South Bay residents shocked by last fall’s price jump for the San Jose BART extension — from $9.1 billion to $12.2 billion — may need to brace themselves again.
In a turn of events that could have major consequences for an extension already struggling with exploding prices and timeline delays, an independent assessment set to be released this month from federal officials may peg the project’s cost even higher than the agency’s $12.2 billion estimate, the Valley Transportation Authority’s chief megaproject officer told The Mercury News in an exclusive interview this week.
“I don’t want to ever be sugarcoating things for our (VTA Board of Directors),” said the agency’s Tom Maguire. “I think there’s a chance the number is over $12.2 billion dollars, but I don’t know how much higher.”
The forthcoming risk assessment, overseen by the Federal Transit Administration, serves as a third-party study that shows a project’s progression and points out potential issues when local agencies request funding. VTA is seeking to get about half the project covered by the FTA, with the rest paid by state dollars and local tax measures. Maguire and federal officials spent three days this month going over the BART plans — and the chief megaproject officer said the continuing rise in construction costs leads him to believe the total may increase.
If the FTA raises the price tag, it would be the fourth time local and federal agencies have increased estimates from the original 2014 projection of $4.7 billion. In October, VTA announced its most recent cost jump and an expected completion date of 2036 — a decade later than originally expected. The announcement sparked the VTA Board to create an oversight committee investigating issues facing the project.
“I think if there is one common theme with the cost escalation, it is that the more time we wait to get a shovel in the ground, the more expensive it gets,” said Maguire. “We feel urgently with this — to answer for the voters who have been asking about this for 20 years. … I don’t mean to poo-poo a billion dollars. But it only gets worse if we don’t get started. And we are ready to get started.”
Members of the VTA’s board said that while a further cost increase to the project could present funding difficulties, the importance of creating a “ring of transit” around the Bay Area is paramount. The extension would create six miles of new track — including a subterranean tunnel underneath San Jose — looping BART service from the north part of the city to downtown and then up to Santa Clara at its Caltrain terminal.
“I think what the federal government is trying to make sure is that we’re being conservative as we can be when we’re pricing projects,” said Santa Clara County Supervisor Cindy Chavez, who also serves on the extension’s oversight group. “Because we want to be open and transparent with the public and also progress with the construction.”
Palo Alto Councilmember Pat Burt said that he doesn’t expect the federal government’s new number to be too much higher than $12.2 billion — but that any increase may present funding challenges.
“The FTA has treated this program as one of their top transit projects in the country,” he said. “They’ve repeatedly found it to be an important and worthwhile investment. And they’re committed to it. However, we still have uncertainties.”
The rising construction costs track with what Ken Simonson is seeing. The chief economist at the Associated General Contractors of America said the prices for materials necessary for transportation projects, namely concrete, have jumped significantly — a unique trend that’s continued during the pandemic. In addition, electrical equipment such as switch gears and transformers are experiencing “unprecedented” delays, he said.
Simonson also attributes the rising prices to the national competition to obtain materials and recruit transportation expertise, as cities across the country aim to beef up their infrastructure.
“The fact that so many agencies have been doing expansions and modernization (is) putting pressure on the same suppliers,” said Simonson.
That challenge is reflected in the federal government’s most recent update this month on the BART extension, which states that they are “concerned” about two vacant positions for the project — program director and construction director — blaming “high demand for transit professionals in the U.S. and especially in the California market.”
The report states, “Due to frequent turnover and vacancies in key (BART San Jose extension) positions, (the Project Management Oversight Contractor) is concerned about the lack of succession planning and inadequate transition periods in dealing with attrition and turnover.”
Maguire said a “national recruitment effort is underway, and we hope to have two directors on board by the middle of 2024.”
If the federal estimate does outpace VTA’s, it wouldn’t be the first time. A previous risk assessment from 2021 found the project would cost $9.1 billion compared to the local agency’s $6.9 billion. A recent auditor general’s report found VTA publicly dismissed those projections while internally using higher estimates to apply for federal funding.
In a scathing report published earlier this month, Auditor General Scott Johnson found that VTA’s staff had engaged in a “breach of transparency” with the agency’s governing board and the public over issues concerning the project.
Scott’s findings have ruffled feathers from some of the agency’s board members.
“We on the board are really pissed,” said Sudhanshu “Suds” Jain, a councilmember from Santa Clara and a member of the project’s watchdog committee, about the auditor general’s findings. “The lack of transparency is just appalling to me.”
