Judge blocks California bond sale for high-speed rail project

Reuters

SAN FRANCISCO (Reuters) - A California judge ruled on Monday against the state's plan to issue more than $8 billion in bonds to build a high-speed train system and rescinded the project's funding plan, estimated at $68 billion.

Judge Michael Kenny, of Sacramento County Superior Court, said in a written ruling that there was too little information to support the decision by the California High-Speed Rail Authority to move forward with the debt sale.

"In this case, the court can find no evidence in the record of proceedings submitted by plaintiffs that supports a determination that it was necessary or desirable to authorize the issuance of more than eight billion dollars in bonds under Proposition 1A as of March 18, 2013," he said in the ruling.

In a separate decision, Kenny ordered the rail authority to rescind its funding plan for the statewide passenger rail system but did not block the project, which has the political backing of Governor Jerry Brown.

Brown's office was not immediately available to comment.

California voters approved the ambitious project in 2008 when they endorsed Proposition 1A, which authorized nearly $10 billion in state obligation bonds for financing.

The project, which would connect California's far-flung metropolitan areas, has faced opposition including lawsuits aimed at stopping it and controversy over its different funding plans.

Dan Richard, chairman of the rail authority, said in a statement that he was reviewing Kenny's rulings to "chart our next steps, but it is important to stress that the court again declined the opposition's request to stop the high-speed rail project from moving forward."

The judge did not invalidate the bonds as approved by the voters in Proposition 1A, Richard added.

"Like all transformative projects, we understand that there will be many challenges that will be addressed as we go forward in building the nation's first high-speed rail system," he said.

Jon Coupal of the Howard Jarvis Taxpayers Association, an opponent of the project, said Kenny's decisions mark a major setback for the California High-Speed Rail Authority.

"It's a victory for common sense," Coupal told Reuters. "I'm not sure how they salvage this."

Critics of California's high-speed rail effort say money will run dry before its network can be completed and that it is uncertain that federal and private funds will be available for it over the long haul.

(Reporting by Jim Christie; Editing by Sandra Maler, Philip Barbara and Leslie Adler)

View Comments (35)