Our review of the California Department of Transportation (Caltrans) and the Metropolitan Transportation Commission (commission) to examine the delays and higher cost estimates for the seismic upgrades of Bay Area toll bridges revealed that:
RESULTS IN BRIEF
Rising costs and time delays plague the State's efforts to complete seismic retrofitting of selected toll bridges. To ensure maximum public safety and the continuous operation of the State's transportation network in the event of a major earthquake, the California Department of Transportation (Caltrans) determined that six state-owned toll bridges need seismic retrofitting, and one other needs a partial retrofit and a partial replacement. Initial estimates prepared by Caltrans set costs at $2.6 billion, with work to be completed by 2004; however, its current estimates increase these costs to $4.6 billion and delay project completion until 2009. The estimated $2 billion increase in cost and the 5-year time delay occurred for many reasons, but the replacement of the San Francisco-Oakland Bay Bridge (Bay Bridge) east span is the largest contributor with an estimated cost increase of $1.3 billion.
Overall, the program was likely to experience increases to its cost estimates because the initial legislation passed to aid in financing retrofit efforts allows the Bay Area to purchase a more expensive "signature" east span for the Bay Bridge than Caltrans originally envisioned and estimated for. Figure 4 on page 20 shows the chosen signature bridge for the east span and labels some of the significant features. The Metropolitan Transportation Commission (commission)-the regional transportation planning, coordinating, and financing agency for the Bay Area-has the authority to choose the bridge replacement for the east span, including the ability to select amenities not included by Caltrans.
Although legislation allows for the purchase of a different and more expensive bridge, it also requires that the commission fully fund any chosen amenities, such as a bicycle/pedestrian path, with the seismic retrofit surcharge equal to $1 per vehicle imposed for passage on all Bay Area toll bridges (seismic surcharge). Partially based on initial cost estimates, the commission extended the seismic surcharge, originally imposed for no longer than 10 years, for 2 years to pay for these additional amenities and to generate a pool of reserve funds for future eligible projects. Later, when Caltrans updated its cost estimates, it became clear that more funding would be needed. Subsequent legislation, passed in 2001 to provide this additional funding, addressed the majority of the expected $2 billion funding shortfall by allowing for an overall 30-year extension of the original seismic surcharge, with the remaining funds coming from federal sources. Currently, the Bay Area toll surcharge overseen by Caltrans will pay for 49 percent of the entire toll bridge seismic retrofit program, an increase from its original 35 percent share.
Aside from the higher cost estimates resulting from the selection of a different and more expensive Bay Bridge east span replacement, Caltrans recognizes that the lack of including escalation rates in most of its estimates played a role in the understatement of cost estimates in the initial legislation. Also, the costs for the Bay Bridge east span replacement increased due to both efforts by the U.S. Navy to impede test drilling on Yerba Buena Island and a delay in the environmental review process. A few other bridges, such as the Richmond-San Rafael Bridge, experienced cost increases due to difficulties in estimating costs for underwater work, and like the Bay Bridge east span replacement, the Carquinez Bridge encountered problems with outside parties that resulted in cost increases and time delays.
A review by a commission-hired consulting firm concludes that program costs may go even higher than reported by Caltrans-as much as $250 million to $630 million more. The consulting firm based its conclusions on preliminary seismic retrofit designs provided by Caltrans, some of which are likely to experience additional changes. Furthermore, the consulting firm relied on a few assumptions, including that the program would not experience any more time delays. At this time, Caltrans says it will pursue cost-saving measures aggressively to stay within the funding levels established by the subsequent legislation. In addition, Caltrans explained that the consulting firm chose a different and more costly approach to demolishing the current east span of the Bay Bridge. However, we were able to confirm that the consultant was correct with regard to the significant underestimating of a time-related overhead cost. This seems to suggest that Caltrans may need additional funding to complete the Bay Bridge unless the contingency reserves it has planned for the other retrofit projects are overstated. However, past experience has shown that Caltrans' planned costs for retrofitting its toll bridges are generally understated rather than overstated.
If costs do go higher, the subsequent legislation requires Caltrans to acquire the additional funds of $448 million from the State Highway Operation and Protection Program (SHOPP), the Interregional Transportation Improvement Plan, or federal bridge funds. Caltrans has already committed to using $642 million from the federal bridge funds to cover earlier estimated cost increases. It considered recommending the use of SHOPP funds to cover overruns previously identified; however, it indicated that doing so would require using funds already earmarked for other projects. This particular solution would require approval by the California Transportation Commission.
The Business, Transportation and Housing Agency and the commission agree with the conclusions presented in our report. In addition, the commission offered a few clarifying points and proposed two suggestions directed toward the Legislature for funding and reporting on future large and complex transportation projects.