As he approached his last day on the job before retiring on Aug. 30, Kelly sat for an exclusive interview with The Fresno Bee to reflect on his tenure. The discussion ranged from the progress of construction after a slow start to the challenges that lie ahead for the ambitious rail project.
Succeeding Kelly will be Ian Choudri, a senior vice president for transportation engineering firm HNTB Corp. Choudri will officially start work at the rail authority this month.
Kelly inherited a massive project that had been bogged down by slow acquisition of property for the route through the central San Joaquin Valley and beset by schedule delays and cost increases. Those were challenges with which he was already familiar after five years as secretary of the California State Transportation Agency under then-Gov. Jerry Brown.
Construction began 11 years ago on the first 119 miles of a Valley stretch between Merced and Bakersfield — billed as the “backbone” of a system that’s planned to eventually run between Los Angeles and San Francisco. But it’s been slow going, Kelly acknowledged.
“When I walked in the door in 2018, it was hard to know where we were on the 119 miles in construction down here, because so much of it was still not fully designed yet,” Kelly said. The three construction contracts in the Valley were awarded starting in 2014 on a “design-build” basis, meaning that design for the project would progress even as construction was taking place.
But the process turned out to be much slower than anticipated.
Now, engineering designs are completed for all 163 of those components of civil infrastructure — the grubbing of the right of way and construction of viaducts, bridges, overpasses, trenches and other work, “and construction is now moving,” Kelly said. “Today the 119 miles (from north of Madera to northwest of Bakersfield) is about 65 to 70% complete, and it will, in my view, by done by about the end of 2026. And then we’ll be laying track and getting ready for testing trains.”
Kelly recalled telling Tom Richards, chairperson of the rail authority’s board of directors and a Fresno-based developer, that he hoped the construction would be completed by the time he retired.
“It won’t be,” Kelly added. “But what I am satisfied about, what I do feel good about, is that it is so much clearer today about what it takes to get that done.”
“I’m not entirely satisfied that the 119 miles (from Madera to Shafter) isn’t done, but I am very optimistic and satisfied with how we have set up the future,” Kelly told The Bee.
FEDERAL DEADLINES
One of the challenges that the rail agency faced even before any construction contracts were awarded included deadlines imposed by the Obama administration when the Federal Railroad Administration awarded $2.5 billion for California’s bullet-train program in 2011.
The federal stimulus funds came with the condition that the money be spent on work in the economically stressed San Joaquin Valley. Under the original terms of the grant agreement, California was obligated to achieve “substantial completion” of the civil construction work in the Valley by the end of September 2017.
Those terms were later modified to indicate that the grant money needed to be committed and spent by September 2017.
But the grants came before the rail authority had even begun acquiring the land it needed up and down the Valley for the bullet-train right of way — something without which construction could not begin. The need to begin spending money forced the rail agency to rush its process, putting work out to bid and awarding contracts before it had acquired a critical mass of property to begin construction.
Between the cart-before-the-horse process imposed by the federal grants and awarding contracts on a design-build basis instead of the traditional design-bid-build model, the combination has proven problematic, if not disastrous, in terms of cost and schedule.
It’s a strategic error that Kelly, early in his tenure, determined would not be repeated. “It’s the biggest lesson that we learned,” he said. “And it’s kind of an obvious lesson, but we learned it the hard way.”
The relatively new design-build process that was intended to keep costs lower has seen costs escalate well above the original contract amounts due to unforeseen issues with relocating utilities, slow land acquisition. And “then the feds said you’ve got to spend your federal money right away.”
“All of these things led to perverse incentives.”
By the end of this year, the rail authority anticipates awarding a contract for track and systems in the central San Joaquin Valley — construction of which will include building the trackways and laying the tracks, and putting in the electrification and signal-control systems for the trains.
The agency also solicited bids for manufacturers to build the actual trainsets. Two multinational companies that have built trains for high-speed rail lines in other countries — Germany’s Siemens and France’s Alstom — have submitted bids to build the six trainsets California wants to buy, and Kelly said he expects a contract to be awarded by the end of this year.
NO TIMETABLE SET
Design work for the Bakersfield and Merced extensions is expected to continue through 2024 and be completed by the end of 2025. The latest cost estimate for completion of a Merced-Fresno-Bakersfield line ranges between $26.2 billion and almost $33 billion.
Now there is no forecast on when California might undertake work reaching San Jose, San Francisco or Los Angeles, but the latest incarnation of the rail authority’s business plan indicates that in 2024 dollars, “the cost of going from San Francisco to Los Angeles is about $130 billion,” Kelly said.
While a system of fast trains flowing through Fresno to Bakersfield and Merced would demonstrate to the rest of California how it can work, “I still think an electrified high-speed train connecting San Francisco through the Central Valley to Los Angeles in about three hours changes the world,” Kelly said. “I mean it just changes the way people move here.”
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