Bullet Train Fiasco: Farmers Sue Over Land Rip-off; Contractor Demands Penalty

California farmers are now suing the state over the high-speed rail project, refusing to have their land sold for pennies-on-the-dollar. And with a 12-year estimated project delay, the contractor is threatening to sue the bullet train for delay penalties.

As Breitbart News reported in a February article, “Cal High Speed Rail Confiscating Farms for Development Profits,” the planners of the high-speed rail project–estimated to be $65 billion over cost already–were promising to make up shortfalls by using eminent domain to acquire low-cost farmland and then re-zone and sell properties at big mark-ups for high density developments.

The California High Speed Rail Authority (CHSR) promised voters, ahead of the 2008 referendum that approved the bullet train initiative, that the cost would be $33 billion to provide service from Los Angeles to the Bay Area in less than three hours. Yet the state has since upped the cost estimate to $68 billion and the trip time to at least four hours.

Ridership projections have also been cut by two-thirds, from 90 million to 30 million a year. A panel of transportation experts hired by the Reason Foundation estimated ticket prices, despite a $300 annual state subsidy, will need to be 60% higher at $80 each way, versus the 2008 promise of $50. Independent experts that crunched the numbers believe the bullet train price tag will soar to $98 billion.

The train was hailed as a way to get people off freeways and reduce carbon emissions, but a panel of experts now says any carbon savings will be nominal.

Dan Richard, Chairman of the Board of CHSR, recently acknowledged to the Los Angeles Times that the Authority is short billions of dollars to complete the project. Yet he bragged that by CHSR converting rural farmland, “advertising and real estate development rights along the route could provide large amounts of cash.”

The state promised that the easiest part of the project would be assembling needed land from the poor rural farmers. But it turns out that many of the supposedly dumb farmers are retired lawyers, doctors and dentists. They have been unwilling to sell for “dog biscuits,” and many have the financial wherewithal to afford fighting the CHSR in court.

The CHSR only budgeted $766 million for mostly farmland acquisition along its initial 29 miles stretch of track from Fresno to rural Madera. But of the 822 parcels the state tried to buy between Madera and Bakersfield, it was only successful in acquiring 106 properties, as of the latest figure. Although government planners have called the prices they are offering farmers as “fair value,” the vast majority of property owners have bitterly called the offers “pennies-on-the-dollar.”

California Gov. Jerry Brown broke ground for the bullet train as the most expensive public works project in U.S. history on January 7, 2015. He disclosed a plan that California intended to spend roughly $4 million a day for the first 1,000 days of the project.

But as the prime contractor for the three-member consortium building the bullet train,  Tutor Perini Corporation’s Chief Executive Ronald Tutor told security analysts on their quarterly earnings call that the consortium is in discussions with the state about being compensated for a 1 1/2-year project delay. Mr. Tutor refused to estimate the size of the financial penalty owed to the contractors because, he said, “There is no agreement.” But he emphasized, “We are just talking.”

CHSR has also obtained about $2 billion of its $3.2 billion in federal grants for the bullet train as “shovel ready projects” under the Obama Administration stimulus program. There are substantially federal penalties that could be asserted against CHSR for project time delays.

Despite all this turmoil, officials still claim CHSR will complete the project on time.

“We do not believe we are behind schedule,” said project California High-Speed Rail spokeswoman Lisa Marie Alley to the Times. When asked about the delay in acquiring parcels she replied, “We do not believe those will have any impact on the program delivery.”