CA bullet train officials deny reports of potential $3.6B cost overrun

Dive Brief:

The California High Speed Rail Authority has disputed a report in the Los Angeles Times that alleged its $64 billion bullet train project was headed toward a $3.6 billion cost overrun, according to the Silicon Valley Business Journal.
The initial 118-mile segment through northern California (Merced to Shafter) could end up costing as much as $10 billion — more than 50% over its original budget of $6.4 billion — even though the CHSRA relocated the inaugural route there to save money, according to the Times report.
The Times said it based its story on a "confidential Federal Railroad Administration risk analysis," but both CHSRA and FRA authorities said the report in question was prepared for discussion purposes, was populated with hypothetical situations and did not accurately reflect the current state of the high-speed rail project.

Dive Insight:

A CHSRA spokesperson told the Business Journal that the agency is in the process of preparing a letter addressed to the state Legislature that will contest the allegations made in the Times article. This is no doubt critical as it was just a little more than a year ago that another Times story launched a series of special legislative hearings after it suggested that the CHSRA did not present all the available information in its initial financial and feasibility projections.

Nevertheless, last summer, the authority agreed to pay contractor Tutor Perini $63.6 million in delay-related charges and extend its contract by 17 months. Tutor Perini had a $1 billion contract to build the first 29 miles of the system, mobilized equipment and personnel to begin construction in 2013 but, according to the Times, was unable to start because all the necessary land acquisitions had not been made. The agency said the extra money would come out of its reserves and would not affect the budget or schedule.

To help finance a portion of construction and to electrify a separate rail line, the CHSRA authorized a $3.2 billion bond sale in December. That amount is part of $10 billion in funding that voters previously approved. Critics of the bond sale have filed a lawsuit arguing that electrification was not part of the agency's original plan and prevents it from using any of the $10 billion for that purpose.