The Third District Court of Appeal reversed a Sacramento Superior Court Judge’s ruling that prohibited the High Speed Rail Authority (HSRA) from selling bonds under Proposition 1A to construct the High Speed Rail Project (the Project) and ordered the HSRA to draft a new funding plan for the construction and operation of the Project. (See California High-Speed Rail Authority v. The Superior Court of Sacramento County, No. C075668 (Cal. Ct. App. 3d Dist., July 31, 2014).)
Proposition 1A, originally approved by voters in 2008, authorized the HSRA to issue and sell general obligations bonds (upon appropriation by the Legislature), to begin construction of the Project. Pursuant to Proposition 1A, the HSRA prepared, published, adopted, and submitted a preliminary funding plan to the Legislature that was also made available for public review and comment. The plan included the total anticipated federal, state, local, and other funds the HSRA intended to access to fund the construction and operations of the system. A final funding plan must also be approved by the Director of the Department of Finance before committing any bond proceeds, but such a plan has not yet been prepared by the HSRA.
In 2013, the HSRA requested, and the Legislature appropriated, the issuance of $8.6 billion in general obligation bonds for the Project. In order to preclude any future lawsuits, the HSRA filed a validation action in Sacramento Superior Court to obtain a judgment validating the bonds to be sold on the capital markets. Subsequently, several real-parties-in-interest filed a responsive pleading requesting that the court issue a writ of mandate directing the HSRA to rescind the preliminary funding plan for failure to comply with statutory requirements. On November 25, 2013, the trial court issued a writ of mandate directing the HSRA to rescind its approval of the preliminary funding plan for failing to comply with the statutory requirements. On the same day, Judge Kenny issued a ruling denying the request for a validation judgment on grounds that the Legislature’s determination to issue the bonds was not supported by evidence in the record.Continue Reading Court Signals Green to $8.6bn California High-Speed Rail Bond Issuance