As the Santa Clara Valley Transportation Authority barrels ahead with extending light rail and the six-mile San Jose BART extension, a new state audit is calling for the transit agency to be reformed, criticizing it over weak project management and financial oversight.
The 78-page report released this week by the California State Auditor stems from a 2022 request from state Assemblymember Marc Berman (D-Menlo Park) – a vocal critic of VTA’s governance structure who has pushed for several legislative changes to the 12-person board of directors made up of South Bay elected officials.
Berman said the audit confirmed what he and many others have known for years: the issues are rooted in the nature of the transit agency’s board.
“I think if you fix the governance issues, and if you have a board that is best equipped to provide the very detailed oversight that a complex transit agency like VTA needs, then I think a lot of these issues will be addressed and solved naturally,” Berman told The Mercury News.
VTA said it’s already in the works of implementing many of the more than a dozen recommendations from the auditor, such as strengthening project oversight and improving its long-term financial planning.
“The audit timeframe spans several years, some of which were difficult times in the history of VTA,” Carolyn Gonot, VTA’s general manager and CEO, said in a press release. “As we worked through those periods, we recognized the need for improvements in business processes, accountability and transparency and work has begun in these areas. The effort by the team at the California State Auditor’s office reinforces much of the work currently underway at VTA.”
Berman, however, said he was not satisfied with the agency’s response, and has already talked to VTA about the report – and some of the recommendations they rejected.
“We’re considering introducing legislation to implement the auditors’ recommendations on governance that were rejected by the VTA board,” Berman said. “I was surprised and disappointed that the board continues to reject what in my mind are remarkably low-hanging fruit recommendations for the governance reform that will lead to a better agency for Santa Clara County residents.”
In 2022, Berman proposed a bill that would have changed the board makeup from South Bay elected officials to community members with knowledge of transit issues. The bill, however, failed to make it out of the state Senate transportation committee.
The audit said that VTA’s governance structure, which is outlined in state law, is unique compared to other transit agencies they reviewed. Because the board is limited to elected officials, the audit said it “likely leads to a board with less experience with transit or transportation issues than one that could exist without such limits.”
A 2019 Santa Clara County Civil Grand Jury report similarly criticized the board for being comprised solely of elected officials, stating that many board members didn’t have experience with transportation projects or have knowledge about the agency’s operations and finances. Two previous civil grand juries in recent years also came to the same conclusion.
The audit also took aim at how the current directors are appointed and said a “lack of a formal public process may allow the appointing powers to circumvent the experience requirements.”
VTA agreed with a majority of the recommendations from the auditor, with board president and Santa Clara County Supervisor Cindy Chavez calling the report “thorough, fair and thoughtful.” But the transit agency balked at the suggestion of making its appointment process public, stating that the “same results can be accomplished via a simpler, faster method.”
Aside from how the agency governs, the audit emphasized the need for the transit agency to keep a closer eye on its massive capital projects.
Last weekend, VTA broke ground on the Eastridge to BART Regional Connector Project (EBRC) – a 2.4-mile light rail extension that will run alongside East Capitol Expressway in San Jose. The project has been decades in the making, but the state audit said the agency should have conducted a cost-benefit analysis before board approval.
“VTA’s ridership projections show that VTA expects that the EBRC project – which is projected to cost $653 million – will increase light rail ridership by only 1.5% by 2043 when compared to the number of riders expected if it did not construct the project,” the audit said. “The increase is the equivalent of about 2,500 additional riders per day in that year.”
The audit said cost estimates for projects were also “neither comprehensive nor fully documented” and VTA staff failed to regularly report variances in the cost or schedule of a project, effectively leaving the board in the dark. However, 10 of the 12 projects for which the auditor reviewed cost estimates were generally accurate when comparing estimates to actual costs.
Notably missing from the audit was a deep examination of the San Jose BART extension. The project, which will extend BART from the Berryessa Transit Center in north San Jose, through downtown and up to Santa Clara, has nearly tripled in cost in the last decade from $4.4 billion to $12.75 billion. The opening date has also been pushed back from 2026 to 2037.
Berman said he believes the project wasn’t included in the audit’s scope because it’s already under federal oversight.
Staff writer Kristen Bender contributed to this report.