VTA officials misled public, governing board on cost for San Jose BART project

A scathing report by the Valley Transportation Authority’s auditor general criticizes the agency’s handling of the San Jose BART extension — already beset by major cost increases and timeline delays — finding that staff engaged in a “breach of transparency” and “misleading” communications about the project’s cost.

The Jan. 11 assessment, conducted by VTA’s Scott Johnson, says the agency internally applied for grant money using price projections that they were publicly brushing off — and that staff were long “dismissive” of federal estimates that showed the transit extension’s costs were rising sharply.

Scott’s inquiry focused on earlier cost projections in the single-digit billions that now seem like small potatoes — VTA estimates the extension will now cost a whopping $12.2 billion, making it one of the most expensive transit proposals in the country.

“What we found is that the (VTA) project team and the administration need to do a better job of keeping the board and public informed,” Johnson said in an interview. “There were instances of long gaps of time where critical information was not shared with the board.”

When they announced the latest revised cost and completion estimate in October, VTA leaders blamed inflation and skyrocketing construction costs for a price tag more than twice the original cost set in 2014 — and a finish date of 2036, a decade behind schedule. The news sparked VTA’s Board of Directors to launch a watchdog committee that included San Jose Mayor Matt Mahan to investigate the exploding cost and delays.

In his assessment, Johnson found VTA applied for the “New Starts” grant in October 2022 using the federal government’s own cost estimate of the project at the time — $9.1 billion, with an additional $200 million in added financing costs from the agency.

But while applying for the grant, and even after it was approved in December 2022, the transit agency was publicly stating that their own $6.9 billion estimate of the project was still accurate.

Johnson found that it wasn’t until April 2023, months after federal funding was approved, that the VTA informed its board that the $9.1 billion figure — plus the added financing costs — was now the price they thought the project would reach.

Johnson also found VTA officials ignored the rising cost estimates from the federal government’s independent monitor assigned to the project, known as a PMOC, which informed the agency in July 2021 — citing a 65% “confidence rate” — that the transit extension would cost $9.1 billion.

“As early as December 2021, VTA was dismissive of PMOC concerns,” Johnson writes in the assessment. “For example, in the December 2021 Board meeting, the Chief BART Delivery Officer at the time explained that the assessment value of $9.1B was not an official cost estimate and was based on risk and ‘what if’ scenarios.”

Johnson writes that the federal monitor continued to “remain concerned” about VTA’s own cost estimates throughout 2023, pointing out that the PMOC repeatedly wrote in reports that the agency was “under-representing” the project’s cost. The federal government is set to release an updated risk assessment of the project in February.

Tom Maguire, VTA’s chief megaproject officer, said in an interview that the agency “genuinely” did not know whether the federal government’s $9.1 billion figure “was quite right.”

When asked why VTA would apply for federal money with that estimate — instead of their own, which they were stating publicly — he said the figure was “more credible to the (Federal Transportation Administration’s) audience.”

“What we did know is that we had to go to the federal government with a credible number,” he said. “There was no option to go back to the federal government with a number like 6 billion dollars.”

Maguire said he is committed to the auditor general’s recommendations, which include better communication.