Governator Busts open the Broken Bay Bridge
On the first day of February, 2005 the Senate Transportation Committee convened for a hearing at the California State Capitol to discuss the Bay Bridge.
The Transportation Committee, then chaired by Antioch Democrat Tom Torlakson was meeting to decide whether or not they should proceed with the self-anchored-suspension (SAS) “signature span” that had been chosen in 1998, or whether they should finish the bridge as a “skyway.”
Schwarzenegger favored the latter option, citing it as being cheaper and easier to build than the self-anchored suspension tower.
In either case, the Bay Bridge is woefully over budget, at this point somewhere close to $6 billion before the bridge is finished in 2015. The original budget was pegged at $1.285 billion for the whole bridge, with the “signature span” on one end joining to a viaduct section at the other. The “skyway”, which was the preferred choice of Caltrans and the Pete Wilson administration in 1997, was only supposed to cost $1 billion.
Committee chairman Torlakson opened the hearing at 9:27 a.m. by asking the following question: “How did we get to this point and how did the costs on the Bay Bridge skyrocket so high, and what should we do now?”
Vice-chairman, Republican Tom McClintock of Thousand Oaks, was blunt. Referring to the ballooning budget on the Bay Bridge, he called it the “fiasco of the century. We need to get to the bottom of how these decisions were made, and we have an obligatory opportunity to correct them.”
There was a corrupt process that attended the Bay Bridge decision-making process when it occurred in 1997-98 and it attended it still. This hearing hinted at what that corrupt process involves, but didn’t reveal it entirely.
The first witness to testify in front of the committee was Will Kempton, the new director of Caltrans. Kempton was leading the charge to abandon the SAS for the skyway. “We looked at the SAS complexity and the risk, and we concluded that the skyway is easier to build. The skyway will result in $300-500 million in savings and the bridge would be finished in 2012,” said Kempton.
The SAS proponents, led by San Francisco bridge design winner Donald McDonald, said this isn’t so. Their bridge is completely designed and approved and ready to go. “There’s nothing new about this kind of bridge,” says McDonald. “The SAS is a buildable bridge and it can be completed on time.”
Ephraim Hirsch, an engineer on the panel of experts who made the bridge decision in May of 1998, and supports the SAS said: “The SAS should be built. It’s the most prudent and seismically sound bridge.” Hirsch also characterizes the bridge decision-making process as “an open process”, a claim disputed by many of the witnesses who were present during the 1997-98 Bay Bridge design competition.
All the McDonald team is waiting for is somebody to bid on the tower. The previous bid of $1.4 billion to build just the tower section—more than the original budget for the entire bridge—has expired, and new bids would have to be invited. The SAS tower section is now projected to cost somewhere in the $1.9 billion range. The state audit attributes much of that cost increase to the SAS’s complex tower design.
The inside favorite to build the “skyway” was Kiewit-Pacific, which already has the contract to build the 1.2 mile “skyway” section currently under construction. “Nobody other than Kiewit is going to bid that viaduct. They already have a leg up,” said Robert H. Luffy, the CEO of American Bridge. His company has the inside track to build the SAS, perhaps in partnership with the Fluor Corporation of Orange County. It should also be noted that before he became director of Caltrans, Kempton was a vice-president with Kiewit.
In the seven hours of hearings held that day, the Bay Bridge contenders fought a heated battle over what went wrong, and how best to fix it. “It’s actually criminal the way this thing has been handled,” said SAS proponent Paul H. Mueller, a friend and supporter of McDonald..
Those words spoken by Mueller, an engineer, were probably the most accurate assessment of the whole process since the project first got underway in early 1997.
During a break in the Assembly Transportation Committee hearing, when Torlakson and McClintock were asked by this reporter if they were serious about investigating possible conflicts of interest, they both said that they would if there was evidence to support the allegation.
As Caltrans director and former Kiewit executive Kempton put it: “This is my watch. I am in charge. I am accountable.”
Those words might come back to haunt Kempton, Governor Schwarzenegger and others involved in the Transcam schemes.
The Bay Bridge has been a process rife with corruption from the beginning, and has proven a veritable gold mine for insiders. The enabling Bay Bridge legislation was a means of making a fortune in stock options for insiders, through the publicly traded company that was first in line for the Bay Bridge contract in 1997.
In order to understand how this den of corruption and profiteering came into place we have to go back to 1997, when the Bay Bridge design “competition” was convened. In doing so we discover something that Senators Torlakson and McClintock and many other legislators, law enforcement agencies, and public watchdog groups have ignored for the past ten years.
Like the Bullet Train in 1981-83, The Bay Bridge brouhaha began as a story. This one floated up in the San Francisco Chronicle on January 9, 1997.
A short front-page story on the left-hand gutter, co-authored by Eric Ingram and the Chronicle’s Capitol Bureau chief correspondent Greg Lucas, previewed the idea that a “signature span” cable-stayed bridge would be cheaper to build than the “skyway” that Governor Pete Wilson favored.
The story previewed a new Bay Bridge design. It was a 650-foot single-masted, cable-stayed bridge, built out of concrete. A cable-stayed bridge is one whose deck is fastened to a tower or other anchorage by a series of cables up to the bridge deck.
The story went on to say that Caltrans was chasing some deadlines that required it to move forward quickly. ”The issue has taken on added urgency because deadlines are approaching for awarding several multi-million [dollar] retrofitting contracts,” they reported, and said the Chronicle had managed to obtain a copy of the report, which was supposed to have been kept sealed.
A little less than two months later, on March 10, 1997, another front-page story was published in the Chronicle.
This was a two-page feature by Alan Temko, the Chronicle’s Pulitzer Prize-winning architecture critic. Temko’s story profiled a bridge “designed” by the late T.Y. Lin. Temko derided the skyway proposed by the Wilson crew as “a freeway on stilts.” He went on to state: “That’s why the Chronicle asked the renowned structural engineer T.Y. Lin to create a true alternative.”
This new bridge was also a concrete structure, a 600 foot single-mast, cable-stayed bridge that seemed a mirror image of the bridge published in the Chronicle two months beforehand. But the price was now $1.2 billion, a half-billion-dollar increase in two months, despite the fact that the bridge tower was fifty-feet shorter.
At any rate, the Chronicle’s lobbying for a new signature span that could compare with the Golden Gate Bridge was effective. By signing off on the terms of the Quentin Kopp bill, SB 60 in the spring of 1997, Wilson took the decision-making power over the bridge away from Caltrans and handed it to the MTC. This agency would then choose the design and award the contract.
In mid March of 1997, the MTC selected a chairperson for the new Bay Bridge Task Force. The person they chose was Mary King, an Alameda County Supervisor.
On March 28, 1997, the EDAP committee selection was complete, with Joseph Nicoletti chosen as the EDAP chairman. Nicoletti was an engineer with URS Greiner.
Outsiders who tried to enter designs for a new Bay Bridge weren’t greeted warmly.
“We heard that they were going to be selecting a bridge and that the process was supposedly open,” Sacramento bridge design team member Rick Feher told me. “An engineer named Brian Maroney, who was the Caltrans project manager on the Bay Bridge, told us to call the MTC. Marjorie Blackwell, the MTC spokesperson, told us that she didn’t know anything about it. This was on April 28. Several calls later, Daniel [Coman, Feher’s partner] reached Steve Heminger of the MTC, who said he’d Fax us the criteria, a document which was apparently drafted April 29.”
The Request for Proposals, or RFP’s as they’re known in engineering parlance, was for a supposedly open competition that would be convening two weeks later. It was hardly enough time necessary for other engineering and design firms who were out of the California loop to prepare proposals for the upcoming “competition.”
When I spoke to Denis Mulligan, then a spokesperson with Caltrans, he took issue with the Coman-Feher charge of an unfair process. So did MTC Bay Bridge Task Force chairwoman Mary King, and others.
It would be one thing if criticism of the decision-making process was coming only from the losers, designers like Coman-Feher, or Dr. Abolhassan Astaneh-Asl, an engineering professor at U.C. Berkeley. But much of the criticism regarding this process came from members of EDAP itself. Some said the process was a stacked deck that constituted a clear conflict of interest, because fellow EDAP members were judging their own designs.
“Nobody outside of the Caltrans loop was allowed onto the committee,” one EDAP member, a San Francisco architect named Jeffrey Heller, told me. “We said this process needs a whole lot of improvement. Some of us on the panel kept pressing for better designs and better concepts, but we were hopelessly outgunned by the insider, old boys club.”
EDAP member Steve Thompson, a Mill Valley architect, recalls the first EDAP meeting, held in May 1997. “When we first impaneled EDAP and polled the members of the group as to who had a potential conflict of interest regarding bridge designs that they had entered in the competition, at least two-thirds of the members raised their hands and said that they had a proposal in front of EDAP.”
Astaneh and Thompson told me they stumbled upon a private meeting which was indicative of how the competition was a closed shop to all but insiders. “The Caltrans Peer Review committee (a group within EDAP) was holding meetings with design team members without the rest of us on EDAP being present,” said Thompson. “These were people from the same companies as those putting forward proposals, and they were closed to any but those from the firms on the panel.”
Elihu Harris, who was then Mayor of Oakland and a Bay Bridge Task Force committee member, echoed Thompson’s comments. ”There was a definite conflict of interest. I wasn’t satisfied that there was an open process, and I felt at odds with this whole thing right from the beginning. It was a preordained conclusion we were being handed. This is a bridge to the past, not to the future,” Harris told me when I interviewed him at his office in 1998.
At that first EDAP meeting in May of 1997, the agenda alone told the tale. First the EDAP committee received a presentation on cable-stayed bridges. Then the Ventry team’s Mark Ketchum, who worked on the design previewed in the January 9, 1997 Chronicle float story, gave a presentation. Ketchum was followed by his mentor, T.Y. Lin, who was also a member of EDAP. The next witness was an engineer from Parsons-Brinckerhoff, followed by a representative from URS. At the end of the day, EDAP tossed Astaneh a bone and let him speak about his steel bridge retrofit. But as Heller told me: “It was clear that this panel was leaning towards a cable-stayed bridge.”
As on the bullet train in 1982, Calrans had been cut out of the loop. And like Bruce Young’s spot bill, AB 3547 in 1982, Quentin Kopp’s 1997 spot bill, SB 60, seems to have been the vehicle for a few sharp investors to make serious profits. The company that made these windfall profits was URS Greiner, an engineering & design company then controlled by Richard C. Blum, U.S. Senator Dianne Feinstein’s husband.
The language in SB 60 was amended to provide bridge toll surcharges for seismic retrofits. It also all but named the MTC/EDAP Bay Bridge, which was yet to be officially selected. As the bill itself states, “$80 million will be provided for a cable suspension design” on the Bay Bridge. In short, it named the two finalists in the MTC-EDAP design “competition”: the T. Y. Lin designed “cable”-stayed bridge and the Donald MacDonald designed self-anchored “suspension” bridge. It must also be remembered that URS was first in line for the no-bid Bay Bridge contract, # 59N770, if the bridge was contracted out to a private company.
Further underscoring the significance of the stock connections are the following points. (1) After the amendments were added to SB 60 in late spring of 1997, URS stock shot up from 10 to 18 1/2. (2) URS stock fluctuated according to changing legal perceptions as to whether “contracting out” was still in effect. When it was allowed, URS stock rose. When Sacramento Superior Court Judge James Ford prohibited the practice, in August 1998, URS fell. When Judge Ford exempted the Bay Bridge from his ruling, URS rose again.
During the Bay Bridge selection process, board members of URS Greiner issued themselves almost 5 million shares of stock in the form of 10K options, first in March of 1997, then again in March of 1998. As noted above, U.S. Senator Dianne Feinstein’s husband, Richard C. Blum, was then the primary shareholder in URS.
The Selling Shareholders Amendments filed with the SEC regarding the first stock issuance of URS stock were for 2,933,748 shares of penny stock issued to BK Capital Partners I, II, III and IV, four companies owned by Richard Blum and the billionaire Bass Brothers, from Fort Worth, Texas.
The URS stocks were issued March 25, 1997, three days before Joseph Nicoletti of URS was named chairman of The Bay Bridge EDAP committee. The Selling Shareholders Amendments filed with the SEC stipulated that the shares could be sold at market rate, and that those who were issued the stock were acting as their own underwriters, and were entitled to all the profits derived from their sale.
As the document states under the section titled “Risk Factors” in the subtitled section “Dependence upon Government Contracts”: “‘The Company derives a substantial portion of its revenues from local, state and Federal government agencies. The demand for the Company’s services is directly related to the level of funding of government programs that are created in response to public concern with rebuilding and expanding the nation’s infrastructure and addressing various environmental concerns. The Company believes that the success and further development of its business is dependent, in significant part, upon the continued existence and funding of such programs and the Company’s ability to participate in such programs… A substantial portion of the Company’s current and anticipated work is related to government contracts.’”
The amendment also stated that the four BK Capital companies intended to sell all the shares they had issued themselves.
The companies made a profit of close to $74 million during the Bay Bridge process. Some of Blum’s fellow URS board members exercised similar SSA’s filed with the SEC in the spring of 1998 during the final days of the MTC/EDAP selection process. Their profit taking ranged from URS CEO Martin Koffel’s $10 million, to Treasurer Kent Ainsworth’s $3.36 million, down to URS board member Joseph Master’s $547,000. The 1.1 million shares of URS stock issued to eight URS board members had a value of $25 million in less than six months.
Added to the BK Capital Partners’ $74 million profit and the $390 million increase in outstanding revenues of URS Greiner reported between 1998 and 1999, this demonstrates how a transportation infrastructure selection process can produce fantastic profits.
The Bay Bridge RFP’s stipulated that seismic safety was the number one priority for the new bridge design. It says precisely this in the RFP that came out in the spring of 1997. In the section titled “Design Criteria,” the second paragraph begins “Post-Earthquake performance of the new structure should be high.” One of the members on EDAP was the late Bruce Bolt, a U.C. Berkeley professor who specialized in seismology. Yet, I never once heard the EDAP committee fully address the seismological concerns raised by a number of critics during the hearings. Nor was any empirical evidence on post-earthquake performance ever presented to the public at the EDAP hearings I attended. “Seismic safety and proper design and engineering weren’t adequately examined,” said Elihu Harris. The attitude at EDAP, which I heard expressed numerous times, was that the engineers would work out the seismological problems later.
What’s important to understand regarding the seismic issue is the joining of one bridge typology to another. The eastern span of the existing Bay Bridge was a cantilevered truss section, which joined a viaduct section at an angle. This is where the bridge failed during the Loma Prieta quake in 1989, at a juncture called E-9. Now EDAP was in the process of doing the same thing, by picking another bridge that was really two bridges—a cable-stayed bridge joining a viaduct, which would join at an even greater angle than the original one. “That’s where the transfer point in an earthquake would be,” EDAP chairman Joseph Nicoletti admitted to me when I interviewed him at URS’ California Street office on June 26, 1998. “The tower is the thing that will take the seismic jolt.” Bridge designer Donald McDonald admitted the same thing when I interviewed him at his San Francisco office in the spring of 1999. “The transfer point is where the greatest impact would take place, that’s true, but this bridge will withstand the greatest seismic event foreseeable. We’re working that out with further design improvements,” McDonald told me.
But the design eventually chosen by EDAP was never submitted for shaker-table testing or computer modeling to show its expected seismic performance. Not until the selection was made was the modeling done, and it wasn’t shown to the public. It was shown only to the members of EDAP and the Bay Bridge Task Force on a private plane, as they cruised above the Bay Bridge, a source on EDAP told me.
During the rest of the Bay Bridge EDAP hearings, through May of 1998, I watched EDAP try to shoehorn the cable-stayed and viaduct Bay Bridge through, using the Chronicle to apply pressure whenever it was needed. As EDAP vice-chairman John Kriken admitted: “There were a lot of institutional forces driving this and the San Francisco Chronicle was very much in the forefront of this process.”
The new Bay Bridge has so far cost Californians over $5 billion, quadruple the original projected cost of the “skyway” that Alan Temko dismissed as a “freeway on stilts.” The construction has been funded out of bridge toll surcharges created by passage of the Bay Bridge bill, SB 60, whose legality is also questionable. Passed in 1997, it allows the MTC to impose bridge toll surcharges on the seven Bay Area bridges under its authority.
But Proposition 192, passed by the California electorate a few months earlier in November, 1996, specifically forbade bridge toll surcharges and mandated that seismic retrofits of bridges be paid for with state bond money. A state initiative like 192, passed by California’s voters, usually takes precedence over a statutory law passed by the legislature, like Senator Quentin Kopp’s SB 60. Strangely, the Planning and Conservation League, which sponsored 192, never bothered to challenge the legality of SB 60 in court. When I asked Jerry Meral (then president of PCL) why he never pressed the issue Meral shrugged: “I was too busy and there were other issues we’d moved on to.”
Six months after the Bay Bridge show officially concluded in June of 1998, there was some new action. On February 24 of 1999, chairwoman Mary King of the Metropolitan Transportation Commission’s Bay Bridge Task Force, the woman who set up EDAP, convened a special meeting to address the concerns of the U.S. Navy, Mayors Willie Brown of San Francisco and Jerry Brown of Oakland, and the Bay Area’s Congressional delegation. The Task Force meeting at the MTC office in downtown Oakland was held to discuss the proposed alignment route chosen for the new eastern span of the bridge. The meeting had been sought by the Bay Area’s five-member congressional delegation, including U.S. Senator Dianne Feinstein.
Signed by Senators Barbara Boxer and Dianne Feinstein, and Representatives Nancy Pelosi, Ellen Tauscher and Congressman George Miller, the letter said they “wanted to achieve community consensus” in regard to the project and directed MTC to consider the “redevelopment and land use impact issues of the local communities.” They also wanted the MTC to look at a bridge using the southern alignment that San Francisco Mayor Willie Brown then said he favored… again. On the day scheduled, not one of them bothered to show up for the meeting they had requested.