SAN JOSÉ, CA – In response to today’s Mercury News article about costs of the BART extension, Mayor Sam Liccardo offers the following statement:
“To protect taxpayer dollars, it was my duty as a public official to avoid publicly discussing competing estimates for increased BART construction costs while private contractors were contemporaneously preparing bids on that same multi-billion dollar contract. Doing so would result in higher bids that would cost taxpayers hundreds of millions of dollars. I would do precisely the same thing if I were confronted with this issue today, and I hope that any other public official representing our taxpayers would do so as well.”
“Specifically, the texts revealed that a VTA official urged me to avoid discussing any potential project budget increases because ‘we have 9 major construction teams shortlisted [to bid on the project, and] ‘they [are] listening to everything!’”
“I urged the VTA to encourage the Federal Transit Administration (FTA) to revise language about a $9.148 billion “expected” cost in an FTA press release for two reasons. First, it was misleading; $9.148 billion was not, and still is not, the expected cost of this project. Second, because discussing that figure publicly would boost bid prices, effectively sending hundreds of millions of taxpayer dollars into the pockets of contractors.”
Liccardo continued, “There is a legally-mandated time to publicly disclose rising costs of a construction project: in advance of any vote by the VTA Board to spend the public’s money on that project. That time is not while contractors are still preparing bids.”
Critical factual context to the texts reported by the Mercury News article includes the following:
- As the text exchanges between Mayor Liccardo and VTA officials revealed, a VTA official informed Liccardo that there were nine contractors engaged in potentially bidding on a multi-billion dollar BART construction contract at the time of the discussion of the FTA’s assessment. Any public discussion by officials about increasing the size of the budget would encourage sending hundreds of millions of taxpayer dollars to contractors contemporaneously preparing bids on the same contract.
- The law assures that the VTA board cannot vote to move forward with any public construction project without public disclosure of the cost of that project. In other words, under California Public Contract Code § 10341, the full cost of the contract would have to be disclosed publicly well before any decision would be made to move forward. The time to publicly discuss those higher costs is in advance of a public vote, not at the time that contractors are bidding–or else taxpayers will pay much more.
- To this day, VTA officials do not believe that the construction of Phase II of BART to Silicon Valley will cost $9.148 billion. To be sure, pandemic-era construction cost inflation will increase the cost of the project substantially above the $6.9 billion estimate of several years ago. Yet, VTA officials continue to believe, based on construction bids that the agency has already actually received, and based on its conversations with those contractors, that the BART extension can be built for less than the $9.148 billion figure. Indeed, the FTA’s own report linked here (on p. 5-10) describes its cost risk model as using “factors as a multiplier of the cost of individual project elements to determine the cost for the worst plausible probable scenario cost, taken as the ‘upper bound’.”
Today, Mayor Sam Liccardo, together with two colleagues on the VTA Board – Vice Mayor and VTA Chair Chappie Jones (D1) and Councilmember Raul Peralez (D3) – released the attached memorandum, to which the article makes mention. Contrary to the implication of the article, the decision to consider yet another independent review of the tunnel alignment has nothing to do with the construction cost issue. Moreover, this memorandum does not constitute a “reversal,” because the single-bore design remains the Board-reviewed proposed project. Rather, the proposals reflect a continuation of the unanimous public vote of the San José City Council in December 2021 to encourage VTA to fully and publicly vet alternatives and options in project design prior to the final vote on the project.