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Bay Bridge project gets dual audits

September 17, 2004 Reposted from the Contra Costa Times
  By Mike Adamick

A former state treasurer was appointed by the governor Thursday to find out why costs for a new Bay Bridge span have soared to more than $5.1 billion, just three weeks after the state auditor's office began its own review of construction overruns.

Thomas W. Hayes, a former state treasurer and auditor general lauded for his financial skills, has volunteered his time to perform the latest audit; unspecified costs for his staff will be paid from the state's seismic repair program.

"While we continue to move forward to complete the Bay Bridge construction, it is important that we find out how we got to this point; the taxpayers deserve a thorough accounting of the reasons for the delays and cost increases," said Sunne Wright McPeak, secretary of the Business, Transportation and Housing Agency, in announcing Hayes' appointment.

The dueling audits are both expected to be complete by the end of the year. The prospect of two audits with potentially different conclusions could lead to yet more political posturing over who is to blame for escalating costs on a project that stretches back to 1989, when the Loma Prieta earthquake brought down a section of the existing span and killed a woman.

"What they do is identify the reasons for the cost increases and then leave it to the rest of us to pick up our fingers and start pointing," said Steve Kinsey, a Marin County supervisor and chairman of the Metropolitan Transportation Commission.

Finding a way to pay for overruns on the new eastern span of the Bay Bridge touched off a heated political battle last month that has not yet been resolved.

Once estimated to cost $1.1 billion in 1997, the costs increased to $2.6 billion by 2001. Then on Aug. 16, Gov. Arnold Schwarzenegger's office announced a new price tag of $5.1 billion and attributed the bulk of the overruns to a self-anchored suspension span chosen by Bay Area politicians.

Bay Area lawmakers accepted some responsibility but argued that Caltrans is largely to blame because the state transportation agency repeatedly miscalculated costs and mismanaged construction.

The governor's office said last month it would conduct an independent review to identify reasons behind the increases, and Thursday's announcement makes good on that pledge.

Hayes, who has a bachelor's degree in management and a master's degree in business administration from San Jose State University, has significant experience with government audits and oversight. In the early 1970s, he worked for the U.S. General Accounting Office before joining the California Legislative Analyst's Office.

From 1979 to 1989, Hayes served as state auditor general -- the very same office now conducting a similar audit of the Bay Bridge.

Hayes, a Republican, was appointed state treasurer by former Gov. George Deukmejian and served from January 1989 to January 1991. He campaigned to keep the office but lost to Democrat Kathleen Brown in 1990.

After his defeat, Hayes served as finance director for Gov. Pete Wilson from 1991 to 1993. He also helped bail out Orange County from bankruptcy. He later entered the private sector as president of Metropolitan West Securities, the firm former vice president Al Gore joined after his own defeat in 2000.

Hayes currently runs his own consulting company, TWH Advisors, which is located in Rancho Murietta, southeast of Sacramento.

Hayes could not be reached for comment Thursday, but some who have worked with him lauded the governor's choice.

Steve Schnaidt, chief of staff of the Senate Transportation Commission, worked with Hayes in the analyst's office and said Hayes has earned a reputation for fairness and thoroughness throughout his career.

"This audit is going to be critical to the negotiations and any resolution when it comes," Schnaidt said. "I think Tom has demonstrated a history of fairness, so he would be a good person to lead this inquiry."

Hayes' audit will be the second review of the Bay Bridge to be initiated in the past three weeks.

Bay Area lawmakers, who blamed Caltrans for most of the overruns, called on the state auditor's office Aug. 26 to conduct its own independent review.

"As far as we're concerned, we continue with our marching orders," said Elaine Howle, the state auditor. "We already have auditors out in the field."

Both audits will delve into who is to blame for overruns, setting the stage for negotiations over how to pay for the bridge. Bay Area lawmakers want to continue splitting the tab, while the governor's office has called on the Bay Area to front most of the costs through tolls.

Contra Costa County Supervisor Mark DeSaulnier, who also serves on the Metropolitan Transportation Commission, said a fair audit will exonerate the Bay Area from blame.

"I think the MTC's actions are very justifiable considering the information we were getting from Caltrans," DeSaulnier said.

Mike Adamick covers transportation. Reach him at 925-945-4745 or [email protected].

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