Finally tuning into legislative hearing on critical @CaHSRA audit report.
You can watch too!
calchannel.com/live-webcast/
Vince Fong asks auditor about finding that agency lowballed construction cost estimates

Auditor - doesn't know how @cahsra can defend them
Earlier, Elaine Howe stated that this project was bigger and needed better controls but had worse controls even with lots of audits and other oversight.

Committee chair asks why.

Elaine Howle says she can't explain it - maybe would be good question for @CaHSRA .

Ouch.
.@CaHSRA gets 15 minutes to give their side of the story. This task is given to board member Tom Richards (Fresno developer).
Richards wants to provide more "context" for the collosal .

Decisions reflected careful consideration on how to maximize federal $$ which handling risk.

ARRA funds had a lot of strings [Our note: the Authority actually got to tell @USDOTFRA what the strings should be]
The federal ARRA $$ had to be spent by September 2017.
The Audit report questions decision to start construction without owning required land/ agreements with freight railroads.
Richards: we knew the risks and some were realized.
@CaHSRA
We weighted the decision of early construction and lots of risks vs starting later and giving up ARRA/bond $$.
The bond $$ required matching funds - and at that time, there were no other funding sources.
[Our note: there were actually other uses for ARRA $$]
We think we made the right call - 36k job years and lots of economic activity.
Yes, the project cost is now BILLIONS more but if we had actually put a price tag earlier on the costs of starting construction without having finished planning, the earlier costs would have been much higher.
[Huh - so the justification of the cost increases is that we lowballed the original price]
[For an agency that says it has learned lessons and accepts the audit's findings, this doesn't really feel like they have learned the right lessons]
Richards: we actually don't agree that we have billions of overruns because of our land purchase delays.

We stand by our decision.
We do think we can have more internal controls and better contract management. We might get new audit software!
Tom Richards stumbles a little bit - notes this is the first time he has done this (read 15 minute statement at televised legislative hearing0

Does beg the question - where the @CaHSRA chair? Assume this means CEO Brian Kelly is still out on medical leave.
.@Jimbealljr asks what would a new better organization look like?
Joe Hedges (@CaHSRA COO -ex Seattle) = we have reorged entire organization. You will see---
Beall- I want to see - where can I see it?
Hedges - it is all documented in our PMP[program mgmt plan] and our org charts.
Beall -is this what the auditor wanted?
Richards - maybe
Beall - this doesn't mean anything until the positions are filled and the plan executed. Give me some hard data. How much more work is required?
Richards - reorg completed. It is underway [completed <> underway FYI]
Hedges - 38 vacancies, throughout organization.
Beall - how many at top levels?
Hedges - not sure, mostly admin
@Jimbealljr - who is in charge? Is it hard to hire people [note: he seems to want to get higher pay levels]
Richards - all state govt has trouble hiring, not sure why
Richards (who is from private industry) says he is trying to understand the reasons. Now focused on reallocating resources they do have.
@Jimbealljr -Working for @CaHSRA seems like it would be desirable resume builder for engineers. Is the issue salary levels?
.@Jimbealljr - auditor recommendation for some continuity seems important. Are low salaries an unfair barrier? How can we work on retention? Maybe your problems are lack of sense of urgency by contractors.

No other questions [REALLY???]
.@AsmFrazier (chair Assembly trans) -
Report says one factor was concern that people were trying to stop the project and you wanted to get it started- sense @CaHSRA had to show progress
Richards - that is not how I remember it -we were worried about losing money
Richards - we got $3.5 billion of money. A lot of cost overruns were actually undefined scope. If we could have defined those costs, we would have had higher cost estimate earlier and then [we would be on time and on budget?]
Richards - Intrusion barriers are example of unknown cost and higher than we expected.

[note; in 2009 we were concerned about choosing route without knowing the rules that would be in place - calhsr.com/wp-content/upl…
Richards pushing idea that REAL cost of delays is minimal - we would have nothing if we hadn't made choice to build something that we hadn't actually engineered.
.@AsmFrazier asks about bridge mentioned in report where Authority ended up eating the cost of a change order that our consultant thought the contractor should pay for.

Richards; We have not documented the reasons for things - embarrassed.
Frazier - has authority staff kept you informed?
Richards [stumped for a moment] "That's a great question" [which means no]
Says he is impressed by staff, happy with new people -[did not answer questino]
Breakdown not in people trying to do right thing, but in documentation
[Okay - big editorial comment - we have specific documentation that former CEO Jeff Morales gave specific orders to reduce documentation to avoid information getting out via #FOIA.]
Frazier - comes back to whether board adequately informed.
Richards - we are.
Frazier - so then when were you informed that your oversight sucks?
Richards - we are moving there. In a year, we will be there. All the things the auditor said, we are in the process of implementing.
[Note: Frazier ate his wheaties this morning. Go Team Oversight!]
Frazier - are the salary limits that Beall keeps harping on about a problem/where did this come from?
Richards - Always worried about senior mgmt. Hard time getting candidates for the amount they are being paid.
Richards - for lower level positions, not actually sure why it is hard to fill positions.
Frazier - Brian Kelly got hired as CEO for $387k. Why can't you pay engineers enough?
Richards - non-appointees may be on lower pay schedule (but not sure)
Richards - help us raise the administrative cap
Frazier - I have begged to partner with you for 3 1/2 years. Nothing. This meeting is first time I"ve met you.
Frazier - there has been
"Wall of secrecy" "This has to stop"
Now it is @JimPatterson559 (Assembly member from Fresno - long time critic) turn.
Patterson - Please explain the $1.6 billion of potential additional cost orders
Richards - again, a lot of this cost is stuff we should have had in our budget.
Also, we added extension north of Fresno [does not note that a more expensive segment from Shafter to Fresno got dropped]
Patterson - your testimony seems like it anticipates a Federal audit due soon. [denied by Richards] that might recommend clawing back federal monies we received for project

Plan B - what is it? Plan A is failing.
Are you worried about the Fed audit?
Have you been interviewed?
Patterson- Are we going to have to give back $3 billion to the feds?
Richards - something, something
Patterson - Are you going to meet timeline [assume this means new 2022 deadline in amended fed agreements]?
Richards - we lost a year in litigation, some delays in right of way acquisition but we are now ramping up - we have 77% of the parcels. [note; in 2012, this construction was supposed to be done in 2016]
THere will be a plan b by next year!
One plan B will be extension past 2022. We won't wait to figure this out 2021.
Patterson - What can your plan B be? It is very expensive to connect the Central Valley segment to NorCal [Pacheco Pass] or SoCal[Tehachapis].
Richards - we are just trying to get the 120 miles in the Central Valley done
Patterson - The value proposition in 2009 was 220 mph in 2 hrs 40 minutes from LA to SF. Your speed is going down, your time is going up. HSR's competitive advantage being eroded? Are you worried?
Richards - It'll be fine.
Patterson - What is point of 119 miles?
Richards - Likely use for the 119 miles is @Amtrak
Patterson - You have been saying that for years but you know there are connection issues[?]
[Should be noted both Patterson and Richards are major Fresno denizens - pretty sure they know each other well]
@AsmMuratsuchi (audit chair)- many audits that said contract mgmt had to improve but it still sucks. What grade would you give?
Richards -"Very disappointing" [This guy isn't a politician but he is pretty good at this game]
- so not passing?
Richards - we are still in class
How do we justify throwing more money at system that is failing? [the old "good money after bad"]
Richards - we are working hard to fix this, I'm a member of the audit committee and we were ones who ordered 2015 audits.
Asks now about how much money does @CaHSRA have
Richards -but, but, but "compassion for people who proceeded us on the board" "a challenge is not having all the information" [very politic way of saying earlier estimates were BS]
[note: Richards and Mike Rossi are audit committee -have been asking hard questions over last couple of years so the resistance of organization to their skills and effort is actually more concerning, IMO]
Richards - since 2012, project costs have actually been relatively stable

[more editiorial comment - there have been a lot of games played to create that impression - real cost now MUCH higher]
@AsmMuratsuchi - so this project doesn't connect to anywhere without billions more?
Richards- yeah
@AsmMuratsuchi - does the public know this?
Richards - the public that comes to our monthly meetings in Sacramento [this is 6 stalwarts]
@AsmMuratsuchi - do you think public is cool with only getting 119 miles?
Richards - who knows?
{missed a few minutes - nature calls - sure nothing consequential happened :))
.@Jimbealljr now back. He wants Richards to talk more about economic benefits of the project [little birdie told me that earlier he was mad that auditor focused on the problems with the project, not the awesomeness]
"You are from Fresno. How awesome is this/"
Richards - we have spent $5 billion and created almost 36k job years (ie 6k jobs that have lasted for 6 years.

When I first moved to Fresno, concerned because city had low self-esteem.

Fresno had lack of opportunities. This is an opportunity.
.@Jimbealljr - Can you tell us about synergies between Fresno and Silicon Valley?

Richards - We just want chair at the table (in Fresno). We have growing and vibrant tech industry over last 3-4 years [check out @BitwiseInd !].
@joaquinaram (Fresno assemblymember) - What about Beall's idea to put @CaHSRA under Caltrans inspector general [new function created in SB1]?
What about more authority for land purchases a la @CaltransHQ ?
Richards - sure.
@AsmMuratsuchi - Agree with Arambula and Beall about tremendous benefits from Central Valley links but still concerned about audit results. Are taxpayer funds being spent well?
This hearing helps regain confidence but still.. the big plan is hiring more state employees.
..But will we back here next year after you try but fail to hire people - and in the meantime 2022 deadline will be approaching.
Asks Joe Hedges about Seattle tunnel project - aren't there models for public projects to oversee consultants / manage projects properly?
Joe Hedges (COO)- Absolutely. We have done this with our new plan. It is working - tremendous gains in last 6 months. We are in S curve of construction. We have those controls in place. Ability to share - we have promised your staff loads of info. [exudes confidence!]
.@AsmMuratsuchi - Is @CaHSRA thinking about connecting the 119 Central Valley miles to Silicon Valley then revisit viability of rest of system? [this means put LA on ice]
Richards- yes, we need to get paying passengers asap.
.@AsmMuratsuchi - Do you agree with auditor that we need to do more about holding contractors accountable for deliverables in contracts? Auditor says only 1 incident of corrective action required.
Hedges (jumps in) - there is some confusion here... I know there are more..
.@AsmMuratsuchi - We will be looking forward to process where we see @CaHSRA put in place all these recommendations...

Time for public comment!
<the end>
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