A business plan that forecasts where Merced’s proposed bullet train station may ultimately end up has received unanimous approval from the California High-Speed Rail Authority’s board.
The board’s Monday vote means the authority’s revised final business plan will be delivered to the Legislature. Every two years, the authority is required by law to submit a business plan that includes proposed timelines for construction and schedules for completion.
The part of the business plan that’s of particular relevance to Merced County residents is contained in the plan’s technical document.
The document mentions a proposal to build Merced’s high speed rail station on an alternate site near East Mission Avenue and Highway 99 – a departure from longstanding plans to build the station in the city’s downtown.
Referencing that specific part of the business plan, Merced Deputy City Manager Frank Quintero told the board he anticipates continued dialogue between the city’s transportation subcommittee and authority staff.
Quintero said the city would like to get a preview of the proposed station area and its future design. He also said the city and other regional stakeholders look forward to working with the authority to develop a strategic plan for the alternate site.
“No doubt, that much is required for the first segment of the high-speed rail project to be fully functional by 2032,” Quintero said.
The authority first proposed the alternate site, located about four miles away from downtown, to the Merced City Council in January. Officials said the revised plan would shave roughly $1 billion in construction costs, while causing fewer traffic impacts, compared to building amid heavy traffic in the downtown core.
The idea hasn’t been universally accepted by local leaders and residents, with some members of the city council saying they need more details before supporting the proposal.
Others have said the proposed Mission Avenue station would be a mere single side platform with a small support building in a relatively rural area. Some say that would be a far cry from the transportation hub and juggernaut of economic revitalization the proposed downtown Merced station was once advertised as being.
One of the key selling points of a downtown station was connecting ACE Rail, Amtrak and High-Speed Rail in one location, although those plans have been set aside.
The Authority’s proposal to build the station near East Mission Avenue would require the Legislature to make changes to state law. Senate Bill 198 gives special priority for the initial operating 171-mile segment of the bullet train to be built specifically from downtown Merced to Bakersfield, with a spending cap of $500 million to build anything outside of that area.
Merced County Supervisor Josh Pedrozo read a statement to the board Monday, saying while the supervisors recognize there are “differing views and ongoing concerns” about the project, it’s important to focus on the project’s potential benefits, such as reduced congestion on Highway 99, expanded transportation options and progress toward the state’s environmental goals.
Pedrozo also said moving the station to the East Mission Avenue area is based on “common sense, not politics,” citing factors such as better access to UC Merced, reduced capital costs and reduced disruption caused by construction impacts.
“We remain committed to ongoing cooperation and communication with the authority and our regional partners as the project moves forward,” Pedrozo added. “The business plan reflects commitments made to Merced County, and it is important that those commitments are followed through, which I believe they are.”
The business plan estimates building the bullet train’s initial operating segment from Bakersfield to Merced at a price tag of $35.7 billion, with completion of the segment scheduled for 2032. So far, about $15.3 billion has been spent on the project. Construction so far has been limited to three construction contracts running from just north of Madera to the Kern County community of Shafter, a span of 119 miles.
The authority expects to begin laying tracks for the project this year.
Achieving the project’s long-term vision of connecting San Francisco with Los Angeles would conservatively cost roughly $126 billion. Back in 2008, when California voters supported the bond measure to build high speed rail, those costs were anticipated to be around $33 billion.
Questions about tax increments and data centers
When the business plan was first introduced in April, it received a somewhat icy reception from the California Legislative Analyst’s Office and others who said it lacked transparency. That caused Authority staff to make several revisions.
The plan reflects a desire by Authority CEO Ian Choudri and others to forge public-private partnerships and strategize to find alternative streams of revenue.
One idea that’s rankled more than a few Valley leaders is a proposal to use Enhanced Infrastructure Financing Districts as a tool to gather tax increments within a half mile of high-speed rail stations. Tax increment is the increased share of property tax based on improvements to the land.
The Fresno Bee last month reported how Valley mayors, including Merced Mayor Matthew Serratto, signed a letter stating they’d be willing to sue if the authority were to attempt such a strategy.
Merced Councilmember Darin DuPont also raised similar concerns about the tax issue back in January, not long after the authority proposed the East Mission Avenue station.
The idea continues to draw detractors, such as Damon Conklin, legislative representative for the League of California Cities. Speaking to the board Monday, Conklin said the authority has been vague about how those tax increment financing districts would be structured.
“We recognize the significant financial challenges facing the high-speed rail project and appreciate the Authority’s efforts to identify innovative funding strategies. The proposed value capture framework raises to us profound legal, fiscal and policy concerns for local governments and the communities that we serve,” Conklin told the board.
“We believe at its core, the proposed business plan, if compulsory for cities, is a direct attempt to divert local control tax revenues and undermine voter approved constitutional protections,” he added.
Another idea that’s raised a few eyebrows is a proposal to potentially generate streams of revenue by using the corridor of the bullet train to attract private investment related to solar farms, battery storage facilities and data centers.
That idea doesn’t sit well with Merced resident Noma Cardona. While Cardona said she is supportive of high-speed rail, she’s concerned about the potential environmental and quality-of-life impacts associated with some of the ideas.
“I urge this Authority to pursue the revenue, yes, but find alternatives that do not ask the San Joaquin Valley to bear the environmental costs of California’s progress,” Cardona said.
Henry Perea from Fresno, one of two San Joaquin Valley members who sit on the board, said in reference to the tax increment concerns that “obviously we want to put out good ideas when it comes to creative ways to finance our project, but it doesn’t necessarily mean that it’s going to happen.”
When asked about it by Perea, Chaudri responded: “Right now, these are all concepts. They are not built into our costs. None of the costs that are associated, that we are projecting, include any of the tax increments” at this point.
Chaudri also clarified that while ancillary revenue could be generated from the fiber connectivity of the bullet train corridor – which could benefit data centers – the Authority itself is not in the business of building data centers.
“The intent is to say ‘We have the corridor with the provisions of future renewable power, clean energy, and also fiber connectivity. That’s what we’re talking about,” Chaudri said.
Senator Anna Caballero, D-Merced, who sits on the board, said “just the discussion of taking local tax revenue” during a year that began with potential budget cuts “had everybody a little paranoid.”
She expressed a willingness to talk to local governments to answer any questions they may have.
“Because I have been thinking about this a lot. Cities have a number of different ways that they pay for the infrastructure when they have construction, so there may be a way for us to do something that really is a partnership,” she said.
Caballero said she also hears the concerns expressed by some in the community about moving the proposed station out of downtown.
“There is great distress in the community because they haven’t been included in any of these discussions,” Caballero said. “And so I do think that we’re going to have to go out and have conversations.”