Archive for California High-Speed Rail

Proposed New Sacramento Kings Arena: Another California Infrastructure Project Burdened by Visions to Change the World

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California can’t build a bullet train to transport people in two hours and forty minutes from San Francisco to Los Angeles. That’s too mundane. Instead, California High-Speed Rail is burdened with revitalizing Central Valley cities, employing the homeless, saving the planet from global warming, creating jobs, ending poverty, planting trees, transforming society, etc.

It’s not surprising that the California High-Speed Rail project is about to wither away after five years of visionary leftist nonsense. The project became too much for too many.

As the hyperbole rises to the absurd about the proposed new Sacramento Kings basketball arena, I’m predicting this “Entertainment and Sports Center” will suffer the same fate. See my December 16, 2013 article in www.FlashReport.org entitled Regional Sports and Entertainment Facilities in the Urban Core Attract Costly Political Meddling: Sacramento Kings as a Case Study.

 

Three Sacramento County Superior Court Rulings on California High-Speed Rail – Bond Validation Lawsuit and Prop 1A Lawsuit – November 25, 2013

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California High-Speed Rail Court Decisions

November 25, 2013 California High Speed Rail Authority Bond Validation Lawsuit Ruling (original source http://www.saccourt.ca.gov/general/media/docs/tos-v-ca-high-speed-rail-authority-ruling-112513.pdf)

HIGH-SPEED RAIL AUTHORITY and HIGH-SPEED PASSENGER TRAIN FINANCE COMMITTEE, for the STATE OF CALIFORNIA, Plaintiffs, v. ALL PERSONS INTERESTED IN THE MATTER OF THE VALIDITY OF THE AUTHORIZATION AND ISSUANCE OF GENERAL OBLIGATION BONDS TO BE ISSUED PURSUANT TO THE SAFE, RELIABLE HIGH-SPEED PASSENGER TRAIN BOND ACT FOR
THE 21ST CENTURY AND CERTAIN PROCEEDING AND MATTER RELATED THERETO.

  • It was NOT proven to be “necessary and desirable” to authorize bond sales on 3/18/13 for California High-Speed Rail.
  • I’m referenced on pages 7-8 & page 18 (footnote 30).

August 16, 2013 Tos Fukuda Kings County v California High-Speed Rail Prop 1A Part 1 Ruling (original source http://www.saccourt.ca.gov/general/media/docs/tos-v-ca-high-speed-rail-authority-ruling.pdf)

JOHN TOS, AARON FUKUDA, COUNTY OF KINGS, Plaintiffs and Petitioners, v. CALIFORNIA HIGH SPEED RAIL AUTHORITY, et al., Defendants and Respondents.

  • California High-Speed Rail doesn’t need to rescind its Tutor-Perini contract for first segment construction (Merced to Fresno).
  • The 2012 appropriation of funds to California High-Speed Rail from Senate Bill 1029 is not invalidated.

November 25, 2013 Tos Fukuda Kings County v California High-Speed Rail Prop 1A Part 2 Ruling (original source http://www.saccourt.ca.gov/general/media/docs/tos-v-ca-high-speed-rail-authority-ruling2-112513.pdf)

JOHN TOS, AARON FUKUDA, COUNTY OF KINGS, Plaintiffs and Petitioners, v. CALIFORNIA HIGH SPEED RAIL AUTHORITY, et al., Defendants and Respondents.

  • California High-Speed Rail Authority has to rescind its approval of its non-compliant November 3, 2011 funding plan.

News Media Coverage

Judge Blocks Sale of California High-Speed Rail Bonds – Associated Press (in Sacramento Bee) – November 25, 2013

California High-Speed Rail Funding Overturned by Judge – FOX 11 (Los Angeles) – November 25, 2013

Judge Blocks Use of State Bond Money for California Bullet TrainLos Angeles Times – November 25, 2013

California High-Speed Rail Plans Stopped in TracksSan Francisco Chronicle – November 26, 2013

California’s High-Speed Rail Imperiled by Court RulingsSan Jose Mercury-News – November 25, 2013

Sacramento Judge Sides with Kings County Plaintiffs, Puts California High-Speed Rail Plan on the RopesHanford Sentinel – November 25, 2013

California High-Speed Rail Bond Sale Rejected by Judge – www.bloomberg.com – November 25, 2013

Judge Grants Partial Victory to Foes of California Bullet Train – KQED – November 25, 2013

California Bond Sale for High-Speed Rail Project Blocked by Judge – Reuters – November 26, 2013

Locals Participated in High-Speed Rail Court Case – Bakersfield Californian – November 26, 2013

Judge Blocks Sale of California High-Speed Rail Bonds – Capitol Public Radio – November 25, 2013

California High Speed Rail Bond Sales Halted and Funding Plan Invalidatedwww.nextcity.org – November 26, 2013

Judge Strikes Down High Speed Rail Bond, Causing More DelaysSilicon Valley Business Journal – November 26, 2013

Court Instructs California High-Speed Rail to Redo Funding Plan; Refuses to Validate State Bonds – www.Examiner.com – November 26, 2013

Judge Deals Setback to California High-Speed Rail ProjectWall Street Journal – November 26, 2013

Applying a Brake to High-Speed PlansThe Economist – November 26, 2013

California Judge Cuts Off State Funding for High-Speed Train Venture – FOX News Channel – November 26, 2013

Judge’s Rulings Favor Opponents of Rail Project – www.agalert.com – November 26, 2013

LaMalfa: High-Speed Rail ‘Dead in the Water’Redding Record-Searchlight – November 26, 2013

California Bullet Train Might Be Breathing Its LastMother Jones – November 25, 2013

Will High-Speed Rail Keep Rolling Ahead? – columnist Dan Walters (video) – Sacramento Bee – November 26, 2013

Hurdle for High-Speed Rail: Where is the Money? – Associated Press (in Sacramento Bee) – November 26, 2013

Hurdle For California High-Speed Rail: Where Is The Money? – KPIX Channel 5 (San Francisco), video – November 26, 2013

Judge Issues Setback to California’s High-Speed Rail Plan – KQED Forum, radio interview – November 27, 2013

  • Dan Richard, chairman, California High-Speed Rail Authority
  • Juliet Williams, political reporter for the Associated Press
  • Quentin Kopp, former chairman of California State Senate transportation committee

Bullet Train Snag Could Affect Transbay Terminal – columnists Matier & Ross (in San Francisco Chronicle) – November 27, 2013

High-Speed Rail Ruling Threatens To Derail Future Of Caltrain – KPIX Channel 5 (San Francisco), video – November 27, 2013

California State Senator Mark DeSaulnier Talks About The Fate Of High-Speed Rail – KPIX Channel 5 (San Francisco), video – December 1, 2013

Editorials

Bullet-Train Fiasco: Gov. Brown, Heed the JudgeUT San Diego – November 25, 2013

Time to End the California High-Speed Rail Fraud – Bay Area News Group (Contra Costa Times, Oakand Tribune, etc.) – November 26, 2013

Hit the Brakes on California’s High-Speed Rail FraudLos Angeles Daily News – November 26, 2013

Pump the Brakes on Bullet TrainRiverside Press-Enterprise – November 26, 2013

Judge Detours Plans for Bullet TrainOrange County Register – November 26, 2013

Bullet Train Must Deliver on Its Pledge to VotersVentura County Star – November 26, 2013

High-Speed Rail Proceeds in Fits and StartsSacramento Bee – November 27, 2013

Bumps in the Path of High-Speed RailSan Francisco Chronicle – December 1, 2013

Commentary

California Judge Sends High-Speed Rail Plan Careening Backward Into the Station – Reason Foundation – November 25, 2013

Rube Goldberg Legal System Derails California Bullet Train – The American Interest – November 26, 2013

End Game on Bullet Train: No $, No Project – and No Prospects for $ – CalWatchdog – November 26, 2013

Court Rules Against Bullet Train Authority – Howard Jarvis Taxpayers Association (in www.foxandhoundsdaily.com) – November 26, 2013

Obama’s Bullet Train Dream Just Derailed in California – American Enterprise Institute – November 26, 2013

Getting to the Bottom of it: Backroom Administrative/Executive Deliberation Leading to Project Labor Agreement on California High-Speed Rail

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UPDATE: I emailed this message to the California High-Speed Rail Authority at 4:51 p.m. on Friday, December 20, 2013:

Today is December 20, 2013, the date cited in the last correspondence from the California High-Speed Rail Authority.

“Under Government Code §6253(a), the Authority invoked a 14 day extension in order to further research your request and make a determination. A determination letter would be sent to you no later than November 18, 2013. The Authority will provide all responsive documents to you by December 20, 2013.”

http://laborissuessolutions.com/wp-content/uploads/2013/11/2013-11-18-CaHSRA-letter-to-Dayton-on-Public-Records-Request.pdf

Any news on progress to fulfill the October 24, 2013 request?

At 5:58 p.m., the California High-Speed Rail Authority emailed me this letter notifying me that “The amount of electronic records that are responsive to your request are too large to send via email. A CD-ROM with electronic records will be sent via U.S. Mail to your attention no later than December 20, 2013.”

December 20, 2013 California High-Speed Rail Authority Letter to Kevin Dayton on Public Records Request

Then, at 6:14 p.m., the California High-Speed Rail Authority emailed me this batch of letters:

Associated Builders and Contractors of California – State Building and Construction Trades Council of California – California High-Speed Rail Authority 2013 letter exchange on Project Labor Agreement

UPDATE: In a November 18, 2013 letter, the California High-Speed Rail Authority informed me that it will provide me with the requested public records by December 20, 2013.

UPDATE: In a November 4, 2013 letter, the California High-Speed Rail Authority informed me that it is taking an additional 14 days (as allowed by law) to provide me with the requested public records.


On April 29, 2013, I posted the results of my request to the Fresno County Workforce Investment Board for public records related to the development of the Project Labor Agreement with the State Building and Construction Trades Council of California for construction of the California High-Speed Rail system. (See Newly Obtained Documents Reveal Which Elected Official Was the Catalyst for the Project Labor Agreement on California High-Speed Rail: Fresno Mayor Ashley Swearengin.)

I also listed seven questions that remain to be answered about how this costly union construction monopoly was implemented. It was done without any public discussion or vote by the board of the California High-Speed Rail Authority, obviously because public scrutiny and discussion would have further damaged its reputation in California and even in Washington, D.C.

Today I submitted another request for public records related to the Project Labor Agreement, this time directly to the California High-Speed Rail Authority. I expect these records will answer those seven questions and give the public a complete picture of the backroom wheeling and dealing.


From: Kevin Dayton [mailto:kdayton@laborissuessolutions.com]
Sent: Thursday, October 24, 2013 10:45 AM
To: ‘records@hsr.ca.gov’; ‘xxxxx’
Subject: Public Records Request to California High-Speed Rail Authority: Community Benefits Agreement/Project Labor Agreement

October 24, 2013

Lisa Marie Alley
Assistant Deputy Director of Communications
California High-Speed Rail Authority
770 L Street, Suite 800
Sacramento, CA 95814

Re: Public Records Request – Community Benefits Agreement/Project Labor Agreement

Dear Ms. Alley:

Under the authority of the California Public Records Act, I am requesting the following records to determine the following:

The administrative/executive branch deliberative process within the California High-Speed Rail Authority that led to the execution of the “Community Benefits Agreement” (aka Project Labor Agreement) as signed by Robbie Hunter, President of the State Building and Construction Trades Council of California, on August 7, 2013 and by Jeff Morales, Chief Executive Officer of the California High-Speed Rail Authority, on August 13, 2013. Here’s a link to that Project Labor Agreement: Project Labor Agreement with Unions for California High-Speed Rail.

“Public records” include any writing containing information relating to the conduct of the public’s business prepared, owned, used or retained by the California High-Speed Rail Authority regardless of physical form or characteristics. “Writing” means handwriting, typewriting, printing, photostating, photocopying, photographing, transmitting by electronic mail or facsimile, and every other means of recording upon any tangible thing, any form of communication or representation, including letters, words, pictures, sounds or symbols or any combination thereof, and any record thereby created, regardless of the manner in which the record has been stored.

“Public records” shall include writing from private email addresses used by the Board and staff of the California High-Speed Rail Authority for public business. For example, if a staff member sends electronic mail through a Google mail account to schedule a meeting with Robbie Hunter, that email is a public record.

Please provide the following public records – in electronic form if possible – from the California High-Speed Rail Authority:

  • All records dated after January 1, 2012 concerning consideration, rejection, and approval from any federal or state agency for a Community Benefits Agreement/Project Labor Agreement and/or “Targeted Hiring Agreement” based on a similar agreement adopted at the Los Angeles County Metropolitan Transportation Authority.
  • All records dated after January 1, 2012 concerning evaluation or deliberation of the conditions, benefits, challenges, and negative impact of a Community Benefits Agreement/Project Labor Agreement.
  • All records dated after January 1, 2012 referencing the Community Benefits Agreement/Project Labor Agreement in communications from, to, or citing the following individuals:

a) Robbie Hunter (Current President, State Building and Construction Trades Council of California)

b) Bob Balgenorth (Past President, State Building and Construction Trades Council of California and past board member, California High-Speed Rail Authority)

c) Ashley Swearingen (Mayor of Fresno)

d) Tom Richards (Chair of Fresno Regional Workforce Investment Board and current board member, California High-Speed Rail Authority.)

e) Lee Ann Eager (Economic Development Corporation serving Fresno County)

f) Chuck Riojas (International Brotherhood of Electrical Workers – IBEW)

g) Blake Konczal (Executive Director, Fresno Regional Workforce Investment Board, and Fresno Works Consortium)

h) Ken Price (counsel for Fresno Regional Workforce Investment Board)

i) Michael Bernick (Applied Development Economics)

j) Robert Padilla (Small Business Advocate, California High-Speed Rail Authority)

  • All records dated after November 1, 2012 referencing the Community Benefits Agreement/Project Labor Agreement in communications from, to, or citing the following individuals:

a) Eric Christen (Coalition for Fair Employment in Construction)

b) Nicole Goehring (Associated Builders and Contractors, Northern California Chapter)

c) Kevin Dayton, Labor Issues Solutions, LLC

  • Any other records related to the Community Benefits Agreement/Project Labor Agreement.

Note: the California High-Speed Rail Authority does not need to provide board meeting agendas, minutes, board meeting transcripts, or staff reports for meetings already provided to the public as posted on the California High-Speed Rail Authority web site in association with board meetings. It does not need to provide the Addendum 8 version of the Project Labor Agreement (Addendum 8 Project Labor Agreement for Initial Construction Segment) or the revised Project Labor Agreement linked above (Project Labor Agreement with Unions for California High-Speed Rail).

Upon receiving this request for a copy of records, please, within 10 days, determine whether the request, in whole or in part, seeks copies of disclosable public records in the possession of the California High-Speed Rail Authority and promptly notify me of the determination and the reasons therefor.

In unusual circumstances, the time limit may be extended by written notice, setting forth the reasons for the extension and the date on which a determination is expected to be dispatched. No notice shall specify a date that would result in an extension for more than 14 days, and the notice shall provide the estimated date and time when the records will be made available.

###

Evading Public Accountability: Four Recent Project Labor Agreements on Government Projects Without a Vote

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In the past 12 months, government officials in California have helped to arrange backroom deals with building trades unions to require construction companies to sign a Project Labor Agreement as a condition of working on four publicly-funded projects.

  1. California High-Speed Rail Initial Construction Segment
  2. San Diego Convention Center Phase 3 Expansion
  3. New Sacramento Kings Arena
  4. New San Diego County Central Courthouse

Project Labor Agreements imposed on these four projects were developed under the pretense of being independent decisions of private parties within a design-build contract or public-private partnership. Elected or appointed officials of the government agencies did not deliberate or vote on these labor agreements. Yet in all four cases listed above, representatives of the applicable public agency played a key role in arranging the union deal.

For more information, see my September 17, 2013 www.UnionWatch.org article California Construction Unions Circumvent Public Scrutiny of Project Labor Agreements.

2012 “Buy America” Law Estimated to Cost $20 Million for Utility Relocation on First 29 Miles of California High-Speed Rail

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An item on the September 10, 2013 meeting agenda for the board of the California High-Speed Rail Authority authorized a “contingency” amount of $160 million for the $969,988,000 design-build contract (Construction Package 1) awarded to Tutor Perini/Zachry/Parsons for the first 29-mile segment of California High-Speed Rail, from Madera to Fresno.

As defined by the California Department of General Services, a “construction contingency” is a set percentage of the construction contract amount budgeted for unforeseen emergencies or design shortfalls identified after a construction project commences. The California High-Speed Rail Authority claims this amount was set based on “an exhaustive risk-based, informed investigation of the facts and circumstances that exist as design work commences.”

The staff report for the item included a cryptic explanation of a $20 million increase in the contingency amount:

Following the procedures established by this Board in Resolution #HSR13-20, Authority staff has developed a construction contingency of $160,000,000 as appropriate at this time for CP 1. Pursuant to said resolution, the CEO is authorized to manage the CP 1 contingency. For reference, $140,000,000 in contingency funds was included in the capital cost estimate for CP 1. Not included at that time was the application of new Buy America requirements to utility relocations. This issue has only surfaced in recent months, applying not just to the project but to federally-funded highway and transit projects throughout California and nationally. Although staff is working to mitigate any impacts, it is prudent to include additional contingency at this time.

As soon as I saw this, I wondered what materials were originally going to be imported for utility relocation but will now be obtained in the United States at an additional cost of $20 million.

I asked this question during public comment at the September 10 board meeting. I pointed out that my inquiry was not related to support or opposition to high-speed rail, but it was important for Congress to know specifically how its “Buy America” requirements affect purchasing and cost for projects, so it can make an informed decision on such policies in the future.

Staff failed to address my question when the item was under consideration. I was surprised and pleased when new board member Katherine Perez-Estolano asked staff for elaboration on the $20 million contingency amount to account for the newly-implemented Buy America directive. She did not get a specific answer, but staff assured her that they applied careful risk analysis.

Apparently the Federal Highway Administration (FHWA) and Federal Transit Administration (FTA) are now interpreting Section 1518 of the “Moving Ahead for Progress in the 21st Century Act” (MAP-21) as direction to impose “Buy America” requirements to utility relocation. MAP-21 is Pub.L. 112-141, signed into law as H.R. 4348 by President Obama on July 6, 2012.

SEC. 1518. BUY AMERICA PROVISIONS. Section 313 of title 23, United States Code, is amended by adding at the end the following: “(g) Application to Highway Programs.–The requirements under this section shall apply to all contracts eligible for assistance under this chapter for a project carried out within the scope of the applicable finding, determination, or decision under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.), regardless of the funding source of such contracts, if at least 1 contract for the project is funded with amounts made available to carry out this title.”

A July 11, 2013 memo from the U.S. Department of Transportation Federal Highway Administration “Application of Buy America to non FHWA-funded Utility Relocations” suggests that the items made abroad that will now be made in the United States are “steel and iron products.” I’m guessing the United Steelworkers union was influential in adding this provision, and the country now making these products at lower cost is the People’s Republic of China. See the extensive Buy America information at the web site of the United Steelworkers.

A May 16, 2013 report from the California Department of Transportation (Caltrans) entitled “Buy America Utility Relocation Challenges in California” claimed that the regulation would jeopardize $2.5 billion in ongoing construction and $3.2 billion in planned construction: “A significant majority of these projects involve utility relocations by utility owners who have expressly stated that they are currently unable to comply with MAP-21s Buy America provisions.” This danger was alleviated on July 12, as reported by the Riverside Press-Enterprise in “‘Buy America’ Relief Clears Way for Projects,” when the Federal Highway Administration gave government agencies and utilities “until Dec. 31 to comply with new rules to buy domestic materials for utility lines that must move because they are in the path of construction.”

Here are some interesting questions that have yet to be answered:

  • Which countries and companies are losing business because of the Buy America requirement for utility relocation?
  • Which companies are gaining business?
  • How many net jobs will be gained in the United States because of it?
  • How much more in total will it cost utilities and government agencies?
  • The California High-Speed Rail Authority is estimating a cost increase of $20 million for the first 29-mile segment of the bullet train because of the Buy America requirement. What’s the estimated cost increase for the whole system?
  • Will any additional items be manufactured in California because of the requirement?
  • If so, will that manufacturing increase have any effect on the state’s greenhouse gas emissions?

I don’t expect these answers to come from the California High-Speed Rail Authority.

My Public Comments on Bond Finance for California High-Speed Rail Entered into Record for Pivotal Bond Validation Lawsuit

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My March 15, 2013 written comments to the California High-Speed Passenger Train Finance Committee outlining several concerns about its plans for bond financing were the ONLY written comments submitted to the committee before its March 18, 2013 meeting, at which it authorized borrowing more than $8 billion for California High-Speed Rail through bond sales (a requirement under Proposition 1A).

In addition, I was one of four people to speak in person at the March 18, 2013 California High-Speed Passenger Train Finance Committee meeting at which committee members voted to authorize the bond sales.

My written and oral comments to the California High-Speed Passenger Train Finance Committee have been entered into the record for the validation lawsuit (High Speed Rail Authority et al. v. All Persons Interested et al. – Case No. 2013-00140689) filed on March 19, 2013 in Sacramento County Superior Court concerning the legal validity of the bond sales. My comments help to boost the case of the respondents (“All Persons Interested”) that the California High-Speed Passenger Train Finance Committee failed to fulfill its legal responsibilities under Proposition 1A before it authorized the bond sales.

My written comments are submitted to the court as Exhibit G (public comment letter to the HSPT Finance Board by Kevin Dayton, March 15 , 2013) in the August 19, 2013 declaration of Rita Wespi of Californians Advocating Responsible Rail Design (CARRD) based in Palo Alto. Her declaration states that “Based on a series of Public Records Act requests I submitted to the High-Speed Rail Authority and the High-Speed Passenger Train Finance Committee, it is my opinion that the Finance Committee voted to approve over eight billion dollars of state bonds with little more information than a resolution from the High Speed Rail Authority.”

The declaration goes on to state the following:

On March 25, 2013, I made a similar request of the HSPT Finance Committee for “copies of all reports, analyses and recommendations provided to the HSPT Finance Committee members.”

Mr. Mark Paxson, General Counsel for the Treasurer’s Office, replied that “other than the agendas, resolutions and minutes from the prior meeting that are due for approval, there are typically no other documents provided to Finance Committee members prior to their meetings.”

In his response, Mr. Paxson stated that, for the March 18 committee meeting, the HSPT Finance Committee received in total one public comment letter and a briefing memo from the Public Finance Division’s staff. The staff briefing memo simply reiterated the agenda.

The March 15, 2013 public comment letter requested the Finance Committee to add language to Resolutions IX and X which would a) prohibit 40-year terms of maturity, and b) prohibit the use of Capital Appreciation Bonds. The letter argued that without this language, the bond sales and resulting repayment schedule would deviate from what was described in the 2008 voter guide for Proposition 1A. To the best of my knowledge, this letter was not acknowledged or discussed by the Finance Committee.

The declaration is correct: the only indications that my public comment was received was a subsequent email dated March 20, 2013 from Timothy Aguirre in the State Treasurer’s office informing me that “The State Treasurer’s Office will be holding the High-Speed Passenger Train Finance Committee meeting on Friday, March 29, 2013 at 2:00 pm at STO Room 587. Please see the attached meeting agenda” and a March 25, 2013 email from a general mailbox for the State Treasurer’s Office stating “You have indicated you would like to be contacted on items relating to the High Speed Passenger Train Finance Committee. The resolutions to be taken up during the March 29th meeting have been posted to the State Treasurer’s website.  You can find the resolutions by following the web link provided below. http://www.treasurer.ca.gov/financial/meeting.asp.”

My comments in person at the California High-Speed Passenger Train Finance Committee meeting on March 18, 2013 were submitted as Exhibit A (transcript of the meeting) as part of an August 19, 2013 declaration of Kathy Hamilton of Menlo Park, who writes articles about California High-Speed Rail for the Examiner web site.

Kevin Dayton: Note: Tape was turned on a little late, missing his intro. Kevin is CEO of
Labor Issues Solutions.

“Will the bonds be sold separately or at the same time for state bonds for other purposes? What rate do you expect to sell them at? I heard the chairman say 6.25% but I’m going to guess that was probably made that number up out of his head. The bonds selling last week were between 3.5 and 3.8%, something like that. I’d like to hear more about what you think you will get out of this. How will the bonds be structured? Will we be selling capital appreciation bonds at all for this? If the lawsuit that is coming up in Kings County is lost by the High-Speed Rail Authority and you’ve sold bonds, what happens to the money? These are questions I think that regular Californian who voted for this want to know. [They want to know] a lot more about this. We need to know a lot more about this [because] it’s a lot of money for us especially when you consider the interest etc will be about $20 billion [interest on bond funds] total for the whole thing. Thank you.”

Carol Ferris breaks in: “I’d like to thank you for your comments. I would also like to say that the purpose of this is to hear public comment and certainly the committee members can then take your comment into consideration. It’s not a question and answer session at this time.”

As noted in Kathy Hamilton’s declaration about the California High-Speed Passenger Train Finance Committee, “There was no evidence presented, questions asked or witnesses called. There were no discussions that the approval of the High-Speed Rail resolution was necessary or desirable. There were no discussions at all…none of the appointed committee members were in attendance, and all were substitute representatives.”

In other words, it was a farce. My article California High-Speed Rail: One-Way Ticket to Debt in www.FlashReport.org on March 25, 2013 described my experience speaking at the March 18, 2013 meetings of the California High-Speed Rail Authority and the California High-Speed Passenger Train Finance Committee. Also related to this meeting are my March 15, 2013 post Message to California High-Speed Rail Authority and California High-Speed Passenger Train Finance Committee: No 40-Year Bonds, No Capital Appreciation Bonds, What If You Lose Lawsuit? and my March 30, 2013 post Reality of Crushing Public Debt from Bond Sales Eclipses the Fantasy Vision of California High-Speed Rail.

Additional Background on Bond Validation Lawsuits

Documents filed in California High-Speed Rail Bond Validation Lawsuit – on the web site of Transportation Solutions Defense and Education Fund (TRANSDEF)

Sacramento Judge Has a Full Plate of Rail LawsuitsFresno Bee – September 9, 2013

Legal Challenges Plague the California Rail Projectwww.Examiner.com, by Kathy Hamilton – September 8, 2013

Bullet Project Attempts Legal Maneuver to Limit Damage by Lawsuits – www.Examiner.com, by Kathy Hamilton – April 2, 2013

California’s High-Speed Rail Authority Sues Everybody, Invites You to Argue Case in CourtSan Jose Mercury-News – March 28, 2013

Here’s the August 16, 2013 Court Decision Against California High-Speed Rail

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On August 16, 2013, a Sacramento County Superior Court judge ruled in Tos, Fukada, and County of Kings v. California High-Speed Rail Authority that “the Authority abused its discretion by approving a funding plan that did not comply with the requirements” of law approved by voters in November 2008 as Proposition 1A and implemented as California Streets and Highway Code Section 2704.09. Here’s the text of the court decision:

August 2013 court decision against California High-Speed Rail Authority

 

Proposed Route of California High-Speed Rail Through Kings County

A proposed route of California High-Speed Rail through Kings County.

Kings County posted its briefs and other documents related to its argument. Find them at Prop 1A Lawsuit Against High-Speed Rail. The case number is 34-2011-00113919; go to the web site of the Court Index System of the Sacramento County Superior Court to obtain all documents related to Tos, Fukada, and County of Kings v. California High-Speed Rail Authority.

Proposition 1A was enacted with 52.7% of the statewide vote in November 2008. (It won in San Francisco with 78.4% of the vote.) That statewide ballot measure authorized the State of California to borrow $10 billion (actually $9.95 billion) by selling bonds to Wall Street investors, thus providing seed money to start construction of a high-speed rail system estimated at that time to be $45 billion. That estimate turned out to be woefully low.

This court decision – combined with the lack of additional federal funding and the lack of interest from private investors – could mean the end of California High-Speed Rail.

News Media Coverage

Judge: California High-Speed Rail Violates Initiative – Associated Press (San Jose Mercury-News) – August 16, 2013

Judge’s Ruling Could Bring Valley’s High-Speed Rail Project to Screeching HaltFresno Bee – August 16, 2013

Bullet Train Funding Plan at Odds with State Law, Judge RulesLos Angeles Times – August 16, 2013

Sanity May Finally Prevail on Bullet TrainUT San Diego (editorial) – August 16, 2013

California High-Speed Rail Violates Initiative, Judge Says – KABC (Los Angeles) – August 16, 2013

Construction Unions Remain Big Boosters of California High-Speed Rail – My Article in www.UnionWatch.org

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I attended the May 28, 2013 field hearing in Madera, California of the Subcommittee on Railroads, Pipelines, and Hazardous Materials of the Committee on Transportation and Infrastructure for the U.S. House of Representatives. The hearing was on oversight of the California High-Speed Rail project.

As I expected, union representatives attended the hearing in their brightly-colored t-shirts, and letters from union officials comprised the bulk of 120 pages of support letters for California High-Speed Rail, as submitted by Congressman Jim Costa (D-Fresno/Merced) for the hearing record. I write about this in my June 4, 2013 article in www.UnionWatch.org entitled Unions Defend California High-Speed Rail Project at Congressional Hearing.

The Project Labor Agreement for the California High-Speed Rail first segment was never mentioned during the hearing, but Associated Builders and Contractors (ABC) of California submitted a written statement “critical of High Speed Rail Authority for shutting out California workers.”

My Article in www.FlashReport.org: Two Gifts for the Planet: Build California High-Speed Rail and Choose a Path that Crushes the Dairy Industry

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Baker Commodities Entrance SignToday (June 4, 2013) www.FlashReport.org posted my article Two Gifts for the Planet: Build California High-Speed Rail and Choose a Path that Crushes the Dairy Industry. It reports on a little-known issue of concern to California’s Kings County: the proposed route for the California High-Speed Rail “goes in the front door and out the back door” of Baker Commodities, the main rendering plant in the region for dairy cow carcasses. Farmers worry (rightly) that environmental issues will prevent Baker Commodities from relocating this rendering plant, as a result exacerbating the economic difficulties of an already struggling dairy industry in the lower San Joaquin Valley.

Baker Commodities in Path of California High-Speed Rail

The Baker Commodities rendering plant is directly in the proposed path of California High-Speed Rail through Kings County.

Since I submitted the article to www.FlashReport.org, Item 2 on the original June 6, 2013 California High-Speed Rail Authority agenda – “Proposal to Identify a CEQA Preferred Alignment and Station Locations for Inclusion in the Fresno to Bakersfield Final Environmental Impact Report/Environmental Impact Statement (EIR/EIS)” – has been removed. Kings County will remain in suspense about the fate of the rendering plant, even as it waits for a Sacramento County Superior Court decision in John Tos; Aaron Fukuda and County of Kings v. California High Speed Rail Authority regarding the California High-Speed Rail Authority’s compliance with Proposition 1A.

2013 Annual Conference of California League of Bond Oversight Committees Highlights Current Controversies on Municipal Bond Sales for Schools (and High-Speed Rail)

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I’m on the Advisory Board of the California League of Bond Oversight Committees (CalBOC), which held its annual conference today (May 10, 2013) in Sacramento. To improve public accountability for California K-12 and community college construction programs funded by money borrowed through bond sales, this non-partisan organization improves the training and resources available to bond oversight committees; educates the state legislature, local school boards, and the public about the oversight and reporting authority of bond oversight committees; and advocates on a state level, where appropriate, on issues of common concern to bond oversight committees.

California League of Bond Oversight Committees Logo 2013

Citizens’ Bond Oversight Committees were established through a section of Proposition 39 in 2000 that became California Education Code Sections 15278-15282Michael Day, president and co-founder of the California League of Bond Oversight Committees, said that attendees should “go with the knowledge that you’re doing good things” as ordinary California citizens. Day kicked off the 2013 conference by asserting that “spending wisely shouldn’t be a partisan issue.” (I would have added that spending foolishly doesn’t seem to be a partisan issue.)

Presenting first at the conference were two finance and business administrators from the Santa Ana Unified School District, which is getting criticized for borrowing $35 million in 2009 by selling Capital Appreciation Bonds at an almost 10:1 debt-service-to-principal ratio. In addition to suggesting that Capital Appreciation Bond sales can be a valid business decision under certain conditions, they insinuated that school districts know best how to sell their bonds, and perhaps the state legislature is needlessly interfering in their own local affairs. To boost their case, they asked two rhetorical questions to show the arbitrary nature of the provisions in Assembly Bill 182 that would restrict school district sales of Capital Appreciation Bonds:

1. What’s the proper maximum maturity period for school bonds?

(AB 182 proposes 25 years)

2. What’s the proper maximum ratio of debt-service-to-principal on school bonds?

(AB 182 proposes 4:1)

Following their presentation was Assemblywoman Joan Buchanan (D-San Ramon), who introduced Assembly Bill 182 to restrict the sale of Capital Appreciation Bonds. (The bill passed the Assembly on April 8, 2013 with a 75-0 vote.) Catching my attention during her speech was her assertion that the legislature should expand state-mandated performance reviews for school bond measures to include such items as an examination of the school district’s labor compliance program. Knowing how the old labor compliance program laws and regulations had changed starting in 2009, I asked what she meant. Assemblywoman Buchanan said that the State Allocation Board had discovered that some school districts had applied for and received state reimbursement for labor compliance program expenses but weren’t actually following the state requirements and didn’t deserve the reimbursement.

California State Treasurer Bill Lockyer Speaks at 2013 California League of Bond Oversight Committees Conference

California State Treasurer Bill Lockyer speaks at the 2013 California League of Bond Oversight Committees annual conference.

California State Treasurer Bill Lockyer was the keynote speaker. He declared that the Poway Unified School District officials who engineered its notorious 2009 Capital Appreciation Bond sales were “stupid” and should be fired or recalled. Many people in the meeting room clapped in response, although I don’t know what the representatives from the Poway Unified School District did.

Lockyer sees “a whole industry that lives off of this” scheme for Capital Appreciation Bonds and detects “an odor” of underwriters and other financial management firms engaged in “corrupt practices” and taking advantage of school districts through bond sales. He said he heard a story about how an underwriting firm turned down a school district’s request for handling a ill-advised, foolish Capital Appreciation Bond sale, and then the school district asked another firm with fewer scruples, which was pleased to do it for a fee.

Lockyer noted that the 4:1 debt service to principal ratio for school bonds indicated in Assembly Bill 182 was a political compromise among various parties, including some special interests that demanded either absurd ratios (such as 9:1) or no ratio at all. He actually supports an outright ban on Capital Appreciation Bond sales by school districts. (Michigan enacted such a ban in 1994.)

At the March 18, 2013 meeting of the board of the California High-Speed Rail Authority, chairman Dan Richard told me to ask the State Treasurer about the details of the bond sales for the California High-Speed Passenger Train for the 21st Century. So I was ready with the first question for Bill Lockyer: when will the authorized High-Speed Rail bonds be sold, what will be the rate, will they be 35-year bonds as authorized, and will some of them be sold as Capital Appreciation Bonds?

Lockyer answered by revealing that California High-Speed Rail bonds will not be issued separately but will be “mixed in” with general state bond sales (such as the state bond sales in mid-April 2013). Then to my surprise, he said that a small amount of the high-speed rail bonds had already been sold! I sent out a tweet that’s now getting some attention:

California Treasurer Bill Lockyer says small amount of bonds for California High-Speed Rail have been sold already. Did anyone know this?

He also told me that the market sets the rates – a clever answer from an experienced politician who knows how to evade the tough questions.

Regarding state K-12 school bonds, Lockyer said about $2 billion was left from the state school bond measures approved in the 2000s and that it was likely that the state legislature would put another school construction bond measure on the November 2014 ballot. (Three school bond measures approved by California voters in 2002, 2004, and 2006 authorized the state to borrow $35.8 billion by selling bonds. The State Allocation Board disperses the grants.)

Finally, in response to an excellent question from Kern County Taxpayers Association executive director Mike Turnipseed, Lockyer said that perhaps some of very old voter authorizations for bond sales that never happened in the end could be “erased” or cancelled, thus eliminating the state’s liability for repaying the principal on those bonds.

Kevin Carlin of the Carlin Law Group in San Diego made a presentation about single-source alternative construction procurement methods, including design-build and lease-leaseback. The presentation was routine until he began advancing his view that there’s a “proliferation of illegal lease-leaseback school contracting” in California and cited the Sweetwater Unified School District in Chula Vista as an example. A vocal faction in the audience – primarily school district officials and an attorney for school districts – disputed these claims. During the question-and-answer session, I told Carlin that his only ally in the state legislature was the self-interested Professional Engineers in California Government union and that his best chance for addressing the problem was to add provisions to law that ensure better public access to bidding and contract documents on design-build and lease-leaseback projects. (See California Public Contract Code Section 20133 (g).) Supporters of lease-leaseback complained that I wasn’t asking a question.

Joel Thurtell Speaks on Capital Appreciation Bonds at 2013 California League of Bond Oversight Committees Conference

Joel Thurtell speaks on Capital Appreciation Bonds at the 2013 California League of Bond Oversight Committees annual conference.

Retired Detroit Free Press reporter Joel Thurtell, now a blogger at www.JoelontheRoad.com, was the last speaker at the conference. His investigative report “Michigan Schools Load the Future with Debt” was the headline story in the April 5, 1993 Detroit Free Press, and it led to a 1994 state law banning Michigan school districts from selling Capital Appreciation Bonds.

One of the reasons why the article was effective in changing public policy was the directive of a Detroit Free Press editor to Thurtell to produce a “Big Graphic” showing the extent of Capital Appreciation Bond sales by Michigan school districts. Thurtell had to perform many days of tedious paper-based research at the state treasurer’s office in Lansing, but the result was stunning. (Likewise, I believe that the graphic elements of the www.VoiceofSanDiego.org articles on Capital Appreciation Bond sales by California school districts was a major factor in finally bringing state and national attention to the issue.)

In January 2009, Thurtell posted the text of his old Detroit Free Press articles on his web site. Nothing more happened with them until March 2012, when Alicia Minyen, a member of the Board of Directors of the California League of Bond Oversight Committees (CalBOC), found his articles with a web search using the terms “Capital Appreciation Bonds” and “ban.” At this time the word was beginning to spread about the astonishing 10:1 debt service to principal ratio for bonds sold in 2009 by the Poway Unified School District, and the Los Angeles County Treasurer was publicly warning against Capital Appreciation Bond sales.

Joel Thurtell and Alicia Minyen

Champions of fiscal responsibility: Joel Thurtell from Michigan and Alicia Minyen from California.

Minyen contacted Thurtell and then reported on what she learned at the 2012 California League of Bond Oversight Committees. I heard Minyen’s presentation on Capital Appreciation Bonds and then reported it on my blog on May 11, 2012 as Please Read This, Even If You Think Municipal Bonds Are Really BORING: We’re Setting Up the Next Generation of Californians to Pay Staggering Property Taxes, apparently being the first Californian to post a journalistic report on the web about this practice in California.

Thurtell noted today that the worst abuse of Capital Appreciation Bonds in Michigan was at a school district that even used bond proceeds to buy personal computers. I immediate thought about how California school districts are using bond proceeds to buy electronic tablets, with Los Angeles Unified School District and San Diego Unified School District being two prominent examples.