Bullet-train P.R.: Biggest scandal of all is hiding of key fact in 2008

The stories over the weekend about the heavy public relations spending by the California High-Speed Rail Authority have inspired fresh ire and dismay over the CHSRA. The coverage offers more evidence of the religious zealotry with which supporters pursue their boondoggle. After a half-dozen independent assessments trash the project, they remain convinced that their biggest problem is poor PR. Yet the far bigger PR scandal dates back to 2008 — when a crucial but devastating fact about the bullet train’s  business plan was held back from California voters until just after they’d narrowly given the OK to spend $9.95 billion in public funds on the project.

People who have followed the bullet train fiasco as it has unfolded are aware of the sharply critical independent evaluations of every facet of the project, and with the horrible public image the rail authority now has in Silicon Valley and the Central Valley because of the klutzy ways it has operated. They also have seen coverage of how the bullet train was promoted for years with myths about ridership, ticket cost, economic value, environmental benefits and so much more.

But what has never been emphasized nearly enough is that the boondoggle isn’t solely a familiar government scandal involving wasteful spending. Instead, it appears that the rail authority didn’t just exaggerate and oversell its project. The public record suggests that its execs and P.R. people may have actually broken a state law when they kept a crucial fact from voters in 2008.

This is from the Oct. 9, 2008, S.F. Chronicle:

A group opposing Proposition 1A, the high-speed rail bond measure, filed suit against the California High Speed Rail Authority on Wednesday for failing to release an updated business plan by a Sept. 1 deadline.

“A more clear violation of law is hard to imagine,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association said in a press release. His group filed the suit and is opposing the measure.

The suit seeks a court order mandating the report be produced “as required by law.”

But authority officials say that’s impossible – and that the association knows that.

Legislation signed by Gov. Arnold Schwarzenegger on Aug. 27 required the updated business plan but authority officials said they wouldn’t have money to work on it until the state passed a budget, and estimated it would take 45 days to complete. The budget was signed on Sept. 23 – 85 days late.  …

Authority spokeswoman Kris Deutschmann said most of the contents of the plan have already been made public, but they need to be compiled and updated – a process that will be completed within weeks. That could be before or after the Nov. 4 election, she said.

So the contents were known, and this missing of the deadline was of little import. Really? All Californians had heard was happy talk, especially a ballot description that was so ridiculous that it prompted a state appeals court to rule the Legislature could no longer draft ballot descriptions.

When the business plan finally was released — days after the election — it was full of happy talk. But it also had one paragraph that could have turned the election had it been widely publicized (the bolding is mine):

In the spring of 2008, the Authority issued a Request for Expressions of Interest (RFEI) as an effort to gauge private sector interest in participating in a P3 arrangement for the high-speed train project. Interest was strong, especially among construction firms, system and equipment providers, financial institutions and operators. However, most private firms responding made it clear that they would need both financial and political commitments from state officials that government would share the risks to their participation. The amount of private funding and timing of private sector participation will be a reflection of how risky the private sector perceives this project overall.

Shared risk equals commitment to provide public funding — i.e., taxpayer subsidies — should ridership or revenue come up short. That’s illegal under Proposition 1A. And that is what the business plan for the project contemplated all along — except voters weren’t told about it until days after giving their blessing (and $9.95 billion) to the project.

So while the current scandal over heavy PR costs plays out, the bigger picture must not be forgotten. The bullet train was built on dishonesty from the start, when voters were told they’d never have to give another dime to the project — even as train planners and executives knew taxpayers would have to “share risks” going forward to attract the billions in private investments needed for the project to come to fruition.

This fish didn’t just start rotting recently. It began rotting in 2008. Hence the current stench.

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