Report Prepared by: Frank Quintero, Deputy City Manager
Title
SUBJECT: City of Merced Letter of Comment to the DRAFT 2026 Business Plan and Technical Supporting Document as Published by the California High-Speed Rail Authority
REPORT IN BRIEF
City staff prepared a Letter of Comment concerning High-Speed Rail’s DRAFT 2026 Business Plan including the Technical Supporting Document. Staff is seeking direction from the City Council if they desire to submit the Letter of Comment to the High-Speed Rail Authority.
RECOMMENDATION
City Council - Adopt a motion:
A. Approving the Letter of Comment to the High-Speed Rail Authority’s DRAFT 2026 Business Plan including the Technical Supporting Document; and,
B. Authorizing the City Manager to send a Letter of Comment to the California High-Speed Rail Authority regarding the DRAFT 2026 Business Plan and Technical Supporting Document on behalf of the City Council of the City of Merced.
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Approve, subject to conditions other than as recommended by staff; or,
3. Deny; or,
4. Continue to a future meeting.
AUTHORITY
Charter of the City of Merced, Section 200, et seq.
CITY COUNCIL PRIORITIES
FY 2025-2026 Budget Tab 7, Economic Development and Airport, Objective #3, “Coordinate High Speed Rail, ACE Train MITC, and other projects that may serve as economic engines in Downtown Merced.”
DISCUSSION
Business Plan Statutory Requirement:
Public Utility Code Section 185033 requires the High-Speed Rail Authority to publish, adopt, and submit a Business Plan to the Legislature every two years. The first Business Plan was adopted in 2000, and since the codification of Public Utility Code Section 185033, Business Plans have been prepared and adopted from 2008 to 2024.
Each Business Plan must contain the following elements:
• The type of service the Authority anticipates it will develop;
• The proposed timeline for construction and the expected schedule for completing the environmental review process;
• Alternative financial scenarios based on different levels of service;
• Forecasts of ridership levels, operation and maintenance costs and capital costs;
• Written agreements with public or private entities to fund the system and an estimate of anticipated funding sources;
• And a discussion of foreseeable risks to the project and plans to mitigate those risks.
Once the Business Plan is published, the High-Speed Rail Authority must provide at least a 60-day period for public review and comment. The DRAFT 2026 Business Plan was issued on February 28, 2026, and comments are due by April 29, 2026. A High-Speed Board of Directors meeting is scheduled for April 29, 2026, when comments are due. The 2026 DRAFT Business Plan was introduced to the High-Speed Rail Board of Directors at the meeting of March 4, 2026 (ATTACHMENT 1.)
Upon approval of the DRAFT Business Plan, the document is also submitted to the Senate Committee on Transportation and Housing, the Assembly Committee on Transportation, the Senate Committee on Budget and Fiscal Review, and the Assembly Committee on Budget.
DRAFT 2026 Business Plan Key Points as Applicable to Merced:
• Station Relocation - The DRAFT 2026 Business Plan does not plainly state that the Downtown High-Speed Rail Station would be relocated from its current site, O St to R St/W. 15th St to W. 16th St, to Southeast Merced at Highway 99/Mission Avenue adjacent to the Union Pacific Railroad Tracks. However, the Technical Supporting Document calls out that Merced station would be relocated to Highway 99/Mission Avenue. The High-Speed Rail train is a project administered by the State of California. The final decision regarding the station location ultimately falls with the High-Speed Rail Authority and Governor’s Office.
• Station Features - The Downtown Merced Station was originally designed to have multiple tracks, elevated, contain two platforms, supported by commercial uses, and be a full-service station with a Yosemite theme for the architecture. The Technical Supporting Document notes the following (excerpt from Page 51):
Merced Station
o New station and location near E. Mission Ave south of downtown Merced
o Introduced as an overarching cost savings measure coupled with schedule timeline risk reductions. In addition, the newly proposed location supports Merced’s long term growth plan along with providing a clear fundable path to high-speed rail delivery
o Station changed to a simple at-grade station, with a single side platform, with transit facilities, surface parking, and a small station support building.
• Amtrak/Gold Runner Connection - Both the DRAFT Business Plan and Technical Supporting Document illustrate that the Amtrak/Gold Runner connection to Sacramento will no longer be in Merced, but Madera.
• Shared Benefit Costs - Chapter 10 of the Technical Supporting Document, Shared Benefit Costs, identifies in Table 30, Grade Separations in southern segment of the Merced to Madera to cost $376M, but does not identify who would be sharing the costs.
• Tax increment Financing - The DRAFT Business Plan identifies the use of Tax Increment Financing Tools such as an Enhanced Infrastructure Financing District (EIFD) to help fund construction and commercialization. The use of such a tool has generally been limited to Cities and Counties. The proposed TIF model would divert future property tax growth and revenues that local governments rely upon to fund essential public services, including public health and safety, infrastructure maintenance, parks, housing programs, and local transportation improvements.
• Local Area Partnerships - Also contained in the DRAFT 2026 Business Plan is for the High-Speed Rail Authority “to maximize the economic and community
benefits of high-speed rail station investments, it is important to strengthen partnership frameworks with local governments around land use planning and coordinated infrastructure investment.” In his August 2025 CEO Report, the CEO identifies empowering the Authority with certain regulatory powers, including zoning and land use permitting controls over land it owns and within one-half mile radius of High-Speed Rail Stations. In essence, the Authority would not recognize the land use controls, and authority granted by the State to local jurisdictions.
• Encroachment Permitting - The DRAFT Business Plan also calls out empowering the Authority with certain regulatory powers including the issuance of encroachment permits to third parties. Granting such authority again devalues the discretion of local jurisdictions of issuing encroachment permit which generally protect major infrastructure investments made at the local level.
• Update Senate Bill 198 - The DRAFT Business Plan identifies the need to modify Senate Bill (SB) 198. Currently under SB 198, a Downtown Merced High-Speed Station is guaranteed supported by rail service from the Altamont Corridor Express (ACE) and Amtrak/Gold Runner. Furthermore, SB 198 restricts that amount of funding that may be spent outside of Phase I/Segment 1. Relocating the station from Downtown Merced to Southeast Merced requires amending SB 198. The City of Merced previously submitted a letter to the High-Speed Rail Authority noting that modifications to SB 198 should be decided by impacted stakeholders such the City of Merced, Merced County, and the Merced County Association of Governments (ATTACHMENT 2).
Proposed Action:
Adopt a motion approving a Letter of Comment to the High-Speed Rail Authority regarding the DRAFT 2026 Business Plan and Technical Supporting Document and authorize the City Manager to send a letter to the Authority behalf of the City Council of the City of Merced (ATTACHMENT 3).
Document Availability:
The DRAFT 2026 Business Plan and DRAFT 2026 Business Plan Technical Supporting Document may be downloaded at the following link: HSR 2026 DRAFT Business Plan <https://hsr.ca.gov/communications-outreach/reports/business-plans/2026-business-plan/>.
Scroll down to the bottom of the webpage to the link to the DRAFT 2026 Business Plan Technical Supporting Document
ATTACHMENTS
1. HSR Report -DRAFT 2026 Business Plan Introduction
2. Letter to High-Speed Rail Regarding Conceptual Station Move
3. DRAFT Letter to the High-Speed Rail Authority