Over $2.6 billion in state bond money dedicated for the California’s high-speed rail plan should be withheld until the project establishes a more financially viable business model, an advisory council recommended on Tuesday.

The California High Speed Rail Peer Review Group, a body charged with advising the State Legislature on the $98 billion rail project, issued their response to the project’s business plan, which was released late last year.

The peer review group, headed by former Caltrans director Will Kempton, noted that the project’s first phase of operations is facing a $25 - $30 billion shortfall, and that there are no available funding sources that could fill that gap. The peer review group also said that ridership projections for the undertaking are unverifiable and it criticized the lack of management resources at the California High Speed Rail Authority, the state agency overseeing the project.

In 2008, California voters approved a $9.95 billion bond measure to fund high speed rail. The State Legislature is tasked with appropriating these funds, and the latest allocation for the project is a $2.6 billion measure to match $3.5 billion already approved the federal government.

However, the project’s peer review group said that, “absent a clearer picture of where future funding is going to come from,” it cannot recommend appropriating the bond money for the project.

wreisman@sfexaminer.com