California’s high-speed rail chief stepping aside as project pivots toward train operations

A big change is coming to the agency tasked with developing a bullet-train system to link northern and southern California through the San Joaquin Valley with the coming resignation of its top executive.

Brian Kelly, who has led the California High-Speed Rail Authority as its CEO since early 2018, announced Thursday that he will step down from the post.

Kelly submitted his formal letter of resignation to the authority’s board chairperson, Fresno developer Tom Richards. Kelly told The Fresno Bee that he plans to stay in the role, perhaps for several months or more, as the agency begins its search for a new chief executive.

Kelly inherited a massive project that had been bogged down by slow acquisition of property for the route through the central San Joaquin Valley and beset by schedule delays and cost increases. One of the first efforts that Kelly directed was to emphasize learning from previous miscues and to sharpen the agency’s focus on completing the construction segments in the Valley with the money it had in hand. Kelly also advocated putting the Valley “backbone” of the statewide system into service as rapidly as possible while lining up funds for expansion of the routes north and east to the San Francisco Bay Area.

“I took this job with the intent to stabilize the organization, to have it perform better, and to try to get reinvestment of public funds in the project, and I feel good about it. I feel like I’ve achieved much of that,” Kelly told The Bee on Thursday. “This project is on an uptick and it’s time for it to transition to the next generation of leader for its next phase.”

One key milestone came in mid-2022, as the rail authority worked with Gov. Gavin Newsom’s administration on securing approval from the state Legislature to access the last $4.2 billion from Proposition 1A, a bond measure approved by California voters in 2008 that provided almost $10 billion for planning, development and construction of high-speed rail.

Another was last December, when the U.S. Department of Transportation and the Federal Railroad Administration awarded a $3.1 billion grant to the state to advance engineering and construction to extend the current 119 miles under construction to 171 miles between Merced and Bakersfield.

“I just believe this in my core, that the project is about to make a key transition into getting ready and getting into operations,” Kelly told The Bee. “With this new award of federal funds, and before that the awarding of the state bond money, the project is well on its way to transition into operations. … It’s the right time now to bring in somebody specifically with passenger rail operations experience at a high level, at a chief executive level.”

Kelly said that after the transition from one leadership to the next, “it’s really about preparing to spend more time with my family and my wife at the end of a longer public service career.”

Before he joined the rail agency in January 2018, Kelly served five years as secretary of California’s State Transportation Agency. From 1995 to 2013, Kelly served as either a transportation consultant or executive staff director for four separate state Senate pro tempore leaders.

Authority board member Henry R. Perea, a former Fresno County supervisor and longtime supporter of high-speed rail, described Kelly as “the right guy at the right time” to guide the listless agency.

“What Brian did was bring a lot of focus and credibility to the project, and hired the right team to get us moving in a new direction,” Perea told The Bee on Thursday.

Perea added that the recent federal grant award “would not have happened without Brian and his credibility.”

“A completely different organization today”

Richards, the authority board chairperson, praised the strides that the agency made during Kelly’s tenure.

“There’s no question he’s taken it to the next level from where we were before,” Richards told The Bee in a telephone interview. “But he didn’t think it would take this long, and probably we (as a board) didn’t, either.”

Kelly “brought a skill set that we didn’t have before, and a very, very strong government background; he understood and understands the way that state government works,” Richards added. “He brought a management style … and really restructured the entire organization in a very methodical way to emphasize function over form. Singly, that was probably the most important thing he did.”

But, Richards said, “the bottom line is that the skill sets in running an organization that’s moving rapidly toard operations is not something he necessarily felt was in his toolbox at the outset.”

It’s unclear how long the search for a successor may take, but Richards and Kelly both stressed that Kelly has pledged to remain on board throughout the search and selection as well as a transition period.

Richards said he believes the authority is in a better position now to attract qualified candidates than when the previous permanent CEO, Jeff Morales, left the authority in mid-2017.

“I think the project and the organization is viewed much differently now than it was six years ago at the outset when Brian came on,” Richards said. “The expectation for success, I believe, has materially improved from six years ago.”

“I think it will lead perhaps to a shorter transition than one might expect,” he added. “The last time it was a very difficult sell. This is a completely different organization today.”

Former Gov. Jerry Brown, under whose administration Kelly took over the project, said in a prepared statement that “Brian has kept this train on the tracks with great skill and determination; very important work for California and the whole country.”

Newsom’s administration also applauded Kelly’s tenure in state government. “Brian Kelly’s strong leadership and decades of service to the people of California have been instrumental in advancing our state’s vision for clean, electrified transportation that will serve generations of Californians,” said Erin Mellon, Newsom’s communications director.

“The state has made key progress to deliver on the nation’s first high-sped rail system –including the creation of more than 12,000 construction jobs,” Mellon added, “and we look forward to continuing the momentum to get this transformative project into service across the state.”

Perea said he was not surprised by Kelly’s announcement, but added that his continued service will be critical in the coming months. Between anticipated bids for contracts for trains, tracks and systems, “we need him for a smooth transition,” Perea said. “We’re going to keep him working.”

A period of lessons learned

In his resignation letter to Richards, Kelly wrote that “this job has been both the most challenging and most satisfying of my nearly 30-year public service career.”

Prior to his tenure, the rail project had received more than $2.5 billion in federal economic stimulus funds from the Obama administration, as well as other grant funds from the Federal Railroad Administration for rail improvements, awarded with the caveat that the money be spent on construction in the central San Joaquin Valley. But that money came with an initial deadline to be spent by the fall of 2017.

That forced the agency into an artificially compressed time frame to award three contracts for construction in the Fresno region and neighboring Valley counties even before it had acquired the properties it needed for the route. Contractors were tasked with not only designing and building the rail line, but also for securing some environmental permits and handling relocation of gas, electric and communications utilities along the route. The less-than-ideal result is what authority leaders in 2018 called “a shotgun marriage of project development and delivery.”

About 98% of the property needed for the 119-mile construction segments from north of Madera to northwest of Bakersfield have now been made available to contractors to build, but relocation of various utilities including electricity, gas, communications and water at hundreds of sites up and down the route still remain to be accomplished.

The travails prompted by the rush to construction, Kelly said, provided valuable lessons learned. He has pledged that the rail authority won’t enter any future construction contracts until the agency has a firm grasp on the money needed for the work – and has all of the property it needs for construction under a particular contract.

The December award of the federal grant, however, has paved the way for the agency to take steps needed to design extensions of the rail line into downtown Merced and downtown Bakersfield and to begin the process of buying electric-powered, 220-mph trainsets for testing in 2028 and passenger operations sometime between 2030 and 2033.