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 tenth semi-annual report and covers Sound Transit's performance during the second half of the year 2001.
Summary of Sound Transit Performance
Sound Transit is five years old. It has reached the half-way mark of what was originally envisioned to be a ten-year plan. Much has occurred that was not anticipated. Almost all of the Sound Move budgets and schedules turned out to be significantly underestimated. Implementation of a regional plan proved harder and more contentious than was expected. Management failures and poor communication precipitated a crisis that significantly reduced the confidence of the public and nearly cost the agency the participation of funding partners.
Today, however, viewing the year-end of 2001, the Panel finds that much has been accomplished and Sound Transit appears to be on an upward path again. COP members credit Board Chair Dave Earling and Executive Director Joni Earl with having led the organization through its most difficult period with strong commitment and purpose. Today, commuter rail and express bus services carry tens of thousands of riders a day, comfortably and reliably. Numerous capital projects are either in construction or nearing the construction stage. Years of planning, public outreach, design, environmental review and permitting processes will soon result in tangible improvements and additions to transportation capacity. While the original ten-year plan has had to be extended by three years, this five-year point is nevertheless a time to take stock of Sound Transit's accomplishments and resolve again to focus on its regional mission and on delivering on the plan's commitments.
The three main themes of this year-end report are, thus, accomplishments, keeping the regional focus and executing the plan.
1. Accomplishments
In reviewing the year 2001, COP members saw a number of accomplishments and successes that it wanted to highlight. First and foremost was Executive Director Earl's leadership, which has introduced a new management discipline into the organization. Professionalism has never been higher and accountability to mission and goals appears to be real for the first time. A sense of Sound Transit as a dedicated team pulling together with optimism and cohesion is apparent. There is evidence that internal disputes are being resolved; that staff are being intensively supported with training and morale-building efforts; and that the organizational culture is undergoing a shift toward rigor and pragmatism in delivering projects.
The improving confidence in the Central Link program is the clearest evidence of change at Sound Transit. While it is still too early to say that Link will be built as planned, there is a renewed belief among stakeholders and advocates of light rail, including this Panel, that there is a good chance it will. The adoption of the new initial segment from Convention Place to South 154th Street was a concession to the reality of higher costs and lowered expectations. The new budget and schedule were an admission that the original estimates were unrealistic, yet brought a welcome degree of renewed confidence that the numbers had been thoroughly scrutinized. Sound Transit is vigorously pursuing the needed planning to extend Link north and to the airport, as was promised in Sound Move. We noted that the agency recently responded to COP's request to highlight the criteria to be used in the selection of a new preferred alternative for the north corridor. Public credibility is not fully restored, but the foundation for future success of the Link program appears to have been laid.
In Tacoma, light rail is under construction. Tracks are being laid and the maintenance facility is nearly completed. Sound Transit's early commitment to using small and diverse businesses was tested and met when the agency rejected the low bidder on the construction contract and prevailed despite a bid protest.
Sounder commuter rail and ST Express Bus services are showing increasing ridership and high customer satisfaction. On the capital project side, Sounder and Regional Express face real funding constraints and ongoing management challenges. However, newly developed project budgets and schedules carry higher levels of confidence. Risks are being assessed and documented for the Board and public.
COP members saw real improvements in the 2002 budget and finance plan. We noted a new level of forthrightness and clarity in describing cost trends and the reasons for cost increases. We applauded the shift to year-of-expenditure dollars. In Regional Express, we were impressed to see capital budget risks openly addressed by the proposal to create a new program reserve for unanticipated cost increases. Subarea borrowing was highlighted for the first time. While the revised November revenue forecast was cause for concern about some parts of the Sound Transit program, the Panel felt generally good about the strengthened and proactive fiscal management that was demonstrated.
COP also noted the increased attention being paid to identifying and analyzing policy issues in Board briefings. Board members have been clear in requiring fuller information prior to decisions. The Board has also exhibited a renewed commitment to strong oversight. While the resolution of Sound Transit's problems is not yet in place, the
2. Keep the Regional Focus
Sound Transit is entering a new phase of the Sound Move program with several new Board members and a new Board Chair. This creates an opportunity for the Board to re-exert the regional mission of the agency. Concerns exist about the role of the Board and its ability to provide effective oversight and policy direction for a regional program. This Panel has acknowledged on a number of previous occasions the challenges posed by a federated Board comprised of local elected officials. Some observers have been more cynical; a legislative proposal has even called for replacing the current Board structure with a directly representative Board. To address these challenges, COP believes that the Board must, through its deliberations, decision-making and negotiation processes, demonstrate its ability to keep the focus on the regional nature of the Sound Transit program.
COP members believe that special attention should be paid to several areas. We urge the Board again to engage as a policy-making body in setting clear priorities on how to proceed if dollars fall short. The recently updated revenue forecast projected that the Pierce County subarea will have over $30 million less than was anticipated and budgeted. Staff are preparing to engage the Board in a discussion of options for dealing with this shortfall. COP intends to watch this process carefully. We expect that a public discussion of policy guidelines and priorities for managing shortfalls will be held as part of this process.
As it embarks on upcoming negotiations and approvals, the Board must ensure that region-wide transportation benefits come first and that agreements with such third parties as King County, Tukwila, Mukilteo and BNSF do not overwhelm the budgets for the Sound Move -promised program. We urge the Board to assume a strengthened role not only as fiscal watchdog but also as an outspoken public advocate of a regional transit plan with limited resources.
COP urges the Board to stay focused on the long-term goal: a regional high capacity transit system that links major population and job centers. It must continue to be the goal to achieve the full Sound Movep rogram, including the 21-mile light rail line from the airport to the University District and beyond. A regional focus and strong Board discipline and oversight will be needed to get there.
3. Manage and Monitor Execution
Delivering the promised plan will also require a full range of organizational and individual execution skills, an area in which Sound Transit has been weak. Each Sound Transit line of business continues, now more than ever, to work in a constrained funding environment. One subarea, Pierce, has a known shortfall in anticipated revenues. Link and Regional Express are entering into their next, more complicated phase when numerous projects will be in construction. We look forward to the appointment of new directors to fill the Sounder and Link vacancies and to bring management stability to these lines of business.
Monitoring, reporting, project control and management are essential. Executing the myriad tasks well and efficiently will be challenging in any case. We believe the necessary management and systems are being implemented and we urge the agency's leadership to continue to provide discipline and strong controls and to emphasize accountability throughout the organization.
COP has observed recent instances that lead us to believe that management discipline, while stronger, has further improvements to make. For example we attributed the scope expansion and rising costs at the Everett station to staff failures to anticipate routine requirements and poor communication with third parties. The Panel will continue to look for projects to be completed on time and on budget.
On the other hand, we have seen evidence of a new fiscal restraint and new staff and Board efforts to evaluate and control expenditures. Express Bus operating rates were successfully renegotiated to manage annual increases. Staff have terminated several consultant contracts when agreement could not be reached on billing rates and budgets. The Board has sent back at least one contract without approval due to excessive cost increases. Staff have been reevaluating funding levels originally allocated to the Research and Technology Fund and to the fare integration system and are poised to recommend reduced spending to the Board. Finally, COP members were pleased to note that the agency has agreed with COP's recommendation to separate the financial and performance audit functions to avoid potential conflicts of interest and improve the credibility of the audits.
We urge Sound Transit to anticipate actions that might need to be taken if any of the current cost estimates or revenue assumptions again prove to be wrong. We will monitor this issue closely in the coming months.
Recap and Update of Previous Issues of Concern
Sounder Service
COP has commented on the continuing uncertainty about when service will be added to the Tacoma-Seattle segment and when it will begin on the other promised segments (Lakewood-Tacoma and Everett-Seattle). We have stated in prior messages that target service dates are behind schedule. Delays in implementing Sounder service are accumulating and costs are escalating. We are happy to note that our message about increasing the level of urgency has been heard and the Executive Director has traveled to Texas to meet with BNSF executives. We look forward to progress in this area.
Financial Plan
In recent reports, COP expressed concern about the degree of risk in the Sound Transit long-term financial plan and about the lack of clarity in some assumptions that were made. Together with the Finance Plan Peer Review Panel, COP was pleased to note that the updated plan is much improved. The federal funding assumptions are much more realistic, the contingencies and project reserves are restored to appropriate levels, and assumptions for revenue growth, investment yields and inflation are adjusted to the most recent economic conditions.
Project Management and Project Control
We are encourage to note that the agency is on track to finalize and coordinate the systems and reporting tools used to manage costs and schedules, at the project, department and agency levels. We look forward to seeing the promised demonstration of the new tools and the reports they will produce.
Relationships
One year ago, COP reported on the state of Sound Transit's relationships with the federal and state governments and with some members of the regional community. Today, the situation is somewhat improved. A new, proactive and wider ranging outreach strategy has shown improvement in the relations with the Congressional delegation and with local elected officials. The $500 million in federal funds for Central Link, while not yet secured, appears to be on track for reauthorization by Congress later this year. Joni Earl has exhibited leadership in her dealings with Washington DC and her reorganized communications and government relations department has provided strong support.
Other relationships still need work. Some stakeholders contacted by COP have described working relationships with Sound Transit staff as productive. But we also heard concerns from local governments over poor communication by Sound Transit staff concerning station budgets, design processes, permitting requirements and other expectations. Without clear communication and agreements between Sound Transit and local governments, project costs and scope cannot be controlled. We are also concerned about state-level relationships, especially in light of the recently filed Initiative 776.
Who is the Citizen Oversight Panel?
