Tue, Jul

Metro Faces Scrutiny Over Measure M Cost Overruns and Transparency Issues



[This is the seventeenth article in a series examining whether Metro can be a trusted steward for the Sepulveda Pass Transit project.]

The sixth of my 20 questions to Metro CEO Stephanie Wiggins asked: “Did contractor(s) help Metro develop project cost estimates for Measure M or was Metro solely responsible for them? In 2016, voters approved Measure M to build about 80 new transit and transportation projects in LA County. Measure M Attachment A listed every project and provided funding and cost estimates for each project. Metro is overrunning these estimates on every project it builds, which could indicate that these initial Measure M cost estimates were unrealistically low and should be investigated. To do this, it’s critical to understand if a contractor did or did not assist Metro in developing the Measure M estimates.”

Metro’s answer defended their Measure M estimates and ignored the reality that Sepulveda Pass subway costs are now more than three times higher than originally estimated: “Metro hired a consultant to prepare the Measure M cost estimates, which were based on assumptions available in 2015, and were reviewed by Metro’s estimating team. Many factors contribute to the early cost estimates differing from more recent estimates including inflation, market conditions, the supply of labor, etc. Attachment A of the Measure M ordinance indicated that many of the projects were still subject to environmental review and thus project costs might change depending on that result.”

Metro’s cost estimate history on the project reveals why they should be defensive and scared. Their Measure M project cost estimate was $5.674 billion in 2015 dollars – $3.134 billion from local, state, federal, and other sources and $2.540 billion from sales tax. Showing many digits makes the estimate look accurate, when it obviously was not. Today, this inflates to about $8 billion – and this is nowhere near enough budget for almost any alternative.

Believe it or not, Metro has only presented project cost estimates once in the last seven years – in the chart below at its July 2019 public meetings. The alternatives had different names then which translate to Alternatives 6, 5, 4, and 3 today. At this time, Metro’s project budget had inflated to a little more than $6 billion. The capital cost estimates show that none of the four alternatives Metro was studying could be built within this budget. All upper estimates (red boxes) are more than double the budget. Think about Metro’s absurdity in studying no alternatives that could be built within their budget only three years after voters passed Measure M. This is not being an honest and transparent steward, especially since Metro has already spent more than $100 million on contractors plus millions on internal costs for the project so far.

Since the July 2019 public meetings five years ago, Metro has never again presented any more project cost information – not at any public meeting and not in any project factsheet. Metro listed capital cost estimates from its contractors in a February 2021 Board Report, with Bechtel’s Alternative 4 at $10.8 billion and SkyRail’s Alternative 1 at $6.1 billion. Metro never presented these to the public.

Today, Metro must face new federally approved cost data from the Bay Area Rapid Transit San Jose Extension project showing that the six-mile subway will cost $2.1 billion per mile. Apply this to the cost estimates from my March 18th CityWatch article, and you get the costs below showing that Metro is studying only one alternative that could be built within their $8 billion budget.

Most anyone with common sense could develop more accurate estimates than Metro. No wonder the public thinks transit agencies conspire to “low-ball” project cost estimates for public buy-in.

(Bob Anderson is a nuclear engineer with 50 years engineering and business development expertise in the aerospace and high-technology sectors. He is VP and Transportation Committee Chair of the Sherman Oaks Homeowners Association. Contact him at [email protected].)