Introduction
The Sound Transit Citizen Oversight Panel (COP) is a 15-member volunteer body appointed by the Sound Transit Board to oversee and monitor the implementation of Sound Move, the voter-approved regional transit plan. This is the Panel's ninth semi-annual report and covers Sound Transit's performance during the first half of the year 2001.
Summary of Sound Transit Performance
Sound Transit is almost halfway through the ten-year implementation period originally envisioned in the Sound Move plan. Much has been accomplished and many lessons have been learned in four and a half years. Management failures that emerged last year are being addressed with new leadership and with a reorganized agency. However, during the first half of 2001, new obstacles appeared on the scene, affecting the future viability of Link light rail and Sounder commuter rail. Thus, of the four key topics on which we are reporting to you, two are positive and two are concerns:
Major Themes for This Reporting Period
Strengthened leadership and management
COP members noted improvements in previously- identified management and oversight problems. Management has reorganized a number of key functions including project control, communications, government relations and policy and planning. Project controls are being imbued with a new sense of management discipline and a firm timeline for improvements is in place. Observers have seen significant steps forward in rebuilding relationships with key stakeholders and communities. A strategic communications plan has been developed and is being implemented, with a focus on proactive outreach to the media. COP has been impressed with the new forthright and open manner of presenting information to the Board, the press and the public and will be observing the agency's progress toward implementing these plans and controls in future reports.
Board members have been highly engaged, debating issues, providing supporting arguments for their positions, and asking detailed questions of staff. This new level of dialog signals a much higher ownership of the decisions the Board is making.
The Board acted expeditiously to appoint a new permanent executive director for the agency. COP members are confident in Joni Earl's management capabilities and applaud the Board's choice in selecting her.
Six months ago, the Panel identified these issues of leadership, management and oversight as vital to restoring the credibility of Sound Transit and as the agency's highest priority. We were happy to note these improvements and felt the agency was beginning to turn the corner on issues of internal discipline and external trust.
Link alignment decisions
Without expressing a view on a preferred Link alignment, COP members wanted to remind the Board of its public commitment to a full evaluation of all alternatives. Such an evaluation has not yet taken place and COP members are concerned that haste and political considerations are driving the decision process.
In observing the process of Board deliberation since the Inspector General's report was released in April, COP has been concerned about the repeated changes in the work programs for framing and analyzing options. There have been several perceived shifts in course and Link staff did not have clear direction from the Board about where to focus efforts. That lack of direction stemmed in part from a lack of consensus on the Board but also from a failure to insist on evaluation criteria as the basis for decision-making. At its June 28, 2001 meeting, the Sound Transit Board took a number of actions, directing numerous new studies and evaluations. It elected to proceed with a first-phase focus on the Link segment between Convention Place Station and South Henderson Street; to continue to evaluate joint use of the downtown Seattle transit tunnel; and to develop a conceptual route for a South Lake Union alignment north of downtown.
On June 28th, COP wrote to the Sound Transit Board of our concern about the evaluation and decision-making process for the Link alignment. We expressed our concern that the Link alignment was in danger of succumbing to a sense of urgency to make quick decisions. We urged you to uphold a process of evaluating alternatives that is rigorous, fair, open and complete. In our letter, we stated that we believe that the First Hill/Capitol Hill alignment confirmed and adopted as the Locally Preferred Alternative in 1999 was firmly rooted in an evaluation of alternatives base on discrete criteria such as ridership, cost and cost-per-rider and found to be the best among the available alternatives. Any new analysis conducted today can and should apply those and additional criteria, including the potential for maximizing the federal partnership and assessments of new environmental, legal and financial risks compared to the known ones.
COP is concerned that the recent Board decisions may represent yet another course correction taken without the benefit of rigorous analysis using comparative criteria.
Members of the public and the press have on occasion accused Sound Transit of having "tunnel vision." This may be a clever sound bite implying a limited ability to see and evaluate alternatives, but the reality is that the Capitol Hill/First Hill tunnel alignment was chosen based on exhaustive research and analysis over many years, the best professional judgment of dozens of transportation professionals and the input of hundreds of citizens, community groups and public officials. If in fact a different alignment, such as the proposed South Lake Union corridor, should be determined to be superior, that must be demonstrated with data, facts and comparative evaluation criteria.
Finally, we would like to offer a few words on the Project Review Committee (PRC) for Central Link, appointed by the Board to advise it on the north alignment. In its letter of June 27, 2001, the PRC supported a south focus segment terminating short of the downtown Seattle tunnel. The PRC also supported terminating work on the existing north alignment and reevaluating an alignment through South Lake Union. The rationale for these recommendations was based on the belief that the adopted alignment through First Hill/Capitol Hill was no longer feasible.
The PRC was formed in early 2001 with the intent of providing technical review and guidance to the Board on whether the costs of the north alignment could be brought down and the project made technically viable. That original intent was fully in keeping with Sound Move and honored the many years of technical and community effort already expended. Over a number of months, the PRC's membership and mandate changed and the group prepared a set of wide-ranging recommendations in a short period of time and based on very limited information and analysis. The PRC did not investigate its assigned mission of finding cost reductions on the existing north alignment. Further, the PRC did not articulate the very significant risks and trade-offs it was assuming in its recommendation to abort the existing north alignment for investigation of a new one.
While COP believes that the financial uncertainties for Link have increased, the Board and staff should be cautious in discarding the work of ten years and tens of millions of dollars of planning, engineering, public involvement and numerous reviews. Sound Transit should analyze the financial assumptions underlying the adopted MOS1 to determine if it can occur under some new set of assumptions. The Board should weigh this analysis against the other proposals being considered and against the risk of starting from scratch with another segment, with its whole new set of technical, environmental, legal and community factors.
- Recommendation: We urge staff to prepare a framework of performance criteria for the Board's use in evaluating and comparing all potential Link alignments. The Board should recommit to using such criteria in a full, fair and open process for selecting alternatives.
- Recommendation: In the past, the Panel has expressed concern about Board actions that direct staff to prepare costly studies of alternatives that are unlikely ever to be implemented. Such studies are often intended to stave off the inevitable decision to disappoint some interest group advocating an option that benefits only a small segment of the public. COP would again like to caution the Board against wasteful studies of alternatives that can clearly be anticipated would not withstand scrutiny.
- Recommendation: The Board should clarify and refocus the charter of the Project Review Committee. The PRC's role as technical reviewer should be sharpened and it should be directed to use the criteria the Board identifies for its own evaluation.
Sounder development
Sounder commuter rail is now carrying almost 2,200 riders a day on two round trips between Tacoma and Seattle. The service is popular with riders because of its reliability and convenience. However, Sounder implementation has suffered from repeated cost increases and schedule delays. Originally, these were attributed to the passage of Initiative 695 and to difficulties reaching agreement with the Burlington Northern Sante Fe Railroad, which owns the tracks on which the system operates. After nearly three years, those arguments can no longer hold in explaining further budget and schedule slips.
The south segment from Tacoma to Seattle, despite a comprehensive "cost-to-complete" estimating effort just a few months ago, has costs continuing to rise above those estimates. The north segment between Everett and Seattle may be between $75 and $100 million short of the needed funds. (Original revenue estimates are short due to the $46M loss of state funds and a $30M loss of Amtrak funds. Original cost estimates will likely increase by many millions due to the need for a new wetlands mitigation plan and site, and a significant conflict over the station siting and design in Mukilteo.)
The schedule for all segments is also slipping further behind. The projected date for added service on a third daily round trip from Tacoma to Seattle has further slipped from the first quarter of 2002 to the second or third quarter of 2002. Service to Everett is unlikely to begin before the fourth quarter of 2003, if then. As of our last report six months ago, COP was informed that Seattle-Everett service could begin by the end of 2002. Several months later we were told service could start in the first quarter of 2003. In less than six months, then, COP has been given three separate estimates (spanning an entire year) of possible start-up dates for service to Everett.
We recognize that many factors in the Sounder environment are difficult to control. The original Sound Move cost estimates and schedules, we now know, were unrealistic. Conflicts with freight movement impinge on important economic interests in the region that must be protected. Some local jurisdictions may be using the permit process to negotiate for local improvements. Safety conflicts with street-level grade crossings have had to be resolved in several places. Wetland mitigation is proving to be a highly challenging process on the north segment.
Addressing such project issues should be inherent in a capital project management effort and strategy. COP acknowledges all of these factors, yet continues to be concerned and frustrated with apparent poor project management and poor communication as factors that contribute to Sounder schedule delays and cost increases.
COP is concerned that there may be an incentive for staff to delay service expansion so long as the Board is willing to authorize the transfer of operational cost savings to address capital cost shortfalls.
- Recommendation: Sounder staff should prepare a realistic, full and open assessment of risk factors and issues that may affect future Sounder budgets and schedules. The Board should require staff to clearly identify cost and schedule risks associated with individual elements of the Sounder program and develop fallback options and alternatives for consideration if the complete Everett-to-Lakewood Sounder system is no longer affordable.
- Recommendation: The Board should review these risks, along with current schedule and budget projections, and hold the Sounder management and program development team accountable for delivering the service according to a firm plan.
Regional Express
COP continues to view with admiration the work and accomplishments of the Regional Express department which is responsible for operating 14 express bus routes and a portfolio of 48 capital projects. Despite an enormous reliance on external partners such as WSDOT, local transit agencies, and local jurisdictions to get its work done, this department has continued to make strides in delivering its program.
One achievement noted by COP members was the adoption of a Sound Move amendment, substituting corridor improvements between Redmond and Kirkland for a second HOV ramp that was found to be of limited benefit. Instead of a costly freeway facility on I-405, Sound Transit will make improvements to enhance transit speed, reliability and access for Route 540 service through intersection improvements, transit signal priority installations and queue by-pass lanes. Support for this change was developed over three years through a collaborative process with all affected parties and it was adopted unanimously by the Board.
Other Noteworthy Topics
Communications
Sound Transit has made impressive strides in reorganizing its communication functions under a single, newly-coordinated department and in developing more effective communications strategies. An example of the agency's quick and proactive communications was its response to the inaccurate May 4, 2001 Seattle Post-Intelligencer article alleging knowing concealment of Link cost information. Within a few days, Sound Transit prepared detailed documentation rebutting the article's claims and succeeded in obtaining a very rare front-page retraction.
Government Relations
In its last report, COP urged Sound Transit to develop an effective strategy to succeed in Washington, D.C. The government relations function has been reorganized, and relations with the Congressional delegation, the Federal Transit Administration, the Inspector General and other influential entities are being rebuilt.
Regional Fund
Sound Move created a Regional Fund that was to be funded through a percentage (up to 10% per year) of local tax revenues contributed by each of the five subareas and interest earnings. The Fund was to be used to fund system-wide elements including agency administration, research and development of new technology, the fare integration program, planning for a future capital program and contingencies that might occur due to shortfalls in revenues or overruns in expenditures.
There is an ambiguity in how the Regional Fund language can be interpreted. COP members have understood this provision to mean that a fixed percentage of subarea revenues would be contributed for regional purposes, and all interest earnings accrued from Sound Transit cash deposits would be accumulated in the Regional Fund and made available for disposition by Board action. Instead, it has been the agency's apparent practice to expend all interest earnings in the Regional Fund first each year, then calculate an annual percentage to be contributed by each subarea, based on the Regional Fund shortfall.
In at least one specific instance-Sounder's agreement with BNSF-a projected $50 million in interest earnings have been allocated directly to capital projects without clearly calling out the policy decision for Board information. Interest earnings that were intended to support region-wide purposes are instead being allocated to a single project.
The concern COP members are raising is that these practices appear to circumvent the intent of the Regional Fund provision of Sound Move, which was to create a regular fund source for system-wide purposes. Instead, these practices reduce Board discretion and policy options and contribute to fragmentation and the emphasis on purely local interests.
- Recommendation: The Board should clarify the intent of the Sound Move sections on subarea contributions and the use of interest earnings in the Regional Fund and the Board's role in allocating those funds. Consider developing an annual Regional Fund budget that clearly identifies revenues, expenditures and fund balances.
Recap of Selected Previous COP Recommendations
COP was pleased to note that most of the recommendations made in its Year-End 2000 report were addressed and contributed to the improved performance and credibility of the agency. A few of our recommendations remain open with work yet to be done.
Financial Plan
In its last report, COP recommended that Sound Transit provide the public with a complete and easy-to-understand breakdown of current cost estimates and all assumptions used in forecasting costs. We also asked for a complete explanation of contingencies and reserves and the policies governing them. COP recognizes that the program has been evolving and that estimating costs for an uncertain project is difficult. Developing a long-term financial plan for a project not yet designed will require many assumptions and uncertainties.
However, the Sound Transit Board is being asked to make decisions and the public is being asked to trust a program with almost no current published financial information. Only the highest level revenue and cost ranges are being used in Sound Transit briefing materials. Elsewhere, potential projects are evaluated using a project pro forma, a detailed spreadsheet of year-by-year sources and uses of funds. Assumptions are clearly described and illustrative scenarios show the bottom line under high, medium and low assumptions. Sound Transit has never published such detailed information despite requests for it from many sources. ·
- Recommendation: COP again recommends that Sound Transit publish detailed cost breakdowns for its capital projects. Further, we urge that a simplified pro forma format be developed to show detailed year-by-year assumptions of fund sources and uses. COP believes such information would provide for better-informed evaluation of alternatives and greater public trust.
Performance audits
COP found in its last report that the performance audits promised in Sound Move had not been an effective tool in identifying or correcting any of the known problems in project management and project control. It recommended that the performance audit function be separated from the financial audit function to step up its capability to assist the organization in solving problems. Although such a separation has not occurred, the agency acknowledged a need for improvement by forming a new Audit and Reporting Subcommittee at the Board level.
The committee met for the first time in April and directed that a performance audit be conducted examining the functionality of Sound Transit's project control systems and practices. That direction was the result of discussion by committee members of a number of alternative audit topics and was selected as forward-looking in its potential to help strengthen the agency's management. Instead of proceeding with that audit, the Board in May authorized an audit of Link light rail cost estimates, an expensive undertaking that will likely yield little useful result because the past errors in Link estimating are already well-understood.
Project control
In a number of recent communications to the Board, COP has expressed concern about delays in the full implementation of the agency's integrated financial and project control systems. Staff has made progress in this area and project managers in all three lines of business are in the process of entering and updating project data in OneWorld, the agency's enterprise system. Staff has committed to briefing COP in August on the full use of the system by all projects, including estimates and forecasts of cost changes that will affect project budgets. We look forward to this step forward in the agency's ability to fully understand and manage budget risks.
Who is the Citizen Oversight Panel?
