the program faced state-internal opposition from Republicans
Except for single-vote majorities in 1969-70 and of just the Assembly for just part of 1995-6, the Republicans haven't had a majority in either house in the past sixty years.
They had, and used as a lever on every other issue, a veto pretty much forever on the budget up until Prop 25 in 2010 dropped the 2/3 supermajority for passing the budget. (Despite the current situation, 2/3 supermajority for either party in either house, much less both houses, of the legislature is historically extremely uncommon.)
They also had and used a similar power with regard to tax realignment since there was (and remains) a similar requirement for tax increases, but that's been a weaker power both since Dems went around them to the voters on tax increases in 2012 and because the Dems have actually had 2/3 supermajorities in the legislature at some times recently, including right now.
But, both of those powers were in full bloom when the funding application to the federal government (which needed budgeted state funds) was made (by, it must be noted, a Republican administration in Sacramento, with whom legislative Republicans had more pull than their hard power in the legislature would suggest, though given the quirkiness of the Schwarzenegger adminstration, probably less than would be typical of a Republican governor.)
A couple reasons; pragmatically, there were issues toward both termini, but an initial route in the Valley would be useful to connect to either terminus and start getting real benefit (the valley stretch alone is of very little, though non-zero, utility)
Politically, the program faced state-internal opposition from Republicans, and putting the initial construction and operation, with associated jobs and benefits in one of the more Republican areas of the route was a mechanism to mitigate that.