Calif bullet train faces funding, legal challenges

LOS ANGELES – Gov. Jerry Brown gave his approval Wednesday to spending billions of dollars in government money for a high-speed rail line that still faces major funding, environmental and political challenges before it could connect Los Angeles and San Francisco.

Brown was at historic Union Station in Los Angeles to celebrate the project and sign a bill authorizing California to begin selling $2.6 billion in bonds for construction of the initial 130-mile segment of the bullet train in the Central Valley. The move allows the state to tap $3.2 billion in federal funds for the project.

However, most of the money for the $68 billion project linking the two major cities has yet to be identified.

California voters approved $10 billion in bonds for the project in 2008, and the state's business plan calls for some backing from private investors and for a private operator to run the system without a state subsidy.

Supporters say it's rarely known upfront where all the money for such massive transit projects will come from.

The Democratic governor signed the bill, SB1029, at a carefully staged event where cheering politicians and unionized construction workers provided a striking contrast with the political fight earlier this month in the state Senate, where the plan narrowly survived.

The first segment of the line will be financed by taxpayers, and Brown said there was strong interest from private companies in financing the rest of the project. He didn't provide any specifics on possible investment or name any of those firms.

"Private investment will come in the second phase," he said. "Private investment has worked in Europe, and it will work in this project."

The business plan by the California High-Speed Rail Authority, which is overseeing the project, relies on the private sector to "design, build, operate, and maintain a high-speed rail system that is funded by a combination of government investments and future revenues that support the investments of capital from the private sector."

Officials at the authority were unable to identify any future investors and instead released a written statement from Chief Executive Jeff Morales.

"We are continuing to receive strong interest among private investors," it said. "Once the (initial segment) is completed we will bring on board a private operator and will have private investment and expansion of the system. We are continually sounding the market to determine if there are options that could bring in investment opportunities sooner."

Republicans promise to block future public funding for the line, and the project could take years to clear environmental reviews.

Farmers whose land lies in the path of the massive infrastructure project are among the most vocal critics, and farm bureaus in Madera and Merced counties have sued to stop it.

As in the past, Brown on Wednesday dismissed suggestions that the train was too costly or would become a drain on taxpayer dollars while California is slashing programs and facing budget shortfalls linked to the weak economy and soaring public pension and health care costs.

"I've been around long enough to know the difference between the skeptics, the fraidy-cats and the builders," he said. "And we will create jobs, not by hiding out, not by saying no, but by saying yes to the future."

Some business leaders back the project, such as the Bay Area Council, a coalition of San Francisco Bay-area business officials. President Jim Wunderman credited Brown with turning around a mismanaged project.

"After the project's tumultuous start, the governor's speeches, appointments to lead the project, his focused attention on the details, and steely spine in the face of opposition, will pay big dividends for California for decades to come," he said.