Palo Alto Weekly

News - June 1, 2012

Criticism greets new rail CEO

Jeff Morales to lead state High-Speed Rail Authority after serving as executive of agency's top contractor

by Gennady Sheyner

Jeff Morales, the newly hired CEO of the California High-Speed Rail Authority, is in many ways the polar opposite of his predecessor, Roelof van Ark.

While van Ark, a former president of international transportation giants Alstom Transportation and Siemens Transportation System, brought international experience and an engineer's perspective to the table, Morales is a policy insider who knows his way around Sacramento and Washington, D.C. Morales, whose hiring the rail authority announced Tuesday, has headed the California Department of Transportation and the Chicago Transit Authority. He was part of President Barack Obama's presidential transition team, and served on the staff at the U.S. Department of Transportation and the U.S. Senate.

But what worries some critics of the project is Morales' latest job as senior vice president and director of strategic initiatives and government relations at Parsons Brinckerhoff, the firm that has been spearheading the beleaguered project. While the rail authority has been getting by with a core staff of about 20 people, Parsons Brinckerhoff had devoted 100 employees to day-to-day management of the colossal project and had been instrumental in putting together the environmental studies and business plans for the San Francisco-to-Los Angeles rail system.

So while Dan Richards, chair of the rail authority's board of directors, praised Morales as "exactly the right person to take the helm at this pivotal time," others expressed disappointment that after an "extensive international search," the rail authority decided to go with the ultimate insider for the top staff position.

State Sen. Doug LaMalfa is among the latter. As soon as Morales' hiring was announced, the Republican senator released a statement noting the rail authority's $200 million contract with Parsons Brinckerhoff and criticizing the rail authority's choice for the top post.

"The Rail Authority claims it conducted a nation-wide search just to end up with an executive from its biggest contractor?" LaMalfa asked in a statement. "How can we expect this insider to provide an independent review of the project, when he helped write the plan that's already doubled the cost to taxpayers?

"Moving forward, how are we to know where the Authority stops and Parsons Brinckerhoff begins?" he added.

Elizabeth Alexis, co-founder of the Palo Alto-based rail-watchdog group Californians Advocating Responsible Rail Design, voiced a similar concern. Her group was among the first to criticize the rail authority's ridership projections and cost estimates (the price tag for the system increased from about $43 billion two years ago to $98.1 billion earlier this year before coming down to the current level of $68 billion). Parsons Brinckerhoff, she said, was the primary agency responsible for the initial low-balling of the cost estimate. The fact that Morales served as a high-level executive for the rail authority's highest-paid contractor should disqualify him from the position, she said.

"It's always been a major concern with this relationship. Who is running the show? Is it PB or is it the state of California?" Alexis told the Weekly. "Now, that's an even more difficult question to answer."

Parsons Brinckerhoff's management of the rail project also faced scrutiny from State Auditor Elaine Howle, who released an audit in April 2010 criticizing the high-speed-rail project for "lax contract management" and "weak oversight." The report doesn't name Parsons Brinckerhoff, but refers to the firm as "program manager." It notes that the rail authority "is significantly understaffed" and "has delegated significant control to its contractors especially the entity that manages the program." The audit uncovered many instances in which the program manager provided inaccurate information to state officials.

In her January follow-up to the 2010 report, Howle noted that the authority "relies on the Program Manager to provide accurate, consistent, and useful information in its monthly progress report."

"However, we found that these reports were often inaccurate and that at times the Program Manager appeared to misinform the Authority about the speed with which contractors for each region performed tasks."

Howle's office first flagged these problems in 2010. In its follow-up this year, it learned that these problems still persist. Her audit uncovered more than "50 errors and inconsistencies of various types in three of the Program Manager's monthly reports," which were submitted in December 2010, June 2011 and July 2011. In some cases, Howle wrote, the program manager "altered dates to make it appear that the regional contractors would perform work either more or less quickly than they estimated they could in their progress reports." The program manager also changed the regional contractors' estimated milestones and "percentage-of-progress" data. Of the 12 percentage-of-progress changes, Howle wrote, "three made it appear that the regional contractor had completed more than it reported and nine made it appear that the regional contractor completed less than it reported in its progress report."

Howle wrote in the January report that while there are some valid reasons for the discrepancies, "the number and frequency of the changes we noted suggest that the Program Manager misinformed the Authority about the actual status and progress of the construction section."

Her follow-up report states that because the authority has delegated so much control of the project to its contractors, "it may not have the information necessary to make critical decisions about the program's future."

The rail authority's vacancy problem persists to this day. Of the 11 positions listed on the rail authority website's "Executive Staff" directory, seven are vacant (the list does not include the CEO position).

In announcing Morales' hiring, Richard called the move "a giant step forward" for the rail project, for which voters approved a $9.95 billion bond in 2008.

"This Board was deeply impressed by his extensive experience in large and complex transportation issues and projects on the local, state, federal and international levels," Richard said in a statement. "He has a solid track record of creativity and innovation in the delivery of on-time, on-budget infrastructure projects."

Staff Writer Gennady Sheyner can be emailed at gsheyner@paweekly.com.

Comments

Posted by Jerry, a resident of Green Acres
on May 31, 2012 at 11:52 pm

Greed, graft, corruption, conflict of interest, fraud, arrogance, ignorance, boondoggle; all sadly describe the CA High Speed Rail project and their actions. This appointment is exactly what CAHSR does best, flaunt their fraudulent practices for everyone to see, because the Democrats in Sacramento have their backs. This is another shameful moment for Gov Brown and his yes men in Sacramento, all eagerly awaiting their payback (campaign contributions) from all the unions waiting to build the CA train to nowhere. Truly pathetic.


Posted by common sense, a resident of Midtown
on Jun 1, 2012 at 7:35 am

And where is Joe Simitian & Rich Gordon on this appointment? Silence is golden for these two, because they are raising money for their campaigns from the unions & special interest groups.

This November election vote for change, not for the same old, same old.


Posted by Resident, a resident of Another Palo Alto neighborhood
on Jun 1, 2012 at 8:42 am

Anyone who has been in charge at Caltrain doesn't seem to be the right person for running any type of passenger rail system! Caltrain has been mismanaged and needs to be completely overhauled to make it run to its full potential!


Posted by John, a resident of Meadow Park
on Jun 1, 2012 at 9:32 am

These people don't even care about their fraudulent practices for everyone to see.

Our government is out of controla and we are powerless to stop it.

Just keep paying taxes or move out of the state.


Posted by Nayeli, a resident of Midtown
on Jun 1, 2012 at 9:56 am

The poor guy. He is like First Officer Murdoch taking over for Captain Smith on the Titanic shortly before she sinks.


Posted by senor blodder, a resident of Palo Verde
on Jun 1, 2012 at 1:26 pm

SO:
Does Elizabeth Alexis want to be CEO of the HSR?
Don't Worry - They wouldn't have her, as a housewife and an economist, She isn"t qualified.

As for Elaine Howie,- Her recommendations were to turn over the entire management of the project to, of all folks, CALTRANS, an organization who hasn't managed a rail project in their entire existence.

So much for responsible reporting. Whose funding all this opposition to HSR?


Posted by Naysayers, a resident of Adobe-Meadows
on Jun 1, 2012 at 8:38 pm

I don't know whether that person is qualified or not.

What I know is that people who are dead set against the project will never like anyone running the project. They want the project killed because they mostly bought houses near the tracks (knowing full well that they were paying a lower price near a railroad track with a right of way and potential for improvement).

So, they'll never be happy with anyone trying to build HSR no matter what.


Posted by SayNay, a resident of Palo Alto Hills
on Jun 1, 2012 at 9:48 pm

The reasons not to do this are:

We don't have the local mass transit infrastructure to support it.

The long term economic benefit will go to the country supplying the technology.

Given likely ridership, HSR will be an environmental disaster.

We cannot now afford the financial load, and have structural impediments to financial stability that will prevent affordability for decades.

Nothing to do with buying houses near the tracks.


Posted by Barry, a resident of Greenmeadow
on Jun 1, 2012 at 10:05 pm

Naysayers seems to choose to be willfully ignorant of the HSR project. I don't think the only people opposed to the HSR project live near the tracks. If that were the case, you could almost count the opponents on one hand. That's an exaggeration, but the reality is that opposition to HSR is from all over the state. Even communities no where near the tracks are opposed, I believe that Monterey County officially opposes the HSR project. The facts are that this project is a fiscal disaster for the state. Home owners near the tracks might see the impact immediately, but the fact is that when the principal and interest from the bond debt are paid, along with the estimated $2B annual subsidy required just to keep the trains rolling, each citizen, not just tax payer, but each of the 37 million citizens of this state will be on the hook for close to $10,000 to pay for this train. Think of what else you can do with that money. Is a train to nowhere anywhere on that list? I didn't think so.


Posted by neighbor, a resident of Adobe-Meadows
on Jun 2, 2012 at 1:40 pm

I don't know anyone in Palo Alto in favor of HSR. It just seems like a idea that might "sound good" but in reality is just a mess.


Posted by Crescent Park Dad, a resident of Crescent Park
on Jun 2, 2012 at 1:51 pm

I don't live near the tracks. I'm against the project simply because the budget is out of control. Until we regain our economic footing, we cannot afford to do this.


Posted by Marie, a resident of Midtown
on Jun 2, 2012 at 2:19 pm

Marie is a registered user.

I live on Alma in Palo Alto across from the tracks and am in favor of high speed rail done right - which I don't think is possible under the current management. I am a big supporter of CARRD who have done so much work to show how bad this management is. I don't see anyone saying CARRD doesn't support HSR - because they do!!!

In particular, I think it is critical that CALTRAIN be electrified and the intersections at E. Meadow and Charleston be grade-separated. This will negatively impact my quality of life doing construction and I still support it!!!!! I am sick of being accused of being a NIMBY simply because I oppose a poorly conceived, badly managed project. Bring us HSR done right and I'll be out there supporting it.


Posted by Nayeli, a resident of Midtown
on Jun 3, 2012 at 6:40 pm

It seems that California is experiencing widespread "buyer's remorse" regarding this terribly expensive and limited form of transportation:

Web Link

59% of voters would now vote NO on this.
69% said that they would never ride it.

It is time to put this thing to rest. Seriously.


Posted by Steve Ly, a resident of Los Altos
on Jun 4, 2012 at 12:29 pm

We need to kill high speed rail project, which numerous impartial observers like the state auditor, the LAO and UC Berkeley's ITS have faulted. At the very least it needs to go back to voters. The California High Speed Rail Authority is mismanaged and in bed with the consultants and unions.

Money wasted on high speed rail could be better spend on deficit reduction. We should be given another chance to vote on high speed rail because the project now under discussion is not the project voters approved in 2008. Since HSR is not on the ballot, I plan to send a message to Governor Moonbeam by voting "NO" on his tax increases.


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