Pre­sidio Park­way, once called a ‘shin­ing ex­am­ple’, is over bud­get, over­due

The Tribune (SLO) - - News - BY WES VENTEICHER wven­te­[email protected]

For­mer Gov. Arnold Sch­warzeneg­ger cel­e­brated when the Cal­i­for­nia Trans­porta­tion Com­mis­sion voted, de­spite a host of warn­ings, to pay a con­trac­tor more than $1 bil­lion to build two tun­nels and a stretch of road out­side San Fran­cisco nine years ago.

Sch­warzeneg­ger said the project’s new ap­proach, which aimed to cap pub­lic ex­penses and shift re­spon­si­bil­ity to the pri­vate sec­tor, would serve as a “shin­ing ex­am­ple” of an in­no­va­tive way to im­prove the state’s high­ways while sav­ing tax­payer dol­lars.

Now the project, known as the Pre­sidio Park­way, is more than two years late and $208 mil­lion over bud­get. When the com­mis­sion ap­proved an­other $34 mil­lion in de­lay-re­lated spend­ing last month, two com­mis­sion­ers who orig­i­nally op­posed the project lamented their pre­dic­tions had come true.

“This has been a fi­asco from the be­gin­ning,” Com­mis­sioner Bob Al­varado said at the March 14 meeting.

Be­fore Sch­warzeneg­ger got in­volved, the project had an es­ti­mated cost of $473 mil­lion to $499 mil­lion. It would re­place a 1.6-mile sec­tion of U.S. High­way 101 south of the Golden Gate Bridge that had de­te­ri­o­rated since it was built in 1936 and no longer met earth­quake stan­dards.

The project was mov­ing for­ward dur­ing the re­ces­sion, when the price of ma­te­ri­als fell and con­trac­tors were hun­gry for work.

Sch­warzeneg­ger wanted to try some­thing dif­fer­ent, call­ing for a pub­lic-pri­vate part­ner­ship. Un­like other state high­way projects, which Cal­trans would de­sign, put out for bid and then pay a con­trac­tor to build, the part­ner­ship ap­proach would se­lect a con­trac­tor at a lower up­front cost to de­sign, build and main­tain the project for more than 30 years.

Pro­po­nents of Sch­warzeneg­ger’s ap­proach, in­clud­ing Cal­trans lead­ers, said it would give the project a bet­ter chance of be­ing com­pleted on time and on bud­get than the state’s tra­di­tional ap­proach while shift­ing risks of de­lays and fu­ture prob­lems to a con­trac­tor.

Cal­trans se­lected San Fran­cisco-based con­trac­tor Golden Link Con­ces­sion­aire to do the project for $1.1 bil­lion, and then asked the Trans­porta­tion Com­mis­sion and the Leg­is­la­ture to ap­prove the agree­ment.

The project be­came the first pub­lic-pri­vate part­ner­ship fol­low­ing 2009 legislation that au­tho­rized the part­ner­ships. The best fits for the part­ner­ships, an­a­lysts said, were projects that in­cluded up­front con­tri­bu­tions from con­trac­tors and con­tin­u­ous rev­enue streams, such as tolls. The Pre­sidio Park­way is near the Golden Gate Bridge toll, but the park­way is not funded by on­go­ing fees.

“We do not think the Pre­sidio project is a good fit for a ( part­ner­ship) pro­cure­ment ap­proach be­cause the project is al­ready very far along in its sched­ule and it does not rely on a toll or user fee to fund the work,” the Leg­isla­tive An­a­lyst’s Of­fice said in its anal­y­sis.

Now the state is pay­ing for the Park­way through 2043 from its gen­eral high­way ac­count.

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