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Toll Bridge Seismic Retrofit Program The State Could Save Millions of Dollars Annually by Implementing Lessons Learned Report Number: 2018-104

Introduction

Background

In October 1989, the Loma Prieta earthquake caused the collapse of a section of a highway in Oakland and a section of the upper deck of the San Francisco–Oakland Bay Bridge (Bay Bridge). Under state law, the California Department of Transportation (Caltrans) is responsible for maintaining and reconstructing state highways and state toll bridges. Following the earthquake, Caltrans began to use hazard analyses based on individual bridge locations to address the effects of probable seismic events—and for critical structures such as the Bay Bridge—to incorporate projections of the strongest credible earthquake into their retrofit or replacement calculations. In 1996 the State established a retrofit program to meet the latest seismic safety standards. This program, which Caltrans based on likely seismic events, required the retrofit or replacement of California's state-owned toll and highway bridges.

Caltrans is responsible for the retrofit or replacement of the state‑owned toll bridges separately from other bridges in the State, and manages the Toll Bridge Seismic Retrofit Program (seismic program), for this purpose. Figure 1 below shows the locations of the state-owned toll bridges in the San Francisco Bay Area (Bay Area).¹ Following the Northridge earthquake in January 1994, Caltrans began preparing retrofit strategies for each of the toll bridges, except for the east span of the Bay Bridge (east span), which it scheduled for replacement instead. By 2002 Caltrans had finished seismic retrofits for the Benicia–Martinez, Carquinez, and San Mateo–Hayward bridges in the Bay Area, and the San Diego–Coronado and Vincent Thomas bridges in Southern California.² Caltrans finished retrofitting the main portion of the west span of the Bay Bridge in 2004 and the Richmond–San Rafael Bridge in 2005. Figure 2 shows the history of the seismic program.

Figure 1
Bay Area Seismic Program Toll Bridges

Management of the Seismic Program

Caltrans has been responsible for implementing the seismic program since 1996. In addition to requiring Caltrans to complete seismic program projects on Bay Area bridges, state law prior to 2005 also required Caltrans to report to the Legislature on program status, issues identified, and actions taken to address those issues. During this period, a number of factors led to cost increases in the seismic program, including the cost of steel, contractor overhead, and support costs. For example, after construction began on the east span in the early 2000s, the price of steel increased substantially, while lengthened construction schedules also contributed to an increased need for contractor overhead and a corresponding increase in Caltrans support costs.

Figure 2
History of the Seismic Program

Source: State law and quarterly reports of the Oversight Committee.

However, as we described in a prior audit report published in December 2004—Department of Transportation: Various Factors Increased Its Cost Estimates for Toll Bridge Retrofits, and Its Program Management Needs Improving, report 2004-140—Caltrans failed to provide timely reporting to the Legislature when it experienced cost overruns on the Bay Bridge. Caltrans also underestimated its need for additional funds and failed to perform adequate risk management to quantify the potential for future cost increases.

In response to these issues, the Legislature provided additional funding in 2005, but also required Caltrans and the Metropolitan Transportation Commission (MTC) to establish the Toll Bridge Program Oversight Committee (Oversight Committee). The Oversight Committee is required to provide oversight and management to the seismic program, while reporting regularly to the Legislature and the California Transportation Commission. As shown in Figure 3 below, the Oversight Committee is composed of three members—the chief executives of Caltrans, MTC, and the California Transportation Commission—who represent agencies with a wide array of responsibilities. State law requires the Oversight Committee to provide program direction, review costs and schedules, and approve significant change orders. The Oversight Committee has interpreted significant change orders to mean those over $1 million; Caltrans approves change orders under $1 million. In addition, the Oversight Committee is to resolve seismic program issues and regularly update cost estimates.

Figure 3
Oversight Committee Composition

Source: State law and Oversight Committee documents.

At the same time it provided additional funding, the Legislature also consolidated financial management of the seismic program within the Bay Area Toll Authority (Toll Authority) by placing Bay Area toll revenues within the Toll Authority's purview. State law allows the Toll Authority to issue bonds backed by toll revenues for a variety of transportation projects including the seismic program.

To provide the Bay Area with a lifeline structure for use following an earthquake, the Oversight Committee prioritized timely completion of the east span over potential cost savings until the east span opened to traffic in 2013. This decision was in line with state law, which also recognizes the Bay Bridge as a lifeline structure. Caltrans designs lifeline structures to remain functional following a major earthquake in order to facilitate disaster response activities. In the case of the Bay Bridge, Caltrans designed the structure to withstand rare but potentially devastating seismic events expected to occur at the bridge site once in a 1,500‑year period.

Bay Area Toll Increases

The Legislature and Bay Area voters have approved a number of toll increases to accommodate the Bay Area's regional transportation needs, including the seismic program. As Figure 4 below shows, in 1988 voters approved Regional Measure 1, which in part financed toll bridge rehabilitation and replacement. This measure established a uniform toll of $1 on state-owned Bay Area toll bridges; from 1984 through 1988 bridge tolls had averaged about 65 cents. In 1997 the Legislature approved another toll increase to bring Bay Area tolls to $2 and dedicated the additional toll revenue to the seismic program.

Figure 4
Increase in Base Bay Area Toll Prices Over Time

Voters approved Regional Measure 2 in 2004, which raised tolls to $3 to fund a number of transportation projects including the San Francisco Transbay Terminal. The Legislature again increased tolls in 2005, primarily to support the completion of the east span of the Bay Bridge. In 2009 the Legislature added the Dumbarton and Antioch bridges to the seismic program. In 2010, with the Legislature's authorization and citing the need for an increase in the toll rates to fund seismic program work that included the retrofit of the two additional bridges, the Toll Authority board voted to increase the base toll by an additional $1. Currently, the base toll on state-owned Bay Area bridges is $5; however, it can vary depending on the type of vehicle, time of day, and whether the vehicle is part of a carpool.³

The Legislature requested this audit in part to ascertain MTC's and Caltrans' ability to manage future projects because of a measure on the June 2018 ballot, which Bay Area voters subsequently approved. Regional Measure 3 will increase tolls to fund major transportation projects. Specifically, tolls will increase by $1 in 2019, 2022, and 2025, thereby eventually raising the base toll on Bay Area bridges to $8. The measure lists $4.5 billion in highway and transit capital improvements, including support for the Bay Area Express Lane Network, an expansion in the number of Bay Area Rapid Transit cars, and a ferry enhancement program. Further, MTC's regional transportation plan, Bay Area 2040, which shares certain projects with Regional Measure 3, anticipates $303 billion in transportation projects and investments throughout the region by 2040. MTC estimates that more than $212 billion to support its plan will come from local and regional sources, including Bay Area tolls. However, Regional Measure 3 must first pass additional legal scrutiny due to a lawsuit filed in July shortly after the measure's passage. The lawsuit alleges that the measure is in fact either a state tax, which would require approval by two-thirds of the Senate and Assembly, or a local special tax that would require approval by two-thirds of voters from the nine Bay Area counties.

The Design for Replacing the East Span of the Bay Bridge

In late 1997, Caltrans reported on the cost estimates for several different design alternatives for the east span between Yerba Buena Island and the city of Oakland. According to Caltrans, MTC then became involved in the design selection at the request of the Governor and Bay Area legislative leaders to ensure that region-wide interests would be appropriately addressed. Caltrans recommended construction of a concrete skyway—a form of elevated freeway—which it estimated would cost $1.2 billion. However, the Bay Bridge Design Task Force's Engineering Design and Advisory Panel, which was formed by MTC, drafted guidelines that sought to produce a bridge that would be visually memorable, and in harmony with the existing western span of the Bay Bridge. After significant public input, in June 1998 MTC selected an alternative design known as the self-anchored suspension span (suspension span) rather than the skyway or a different suspension design. The preliminary estimate for the suspension span design was $141 million greater than Caltrans' estimate for the skyway.

While cost increases related to the suspension span have proven significant, we cannot quantify the potential for similar increases had the skyway design been implemented. Caltrans predicted that other design alternatives would be less costly, but the true cost of these designs is uncertain because the design phase could not capture all potential costs associated with each of the design options. For example, another seismic program bridge, Richmond–San Rafael, underwent significant cost increases due to complications with its underwater foundation that Caltrans did not anticipate until construction was underway. Further, contract bidding for the seismic program took place during a time of increased market volatility, in which consolidation within the construction industry resulted in fewer competitors to bid on large projects. Any bridge design would have been subject to the same market volatility that influenced cost increases on the east span.

Scope and Methodology

The Joint Legislative Audit Committee (Audit Committee) directed the California State Auditor (State Auditor) to perform an audit related to the management of Bay Area bridge costs by MTC, the Toll Authority, and Caltrans. Table 1 below outlines the Audit Committee's objectives and our methods for addressing them.

Table 1
Audit Objectives and Methods Used to Address Them

Audit Objective		Method
1	Review and evaluate the laws, rules, and regulations significant to the audit objectives.	Reviewed relevant laws, rules, and regulations related to Caltrans, MTC, the California Transportation Commission, the Oversight Committee, and the seismic program.
2	a. Review records related to the Bay Bridge construction project to determine the source of funding used to pay for cost overruns of the Bay Bridge project and whether there are any existing obligations, including debt, from those overruns.	Reviewed Caltrans' expenditure reports and the Oversight Committee's quarterly reports from 2005 through the first quarter of 2018. Identified and documented costs associated with the seismic program and work concerning the east span of the Bay Bridge in particular. Interviewed MTC and Caltrans financial staff and reviewed documentation related to cost savings and funding sources. Reviewed the Toll Authority's audited financial statements to determine the authority's debt and debt service payments.
	b. Review records related to the Bay Bridge construction project to determine whether the Bay Bridge project cost overruns affected capital improvement projects on other Bay Area bridges. If funding was diverted from other projects to pay for the overruns, determine what plans exist to pay for those other projects.	Reviewed MTC documents and the Oversight Committee's quarterly reports, and interviewed key Caltrans staff regarding retrofitting the Antioch and Dumbarton bridges. Reviewed Caltrans documentation showing estimated completion dates for seismic program bridges and compared them to the respective completion dates. For bridges with completion delays, we reviewed Caltrans documentation to ascertain the cause.
	c. Review records related to the Bay Bridge construction project to determine whether there is any continued financial risk as a result of the construction of the Bay Bridge and, if so, what funding source is planned to cover the risk.	Worked with Caltrans staff to confirm outstanding contract costs for the east span. Reviewed contingency data provided by Caltrans to confirm the amount remaining for future costs on the Bay Bridge. Reviewed MTC documentation for tracking maintenance costs. Interviewed Caltrans and MTC staff to obtain their perspective on ongoing risks and costs on the Bay Bridge.
3	Determine the total cost of Bay Bridge defects identified by MTC, the Toll Authority, and Caltrans and the source of funds that have been used or are planned to be used to pay for remediation of those defects. To the extent possible, for each defect, determine the cost associated with remediation.	Interviewed Caltrans staff to gain Caltrans' perspective on defects. Reviewed reports and correspondence from MTC and Caltrans regarding defects on the Bay Bridge. Consulted the Project Management Institute's Guide to the Project Management Body of Knowledge for guidance regarding the definition of defect. Obtained more than 2,000 contract change orders related to permanent work on the east span. Judgmentally selected and reviewed more than 800 contract change orders based on terms indicating repairs or replacements, as well as information provided in correspondence from MTC and the Oversight Committee's quarterly reports. Identified instances in the reviewed contract change orders where Caltrans or the Oversight Committee approved and paid for repairing or replacing bridge components. Calculated the costs of defect remediation and determined applicable funding sources.
4	Determine whether MTC and Caltrans have modified their approaches to prevent and address cost overruns on major infrastructure projects since the construction of the Bay Bridge. As part of this effort, identify any steps that MTC and Caltrans have taken to reduce project defects or budget for defect remediation.	Reviewed Caltrans reports, legislative reports, and prior audits regarding seismic retrofit project management and oversight. Interviewed Caltrans and MTC staff to get their perspective on how their approach to large infrastructure projects changed due to their experience with the seismic program. Interviewed staff and reviewed documentation regarding the use of oversight and risk management on Caltrans projects.
5	Identify any risk-management plans MTC has developed to properly spend and effectively manage any future funding for infrastructure projects.	Interviewed MTC staff and reviewed documentation related to risk management by MTC. Reviewed the PMBOK Guide and assessed the extent to which MTC incorporated best practices related to risk management. Interviewed MTC staff concerning plans for risk management in Regional Measure 3.
6	Determine how long it will take to pay off the debt obligations for the seismic program and what will be the total cost of the program.	Reviewed information on the Toll Authority's debt in MTC's audited financial statements. Interviewed Toll Authority staff regarding seismic program financing and confirmed that the Toll Authority does not track debt service costs specifically for the seismic program. Reviewed Toll Authority revenue projections and interviewed financial staff to assess the Toll Authority's ability to meet its debt obligations.
7	Review and assess any other issues that are significant to the audit.	To determine ongoing costs associated with maintenance and rehabilitation on the seismic program bridges after the program is complete, we performed the following: Worked with MTC and Caltrans staff to calculate routine and long-term maintenance costs on seismic program bridges. Interviewed staff at MTC and Caltrans and reviewed documentation to assess the adequacy and sufficiency of maintenance funding. Obtained and reviewed risk management documents from Caltrans concerning maintenance risks and risk methodology. Reviewed Caltrans maintenance manuals.

Source: Analysis of the Audit Committee's audit request number 2018‑104 and information and documentation identified in the table column titled Method.

Assessment of Data Reliability

In performing this audit, we obtained information from Caltrans' and the Toll Authority's accounting systems to ensure the figures presented in the Oversight Committee's quarterly reports were reliable for the purposes of our audit. The U.S. Government Accountability Office, whose standards we are statutorily required to follow, requires us to assess the sufficiency and appropriateness of computer-processed information that we use to support findings, conclusions, and recommendations. The Oversight Committee constructs the quarterly report of costs related to the seismic program using a report on expenditures from Caltrans' accounting system. We performed data-set verification and electronic testing of key data elements in the expenditure reports from 2006 through 2017 and did not identify any issues. To ensure the reports were complete, we compared the reports to the amounts recorded in the Toll Authority's system and found them to be materially identical. To assess the accuracy of the data in the reports, we reviewed quarterly audits of Caltrans' billing statements to the Toll Authority, reviewed records and interviewed Toll Authority and Caltrans' staff and determined the organizations addressed issues the audits discovered. We determined that Caltrans reports on expenditures are sufficiently reliable for the purposes of this audit. Thus, we have adequate assurance that the Oversight Committee's quarterly reports reasonably represent the costs of the seismic program.

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Footnotes

¹ The Golden Gate Bridge is not a state–owned toll bridge, nor is it a part of the seismic program. Rather, it is operated by the Golden Gate Bridge, Highway and Transportation District. Go back to text

² The eastbound portion of the Carquinez Bridge was retrofit. The westbound replacement of the Carquinez Bridge, which opened in 2003, was part of Regional Measure 1 (1988) and not the seismic program. The Legislature later added the remaining two state–owned toll bridges—the Antioch and Dumbarton bridges—to the seismic program. Go back to text

³ The $5 toll does not include the Golden Gate Bridge, which is not part of the seismic program. Go back to text

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