Judge Kenny Rejects Bond Sale to Fund California’s High-Speed Rail Line

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Sacramento County Superior Court Judge Michael Kenny overruled a request from the California High-Speed Rail Authority to sell $8 billion of the $10 billion in bonds approved by voters in 2008.

Kenny issued two decisions on Monday, based on findings that the project violates promises made to voters: (1) Kenny ruled that the rail authority failed to comply with the requirements under Proposition 1A  (clear necessary environmental permits and specify source of funding for the rail line); and (2) Kenny requested that the state rail agency redo its $68 billion funding plan as it is estimated to be $25 billion short of the amount needed to complete a first working section of the line.

In 2012, California Governor Jerry Brown signed SB 1029, which allowed the state to begin spending $2.6 billion in bonds for construction. The appropriation unlocked $3.3 billion in promised U.S funds, out of $8 billion for a high-speed passenger rail program included in President Barack Obama’s 2009 Recovery Act.

According to a recent report, Kenny claims officials made critical errors in approving the sale of the bonds and declined to legally “validate” the sale. California Treasurer Bill Lockyer said he would not sell bullet-train bonds without a court validation. This would be the first time in California history that a judge refused to validate a bond sale.

While Kenny’s decision does not immediately stop the railing project, it is expected to cause indefinite future delays. Stay tuned…

The case is High-Speed Rail Authority v. All Persons Interested in the Matter of the Validity of the Authorization and Issuance of General Obligation Bonds, Case No. 34-2013-00140689, Sacramento Superior Court.

- See more at: http://www.goodwinsustainabledevelopment.com/blog/douglas-praw/judge-kenny-rejects-bond-sale-to-fund-californias-high-speed-rail-line#sthash.DWCgNRnE.dpuf

Sacramento County Superior Court Judge Michael Kenny overruled a request from the California High-Speed Rail Authority to sell $8 billion of the $10 billion in bonds approved by voters in 2008.

Kenny issued two decisions on Monday, based on findings that the project violates promises made to voters: (1) Kenny ruled that the rail authority failed to comply with the requirements under Proposition 1A  (clear necessary environmental permits and specify source of funding for the rail line); and (2) Kenny requested that the state rail agency redo its $68 billion funding plan as it is estimated to be $25 billion short of the amount needed to complete a first working section of the line.

In 2012, California Governor Jerry Brown signed SB 1029, which allowed the state to begin spending $2.6 billion in bonds for construction. The appropriation unlocked $3.3 billion in promised U.S funds, out of $8 billion for a high-speed passenger rail program included in President Barack Obama’s 2009 Recovery Act.

According to a recent report, Kenny claims officials made critical errors in approving the sale of the bonds and declined to legally “validate” the sale. California Treasurer Bill Lockyer said he would not sell bullet-train bonds without a court validation. This would be the first time in California history that a judge refused to validate a bond sale.

While Kenny’s decision does not immediately stop the railing project, it is expected to cause indefinite future delays. Stay tuned…

The case is High-Speed Rail Authority v. All Persons Interested in the Matter of the Validity of the Authorization and Issuance of General Obligation Bonds, Case No. 34-2013-00140689, Sacramento Superior Court.

Topics:  Bonds, High-Speed Rail, Jerry Brown, Permits

Published In: Environmental Updates, Finance & Banking Updates, Transportation Updates, Zoning, Planning & Land Use Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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