High-Speed Passenger Rail: Preliminary Assessment of California's Cost Estimates and Other Challenges
Published: 2012-12-06T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The California high-speed rail project is the single largest recipient of federal funding from the Federal Railroad Administration's (FRA) High Speed Intercity Passenger Rail (HSIPR) grant program. The 520-mile project (see map) would link San Francisco to Los Angeles at an estimated cost of $68.4 billion. Thus far, FRA has awarded $3.5 billion to the California project. The Authority has to continue to rely on significant public-sector funding, in addition to private funding, through the project's anticipated completion date in 2028. This testimony is based primarily on GAO's ongoing review of the California high-speed rail project and discusses GAO's preliminary assessment of (1) the reliability of the project's cost estimates developed by the Authority and (2) key challenges facing the project.
As part of this review, we obtained documents from and conducted interviews with Authority officials, its contractors, and other state officials. GAO analyzed the extent to which project cost estimates adhered to best practices contained in GAO's Cost Estimating and Assessment Guide (Cost Guide), which identifies industry best practices to ensure cost estimates are comprehensive, accurate, well documented, and credible--the four principal characteristics of a reliable cost estimate. GAO also reviewed project finance plans as outlined in the Authority's April 2012 revised business plan. To identify key challenges, GAO reviewed pertinent legislation, federal guidelines and best practices related to ridership and revenue forecasting, and interviewed, among others, federal, state, and local officials associated with the project.
section_title: What GAO Found
paragraphs: Based on an initial evaluation of the California High Speed Rail Authority's (Authority) cost estimates, GAO found that they exhibit certain strengths and weaknesses when compared to best practices in GAO's Cost Guide. Adherence with the Cost Guide reduces the risk of cost overruns and missed deadlines. GAO's preliminary evaluation indicates that the cost estimates are comprehensive in that they include major components of construction and operating costs. However, they are not based on a complete set of assumptions, such as how the Authority expects to adapt existing high-speed rail technology to the project in California. The cost estimates are accurate in that they are based on the most recent project scope, include an inflation adjustment, and contain few mathematical errors. And while the cost estimates' methodologies are generally documented, in some cases GAO was unable to trace the final cost estimate back to its source documentation and could not verify how certain cost components, such as stations and trains, were calculated. Finally, the Authority evaluated the credibility of its estimates by performing both a sensitivity analysis (assessing changes in key cost inputs) and an independent cost estimate, but these tests did not encompass the entire cost estimate for the project. For example, the sensitivity analysis of the construction cost estimate was limited to 30 miles of the first construction segment. The Authority also did not conduct a risk and uncertainty analysis to determine the likelihood that the estimates would be met. The Authority is currently taking some steps to improve its cost estimates.
The California high-speed rail project faces many challenges. Chief among these is obtaining project funding beyond the first 130-mile construction segment. While the Authority has secured $11.5 billion from federal and state sources, it needs almost $57 billion more. Moreover, the HSIPR grant program has not received federal funding for the last 2 fiscal years, and future federal funding is uncertain. The Authority is also challenged to improve its ridership and revenue forecasts. Factors, such as limited data and information, make developing such forecasts difficult. Finally, the environmental review process and acquisition of necessary rights-of-way for construction could increase the risk of the project's falling behind schedule and increasing costs.

section_title: Letter
paragraphs: Thank you for the opportunity to be here today as the committee  examines the Department of Transportation’s (DOT) High Speed Intercity  Passenger Rail (HSIPR) program. As you know, this program was  established to provide grant funds to states and others to develop high- speed intercity passenger-rail corridors and projects. HSIPR is  administered by the Federal Railroad Administration (FRA), and, as of  October 2012, almost $10 billion has been obligated for 150 projects  under this program, though it has received no appropriations since fiscal  year 2010. The projects range from multibillion dollar high-speed rail  systems, like that in California, to smaller projects designed to improve  speeds, frequency, and reliability of conventional intercity passenger-rail  service.
My statement today will discuss our ongoing examination of the California  high-speed rail project—the largest recipient of HSIPR grant funds to  date. We are providing preliminary observations based on our work to  date, particularly related to the California High Speed Rail Authority’s  (Authority) project cost estimates. We also identify some of the key  challenges facing the project. Our ongoing review, which this committee  and other Members of the House requested, focuses on assessing the  reliability of the project’s cost estimates and financing plans, evaluating  the reasonableness of ridership and revenue forecasts, and examining  the comprehensiveness of potential project economic impacts. As such,  we are assessing the quality of the information used by policymakers and  not evaluating the merits of the project itself, which should be considered  in light of whether this project best meets the transportation needs of the  estimated 51 million Californians in 2050.
This testimony is based on our preliminary assessment of the first phase  of the project’s cost estimates using GAO’s Cost Estimating and  Assessment Guide (Cost Guide). While FRA did not require HSIPR grant  applicants to follow the Cost Guide, the Cost Guide identifies best  practices that help ensure cost estimates are well documented,  comprehensive, accurate, and credible. The Cost Guide has been used to  evaluate cost estimates across the government, including infrastructure  projects. We also assessed the Authority’s analysis of the project’s  finance plans as outlined in the Authority’s April 2012 revised business  plan. We analyzed the extent to which the project’s cost estimates  adhered to the best practices contained in the Cost Guide and  interviewed Authority officials, its contractors, and other federal officials.  To identify key challenges, we reviewed pertinent legislation, federal  guidelines and best practices related to ridership and revenue  forecasting, prior GAO reports on the topic of high-speed passenger rail  and reports published by the DOT’s Office of Inspector General (OIG). In  addition, we interviewed federal, state, and local officials associated with  the project as well as members of the ridership and revenue peer review  panel established by the Authority. We also reviewed the status of the  project’s environmental reviews and sought to identify legal challenges to  the project as well as interviewed officials from the Authority, the  California Department of Transportation, and other state officials about  right-of-way acquisition. We conducted our work in accordance with  generally accepted government auditing standards. We plan to report the  final results of our work in early 2013.
subsections: section_title: Background
paragraphs: While high-speed passenger rail has been in operation in Europe and  Asia for several decades, it is in its relative infancy in the United States.  The Passenger Rail Investment and Improvement Act of 2008 (PRIIA)  called for development of high-speed rail corridors in the United States  and led to establishment of the HSIPR program. FRA administers the  HSIPR program as a discretionary grant program to states and others.  This program was appropriated $8 billion in funding from the American  Recovery and Reinvestment Act (Recovery Act) in 2009 and an additional  $2.5 billion in funding from the fiscal year 2010 DOT Appropriations Act.  According to FRA, as of October 2012, about $9.9 billion has been  obligated for 150 projects. The California high-speed rail project is the  largest recipient of HSIPR funds, with approximately $3.5 billion (about 35  percent of program funds obligated). We have previously reported on  high-speed rail and the HSIPR program. For example, in March 2009 we  reported on the challenges associated with developing and financing  high-speed rail projects. These included securing the up-front  investments for such projects and sustaining public and political support  and stakeholder consensus. We concluded that whether any high-speed  rail proposals are eventually built hinges on addressing the funding,  public support, and other challenges facing these projects. In June 2010,  we reported that states would be the primary recipients of Recovery Act  funds for high-speed rail, but many states did not have rail plans that  would, among other things, establish strategies and priorities of rail  investments in a particular state.
California’s high-speed rail project is poised to be the first rail line in the  United States designed to operate at speeds greater than 150 miles per  hour. The planned 520-mile line will operate between San Francisco and  Los Angeles at speeds up to 220 miles per hour (see fig.1). At an  estimated cost of $68.4 billion, it is also one of the largest transportation  infrastructure projects in the nation’s history. The project’s planning began  in 1996 when the Authority was created but began in earnest after initial  funding was approved in 2008 with the passage of Proposition 1A, which  authorized $9.95 billion in state bond funding for construction of the high- speed rail system and improvements to connections (see fig. 2).  Construction is expected to occur in phases beginning with the 130-mile  first construction segment from just north of Fresno, California, to just  north of Bakersfield, California. In July 2012, the California legislature  appropriated $4.7 billion in state bond funds. The process of acquiring  property for the right-of-way and construction is expected to begin soon.  Request for proposals to select construction contractors and right-of-way  acquisitions were issued in March and September 2012, respectively.  According to the Authority, a design-build contract for the first  construction segment is expected to be awarded in June 2013 with  construction potentially commencing no earlier than summer 2013.
The project underwent substantial revision earlier this year after the  Authority issued its November 2011 draft business plan in response to the  initial high cost and other criticisms. Most significantly, the Authority  scaled back its plans to build dedicated high-speed rail lines over its  entire length. Instead, the April 2012 revised business plan adopted a  “blended” system in which high-speed rail service would be provided over  a mix of dedicated high-speed lines and existing and upgraded local rail  infrastructure (primarily at the bookends of the system on the San  Francisco peninsula and in the Los Angeles basin). This change was  made, in part, to respond to criticism that the cost of the full-build system  contained in the November 2011 draft business plan—$98.5 billion—was  too high. The revised cost in the April 2012 plan was $68.4 billion. In  addition, the ridership and revenue forecasts in the April 2012 revised  business plan reflected a wider uncertainty range than the forecast  presented in the November 2011 plan. For example, in the November  2011 draft business plan, the Authority estimated 2030 ridership to be  between 14.4 million and 21.3 million passengers and annual revenues of  the high speed rail system to be between $1.05 billion and $1.56 billion.  This range increased in the April 2012 revised business plan, to between  16.1 million and 26.8 million passengers and annual revenues to be  between $1.06 billion and $1.81 billion. The Authority attributed the  increase in the uncertainty range to additional conservatism in the low  ridership estimate and the ridership changes to several factors such as  the adoption of the blended approach which, among other things, allows  one-seat service from San Francisco to Los Angeles to begin sooner than  the original full-build approach. However, over time ridership forecasts  under the blended approach are less than the original full-build approach.
To date, the state of California and the federal government have  committed funding to the project. In July 2012, the California state  legislature appropriated approximately $4.7 billion dollars in Proposition  1A bond funds, including $2.6 billion for construction of the high-speed  rail project and $1.1 billion for upgrades in the bookends. The federal  government has also obligated $3.3 billion in HSIPR grant funds. Most  of the HSIPR money awarded to the project was appropriated under the  Recovery Act and in accordance with governing grant agreements must  be expended by September 30, 2017.  In addition, approximately $945  million in fiscal year 2010 funding was awarded to the project by FRA and  is to remain available until expended.
section_title: Preliminary Assessment of California’s Cost Estimates
paragraphs: The Authority estimates that the high-speed rail project in California will  cost $68.4 billion to construct and hundreds of millions of dollars to operate  and maintain annually. Since the project is relying on significant  investments of state and federal funds—and, ultimately private funds—it is  vital that the Authority, FRA, and Congress be able to rely on these   estimates for the project’s funding and oversight (see table 1 below for a  summary of the sources of funding). GAO’s Cost Guide identifies best  practices that help ensure that a cost estimate is comprehensive,  accurate, well documented, and credible.    A comprehensive cost estimate ensures that costs are neither  omitted nor double counted.     An accurate cost estimate is unbiased, not overly conservative or  overly optimistic, and based on an assessment of most likely costs.     A well-documented estimate is thoroughly documented, including  source data and significance, clearly detailed calculations and  results, and explanations for choosing a particular method or  reference.     A credible estimate discusses any limitations of the analysis from  uncertainty or biases surrounding data or assumptions.
These four characteristics help minimize the risk of cost overruns, missed  deadlines, and unmet performance targets. Our past work on high-speed  rail projects around the world has shown that projects’ cost estimates tend  to be underestimated. As such, it is important to acknowledge the  potential for this bias and ensure that cost estimates are as reliable as  possible.
Based on our ongoing review, we have found that the Authority’s cost  estimates exhibit strengths and weaknesses. The quality of any cost  estimate can always be improved as more information becomes  available. And based in part on evaluations from the Peer Review Group,  the Authority is taking some steps to improve the cost estimates that will  be provided in the 2014 business plan.
The Authority followed best practices in the Cost Guide to ensure  comprehensiveness, but also exhibited some shortcomings. The cost  estimates include the major components of the project’s construction and  operating costs. The construction cost estimate is based on detailed  construction unit costs that are, in certain cases, more detailed than the  cost categories required by FRA in its grant applications. However, the  operating costs were not as detailed as the capital costs, as over half of  the operating costs are captured in a single category called Train  Operations and Maintenance. In addition, the Authority did not clearly  describe certain assumptions underlying both cost estimates. For  example, Authority officials told us that the California project will rely on  proven high-speed rail technology from systems in other countries, but it  is not clear if the cost estimates were adjusted to account for any  challenges in applying the technology in California.
The Authority took a number of steps to develop accurate cost estimates  consistent with best practices in the Cost Guide. The estimates have  been updated to reflect the new “blended” system which will rely, in part,  on existing rail infrastructure; they are based on a dataset of costs to  construct comparable infrastructure projects; they contain few, if any,  mathematical errors; and they have been adjusted for inflation. For  example, the Authority’s contractor used a construction industry database  of project costs supplemented with actual bid-price data from similar  infrastructure projects. However, the cost estimates used in the April 2012  revised business plan do not represent final design and route alignments,  and the estimates will change as the project moves into construction and  operation. The Authority did not produce a risk and uncertainty analysis of  its cost estimates that would help anticipate the impact of these changes.  The Cost Guide recommends conducting a risk and uncertainty analysis  to determine the primary risk factors and assess the likelihood that they  may occur, helping to ensure that the estimate is neither overly  conservative nor optimistic.
The Authority followed some, but not all, best practices in the Cost Guide  to ensure that the cost estimate is well documented. In many cases, the  methodologies used to derive the construction cost estimates were well  documented, but in other cases the documentation was more limited.    For example, while track infrastructure costs were thoroughly  documented, costs for other elements, such as stations and trains, were  supported with little detail or no documentation. Additionally, in some  cases where the methodologies were documented, we were unable to  trace the estimates back to their source data and recreate the estimates  using the stated methodology. For example, we were unable to identify  how the operating costs from analogous high-speed rail projects were  adjusted for the California project.
The Authority took some steps consistent with our Cost Guide to ensure  the cost estimates’ credibility, but not with respect to some best practices.  In order to make cost estimates credible, GAO’s Cost Guide  recommends:   testing such estimates with sensitivity analysis (making changes in  key cost inputs),     a risk and uncertainty analysis (discussed above), and     an independent cost estimate conducted by an unaffiliated party to  see how outside estimates compare to the original estimates.
While the Authority performed a sensitivity analysis for the first 30 miles of  construction and an independent cost estimate for the first 185 miles of  construction in the Central Valley, neither covered the entire Los Angeles  to San Francisco project. For the operating-cost estimate, the Authority  conducted a sensitivity test under various ridership scenarios; however,  this test was designed to measure the ability of the system to cover  operating costs with ticket revenues and not to determine the potential  risk factors that may affect the operating-cost estimate itself. The  Authority also did not compare their operating-cost estimate to an  independent cost estimate. Finally, as noted above, the Authority did not  perform a risk and uncertainty analysis, which would improve the  estimates’ credibility by identifying a range of potential costs and  indicating the degree of confidence decision-makers, can place on the  cost estimates.
The Authority is taking steps to improve its cost estimates. To make its  operating-cost estimate more comprehensive and better documented, the  Authority has contracted with the International Union of Railways to  evaluate the existing methodology and data and help refine its estimates.  In addition, to improve the construction cost estimates, the Authority will  have the opportunity to validate and enhance, if necessary, the accuracy  of its cost estimates once actual construction package contracts are  awarded for the initial construction in the Central Valley in 2013. The bids  for the first 30-mile construction package are due in January 2013 and will  provide a check on how well the Authority has estimated the costs for this  work as well as provide more information on potential risks that cost  estimates of future segments may encounter.
section_title: California High-Speed Rail Project Faces Financial and Other Challenges
paragraphs: In addition to challenges in developing reliable cost estimates, the  California high-speed rail project also faces other challenges. These  include obtaining project funding beyond the first construction segment,  continuing to refine ridership and revenue estimates beyond the current  forecasts, and addressing the potential increased risks to project  schedules from legal challenges associated with environmental reviews  and right-of-way acquisitions.
subsections: section_title: Challenges To Securing Project Funding
paragraphs: One of the biggest challenges facing California’s high-speed rail project is  securing funding beyond the first construction segment. While the  Authority has secured $11.5 billion from federal and state sources for  project construction, almost $57 billion in funding remains unsecured. A  summary of funding secured to-date can be found in Table 1.
As with other large transportation infrastructure projects, including high- speed rail projects in other countries, the Authority is relying primarily on  public financial support, with $55 billion or 81 percent of the total  construction cost, expected to come from state and federal sources. A  summary of the Authority’s funding plan can be found in table 2.
Of the total $55 billion in state and federal funding, about $38.7 billion are  uncommitted federal funds, an average of over $2.5 billion per year over  the next 15 years. Most of the remaining funding is from unidentified  private investment once the system is operational—a model that has  been used in other countries, such as for the High Speed One line in the  United Kingdom. As a result of the funding challenge, the Authority is  taking a phased approach—building segments as funding is available.  However, given that the HSIPR grant program has not received funding  for the last 2 fiscal years and that future funding proposals will likely be  met with continued concern about federal spending, the largest block of  expected funds is uncertain. The Authority has identified revenues from  California’s newly implemented emissions cap and trade program in the  event other funding is not made available, but according to state officials,  the amounts and authority to use these funds are not yet established.
section_title: Challenges to Developing Ridership and Revenue Forecasts
paragraphs: Developing reliable ridership and revenue forecasts is difficult in almost  every circumstance and for a variety of reasons. Chief among these are  (1) limited data and information, (2) risks of inaccurate assumptions, and  (3) accepted forecast methods vary. Although forecasting the future is  inherently risky, reliable ridership and revenue forecasts are still critical  components in estimating the economic viability of a high-speed rail  project and in determining what project modifications, if any, may be  needed. For example, the financial viability of California’s high-speed rail  project depends on generating sufficient ridership to cover its operating  expenses. Ridership and revenue forecasts enable policymakers and  private entities to make informed decisions on policies related to the  proposed high-speed rail system and to determine the risks associated  with a high-speed rail project when making investment decisions.  Addressing these challenges will be important for the Authority as it works  toward updating its ridership and revenue forecasts for the 2014 business  plan.
Limited data and information, especially early in a project before specific  service characteristics are known, make developing reliable ridership and  revenue forecasts difficult. And to the extent early stage data and  information are available, they need to be updated to reflect changes in  the economy, project scope, and consumer preferences. For example, in  developing the ridership and revenue forecasts for the April 2012 revised  business plan, the Authority updated several assumptions and inputs  used to develop the initial ridership and revenue forecasts that were  presented in the November 2011 draft business plan. Authority officials  said this update was done, in part, to build in additional conservatism in  the ridership forecasts, in particular in the low scenario, and to avoid  optimism bias. Among other updates, the Authority revised model  assumptions to reflect changes in current and anticipated future  conditions for airfares and airline service frequencies, decreases in  gasoline price forecasts, and anticipated declines in the growth rates for  population, number of households, and employment. Peer review groups,  such as the Ridership and Revenue Peer Review Panel (Panel)  established by the Authority, and academic reviewers have examined the  Authority’s ridership and revenue forecast methodology. These reviewers  recommended additional improvements to the model going forward. For  example, in developing the forecasts used for the April 2012 revised  business plan, the Authority relied on data from a 2005 survey that was  conducted at airports, rail stations, and by telephone from August to  November 2005. In a May 2012 report to the Authority, the Panel  pointed out limitations with this data source and recommended that new  data be collected to supplement the existing data for model enhancement  purposes. Authority officials stated that they are currently developing a  new revealed-preference and stated-preference survey to update the  2005 survey data and that they plan to begin collecting this new survey  data in December 2012. Portions of the new 2012 data will be used to  re-estimate and re-calibrate the ridership model to develop updated  ridership and revenue forecasts for the 2014 business plan. The Authority  also plans to develop a new version of the model that will make full use of  the new 2012 survey data; however, the new model is not expected to be  developed in time for the 2014 business plan. It will be important to  complete these future model improvements as the project is developed.
Risks of inaccurate forecasts are a recurring challenge for sponsors of the  project. Research on ridership and revenue forecasts for rail infrastructure  projects have shown that ridership forecasts are often overestimated and  actual ridership is likely to be lower. For example, a recent study  examined a sample of 62 rail projects and found that for 53 of them, the  demand forecasts were overestimated and that actual demand was lower  than forecasted demand. According to the Authority, the ridership and  revenue forecasts, in its April 2012 revised business plan, include a wider  range of ridership and revenue forecasts and lower ridership and revenue  forecasts compared to earlier forecasts, to help mitigate the risks of  optimism bias. In addition, the Authority performed a sensitivity analysis  of an extreme downside scenario to test the ridership and revenue  implications of a series of downside events coinciding, such as increased  average rail-travel time from Merced to the San Fernando Valley and  lower auto-operating costs. Based on this analysis, the Authority  determined that an extreme downside scenario would be expected to  reduce ridership and revenue forecasts by 27 percent and 28 percent,  respectively, below that shown for the low forecasts in the April 2012  revised business plan. According to the Authority, these forecasts would  still be sufficient to cover the Authority’s estimated operating costs and  would not require a public operating subsidy. Authority officials stated that  they intend to conduct additional sensitivity analyses going forward.
Finally, accepted forecasting methods vary, and FRA has not established  guidance on acceptable approaches to the development of reliable  ridership and revenue forecasts. Industry standards vary, and FRA has  established minimal requirements and guidance related to information  HSIPR grant applicants must provide regarding forecasts. As we have  previously reported, different ridership-forecasting methods may yield  diverse and therefore uncertain results. As such, we have  recommended that the Secretary of Transportation develop guidance and  methods for ensuring reliability of ridership forecasts. Similarly, the DOT  OIG has also recommended that FRA develop specific and detailed  guidance for the preparation of HSIPR ridership and revenue forecasts.  Best practices identified by various agencies and transportation experts  have identified certain components of the ridership- and revenue- forecasting process that affect results more than others and that are  necessary for developing reasonable forecasts. Among others, key  components include processes for developing trip tables, developing a  mode-choice model, conducting sensitivity analyses, and conducting  validation testing. The Authority’s forecasts included each of these key  components in developing the ridership and revenue forecasts for the  April 2012 revised business plan. While addressing these components  does not assure ridership and revenue forecasts are accurate, it does  provide greater assurance that the Authority’s processes for developing  these forecasts are reasonable. In our ongoing review of the California  high speed rail project, we are evaluating the extent to which the  Authority’s ridership and revenue forecasts followed best practices when  completing each of these tasks. We will present the results of our  assessment of the Authority’s process in our 2013 report on this subject.
section_title: Environmental Review and Right-of-Way Acquisitions May Increase Risk of Project Delays
paragraphs: Among the other challenges facing the project, which may increase the risk  of project delays, are potential legal challenges associated with the  environmental laws. Under the National Environmental Policy Act (NEPA)  and the California Environmental Quality Act (CEQA), government  agencies funding a project with significant environmental effects are  required to prepare environmental impact statements or reports (EIS/EIR)  that describe these impacts. Under CEQA, an EIR must also include  mitigation measures to minimize significant effects on the environment. The  Authority is taking a phased approach to comply with NEPA and CEQA by  developing EIS/EIRs for both the project as a whole as well as for particular  portions of the project. To date, program level EIS/EIRs have been  prepared for the project as a whole (August 2005) and for the Bay Area to  Central Valley (initial certification by the Authority in July 2008 and a  revised final EIS/EIR issued in April 2012). Project level EIS/EIRs have  been prepared for the Merced-to-Fresno portion of the project (issued April  2012), and a draft EIS/EIR has been prepared for the Fresno-to-Bakersfield  portion of the project (initial draft issued in August 2011 and revised final  issued July 2012). Environmental concerns have been the subject of legal  challenges. For example, a lawsuit was filed in October 2010 against the  Authority challenging the decision to approve the Bay Area to Central  Valley segment based on an EIR alleged to be inadequate. Several  lawsuits have been filed and these cases are still pending.
The project also faces the potential challenge of acquiring rights-of-way.  Timely right-of-way acquisition will be critical since some properties will be  in priority construction zones. Property to be acquired will include homes,  businesses, and farmland. Not having the needed right-of-way could cause  delays as well as add to project costs. Acquisition of right-of-way will begin  with the first construction segment, which has been subdivided into 4  design-build construction packages. There are a total of approximately  1,100 parcels to be acquired for this segment; all of which are in  California’s Central Valley. In September 2012, the Authority issued a  Request for Proposals to obtain the services of one or more contractors to  provide right-of-way and real property services. The Authority estimated in  its April 2012 revised business plan that the purchase or lease of real  estate for the phase I blended system will cost between $3.6 billion and  $3.9 billion (in 2011 dollars). According to the Authority, the schedule for  right-of-way acquisition will be phased, based on construction priorities with  delivery of all required parcels in the Central Valley no later than spring  2016. Acquisition is anticipated to begin in February 2013. The timely  acquisition of rights-of-way may be affected by at-risk properties—that is,  those properties that the Authority considers at-risk for timely delivery to  design-build contractors for construction. There could be a significant  number of at-risk properties. For example, Authority officials told us there  are about 400 parcels in the first construction package, about 200 of which  are in priority construction zones. Of these, about 100 parcels (50 percent)  are considered to be potentially at-risk for timely delivery. Since right-of- way acquisition has not yet begun, the extent that at-risk properties will  ultimately affect project schedules or cost is not known. However, there  may be an increased risk given the initial high percentage of at-risk parcels.
Chairman Mica, Ranking Member Rahall, this concludes my prepared  remarks. I am happy to respond to any questions that you or other  Members of the Committee may have at this time.
section_title: GAO Contacts and Staff Acknowledgments
paragraphs: For future questions about this statement, please contact Susan Fleming,  Director, Physical Infrastructure, at (202) 512-2834 or flemings@gao.gov.  In addition, contact points for our Offices of Congressional Relations and  Public Affairs may be found on the last page of this statement. Individuals  who made key contributions to this statement include Paul Aussendorf,  (Assistant Director), Russell Burnett, Delwen Jones, Richard Jorgenson,  Jason Lee, James Manzo, Maria Mercado, Josh Ormond, Paul Revesz,  Max Sawicky, Maria Wallace, and Crystal Wesco.
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