San Jose paid “their cut” for BART as VTA seeks billions more

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After months of downplaying a skyrocketing federal cost estimate, the Santa Clara Valley Transportation Authority is now admitting that its long-delayed project to bring BART trains through San Jose could cost a staggering $9.3 billion.

But transit officials overseeing construction of one of the country’s largest transit expansions say they have a plan to bridge the funding gap. They are asking the Biden administration for a historic total of $4.6 billion in federal funding grants that they believe will finally get BART on target by 2034 — four years behind VTA’s current official schedule.

The funding request, outlined in a VTA letter to the Federal Transit Administration last month, would move the BART project to a funding program called New Starts, significantly increasing Washington’s share of the project cost. Currently, the FTA has agreed to fund up to $2.3 billion in project costs.

“We can almost double the federal investment in the project,” VTA Director General Carolyn Gonot said in an interview this week. Santa Clara County residents voted twice to tax themselves—first in 2000 and again in 2008—to make the BART project a reality. Local voters “have done their part,” Gonot added. South Bay taxpayers have agreed to pay about $2.8 billion in sales taxes and an additional $375 million in bridge tolls.

“We just marked it,” Gonot said, referring to the $9.3 billion in total funding now required. “I hate to say this – we try to be as conservative as possible when we go out there.”

The mega-project’s total funding needs are now 35% higher than the last estimate of $6.9 billion and nearly double the 2014 estimate. However, VTA officials are quick to qualify their funding request, saying they don’t know the true cost or don’t know the schedule of the project at the moment. A better estimate will come from top to bottom during a “rebaselining” effort, which could result in a lower or higher number, Gonot said.

Leading this process is Gary Griggs, a former president of Parsons Brinckerhoff, a major design and construction firm. His experience of railroad projects in the Bay Area extends to working on the VTA light rail and the long-delayed Central Subway project. Griggs replaced Takis Salpeas, an aide who recently resigned before his contract expired in February but continues to be paid an annual salary of $640,000.

“What’s going on in the market makes it very difficult to predict (cost),” Griggs said. “There’s a lot of uncertainty, but I think the consensus is that those numbers are going to go down,” Griggs said, referring to inflationary factors that are pushing up the prices of megaprojects across the country.

VTA’s application for funding focuses on a federal risk analysis which put the estimated cost of the project at $9.1 billion in 2021. VTA officials said at the time the federal number was a cost ceiling, but the analysis included higher numbers that were possible over 10 billion dollars. This is what VTA and San Jose officials originally wanted mask the rising costsHaving said that contractors would try to milk the transit agency for more money if they knew the higher estimate. But now they’re accepting the FTA’s estimate and adding an additional $200 million due to rising interest rates.

The ESTV risk analysis is also outdated. The FTA completed its review of the project over a year ago, well before inflation got out of hand. In a July report obtained through a public records request, an FTA consultant said the Santa Clara County Board of Directors has not responded to repeated requests for updated cost and time estimates. The FTA “remains concerned that the project estimate understates total costs, in part due to contingencies, inflation and an optimistic baseline and risk profile,” the report said.

Griggs insists local planners catch up on their to-do list.

“We have made a commitment to (the FTA) to provide this information and to work more closely with them,” Griggs said.

If the FTA accepts the VTA’s plan for more federal funding, it would be “the largest single fresh start grant in history,” said Eric Goldwyn, a New York University professor who studies the costs of transit projects. “That’s a big request.”[whostudiestransitprojectcosts”That’sabigask”[whostudiestransitprojectcosts“That’sabigask”

In a brief statement, the FTA said it had received the VTA proposal and “will review their inquiries and respond as soon as possible.”

But pinning the future of rail travel in the Bay Area to Washington also carries some risk. Republicans, who could take control of Congress in January, earlier dubbed the BART expansion “Nancy Pelosi’s Subway in Silicon Valley” and tried to limit the funds. A senior VTA official said the federal infrastructure program typically enjoys broad bipartisan support and the agency would be surprised if Republicans moved to flip the program’s money.

Now, with the VTA acknowledging an inflated budget and schedule that could stretch as far as 34 years after the project was first approved by voters, the next few months are moving into crucial territory. The VTA will soon approve funds to purchase a giant tunnel boring machine that will spend years digging through the county and downtown San Jose. Could continued cost and time inflation leave Santa Clara County residents stuck on a project that’s over budget and on schedule?

“Let me just be very clear, there are no assurances, period,” said San Jose Mayor Sam Liccardo. “There is tremendous uncertainty and in a world where construction costs are rising rapidly, it is crucial to contain costs and get construction moving quickly.”

On Thursday, Liccardo took a more combative tone and issued an a press release who questioned this news organization’s reports last year, which revealed the state risk assessment and the $9.1 billion funding estimate that VTA is now adopting. The mayor defended the VTA’s efforts so far hide the public’s increasing price estimates, stating that disclosure of such information would prompt contractors to increase their contract offers. In a previous interview, Liccardo couldn’t say whether trying to hide the FTA analysis reduced the cost of the project.

Mayoral hopeful Cindy Chavez, VTA board member and district head, also said she supports the funding change.

“We did our part,” she said. “Now is the time to get the state and federal government involved in this project.”

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