Soaring costs threaten TransNet

By: DAVE DOWNEY - Staff Writer | Sunday, April 1, 2007 12:14 AM PDT ∞

SAN DIEGO ---- Soaring construction costs already are threatening the completion of San Diego County's $14 billion, 40-year road-building program one year before it starts receiving cash from a countywide sales tax, transportation officials say.

Since 2002, construction costs have nearly doubled and they are rising three times as fast as sales tax revenues, said Richard Chavez, principal transportation engineer for the San Diego Association of Governments, a regional planning agency, last week.

Jack Boda, the association's director of mobility management, said in the same interview that the escalation reflects fast-rising prices worldwide for steel, asphalt and cement ---- the main building blocks of freeways, railroads and bridges.

"It has our attention," Boda said.

At the same time, spiking costs have leveled off before and should do so again, he said.

The road-building program will be paid for with money from TransNet, the name the agency has attached to a half-penny on the dollar sales tax that San Diego County voters originally approved two decades ago for a diverse menu of transportation projects.

That tax went into effect April 1, 1988, and was due to expire one year from today. But voters, in the November 2004 presidential election, gave the association permission to continue collecting the special tax for another four decades.

Most North County residents pay 7.75 cents in tax for every dollar they spend at retail stores. Those who make purchases in Vista, however, will begin paying 8.25 cents today.

With the $14 billion anticipated to come from 40 more years of sales tax collections, the agency proposes to widen Highway 76 to four lanes between Oceanside and Interstate 15, to extend the I-15 express lanes north to Highway 78 in Escondido, to widen Highway 78 to eight lanes between Oceanside and Escondido and to build car-pool lanes on Interstate 5 through North County, among other big projects.

However, with construction costs on a pace to double every four years, there is a danger that buying power will be eroded and that some projects won't be completed on time, if at all, officials said.

Left behind

If a project or two gets left behind, it won't be the first time.

During the inaugural TransNet, money ran out before the agency could follow through on 1988 promises to complete Highway 76, extend Highway 52 to Highway 67 in Santee, and build a $1 billion San Diego Trolley extension in the La Jolla area within the first two decades.

But those projects won't be left behind again, officials said. That's because they were given special priority in the second TransNet measure. The projects are part of something called the TransNet "Early Action Program" and are first in line for the sales tax dollars. Agency spokesman Garry Bonelli said each of them will remain on schedule and be completed by 2015.

"We'll definitely still be able to deliver everything we have in the lock box ---- the 76, the 52 over to 67 and the midcoast Trolley from the Old Town transit station up through the campus of UCSD and over to University Towne Centre," Bonelli said.

But projects set to get built in later years could be in jeopardy if cost trends continue.

"The question is, what are we going to be building in 2030?" Bonelli said.

Or, some planned bus routes might end up running every 15 or 20 minutes rather than every 10, he said.

As for the I-5 widening, it is scheduled to be built during the early years of the measure. Environmental studies are expected to be completed by 2009, and construction is expected to wind up around 2016, according to the California Department of Transportation office in San Diego.

Consequently, association officials say, the $2.4 billion project is not likely to become a casualty of soaring costs.

Construction costs are soaring for several reasons.

China's booming economy is one, as that giant country rushes to build dams, highways, railroads and Olympic stadiums that are boosting worldwide demand for steel, cement and asphalt, Boda said.

"China has been building like crazy," he said.

Then there are the soaring global oil prices that factor heavily into the cost of asphalt, he said. And closer to home, Boda said, the multibillion-dollar replacement of a San Francisco-Oakland Bay Bridge span damaged in the 1989 Loma Prieta earthquake has strained steel supplies.

The recent housing boom also has ---- in California and across the nation ---- made cement more scarce and triggered a salary-escalating competition for skilled construction workers, he said.

And the pressure to rebuild quickly in hurricane-ravaged communities of Louisiana and Mississippi hasn't helped matters, Bonelli said.

Light at the end of the tunnel

Chavez, the engineer, said all those factors have translated into fewer bids being submitted for highway projects and have resulted in higher than usual bids.

For example, Chavez said, in 2002 road-building agencies were entertaining six or seven bids for every job they advertised. But by 2005, that number had dwindled to three or four. On the positive side, he said, the number is beginning to creep back up, probably because of the slowdown in home construction.

"There is light at the end of the tunnel," Boda said. "One good thing about our future projects is that most of them don't require a lot of right-of-way purchases. So we don't have to control the real estate market."

And, Boda said, "What goes up should come down. There should be some leveling off over the 40-year period that can help make this program work."

After all, he said, the region has seen this kind of thing before.

Indeed, said Chavez, construction costs also spiked during the high-inflation, energy-crisis of the 1970s. Costs tripled between 1972 and 1980.

But stable prices persisted during the 1980s and 1990s, Chavez said. In fact, during the recession of the early 1990s, sales tax receipts actually were increasing faster than construction costs, he said.

While agency officials are not advocating a return to recession, they are hoping for a return to a trend of more gradual increases.

In the meantime, Boda said, the agency must do all it can to keep project prices from spiraling out of control. While it can't control what suppliers charge for materials, it can resist the temptation to add project features that might seem appropriate but were not promised in the 2004 TransNet ballot measure, he said.

"We have to stick with what we committed to the voters," Boda said.

Contact staff writer Dave Downey at (760) 740-5442 or ddowney@nctimes.com.

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George wrote on Apr 1, 2007 3:33 AM:When the money gets tight, it's time to do a cost-benefit analysis of the various projects and determine which ones can carry the greatest amount of people for the least cost. For example: the $440,000 Sprinter rail line is projected to carry 10,000 people per day. Two freeway lanes paralleling the Sprinter's 22-mile route, costing the same $440 million, and running at half of total capacity can handle 48,000 solo drivers per day. Which project will do a better job of relieving congestion for $440 million? Hint: it's not the Sprinter. What projects should receive the majority of TransNet funding? Hint: it's not managed lanes, the Breeze, bus rapid transit, or rail. More details are online at "SANDAG still unrealistic about traffic relief" http://www.nctimes.com/articles/2006/10/30/opinion/commentary/102906152901.txt and "Wait for a traffic plan that works" http://www.nctimes.com/articles/2004/07/31/opinion/23_17_347_30_04.txt

Randy wrote on Apr 1, 2007 4:16 AM:The tax was passed when construction costs were rising. The rising costs should have been factored into the amount of the proposed bond.

Walt wrote on Apr 1, 2007 7:26 AM:A family or business faced with a budget shortfall reshuffles its priorities to achieve maximum benefit. Clearly road building is the best investment for San Diego mobility and congestion relief. Clearly of the "lock box" items, omission of the $1 billion midcoast trolley won't even be noticed. SANDAG has the lockbox key. Use it to put the limited resources where they will be most effective.

Gary in Murrieta wrote on Apr 1, 2007 7:51 AM:Carpool lanes are inefficient and do not work. I have been using them for 8 years on my commute to San Diego, and I even use a vanpool.

Frustrated wrote on Apr 1, 2007 8:28 AM:This all just shows how foolish it was for the voters to have believed the promises made when the extension of the tax was proposed. Mark my words, the next shoe to drop will be the elimination of the projects that benefit North County in favor of projects that benefit San Diego, East County and South Bay.

donr wrote on Apr 1, 2007 9:33 AM:george, you are correct. the sprinter line is projected to cary 10,000 people...on the first day of operation. ridership increases with time, especially when people realize they have options and gas goes up above $4 per gallon or more, which is an inevitable reality that adding 2 freeway lanes will not be able to fix.

Prices went up? wrote on Apr 1, 2007 11:10 AM:Wow...who woulda' thunk it? Anyone with half a brain I imagine. I like the cost/benefit idea suggested above as one factor in determining what gets built- but I also support rail and bus as viable options for those without cars or who want to get our of their cars with ever increasing, unregulated price gouging of gasoline to say nothing of urbanized global warming. Let's take I-5 widening out of the mix for starters. The cost to demo the hundreds and hundreds of homes makes this project a non-starter- why isn't anyone considering elevated light rail over the freeways we have? I would take that in a heartbeat...if only I could find a place to park at a station. Oh yeah..another good idea...make bigger parking lots at transit stations..if you want more people to use that type of transportation, we want to be able to drive to them and have a parking space.

George wrote on Apr 1, 2007 12:41 PM:Each Sprinter train of dual-DMUs has a capacity of 136 seated passengers, which works out to 8,704 people per day travelling between Escondido to Oceanside with 4 trains in operation over a 16-hour day ("Sprinter trains unveiled at Escondido ceremony" http://www.nctimes.com/articles/2006/08/30/news/inland/8_02_218_29_06.txt). Even if the Sprinter is wildly successful and carries double it's maximum rated seating capacity (don't laugh, I'm sure the planners are counting on this to occur), 17,408 people per day is far less than the 48,000 solo drivers the two added freeways lanes can handle when operating at **half** of maximum capacity. If you double the number of trains operating at twice their rated seating capacity (not likely, but let's keep going!) 34,816 passengers is still less than the two freeway lanes operating at **HALF** of maximum capacity. Do you notice a trend, here? Options are good but freeway expansion should not be ignored when money is tight. Congestion relief needs to be planned and implemented, especially since the vast majority of travellers are using those freeways. Do you remember David Druker's comment in SANDAG's transportation meeting back on December 8 -- "The bottom line is that we are not going to get rid of traffic congestion. The traffic congestion is going to be maintained."? (see page five of the Meeting Minutes at http://www.sandag.org/uploads/meetingid/meetingid_1442_6398.pdf). Compare that with the quote from Federal Transportation Secretary Norman Y. Mineta who said "Congestion is not a fact of life. It is not a scientific mystery, nor is it an uncontrollable force. Congestion results from poor policy choices and a failure to separate solutions that are effective from those that are not." (see: "National Strategy to Reduce Congestion on America's Transportation Network" http://www.dot.gov/affairs/minetasp051606.htm). Lastly, when gas goes above $4 a gallon, free-flowing freeways will be critically important so that the fuel isn't idled away in stop-and-go traffic.

Neighbor wrote on Apr 1, 2007 5:07 PM:David Druker has made even more outrageous comments at SANDAG's Transportation Committee Meetings. The minutes contained in the June 16, 2006 Agenda report the following from Druker: Councilmember Druker said we are going to have to make sure that transit has the highest priority rather than roads. In his opinion, we should never build another lane of freeway. You can find this comment on page 19 of the agenda which can be found at www.sandag.org

But didn't you know wrote on Apr 1, 2007 7:27 PM:that all the Charger fans will take all the seats up on the Sprinter? Ask Rocky Chavez. He claims 65,000 people will take mass transit to the games in Oceanside...guess that will mean 26 lanes of I-5, triple tracking the Sprinter and the Coaster and building massive parking garages. What a cool idea? I can hardly wait. Not!

Carter: wrote on Apr 1, 2007 8:11 PM: The same old story - didn't plan right and we are running out of money. But leave us to it and we will see that you have plenty of over runs and the voters will have to give us more money. Has there ever been a county construction job that didn't have over-runs;i.e., that finshed in the blue - or for that matter on schedule. Hep us all!

Heady wrote on Apr 1, 2007 9:21 PM:Please inform me. Does any of the gasoline taxes go towards road construction?

Walt B wrote on Apr 2, 2007 7:23 AM:For Heady; Not enough obviously. Despite voter's desire expresed about 5 years ago to keep gas tax out of general use funding, the recent financial crisis activated a loophole to raid the fund again. But there is some hope. Approved in November Prop 1A restricts gas tax to transportation, again with a hopefully smaller loophole for diversion to general fund uses. Unfortunately "transportation" includes mass transit, and part of the funding problem for roads is a politically determined significant amount of gas tax, originaly intended for roads, still gets diverted to much less effective mass transit.

Kris told you so..... wrote on Apr 6, 2007 9:41 PM:Gee...back in 1987 when the TranNet tax BARELY passed, there was a hard core group of us who told everyone the plan was flawed in that the only thing going up to pay for regional roads was the sales tax....How much have the fees gone up that developers pay to widen I-5 and I-15? Where do you think all the people are coming from that fill up roads and freeways?....NEW GROWTH...NEW HOMES...NEW CONDOS...etc. NEW GROWTH SHOULD PAY ITS FAIR SHARE OF TRANSPORTATION IMPACTS!

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