California Choo-Choo (Cont’d.)

“. . . [T]he state has yet to start full-blown, sustained construction of permanent structures — including bridges, tracks and train stations — at least partly because it lacks most of Central Valley land needed for an initial 29-mile segment that will pass through Fresno. The state has acquired 71 of 526 parcels needed for the segment, about 13% of the total, according to figures provided by the California High-Speed Rail Authority.” Ralph Vartabedian, Lack of Land Slows Work on California Bullet Train Project, Los Angeles Times. Aug. 13, 2014.

This passage pretty much speaks for itself, it but it and the rest of the article may be misleading to lay readers unacquainted with the law and practices of eminent domain. It quotes the former chief executive of the project that “acquiring land for transportation typically involves property owners trying to squeeze the state for the highest possible value.” That is nonsense.

The idea that individual farmers in the Central Valley can “squeeze” the state is absurd on its face. Indeed, the history of eminent domain is a history of undercompensation  of landowners. That is why owners who refuse the state’s offers and litigate value — whether before judges or juries — usually make out better than the ones who accept the state’s offers.

As for that nonsense about farmers “squeezing” the state for the taken land’s highest value, the “highest price” is what California law sets as the measure of just compensation that has to be paid when land is taken by eminent domain. Don’t take our word for it. Check out California Civil Code that provides explicitly in section1263.320 (a) that just compensation is the highest  price that the subject property would fetch in a voluntary, private sale transaction between a willing but unpressured seller and a willing but unpressured buyer, both fully aware of the subject property’s good and bad features, including its highest and best use.

Why does the law say that? Because in a voluntary transaction the seller can take his sweet time in marketing the property until he finds a buyer willing to pay top dollar. An eminent domain action deprives him of that ability, so the law provides him with the “highest” price that he could have obtained in a voluntary transaction.

Moreover, the state has the power of taking the property before compensation is finally determined, so owners cannot “squeeze” the condemnor.

 

California Choo-Choo (Cont’d.)

We haven’t seen the Court of Appeal opinion yet, but according the LA Times the California Court of Appeal has reversed the trial court’s decision enjoining proceeding with the “bullet train” project. As best as we can figure out, the reason for the reversal was the appellate court’s conclusion that preliminary expenditures (such as the ones being challenged) are OK, with the final budget yet to be determined.

The case is California High-Speed Rail Authority et al. v. The Superior Court of Sacramento County, Ct. App. No. C075668.

 

California Choo-Choo (Cont’d.)

A recent headline tells the tale; U.S. House Votes to Stop Funding California High-Speed Rail, by Allen Young, Silicone Valley Business Journal, June 11, 2014. To get the story click on http://www.bizjournals.com/sanjose/news/2014/06/11/u-s-house-votes-to-stop-funding-california-high.html?ana=rss_sjo_tabo&page=all

The take-away paragraph is:

“The Republican-controlled U.S. House of Representatives passed legislation Tuesday to stop federal funding for high-speed rail in California.

“The action is largely ceremonial, however, as the California High-Speed Rail Authority has not requested additional federal funding this year above the stimulus grants the agency is already spending.”

 

California Choo-Choo . . . (Cont’d.)

There hasn’t been much to report lately about California’s proposed “bullet train” between Los Angeles and San Francisco. But a dispatch in today’s Los Angele Times avers that the projected cost, has just been increased by one billion dollars.

So let’s review the bidding, as it were. First, California voters were snookered into approving at the polls the issuance of some $9 billion in bonds for that railway, because that’s what their government leaders told them this project would cost. But the first cut of the projected budget took that figure up to over 100 billion. Whereupon our Governor threw a fit, and the projected figure came down t o something like $67 billion. Now it’s up another billion.

So to paraphrase the expression of the late Illinois Senator Everett Dirksen: “A billion here, a billion there, and pretty soon you’re talking real money.”

In the meantime everything on the project is in suspended animation until the state Court of Appeal reviews the decision of a trial judge who stopped the project pending completion of this litigation.

So stay tuned.

California Choo Choo (Cont’d.)

This is one of those items where a newspaper headline and subheading  tell it all and require no comment. From today’s L.A. Times:

Bullet Train Won’t Meet Target Travel Times, Panel Says

“Regular trips are likely to take longer than the anticipated two hours and 40 minutes.”

But in case you are a non-California flatlander, here is an explanation:

“The faster trips were held out to voters in 2008 when they approved $9 billion in borrowing to help pay for the project. Since then, a series of political compromises and planning changes designed to keep the $68-billion line moving ahead have created slower track zones in urban areas.” Ralph Vartabedian, Bullet Train Won’t Meet Target Travel Time, Panel Says, L.A. Times, March 28, 2014, at p. AA1.

 

 

California Choo Choo – (Cont’d.)

A California Court of Appeal has issued an order expediting the review of a trial court decision whose effect has been to stop the sale of railroad bonds by the state, thereby dooming the proposed Los Angeles to San Francisco “bullet train.” The appellate court decision does not reverse that ruling; it just lets the railroad authority cut into the line of cases awaiting court review on the merits.

Stripped to plain English, the issue in this appeal, inter alia, is whether bond promoters are free to mislead the voters when they submit their proposed state bond issue for voter approval in an election. Specifically, can they represent the public debt to be incurred by those bonds as $X but then go ahead and issue bonds for it that are ten times that amount.

The ruling is covered by the L.A. Times (Ralph Vartabedian, Appeals Court Stays Judge’s Bullet Train Bond Ruling Pending Appeal,  Feb. 16, 2014, http://www.latimes.com/local/la-me-bullet-decision-20140216,0,155139.story#axzz2tV7leS8Z ).

Stay tuned.

California Choo Choo (Cont’d.)

If you have an ongoing interest in the California L.A.-San Francisco high speed train and its misadventures, we recommend an article in the New York Times, of January 6, 2014, High-Speed Train in California Is Caught in a Political Storm – click on http://www.nytimes.com/2014/01/07/us/high-speed-train-in-california-is-caught-in-a-political-storm.html?_r=0

It doesn’t contain any hot, latest news but it sums up the status and the controversy surrounding it in an admirably concise way.

California Choo-Choo (Cont’d.) — There’s Trouble Ahead.

We recently noted that the press reports on the recent trial court’s ruling, mostly against the high speed railroad promoters, cast a menacing cloud over that project. In a nutshell the ruling put a serious block in the path of its funding, on several grounds. One reason was that the trial court thought the voters were misled when the state got their approval on some $8.6 billion worth of state bonds in 2008,  but it turned out that the project, even in its reduced shape, will require a budget of  some $86 billion. As we noted, this is a complex story as are the court’s rulings. So if you are interested in this tale we recommend that you read a more thorough, yet more readable account of this fiasco, which you can find in a front-page story in today’s Los Angeles Daily News.

The bottom line is that those on the side of the project’s promoters are arguing that they can still spend some $3.3 billion in federal funds, and get started on the construction, whereas the challengers disagree and contend that the federal funds may not be spent until the promoters’ financial house is put in order. “In a separate lawsuit, [the judge] also ordered the rail authority to redo its $68 billion funding plan before continuing construction.”  In any event, as things stand, even under the optimistic scenario, there would be only enough money to build a railroad segment between Fresno and Bakersfield — the proverbial middle of nowhere in the Central Valley. So we will have to stay tuned on that one and await the outcome of the appeal which now appears inevitable.

See Jessica Calefati, California High-Speed Rail: Judge’s Decision on Bullet Train Funding Also Endangers $3.3 Billion in Federal Funds, [Los Angeles] Daily News, 11/29/13, at p. A1.  Click on http://www.dailynews.com/technology/20131129/california-high-speed-rail-judges-decision-on-bullet-train-funding-also-endangers-33-billion-in-federal-funds.

California Choo-Choo (Cont’d.)

With all due respect to the press, we have problems figuring out exactly what Monday’s ruling of the California trial court ruling was, regarding the legality of  funding for the high-speed rail project that is supposed to link Los Angeles and San Francisco in the sweet bye and bye. So here it is, and you can do the figuring outing yourself:

“A Sacramento Superior Court judge on Monday ordered the agency building California’s high-speed rail system to rescind its original funding plan, a decision that figures to halt state bond funding for the $68 billion project until a new plan is put in place.

“But, in another ruling in the same case, Judge Michael P. Kenny refused to block the California High-Speed Rail Authority from spending the $3.4 billion in federal money it already has obtained to build an initial rail segment near Fresno.

“In a second case, Kenny declined the rail authority’s request to validate its issuance of $8 billion in bonds that California voters approved in 2008 in Proposition 1A. The ruling sets the stage for several of the project’s opponents to challenge its financing even further.”

The bottom line appears to be that the high-speed train builders can proceed with spending the federal money they received, but not the state money. Which means at best that there is going to be another delay in construction of the rail line.
But we knew that already.

California Choo-Choo (Cont’d.)

It has been a while since we noted the progress (or the lack thereof, as the case may be) of the California high-speed train between Los Angeles and San Francisco. Now word comes from the Associated Press, via the San Jose Mercury News that

“The body overseeing plans to build California’s bullet train has started the daunting and expensive process of acquiring thousands of acres in the Central Valley, where the rail line’s proposed path would slice through farms, stores and motels.

“But months after shovels were supposed to be in the ground, the California High-Speed Rail Authority is in escrow on just one parcel of the 370 it needs to buy or seize through eminent domain for the first 30 miles of construction. The agency says it is within 30 days of reaching deals on another 38 parcels and is negotiating over hundreds of others.”

Not exactly surprising, but there it is.

As usual in eminent domain reportage this dispatch contains stuff that makes clear that its authors are not what you might call well informed.

“California’s eminent domain law limits the amount of money the rail authority can offer above the county’s assessed value.”

Not so. Compensation in eminent domain has little or nothing to do with valuation for property taxes. The constitutionally required “just compensation” in eminent domain cases is defined by statute as “fair market value” which is the highest price that would be paid by a willing but unpressured buyer to a willing but unpressured seller in a voluntary market transaction, with both parties aware of the property’s good and bad features, and giving due consideration to the property’s highest and best use (i.e., its most profitable use). See California Code of Civil Procedure Sec. 1263.320. Also, fair market value may not include any increase or decrease in value attributable to project influence or any steps taken toward its construction. Section 1263.330.

And if the taking is partial, compensation also includes the diminution in value, if any, of the remainder — the part of the subject property that is not taken.

For the full AP story, click here http://www.mercurynews.com/california/ci_24490109/land-acquisition-high-speed-rail-moving-slowly