, call it for 200 billion or 150 billion. Seven to nine percent is billions. And so we just need to know and recognize that we present a business plan with a cost and a schedule and other jurisdictional authorities that we need. They're all together. It only works if they're all solved. So we know we can build this 2032-33 schedule, but we also are asking we need these controls over the destiny of this project, number one. Number two, when we say LA to San Francisco, we can build it by 2038, 39, meaning in our lifetime, we can see it. Well, that also requires these reforms that we have been asking. We asked it first time in 2024, then 25. And thank you, Senator, you did support it a lot on this permitting issue. It's not there. Well, next year when we will sit with the new update, we will have 7% to 9% added to the program because those constraints do remain in place. So we need to be clear-eyed about it. We are telling our team, make sure everyone understands if these things don't move, then this thing cannot stay constant here. The cost and schedule are not constant. They are going to move along with the constraints that are provided. When we come down to the DTX project, and I visited with them several times, I don't know about the $550 million commitment. Not that I have discussed that. However, my view on that is extending the service from 4th and King at Townsend and into the portal is critical. But for what we can do right now, when I visited that with the team there, I think there's a commercial opportunity for the entire thing right now. And we can put it on our P3 tracker that that structure that is in place is really not being commercialized. And through our P3 investors who are coming on board, I would love to put this on our program tracker and put those P3 investors who actually look at how they can commercialize. the real estate we already have built around that. So I will get back to you on that. I will think about that and get back to you in a few weeks' time.

Thank you, Senator. And we'll certainly have ongoing discussions on the permitting also, you know, about the weaponization of some of those you know delay tactics on an intentional basis I don think I not going to speak for Senator Wehner I think that it suspicious how things happen sometimes It may be intentional it may be negligent it may be through misunderstandings about what high-speed rail is attempting to do in a particular geographic area. But it's certainly something in and of itself that needs to be addressed because we should all be pulling in the same direction, you know, especially in the local government, the special district arena. Senator Sayurto.

Senator, just a question on that. Are we referring to a station in Bay Area or in Southern California?

So specifically about Merced and Acresfield movement, if I may jump in. I think the issue has been there been and in fairness your predecessor last time we had a hearing Senator Sarica was here 2024 there was some discussion about well we not going to have stations in a fig orchard

As I understand it from discussions with High Speed Rail Authority, with yourself, and then looking at the PER, that's up in the air still. And so I was going to ask a similar question, but I'd like you to just explain, are there contracts? Were those stations locked in and now you're going to break contracts and move them elsewhere? Has it always been up in the air? You know, should they be in the urban area? Should they not be in the urban area? Is there cost differentials? I think that's what's – I don't mean to paraphrase the senator's question. Yeah, it's fine.

Okay, because our report makes it seem like there was going to be, they had moved the stations outside of.

The risks of increment, tax increment financing were of great concern to the legislature in 2012. Then they stripped cities of the ability to do just that for redevelopment agencies. and so do you feel like there is any risk to doing tax increment financing for areas that have, well, basically nothing right now? So any incremental financing means that the property tax added is all part of a financing,

We started the discussion.

We have not reached any agreement with any of the entities.

The radius is half a mile, isn't it?

The impact to local jurisdictions when property taxes are distributed, if you've taken out the property taxes from something that is actually generating the need for more infrastructure in other parts of the community to be able to attach to that. In other words, those connector routes from where the station winds up to being where it would be convenient for people, If there is a job center there, that's the draw. If there's a job center there, there's not a lot of tourism going on in those communities out there. Their big need is attaching where they live to job centers, and those job centers are generally San Francisco and L.A. So this portion would have to find a way to stay alive, and that way is going to be us, the legislature and the state, trying to subsidize it. Now, that's the honest truth about how we're going to keep this alive. While we try to do the actual hard part of putting this system in, this is just $34 billion, and we're struggling with that. How much of the 34 do we actually have on hand? And I thought it was like the report was $24 billion is still out there.

Okay. Okay. And we're including in, because it says we have the money, but you're including in that we have the money, future money from GGRF funds.

Okay. So that's kind of risky. And going forward, when you're looking at what will no doubt be a $200 billion project at the end, if we're able to do it, we're talking about the environment here in California.

And yet the legislature responds to just these little things. And this isn't a little thing, but there are things that they're interested in. And meanwhile the person trying to bring a business in so that we would actually have some workers that would like to ride the train to go work at the business They can even do it because they can get through that process that you guys can get through either And so that's, you know, for the legislature, that's something that we have to change. Because if we don't change that, this doesn't work for not only that, but, you know, your public-private partnership. Well, the private has to happen for that to happen. And it won't be private if we don't change how we do business as far as our permitting, our regulatory environment, our legal environment, our labor environment.

I would love to have a high-speed rail train. Four years ago when we were doing this, my comment was, unfortunately, California's environment is not very conducive to us getting one done in the time frame or monetarily that gains the confidence of the public. So when you ask the public, you think high-speed rail is awesome, they say, yes, we support having one. But if you ask, how about if it costs you this? How about if it sucks all the money out of transportation dollars, even if the feds decide to give a bunch of money for transportation dollars, and it all goes to this, but it doesn't go into the roads that they're stuck on out there in my area. Well, we grow, and we have no train coming our way. All of those things come into people's minds. So it's not really a propaganda thing. It's not really a partisan thing. It is normal people who thought they were going to get something and didn't, and now they're super distrustful of it. and so that's a big hill for you guys to climb and I wish you luck while you're trying to climb it but I also if there is an inability to get the things done that this is depending on we need to know about it sooner than later because we need to stop throwing good money after bad after this segment because we have lots of projects that we can put people to work doing lots of projects infrastructure projects galore We could put everybody to work if we would do those things. So anyway, I don't think I asked any more questions in that.

I definitely would say you're right that we are looking at permitting issues, but we're also looking at CEQA, the exemptions on things that are renewable energy sites. We are talking about the green energy. And we are asking, exempt those sites. Why? Simply because we do national level clearance, which is the NEPA process, that got further streamlined so we can do very quick all the fair things that we are required by federal law to do. And this is, for us, is redundant, number one. Number two is about air quality. We are talking about green energy. And so if we have a site that we have to put solar or other systems to generate energy, exemption means two to three years of scheduled saving. Two to three years scheduled saving also means a lot of costs that we just take out of the system. And we have put it in our proposals that this is one of the things that we would like to have your support on. So thank you, Senator.

Yes. Thank you, Senator. And we did receive the report. We appreciate the OIG pointing out some of the things we put in the draft business plan. And I think my view is that those will be addressed when the business plan is finalized and final version is issued. The questions around infrastructure, how we build and how we sequence construction, one other thing is that, oh, well, is the station in this location or the other? that's ongoing discussion with the cities and towns. And we may not have an answer to that until that is agreed upon with the jurisdictions that we are dealing with. So I think that will continue to evolve as we move forward for the locations. But other items that OIG has identified, those will be addressed. Those will be addressed in our final report.

Yeah, my commitment on that. We will address all those issues.

No, I think we are getting all the public comments as we go now, and I think what is the schedule on closing the public comments?

but our commitment is to address all the OIG's findings in the final business plan.

Absolutely, yes. And the final business plan will incorporate all the OIJ comments.

Absolutely. Thank you.

Thank you.

Thank you.

Thank you. Whatever order you wish. Thank you. Perfect. Thank you so much. Helen Kirstein with the Legislative Analyst's Office. Thank you for inviting me to participate in this evening's hearing. I know we've already had a very robust discussion, which I really appreciate. I'll try to – I have a lot of content. I'll try to move pretty quickly because I know the hour is late. But I think this is really an important project. There are billions of dollars at stake, so I want to make sure we also give it the time it deserves. So I have a handout, which the sergeants, I think, should have passed out to you. It's also available on our website and on the committee's website. And so I'll try to go through that handout briefly with you. If you turn to page one on the background, I'm not going to go through all of this. I just want to point out a couple things, because I'm going to come back to them, about recent legislation. So SB 198, you all are probably pretty familiar with that legislation. But the legislature really told the authority, focus on Merced to Bakersfield. and actually specifically defined that segment. So in the legislation, it's defined as an electrified dual track segment between Bakersfield and a downtown station in Merced that also serves the Gold Runner and the Altamont Corridor Express. So that was actually in the legislation. That legislation also required some additional components of business plans. I think we'll hear about that later as well. And then last year, actually, the legislature added even yet some additional requirements and specifically for this business plan, the 2026 business plan. So those were added as part of AB 377. If you turn to page two, I wanted to focus on a few of the major features of the business plan. There's a lot in there. The first one, and I know there's been a lot of discussion about this, so I wanted to provide hopefully a little bit of clarity about what the scope is for this initial operation. So the plan never specifically mentions that the station locations are being changed. That in a technical appendix a separate technical document The plan itself doesn mention that However the cost estimates assume that In fact there are billions of dollars of savings that are included because there's an assumption that we're going to cut off nine miles and we're going to go to the outskirts of Merced, to the outskirts of Bakersfield. So it's a really critical assumption because it affects the cost estimates and other things so much. So I wanted to highlight that that Merced station location is not consistent with the SB198 requirement. It is not downtown. It does not connect to those existing services. Also, the business plan assumes most, as we heard, most of that segment is single track. It also assumes pretty basic stations. We heard about the just-in-time, but we're talking pretty basic stations. So the ability, there'd need to be additional infrastructure to do that kind of big development. The second point I wanted to bring up is that there also assumes significant reductions in scope for phase one. And a lot of that is related to additional blending of the system. So we'd have more of the system share existing tracks, for example, with Metrolink. And that does have some time implications. So we likely would not be able to, according to the authority, actually, we would no longer be able to meet the requirements under Prop 1A for the travel times. If you turn to page three, we highlight that the plan assumes the approval of a variety of statutory changes. We've discussed that at length. So I'm not going to go through all of them, but just wanted to highlight that. Also, we identify that the plan does provide updates to the funding and the costs of the plan. And I think most of it was covered already, so I'm not going to go over that in too much depth. And then on page four, we highlight again that there is this mismatch in timing. So we have Greenhouse Gas Reduction Fund revenues. They're anticipated to come in through 2045. The project needs them sooner. So there is this need to borrow, and there is discussion of a P3 as one potential approach. And then, again, there's a timeline that's provided, and I think we heard about that from the authority. Again, that timeline is really assuming all the statutory changes that were discussed are implemented, and also that there are no funding constraints. So I think those are important aspects. If you turn to page five, we highlight some issues that we think are important for the legislature to consider in reviewing this plan. The first is, and I think the OIG will discuss this at greater length, so I'm not going to spend much time on it, but that the draft plan appears not to meet many of the statutory requirements. And I think that's the OIG's analysis, including not meeting any of the requirements in last year's legislation, AB 377. And so that makes it harder for the legislature to make decisions around the project. The second point I wanted to bring up is that in our view, the draft plan's approach lacks transparency. And that's because, again, they're assuming that they're changing station locations, including changing the Merced location to a location that's not consistent with state law. That is never clearly identified in their plan. So you could read the entire business plan and you would not come away with that view. And we think that's a very substantive change to the program and the plan, and it should be called out so that folks really understand what's happening. It's not just kind of optimization in terms of a little efficiency. This is really a scope change in our view. It also makes it really hard to compare costs, right? It looks like, oh, costs are pretty much the same, but it's really a different scope. So it's less meaningful to compare the two. If you turn to page six... This, I think, is one of the most important points I want to make sure to get across, which is that unilaterally assuming a different location for Merced, we think doesn't really recognize the legislature's prerogative to set that scope. So the legislature identified the scope in law. It's perfectly reasonable to revisit that approach. In fact, we may need to downsize because, as I'll get to, there's not a lot of funding for this project relative to the needs. However, simply assuming that law is going to change in a different location than is actually identified in law kind of assumes legislative action and kind of takes away that authority, whereas I think it would be more appropriate perhaps for the authority to come forward and propose a change if that's what they're interested in doing. So the next point I wanted to highlight is this is kind of along the same theme. The draft plan assumes a lot of changes to state law, and those are embedded in those cost estimates. So, again, you know, I think that's kind of that's an issue. We think it's premature to assume those given, as we heard, some of, you know, some of them have some controversy. Some of them have been things that the legislature has maybe had some challenges passing or concerns have been raised. They're not simple. You know, we're talking about CEQA. We're talking about local land use authority. We're talking about lots of things that are difficult questions. If you turn to page seven, we highlight that we think there's significant risk that funding won't be sufficient even for that shorter segment. So it looks on paper like there's enough money and the authority indicates they believe there's sufficient funding. However, there's no borrowing costs assumed and that could be billions of dollars. So right there, that could potentially push the project over into not having sufficient funding. We also think there's a lot of risk. Again, this assumes all the statutory changes are made. We don't know if that's going to happen. They're assuming project savings materialize, including changes to agreements that they have with local governments that may not happen. They're assuming they're going to stay on budget, and we know that hasn't always happened. So we think there's quite a bit of risk here. So it's just unclear to us whether that smaller segment is achievable within the existing funding. And then that kind of brings us to the next point, which is that larger we're set to Bakersfield segment and looking at the numbers, we don't think it's likely that there's sufficient funding to do that currently. So, again, we might have to value engineer if the legislature doesn't want to provide additional funding because that is likely to be within outside of the existing budget. And then there's a very large funding gap for anything beyond. And I know there's a lot of hope that a P3 is going to come and solve it, and it might be part of the solution. But even the initial responses that the authority got indicated the ancillary revenues at this point, they said, are not considered creditworthy sources of funds to raise financing at this stage. That's a direct quote from their summary of the responses. So I think we're at this point where it's unclear how much that's going to be able to contribute to the capital costs for Merced to Bakersfield. If we turn to the next page, page eight, we talk a little bit about borrowing and the challenges with borrowing. And I want to highlight the Greenhouse Gas Reduction Fund and some of the challenges that are really unique to that funding source. So one of them is that the amount of funding that that revenue source brings in are really dependent on the program structure And the California Air Resources Board for example right now is undertaking a rulemaking that could potentially significantly reduce the amount of funding that comes into DGF potentially threatening whether the authority gets a billion dollars a year. So I think there's a not, it would not be unsurprising if even in the next few years, there is insufficient funding to provide everything in that tier two to fully fund that. So it's hard to borrow against a funding source where you just don't know if you're going to have that funding materialize. And then also there's just inherent volatility. You can have undersubscribed auctions, for example. So we think there would probably need to be changes to facilitate borrowing. To date, we haven't seen a plan from the authority about what they're specifically proposing or exactly when they would need it, but it looks like probably 27, 28, so coming up. And then P3s, again, they could be part of the solution, but from a borrowing perspective, if it's just going to be availability payments, that can sometimes be a pretty expensive way to borrow. So I think we're going to have to think about the trade-offs there. And then finally on page nine, we talk about the statutory changes really presenting difficult trade-offs. So again, some of them might make a lot of sense, but some of them might also have downsides, and those are going to be things the legislature is going to want to really have time to weigh. So the key questions facing the legislature, I start on page 10. Really all of those flow through. I'm going to go very quickly. One is the lack of compliance. Again, we heard that commitment, so that's great. The second one is what scope the legislature wants to commit to funding. This is an issue we brought forward to the legislature for a number of years, and it's a critical question. What do you want to make sure you fund? Because some of the scope might require significant additional state funding. And if that's the case, where is that funding going to come from? The next point on page 11 is about the legislature's comfort with the authority's borrowing approach and P3 approach and whether the legislature has sufficient information necessary to allow it to understand those plans. And then finally, related to the statutory changes, again, does the legislature have the information it needs to make sure it's comfortable with whatever is being proposed? So those are my comments. Thank you for your indulgence at this late hour. Happy to take questions at the appropriate time.

Good evening, Mr. Chair, members of the committee. My name is Ben Belknap. I'm the Inspector General of the High-Speed Rail. I have Mark Reinharty with me, my chief deputy. Here to answer questions, one of my office's responsibilities is to review the authority's annual reports. State law sets forth a series of required elements for business plans, including a requirement that the authority's cost estimates be prepared in such a way that stakeholders can compare current estimates with cost estimates from previous years. My office has reviewed the draft business plan and has found that it falls short of complying with statutory requirements that allow the legislature to have a clear view of project conditions and to be able to hold project officials accountable for those conditions. Staff has provided you with a series of tables that summarizes my office's assessment of the completeness of the draft business plan. As indicated in Table 1 of that handout, the authority's draft business plan includes most of the original requirements established in state law. However, as indicated in Tables 2 and 3, the draft business plan does not comply with newer, more specific requirements established by SB 198 and AB 377. I will focus my remarks on three areas of deficiency. First unauthorized changes in the statutory scope of the Merced to Bakersfield segment Second the inadequate funding plan and third the absence of projected dates for significant procurement milestones In its draft business plan, the authority provided the legislature with a cost estimate schedule for a shorter, largely single-track system that does not have a station in downtown Merced and has no connection to the Altamont Quarter Express, which does not comply with state law. As a result, the legislature has no ability to compare the cost estimates in the draft business plan to previous year's reports, which then limits the legislature's ability to question why, scope reductions aside, costs for the Merced to Bakersfield segment have actually increased by hundreds of millions. According to the authority's draft business plan, these project scope reductions, often lumped under the term optimizations, have contributed to a one-year delay in the baseline schedule for the Merced to Bakersfield segment.

Well, this is a disaster. I mean, I am such an enthusiast for rail, and I really want this to be successful. And just hearing these things makes it seem like we're proceeding on a wing and a prayer, basically. We don't have a way to finance it. We have changes to the plan. We don't know what's actually going to happen. and we don't have accurate information. I guess I want to ask the committee if there's anybody available from the High Speed Rail Authority

Yes, there is.

Yeah. I mean, I guess I'd like to... I thought they answered most of them about the station locations, for example, earlier. Yeah, I mean, that was what I wanted to have an answer about. We all know the funding situation because it comes from us. But certainly – Yeah, can we go over the decision-making around moving the station location and not having that be reflected in these documents and not having approval to do it?

You should re-identify yourself.

I mean, the LAO information perspective seems to be that it's not even clear that that's actually happening. but you're proceeding with a smaller footprint that goes fewer miles because the train location is actually moving. So, you know, being in conversations with community, that answer seems like it's obfuscating.

Okay. I mean, I would like to understand more though about train location is really important. So obviously there are existing assets within that community that there was a vision of them being served. And so now if it's going to some outskirt area, I mean, I'm not intimately familiar with these communities, but it does seem like these are huge decisions. And they need to be made consciously and with a full involvement of the legislators who represent that part of the state and the local elected officials. And, you know, it doesn't appear to me that that is actually happening. I mean, what is actually happening in terms of this decision making? Is the decision made?

Okay, does the LAO want to say anything about this?

public, this is what this is going to cost. If we want to shave off nine miles to save money and go out into the suburbs, we could do that. But it does, this really does appear deceptive. Do you want to respond to that? Because I find myself feeling really angry about that. I want to support this project, but I also don't want it to be adrift in us to have no oversight and no ability

Okay, well, I just want to express my dissatisfaction with this process right here. And I was on the committee that was interviewing the candidates to be the inspector general. And part of the whole focus of that, and that we have an inspector general, is we want to know what's going on. And the legislature can't, you know, you're not, the high-speed rail authority is not operating underneath Caltrans. It is its own part of the government, and we need to be able to have you disclose as required as the legislature continues to give enormous amounts of money to the High Speed Rail Authority every single year. So I just really want to emphasize the importance of listening to what they both said and actually doing it, you know, not having a fifth year where the document that's produced is obfuscating the facts and suggesting that you're doing cost savings or optimization when really you're changing the project.

But where the track goes and where the stations are are hugely important decisions, and everything will flow from that. And so the idea, I perceive what's happening is that you feel bad that it's costing so much, so you're changing things so that it can cost less. But then you're not telling us that you're doing that. and we could very well end up with something that we didn't expect. And then, again, say, what were we doing? Why did we build it here? And it's, well, we didn't really realize, and then all of a sudden track was late and we didn't realize. And I don't want us to be in that position. So I just really want to emphasize, you know, when we were going through the cap-and-trade renegotiations, the discussion about accountability and what do we expect from the high-speed rail authority and what does accountability look like, And part of it having the inspector general and having the LAO provide this documentation and look in detail at all the supplements and all the information and let us know what is actually happening I mean we shouldn have to have that We should have the information provided directly from High Speed Rail Authority and not be in this position. So I just, I really, in the strongest terms, want to express that I'm dissatisfied by that. And you should try to keep your champions champions. I mean, I am one of the very few, very strong champions for this project and all rail in the state, and you want us to continue to have confidence in the project. So, yeah, with that, I'll yield back to the chair.

Well, one thing I do agree with my colleague from North San Diego County is it's a disaster. I've been saying this for years, and when you go through this, I have a lot of questions, so bear with me. I want to go through some of the projects. So it goes from double track to single track, and that's a violation of our current law. So we would have to change the law hearing in the legislature in order to move forward with this plan on that single track, double track, or is that not the case?

So the fact that they hope eventually to build a second track, is that sufficient to comply?

Thank you. If I can go, again, I'm sorry about the long questions, but single track to double track, from double track to single track, we have the law already in place on that. I get why you're doing it, but wouldn't that also be sharing with freight and Metrolink? And if you're sharing the same track, how is it going to be high speed going from L.A. to San Francisco?

So we would have to come back to the legislature on that Yes Okay that one of the questions I wanted to ask Also you mentioned the LAO that this plan has no borrowing costs assumed and you use the term in your document

risks when we go into a situation like that, when we don't have the resources? What are the risks?

have a major funding gap and cash flow gap within this plan? So I think for Merced to Bakersfield,

Yeah.

Just say it's Merced to Bakersfield.

Well, where we are right now in terms of the commitment of funding, is it realistic that this plan moves forward to go from L.A. to San Francisco?

Okay. So I'll just end here. I probably have some other questions, but I think I made my point. You know, with the significance of what we've already done. Oh, one other question. I don't know for any of you. Have we violated anything when we passed 1A? Because this has changed so dramatically since the voters originally passed this program. Are we opening up ourselves toward our lawsuits because such of the dramatic change from the original initiative back at 1A back in what was it, 2012? Are we exposing ourselves because we've now dramatically changed this whole program, this whole project? And that's for any of you to answer.

You want to start?

You'll start.

I would love to have an answer to that question because, again, this is so much different than what was first proposed to the people of California and dramatically. And we don't – like – look, I've been on record. I don't believe this will ever be built the way it was proposed to the people of California. But say we're moving forward. This has changed so dramatically. Are we exposing ourselves to some tort reform or some – not tort reform – some lawsuits because we moved well beyond kind of the authority the voters gave us?

Okay. On my own time as I said earlier there so many things in this plan Look I get where the authority is going for in this plan but there so many things that I don think the legislature is going to be comfortable with within this plan not to mention the financing part just some of the provisions that have to go forward on this plan I'm going to be pleasantly surprised if this plan and some of the things you're asking the legislature to do to undo what they've been doing over a long period of time. I personally don't think this plan is realistic, both from a financial and from that point, going to the legislature with the statutory changes. And when we talk about the total amount, LAO, again, I want to make sure it's on record. Right now, the projection without the borrowing, LA to San Francisco is $231 billion?

Right.

So now we're talking about a project. When this was originally put forward to the people of California in 2012, the whole entire state budget was less than $100 billion. It was $98 billion. So you're talking about something that was one project that's more than the entire state budget was 10 years ago and, quite frankly, almost what this whole state budget is today. And we're spending a lot of money. We have a lot of – again, we're moving forward with a deficit this year, maybe next year, and we are committing so many billions of dollars from state coffers on top of the cap and trade. That also is adding to the cost of gasoline prices to the people of California. I just personally believe when we talk about that funding, the funding should be going to other places. I think there's shovel-ready projects around the state that are better for the people of California. For example, I'm in Southern California. There's a lot of need for infrastructure that would help out with the World Cup and the Olympics. That's probably better for the entire state of California than this one project. I respect the people coming forward. You're trying to do your best out of a situation that, quite frankly, has gone on. And you're running into the same thing that a lot of folks run into in the state of California. So much has to do with the permitting and everything else and the cost. I get what you're trying to do, but at the same time, again, I don't think this plan is realistic, and I will go on the record again to say this plan will never be billed as proposed by the people of California, and I'll give back to the chair.

Thank you. I like this congressional yielding back to the chair stuff now.

It's a kind handoff back, indicating we're finished with our comments. Hey, I had one question regarding AB 2879, and I believe we have a change order that's going to be voted on. Is that tomorrow?

Does that get reported out after closed session? Is that how it complies with AB 2879?

Okay. Do we know what that is about? I realize sometimes closed session items are sensitive items but the whole idea between 2879 was for us to understand change orders as they were coming to us Now we going to find out after the fact what the change order is as opposed to should we be going down that road Yeah so what I say to that is that our board and I believe it January meeting met and did report out and subsequently provided additional settlement authority up to a certain amount

Okay, thank you. So one of the things, and I think the LAO mentioned this a little bit, but one of the things that's keeping this project alive is the sunk cost argument, how much money we have already put into it. And I feel like diverting funds to try to sink some costs in some of the other areas is done for the purpose of us going down that path with that part too. Because it's not just sunk costs that we're putting in, but there's a lot of people whose jobs are dependent on a project continuing on. And so there seems to be this effort, and I think the very informal term is to waboozle us into supporting something that we can't normally support the way it's going. And we don't really have an off-ramp for this project. it gets you know really difficult to say we just can't do this and I feel like we're getting closer and closer to that and this is kind of like the thrashing about before you finally go you know what you're right we can't do this I hope that day doesn't come I hope we have some miracles but I don't know that we're going to And we need, you know, in the meanwhile, this board and the legislature, we wrote those laws for a reason. So we would be fully informed of what's going along so we could hit the off-ramp if we needed to. And right now I feel like sometimes we're not being – we're being led away from the off-ramp with a variety of ways to do it. and that, like Senator Blake Spear said, that's annoying to me because I do want to be helpful, but at the same time, there are so many things that we need to attend to in this state, and if the answer is we can't do this in this state right now because of the way the state is, that's the answer, and that someday we're going to have to come to that realization and take the appropriate action. So I appreciate you all being here today and giving us a chance to hear the good, the bad, and the ugly, and appreciate your honesty on all this.

And, Senator, I do appreciate the perspective there. And what I will say is that from the authority's perspective, we do believe that we've laid out a viable plan to deliver Merced to Bakersfield within the funding that we have available. Yes, we do need a tool to accelerate those funds forward so we can actually deliver on a 2032-2033 schedule. We continue to work towards that, but we do believe that we can get to operations by those dates with the plan that we've laid out today. As it pertains to the broader Prop 1B, I, again, don't want to play lawyer up here, But you know ultimately when we build out the full system San Francisco to Los Angeles the intent is for a fully Prop 1A compliant system that meets all of the requirements in terms of travel times We do have legislation I don have the number in front of me but it does allow us to build this project in the building block approach to ultimately get to that ultimate build. So that's what we're laying out in our plan. We do lay out options of how we could deliver the full system as proposed by 2038, 2039. That obviously takes significant capital up front, as we've talked about. But as far as Merced de Bechel is concerned, we do believe that we have a viable plan to deliver. Thank you.

So they're not out of compliance yet? No, I don't believe that they've said they're going to move forward without authorization. The CEO was here and himself said that those proposed station relocations are not under contract yet. The negotiations are still going on.

No, our criticism is that the cost estimate and schedule that's in the business plan is built on a different scope.

No.

I think there's a way to do both. So what you would do is you would lead with this is the information that's required by state law. These are the cost estimates and schedule that comply with SB198. Here's the information, and it would present a problem because those dollar amounts would be higher. And then you would say, here we have available solutions. One is the state could give us more funding, okay, so maybe that one's not so viable. The other is we could do scope reductions, and here's where those savings would be, and this is what we would need.

and do it much more efficiently? Yeah, I understand. I didn't see that called out in your report. I love working with you, but I'm just looking for a constructive approach to this. And I appreciate your last comment because that was constructive. Lay the report out differently. That's a good suggestion. I do think, Senator Cortese, it's important to understand that my criticisms that you see before you in those tables is of the business plan, meaning how is it laid out? Does it comply with state law? Now, it isn't necessarily a criticism of the project and their thoughts on how to move forward with it. My criticism is this plan is not transparent. There is a way to do it that is transparent, and I would encourage them to do that, which would lay out options for scope reductions in a way that would be transparent for you and your body to review.

We already know. I think everybody in this building and the next building over know that we don't have enough money to get Piahan Bakersfield. Is that the epiphany of today? So, yeah, that is not – we have said that, I think, in a number of analysis over the years, So I don't claim that this is the first time we've said we don't have enough money to get outside the Central Valley. A couple of points I wanted to make. Yes, the CEO indicated that they need to borrow. That's also been something that the authority has mentioned for a number of years. It's been in a variety of different business plans and project update reports. We're not alleging that that was not clear. I think what we mention is that there's no cost that's tied to that. And then on Bakersfield.

Other than the cost estimates that are actually in the report, because they do have those. The cost estimates in the report assume a specific station location. That is assumed. That's how they came up with the numbers. Subject to statutory change.

There was, I mean, there already, this is, we're at the locally generated alternative because there were conversations with Bakersfield on that. There are real trade-offs, and we don't mean to minimize the real trade-offs in the station locations. Yes, if you go downtown, you're going to have more conflicts. You're going to have to take more properties. You're going to have more potential issues there. On the other hand, you could have some ridership benefits. So I think it's important for the legislature to understand what's being proposed and what those tradeoffs are. Again, they could come to different decisions. With Bakersfield also, I just wanted to note that this station location is not what the authority intends to be the permanent station. So this North Bakersfield station, they are intending to be a temporary station. They would ultimately build that one that's more in the kind of more central part of Bakersfield. So it's not my understanding that they've made a decision that this is a better station. In fact, they're anticipating eventually moving away from this station location or at least creating the other station and location as well. So, again, you know, there are tradeoffs with any location. But really having that information so that the legislature can make those informed decisions, I think, is what we think is most important.

I don't know what your constructive background is. I have my opinion because I've built things.

I think there's a real tradeoff, right? And I think one of the challenges –

No, absolutely. And I think one of the challenges, to be fair, that the authorities had over the course of this project is that Prop 1A had a number of prescriptive things, and that's been a challenge for the –

No, with 198 specifically, I think it depends on what the legislature's priorities are. If the legislature really cares about some specific thing, it certainly is the legislature's prerogative to memorialize that in statute, as was done. But, of course, the legislature could change that. But there is a tradeoff, so you probably wouldn't want to get down to the minutiae on every single thing, right? It's finding those priorities where if there are certain things that are priorities, then those – or especially if there's guidelines or kind of guardrails, those could make sense. But I think you're absolutely right. You can get into the position where you are too prescriptive and there isn't that flexibility. So you do have to weigh those, I think.

Good evening, Mr. Chair and members. Marcus Detweiler with the California Special Districts Association, CSDA. CSDA joined a number of other local government associations, including the League of California Cities, the California State Association of Counties, the Urban Counties of California, and the Rural County Representatives of California. and the California Association of Recreation and Park Districts expressing our concerns with the draft 2026 High-Speed Rail Authority business plan. I won't regurgitate the entire letter here for you. I would merely highlight our chief concerns. Our chief concerns include and center on the tax increment financing proposal. CSDA believes that any such proposal should not proceed without the express, meaningful, and freely given consent of any of the affected taxing entities. and we continue to have concerns surrounding the land use provisions that are discussed in the business plan. Thank you.

Dylan Elliott here today on behalf of the county of Merced as well as San Francisco. Align a lot of my comments with what was just said before me from the speaker before, but really just want to speak today about the TIF or local increment financing. Just got some concerns about what that could look like for a lot of the reasons already outlined. And really would just appreciate some more clarity as to what local jurisdictions are asking to be in response to. Thank you very much.

On behalf of the City of Burbank, we appreciate the conversation and information relayed to this evening by the High-Speed Rail Authority, but remain very concerned about the potential impact of the current alignment to the City of Burbank. The High-Speed Rail Authority is currently planned to include a station at Burbank Airport and continue through Burbank to Los Angeles. The current alignment would significantly impact the portable water infrastructure and an EPA-designated Superfund site. We believe that the authority is underestimating both the complexity and regulatory implications of relocating wells that are over 30 years old, as well as updating the state and federal drinking water permitting requirements. I would also note the opposition by the cities of Burbank, Glendale, Stockton, to the proposal by the High-Speed Real Authority to create the state-controlled tax increment financing, And I'll just echo the comments that were previously made on that.

Carlin Shelby here on behalf of the Trans Bay Joint Powers Authority. TGPA strongly supports the continued progress reflected in the 2026 business plan. We really want to underscore one key point that the system approved by voters under Proposition 1A was already intended to run from the San Francisco Trans Bay Terminal, now the Salesforce Transit Center to Los Angeles and Anaheim That endpoint was formally adopted by the authority in 2010 and reaffirmed by San Francisco voters While the plan references the 4th and Kings as an interim terminus it's critical that this is not the default endpoint. The system must be completed into the downtown San Francisco terminal. That requires the delivery of the portal, the final connection to the Salesforce Transit Center, which is already built and designed to serve as the northern terminus. We also really want to urge the authority to reaffirm his prior $550 million commitment to the portal in the final business plan, which is essential to advocating for this project and advancing it for matching federal dollars. Thank you. Well, thank you. Mr. Chair,

Thank you for your comments. Good afternoon.

Thank you. Thank you, Mr. Chairman, members of the committee.

I appreciate your insight, Mr. Sharon. We'll say good night. Appreciate your comments. Appreciate everyone's comments all on point. Very much relevant and on point. And look forward to trying to have all those addressed in the future. And the Senate Transportation Committee is now adjourned. Thank you.