California holds off on HSR bonds for Caltrain electrification while exploring fund swap, and even private funding

The state of California Treasurer’s office has decided to float bonds in April for the California High Speed Rail project as authorized by Proposition 1a, but is holding off on selling Prop1A bonds for Caltrain electrification while the federal grant portion of electrification funding is hung up in Washington, DC.

Governor Jerry Brown was in Washington DC on Tuesday talking to Transportation Secretary Chao about freeing up the Caltrain funding. He said he was optimistic about the outcome, but no guarantees were made.

A Caltrain spokesman told this blog that the state holding off on the April bond sale doesn’t cause reciprocal damage to the chances of federal funding, because Caltrain has commitments from the state to cover that portion of the funding.    The governor’s budget proposes a second $1Billion bond sale in the second half of the year, which could conceivably cover Caltrain funding, if the federal funding comes in.

 

A federal judge declined on Wednesday to grant a preliminary injunction to block the High Speed Rail bond sale, setting a hearing on the latest lawsuit for April 19, just one day before the scheduled bond sale.

Plans B for Electrification funding

Meanwhile, according to Chief Modernization Officer Michael Burns on Tuesday addressing the San Francisco County Transportation Authority, Caltrain is exploring alternative state sources of funding, as part of negotiation with California’s Republican delegation to encourage them to withdraw their objection to electrification. The objection by California’s R’s has led Transportation Secretary Chao to withhold her signature from a crucial $647Million federal grant needed to complete the Caltrain funding package.

Caltrain Chief Modernization Officer Michael Burns

Caltrain Chief Modernization Officer Michael Burns

The administration has said that their decision to signal whether the electrification project will get its funding is whether there will be nonzero funding for newly approved capital projects in the President’s completed budget proposal in May. The President’s draft budget proposal eliminated funding for all new transit capital projects that hadn’t yet had their grants finally approved.

Private funding as a Plan B option

On Tuesday, Burns also disclosed that Caltrain is considering other potential backup plans for the $647 million if the federal government does not come through – including bringing in private sector partners. Caltrain’s relatively high farebox recovery – especially considering the likelihood of increased ridership with electrification – would logically make it attractive to private operators.

With that sort of deal the contract structure would make a big difference in whether Caltrain was being run to maximise profit, or to maximise ridership and congestion relief as public benefits (if there is any tension between those two goals).

Funding for Caltrain electrification needs to be confirmed by June 30, or it would need to renegotiate its contract, adding further delay and cost to the $2Billion project.