The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
Sacramento, California 95814
Dear Governor and Legislative Leaders:
As requested by the Joint Legislative Audit Committee, the California State Auditor presents this audit report concerning the Toll Bridge Seismic Retrofit Program (seismic program) including work to replace a section of the San Francisco–Oakland Bay Bridge construction project. This report concludes that the State could save millions of dollars annually by mandating oversight and risk management lessons learned from the seismic program.
We found that the effective use of oversight and risk management in the $9 billion seismic program provides a valuable lesson for the State. In 2005, concerned about escalating costs, the Legislature created the Toll Bridge Program Oversight Committee (Oversight Committee) to oversee the seismic program, and required the California Department of Transportation to develop a comprehensive risk management plan. These two factors minimized delays and controlled costs. For example, Oversight Committee decisions resulted in cost avoidance and savings totaling at least $505 million. Moreover, comprehensive risk management played a critical role in preventing more than $455 million in potential costs and seven years in probable delays. With more than $600 billion in transportation infrastructure projects projected to occur over the next several decades in three of the State's largest metropolitan areas alone, a lack of sufficient oversight and risk management could result in significant delays and cost escalations that taxpayers ultimately would bear. Requiring early oversight committee involvement and risk management plans for major publicly funded transportation projects could mitigate these risks and ensure transparency and accountability throughout California.
Further, we found that the seismic program will end in 2019 roughly on budget at a cost of about $9 billion; however, maintenance and debt service costs will continue. The seismic program experienced significant cost growth between 1997 and 2005, before additional oversight helped to stabilize the cost. Revenues from tolls on San Francisco Bay Area bridges, as well as debt backed by that revenue, accounts for nearly two‑thirds of all funds for the seismic program and will pay for maintenance costs in the future. The Bay Area Toll Authority (Toll Authority) is responsible for administering toll revenues. As of the end of fiscal year 2016–17, the Toll Authority projects that its remaining debt service payments—principal and interest on all of its current bonds—through fiscal year 2055–56 will total $18.7 billion. The Toll Authority had also projected the possible need for a toll increase in fiscal year 2026–27; however, it will be reevaluating its projections in light of a recent voter-approved measure to increase tolls to fund a variety of transportation projects.
ELAINE M. HOWLE, CPA
California State Auditor