SACRAMENTO, Calif. (CN) - California's beleaguered high-speed rail project hit another roadblock Thursday after a report by the state's financial analyst identified large holes in the bullet train's $64 billion finance plan.
The nonpartisan Legislative Analyst's Office says state officials are heavily relying on billions in cap-and-trade dollars that haven't been specifically sourced for the project, and questioned the first construction phase that starts in a rural stretch of the Central Valley.
"There is some uncertainty regarding the future availability of cap-and-trade auction revenues to fund the project," the 12-page report states. "In addition, the business plan lacks a complete funding plan for the remainder of Phase I."
The report recommends moving the proposed terminal in Shafter, population 16,000, 18 miles south to Bakersfield in order to accommodate the expected hordes of daily passengers. While it would cost another $2 billion to move the ending point to Bakersfield, the Shafter site raises logistical concerns that should be addressed.
"Ending the [route] in an unpopulated agricultural area does not appear to be an effective approach. This is because this location would not have the types of facilities and nearby businesses, such as transit connections, rental car facilities and shops necessary to meet the needs of train passengers," the report states.
Thursday's report comes in response to the California High-Speed Rail Authority's recently-released 2016 draft plan .
The business plan drastically changed the original scheme by having the first phase stretch from the Central Valley to San Jose, and not Burbank to Merced as initially planned. It also lowered the project's estimated cost from $68 billion to $64 billion.
The authority said the changes provide "a clear path forward" for the rail system.
"By constructing the line between the Silicon Valley and the Central Valley, while also making significant investments in Southern California's passenger rail systems, high-speed rail service will become a reality in the state in the next 10 years at a lower cost than previously estimated," Jeff Morales, CEO of the authority, said.
The authority is mandated to release a new business plan every two years and it must be approved by the Legislature.
The analyst's report agreed that shifting the first phase to the Silicon Valley would be cost-effective, approximately $10 billion less than the Burbank plan. The northern route also carries less logistical risk, as engineers are still mulling ways to drill through the southern route's massive barrier - the Tehachapi Mountains.
Officials hope building the first phase sooner will generate funding for the more expensive route to Southern California. But the legislative analyst balked at the assumption that the completed route will compel funding and revealed more financial planning is necessary.
"It is unclear whether the system will actually generate an operating surplus. Moreover, the plan estimates that the amount of funding that could be generated would fall significantly short of the level needed to complete Phase I," the report states.
The analyst's report calls on lawmakers to demand a more detailed business plan and increase oversight over the plan that has already received more than $8 billion in state funding.
An Assembly oversight hearing on the high-speed rail plan is scheduled later this month and will give lawmakers the opportunity to address the plan's apparent funding gaps. A separate peer review of the authority's business plan has yet to be released.
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