Why are Bay Area subway and rail costs among the highest in the world?

Article by Andy Bosselman published at Curbed San Francisco

Shortly before the Bay Area appeared on lists of the worst traffic in the world, the region set an ambitious plan to move millions of daily car trips to public transportation by 2040. But local transit agencies pay some of the highest subway and train construction costs in the world, which will limit the impact of $21 billion the nine counties pledged to expand the transit network.

“If your costs are higher you will build less,” says Alon Levy, a mathematician turned transportation expert (and Curbed contributor). His simple cost-per-mile comparisons of subway projects expose the astronomical costs of building urban rail in the United States.

When the Salesforce Transit Center opens in San Francisco this summer, a new tunnel will be needed to connect it to the current Caltrain terminus in SoMa. The project, known as the Downtown Extension, is estimated to cost $3 billion for each mile of subway, six times more than the average outside the United States.

The Central Subway, a 1.7-mile tunnel that will connect Chinatown to Fourth and Brannan Streets, is a relative bargain at $923 million-per-mile. But elsewhere in the world, new subways cost half as much.

Rail construction costs compared

  • $3 billion per mile: SF Downtown Extension (DTX)
  • $923 million per mile: SF Central Subway
  • $780 million per mile: BART to San Jose
  • $451 million per mille: Tokyo Metro Fukutoshin line
  • $450 million per mile: Paris Line 14 extension
  • $64 million per mile: Barcelona Sants tunnel

Recently, Levy’s numbers attracted the attention of the New York Times, whose reporters dove deep into an investigation that debunked nearly all of the reasons New York officials offered to justify exorbitant subway construction costs there. In March, Congress launched an investigation into why urban rail construction costs dramatically more in the U.S. compared to many other developed countries.

In an interview focused on Bay Area transportation, Levy criticized the high costs of several local rail projects and offered ideas for reform from countries where costs are lower. But poor planning is an even more costly problem, he says, which has resulted in local agencies spending billions on unnecessary infrastructure.

In many countries, when passengers arrive at a train station they can step onto a waiting bus for the next leg of leg of their journey. But in the Bay Area, when a rider steps off a train operated by BART or Caltrain, a wait of nearly an hour may be required for a connection to a bus from another agency, like Muni, AC Transit, or SamTrans.

In the Bay Area, an unusually large number of transit agencies, 28 in total, often fail to coordinate routes and schedules. This leads to a slow and clumsy experience that many would-be riders avoid.

This disorganization is costly too. As transit agencies compete for riders, they spend extravagantly on new infrastructure that syncs poorly with the larger regional network. BART’s extension to Millbrae Station offers an example.

Costly turf war in Millbrae

Caltrain has provided service to San Francisco from Millbrae Station for years. But BART added service there as a part of its $1.6 billion expansion to San Francisco International Airport.

“Caltrain and BART are fighting for turf,” says Levy.

Today, BART serves roughly 7,000 passengers per day there. But when the agency made a case for the extension, it projected four times more passengers. Levy argues that decisions about where to expand transit service should have considered needs of the entire region, not just a few thousand BART riders.

The Milbrae BART expansion was overbuilt too. With service to the station every 15 minutes at peak hours, a single track would have been enough, says Levy. But BART built three, a costly decision that would make its southward expansion possible.

“BART has fantasies about ringing the Bay,” says Levy. “Millbrae is designed to make the future takeover of Caltrain easier.” (There are no plans for a takeover).

This battle between BART and Caltrain could also add to the cost of building California High-Speed Rail. With BART occupying so much space at Millbrae Station, the upcoming bullet train may need to go underground with an expensive tunneling project.

Levy argues that all three railroads could share an above-ground station area. “But BART doesn’t like sharing.”

To make smarter investments in future construction, Levy agrees with local transportation advocates who have been “banging their heads against the wall” as they call for transit agencies to coordinate regional planning.

In many countries, including France, Germany, and Switzerland, regional planning organizations are charged with creating well-coordinated network that offers a seamless experience between different transit agencies. They design rail, subways, tram, and buses lines to work together.

In Paris, a single planning organization, the RATP, dictates routes and spending for new infrastructure. Individual transit agencies operate trains and buses, they do not plan or construct their own expansions.

Transit center rail extension

To bring rail to the new Salesforce Transit Center downtown, the Downtown Extension will create a short subway from the San Francisco Caltrain station. But at the cost of $3 billion per mile, only the East Side Access Tunnel in New York is more expensive.

“Constructing in San Francisco and the Bay Area is very complex for a number of reasons.” says Christine Falvey, a spokesperson for the Transbay Joint Powers Authority, the agency building the center.

When asked for specific reasons, Falvey did not respond.

“I want to see a detailed explanation for why they couldn’t do the entire thing for $700 to $900 million,” said Levy after looking at the estimate for the project, which totals $4 billion.

In April, the city proposed an additional subway that would add 1.3 miles of tunnel south of the Downtown Extension, which would prevent train traffic from blocking road access to Mission Bay. Together, the two projects are estimated to cost $6 billion.

Central Subway

When San Francisco’s Central Subway opens in 2019 (or later), its cost will total $923 million per mile. But in Paris, the Line 14 subway is being extended for half as much, $450 million per mile.

“The more accurate peer comparison is with other urban subway projects such as those now underway in New York City and Los Angeles,” says Paul Rose, spokesperson for the San Francisco Municipal Transportation Agency, which is building the Central Subway.

In New York, recent subway projects have ranged from $1.5 billion to $3.5 billion per mile. In Los Angeles, the Purple Line extension will add up to $800 million per mile.

Rose cited reasons for high costs in San Francisco, including building three stations and tunneling under a big city. But in Paris, the 14 Line has stations, too, and the city is three times as dense.

Levy acknowledged that the Central Subway must dig deep as it passes under the Market Street tunnels that BART and Muni use, which contributes to the price. However, he insists it costs far too much.

“The Central Subway is comfortably too expensive by a factor of two.”

Counterproductive cost control practices

California applies two cost control methods that may actually drive up costs: awarding contracts to the lowest bidder and extensive outsourcing. Both practices are handled differently in countries with lower costs.

California law requires awarding nearly all construction projects to the lowest bidder. That benefits Tutor Perini, a construction company that builds many public projects in California. The firm earned a reputation for low-balling bids to win contracts and then going massively over budget, an allegation that Ron Tutor, the firm’s owner, denies.

Since 2000, his firm has cost Bay Area governments $765 million more than expected on 11 major projects.

In 2002, after an expansion at San Francisco International Airport went over budget by $360 million, City Attorney Dennis Herrera sued Tutor Perini for fraud and tried to have it banned from bidding on city projects.

But not long after Tutor Perini settled the SFO lawsuit, the city awarded it an $840 million contract to for work on the Central Subway. In December, the firm demanded an additional $112 million to complete the project.

In April, the city ordered Tutor Perini to rip out much of the steel track it laid because the firm deliberately substituted weaker rails than those specified. The San Francisco Examiner reported that this is likely to delay the opening of the subway and that Tutor Perini may file additional claims to recoup their costs.

Levy says agencies should disqualify contractors who engage in dodgy practices. One way to do that would be to follow an example set in Spain, where regional governments award contracts by weighing factors other than price, like technical merit and speed of delivery.

But in California, much more than construction is outsourced. Large, politically-connected construction firms routinely provide initial designs, cost estimates, and construction management.

For the Downtown Extension, Parsons, a construction firm with projects in 27 countries, provided much of the project’s initial estimate and engineering. Even if the firm is excluded from a project it estimated, the practice is a conflict of interest: The entire industry benefits when public projects cost more. Private construction firms make money by building. When they provide engineering services, they have little incentive to pursue innovation or efficiencies that would save taxpayers money.

Levy highlighted the outsourcing practices of the Madrid Regional Government, which undertook an immense subway expansion between 1995 and 2003, as an example of good governance.

According to a report about the project, in eight years the region built 83 new miles of rail and 76 new stations, much of it tunneled, and all for about 3 billion euros (2003). A team of nine, who were direct employees of the Madrid Regional Government, handled all project planning and management.

Rethinking regional planning and construction costs

As the population of California reaches nearly 40 million, Bay Area transit agencies are failing to make public transit an attractive alternative to driving: more people are crowding onto roads and bus and rail ridership is declining.

If the Bay Area is serious about moving more people onto public transit, the region should bring construction costs under control and coordinate service between agencies better, says Levy.

He believes that construction costs could be brought in line with those in Canada, or France, and the money saved would allow more new transit infrastructure to be built.

A new report from the Regional Plan Association of New York offers a sweeping suggestion: “The entire process of designing, bidding, and building mega-projects needs to be rethought and reformed top-down and bottom-up.”

But if reform is considered, it may have to come through an unusual degree of political leadership. As the Bay Area weathers another round of newspaper layoffs, a new study found that in places where the watchdog role of newspapers diminished, government costs go up.