Report 2009-106 Recommendation 1 Responses

Report 2009-106: High-Speed Rail Authority: It Risks Delays or an Incomplete System Because of Inadequate Planning, Weak Oversight, and Lax Contract Management (Release Date: April 2010)

Recommendation #1 To: High-Speed Rail Authority, California

To ensure that it can respond adequately to funding levels that may vary from its business plan, the Authority should develop and publish alternative funding scenarios that reflect the possibility of reduced or delayed funding from the planned sources. These scenarios should detail the implications of variations in the level or timing of funding on the program and its schedule.

Agency Response*

In the 2016 Business Plan, attached, the Authority described its vision for a phased implementation strategy that allows for a series of phased, incremental extensions to ultimately build out the entire Phase 1 system. Just like other systems around the world, the Authority will fund and build the California high-speed rail system in a series of overlapping, not sequential, phases. The first phase that the Authority has already begun constructing is the Silicon Valley to Central Valley Line stretching from San Jose to a station north of Bakersfield.

The 2016 Business plan presents a snapshot of the funding available in addition to the many strategies and scenarios the Authority will use to implement a fully funded Silicon Valley to Central Valley Line. This includes a range of potential funding options available to pay for construction of the entire line. The range of potential available funding is based on different financing scenarios that the Authority analyzed during its business planning process. For example, in the 2016 Business Plan, the Authority discussed its plan to use annual Cap and Trade proceeds received after 2024 to repay financing. The Authority also discussed the different types of financing tools available including federal programs, revenue bonds and other sources, and how the potential proceeds could range from $5.1 billion to $5.3 billion depending on the financing scenario assumed. Ultimately, the Authority used the midpoint of $5.2 billion for planning purposes.

The Authority also laid out the goal of connecting the Silicon Valley to Central Valley Line all the way to San Francisco and Bakersfield. However, since funding may be temporarily inadequate to reach the permanent station in Bakersfield, the Authority also laid out the abridged Silicon Valley to Central Valley Line that fits within available, identified funds. In this instance, the Authority has proposed an interim station just north of Bakersfield which would still meet

  • Response Type†: Annual Follow Up
  • Completion Date: May 2016
  • Response Date: November 2016

California State Auditor's Assessment of Status: Resolved

See our assessment for Recommendation #1 in our follow-up report, 2011-504.


Agency Response*

See the first recommendation under Responses to the January 2012 report 2011-504 below for our response to this recommendation.

  • Response Type†: Annual Follow Up
  • Completion Date: May 2014
  • Response Date: September 2015

California State Auditor's Assessment of Status: Partially Implemented

We repeated this recommendation in our follow-up audit; see the authority's response and our assessment in report 2011-504, recommendation number 1.

  • Auditee did not address all aspects of the recommendation

Agency Response*

See the first recommendation under Responses to the January 2012 report 2011-504 for our response to this recommendation.

  • Response Type†: Annual Follow Up
  • Completion Date: May 2014
  • Response Date: October 2014

California State Auditor's Assessment of Status: Partially Implemented

We repeated this recommendation in our follow-up audit; see the authority's response and our assessment in report 2011-504, recommendation number 1.

  • Auditee did not substantiate its claim of full implementation

Agency Response*

See the first recommendation under Responses to the January 2012 report 2011-504 for our response to this recommendation.

  • Response Type†: Annual Follow Up
  • Estimated Completion Date: Early 2014
  • Response Date: October 2013

California State Auditor's Assessment of Status: Not Fully Implemented


Agency Response*

The Authority continues to work with stakeholders to define alternative delivery scenarios on blended systems operations. These alternatives will have different levels of costs and differing funding needs. The Authority's business plan includes a section related to the impacts of potential delay in funding or other factors on the project. The Authority has known funding sources from Proposition 1A, $3.3 billion in committed federal funding, and cash flow projections which illustrate that private sector capital should be available when the IOS has been built. The first construction phase is fully funded. The revised business plan clearly identifies known sources and the funding gap that remains to be filled over the next 20 plus years as the full system is built out.

In the spring of 2012, during finalization of the 2012 revised business plan, the Department of Finance and the Administration identified cap-and-trade revenues as potential funding source for the high-speed rail project. Cap and trade funds are available as need, upon appropriation, as a backstop against federal and local support to complete the IOS. The Authority will work with the Department of Finance to define a specific plan for use of cap-and-trade funds, which will be presented in detail in the next business plan to be issued in draft in the fall of 2013.

  • Response Type†: Annual Follow Up
  • Response Date: September 2012

California State Auditor's Assessment of Status: Not Fully Implemented

  • Auditee did not address all aspects of the recommendation

All Recommendations in 2009-106

†Response Type refers to the interval in which the auditee is providing the State Auditor with their status in implementing recommendations made in an audit report. Auditees must submit a response regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year or subsequent to one year.

*Agency responses received after June 2013 are posted verbatim.


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