While the Santa Clara Valley Transportation Authority is pushing ahead with the expansion of the sunshine rail and the ten-kilometer San Jose BART extension, a brand new state review board is asking for reform of the transportation authority and criticizing weak project management and weak financial oversight.
The 78-page report, released this week by the California State Auditor General, follows a 2022 request from state Rep. Marc Berman (D-Menlo Park) – a vocal critic of VTA's governance structure who has pushed for several legislative changes on the 12-member board of South Bay elected officials.
Berman said the audit confirmed what he and plenty of others have known for years: the issues were rooted within the composition of the transportation company's board of directors.
“I think if you solve the governance issues and have a board that is best equipped to provide the very detailed oversight that a complex transit agency like VTA needs, then a lot of these issues will address themselves and resolve themselves,” Berman told The Mercury News.
VTA said the corporate is already working to implement most of the auditor's greater than a dozen recommendations, resembling strengthening project oversight and improving long-term financial planning.
“The audit period spans several years, some of which have been difficult times in VTA's history,” said Carolyn Gonot, VTA general manager and CEO, in a press release. “As we moved through these periods, we recognized the need for improvements in business processes, accountability and transparency and have begun work in those areas. The efforts of the team at the California State Auditor's Office support much of the work currently underway at VTA.”
However, Berman said he was not satisfied with the agency's response and had already spoken to VTA concerning the report – and among the rejected recommendations.
“We are considering introducing legislation to implement the auditors' recommendations on corporate governance that were rejected by the VTA Board,” Berman said. “I was surprised and disappointed that the Board continued to reject recommendations that I believe are remarkably easy to achieve to achieve corporate governance reform that will result in better government for the residents of Santa Clara County.”
In 2022, Berman proposed a bill that might have modified the composition of the panel from South Bay elected officials to community members with knowledge of transportation issues. However, the bill did not make it through the state Senate Transportation Committee.
The audit found that VTA's governance structure, as set out in state law, is exclusive in comparison with other transit agencies they reviewed. Because the board is restricted to elected officials, the audit said, “likely results in a board with less experience in traffic or transportation issues than one that might exist without such restrictions.”
A 2019 report from the Santa Clara County Civil Court grand jury similarly criticized the panel for being comprised entirely of elected officials, saying many panel members had no experience with transportation projects or were blind to the agency's operations and funds. Two previous grand juries in civil cases lately also reached the identical conclusion.
The review also targeted the best way current directors are appointed, saying that “the lack of a formal public process could allow appointing authorities to circumvent experience requirements.”
The VTA agreed with many of the auditor's recommendations. Board President and Santa Clara County Councilwoman Cindy Chavez called the report “thorough, fair and thoughtful.” But the transit agency balked on the suggestion that its appointment process be made public, saying that “the same results can be achieved with a simpler and faster method.”
In addition to governance, the audit also highlighted the necessity for the transport authority to maintain a better eye on its huge capital projects.
Last weekend, VTA began construction on the Eastridge to BART Regional Connector Project (EBRC) – a 2.4-mile light rail extension that may run alongside the East Capitol Expressway in San Jose. The project had been within the planning stages for many years, however the state audit found the agency must have conducted a cost-benefit evaluation before board approval.
The audit also found that project cost estimates were “neither comprehensive nor fully documented” and that VTA staff did not often report deviations in a project's cost or schedule, leaving the board essentially at midnight. However, 10 of the 12 projects whose cost estimates the auditor reviewed were generally accurate when comparing the estimates to actual costs.
Noticeably missing from the audit was an in-depth study of the San Jose BART extension. The project, which might extend BART from the Berryessa Transit Center in northern San Jose through downtown to Santa Clara, has nearly tripled in cost over the past decade, from $4.4 billion to $12.75 billion. The opening date has also been pushed back from 2026 to 2037.
Berman said he believed the project was not included within the scope of the review since it was already under federal oversight.
Staff author Kristen Bender contributed to this report.
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