Obama Denies Loan to Nation’s Only High-Speed Rail Project
Dec. 30, 2016 (EIRNS)—A fiasco jointly created by dead-duck President Obama and California Gov. Jerry Brown may be shaping up for California’s high-speed rail project.
The Obama Transportation Department has (on Dec. 20) refused a loan of $15 billion requested by the California High-Speed Rail Authority for the only high-speed rail project under construction in the United States. The request was made "quietly" on Dec. 2, according to the Los Angeles Times of Dec. 24. The intention was to invest that loan fund in an East-West portion of the planned system, running from Los Angeles east to Bakersfield. It was hoped to be the basis for a "Federal judgment of creditworthiness" for further bond issues, as well as making further Federal loans possible.
But the Obama Department of Transportation blew the quiet request (i.e., informal probe) out of the water, by announcing that California "has not submitted a financing request as of this time."
The ARRA "Stimulus Act of 2009 gave $3.5 billion to California for high-speed rail, but there has been no aid or loan since then. The state sold a $9 billion bond issue in 2008, but a maze of senseless environmental and "consumer" conditions attached to it by the legislature, have prevented much of it from being spent. The Obama refusal to loan anything to CHSRA, creates a funding crisis for the whole system.
There are several underlying problems. There are no American suppliers for the electric locomotives, train sets or electrical overhead equipment; yet a Chinese offer for both the Los Angeles-San Francisco line and a Los Angeles-Las Vegas line was rebuffed by the Administration on "buy America" grounds!
Due in part to this, and to the many harassing rules and conditions for construction, the California system business plan budgets it at about $65 billion total cost, for about 1,100 km of rail—two and one-half times the international average cost of $25 million/km of high-speed rail (China: $24 million/km; Spain the lowest, $18 million/km). The construction timetable runs from 2015-2040 for many stations and sections.
And finally, there is no actual overall funding plan, as EIR was told by the staff of one California Congressional supporter of it, who feared "a black eye for high-speed rail nationally." "I can see," he said, "how your [Hamiltonian] bank would handle it."