Slow Train Coming, And DART Doesn't Care
DART, the regional mass transit agency, announced a couple weeks ago that it had underestimated the cost of building a new billion-dollar suburban rail line by, oh, say, give or take, you know... about a billion dollars.
Was gonna cost $1 billion. Now the DART staff says it's gonna cost more like $2 billion. Oops. "Inflation," they said.
So the board of directors of DART basically humped its shoulders and ho-hummed and said to the staff, "Well, OK then. But try to scrimp."
Think of it this way. The mechanic tells you he will put a rebuilt transmission in your car for $2,000. Three days later he calls and says, "If you want that car back, the bill is going to be more like $4,000. You know, man. Inflation."
Do you say, "Great, guy. Just try to hold 'er down every little chance you get."
I don't think so. That's not what I would say. I think I would say something more like, "How about this for inflation, Geronimo? 911."
I have listened to tapes of the original committee meeting a month ago in which the DART staff made this amazing announcement about missing the cost estimate by a big B. On those tapes, you can hear the kind of reaction you would expect from a board of directors: At least two members, the Reverend Jerry Christian and Faye Wilkins, reacted with shock and awe.
Wilkins, who represents Dallas, Cockrell Hill and Plano on the board, tells DART President Gary Thomas on the tapes that she hasn't missed a board meeting in a year, hasn't ever heard a whisper of a billion-dollar shortfall before the November 27 committee meeting and doesn't appreciate being "blind-sided."
"This is the first that I have known that it has come to the board that there is an issue with the financial plan... It really concerns me, Gary... I don't have a huge vocabulary. I can't come up with a bunch of words that mean 'dishonesty' and 'incompetence.' Those are the two words that I know. And that's what this appears to be to me."
I should mention that it took me more than a week to pry these tapes out of the DART lawyers. In that time, lo and behold, a story appeared in that favorite organ of people with something to hide, The Dallas Morning News, announcing that there had been a bit of a hiccup with the DART budget, but that, happily, everything is now well under control.
Sure enough, when I attended the next public meeting of the same committee on December 11, well, it was all sweetness and light. Yes, they had sorta missed the budget by a B or so, but, gosh, the kids on the staff had come up with a lot of great ideas for saving money. For example, they could sell more advertising to put up inside the trains. Or they could look for more "public-private partnerships."
In the face of a billion-dollar shortfall, this kind of thinking is equivalent to the 1939 classic Babes in Arms in which Judy Garland and Mickey Rooney say to each other, "Let's put on a show!"
Let me tell you what they're really talking about. You had to attend the whole meeting and listen closely for that. The overwhelming bulk of the cost-cutting they want to do would come from delaying construction of a second rail line in downtown Dallas by five years. That is Dis-ass-trous! That's Mickey and Judy saying to each other, "Let's jack a crack house."
All of these new rail lines that DART is building have to go through downtown. Without a second line and a subway to carry some of the new train traffic downtown, downtown will wind up with a solid wall of trains at street level. That will screw up vehicular traffic from here to high heaven.
That's why Dallas has a contract or "interlocal agreement" with DART by which DART has promised to build a subway and a second line downtown when the train traffic reaches a key point. The talk at the most recent meeting was about how the interlocal agreement only forces DART to begin planning for the second downtown line when the new suburban lines are completed.
A staff member told the committee he didn't think the interlocal agreement really pinned DART down on when the second downtown line actually must be built. So, great news, in other words. DART can weasel on the contract and screw the hell out of downtown for several years to make up for blowing the budget.
This is not a small matter. This is not an adjustment. In naval terms, the captain just knocked the end off the pier with the ship and dumped the visiting orphans into the briny blue.
Up until about a month ago, the staff of DART was telling the board of directors they could build light rail lines out to suburban Irving and Rowlett by 2011 for $988 million. At the committee meeting three weeks ago the staff said the bill was going to be more like $1.9 billion, which they sorta don't have in the bank.
I have been doing my best to look at the numbers, based on what I could hear on the tape and what was said at the more recent meetings.
The numbers are not adding up, folks.
The staff says they were counting on the new rail lines costing $40 million a mile to build. But, darn! All of a sudden it's going to cost $70 million.
On the tapes of that first meeting, however, the staff concedes a couple things in response to questions. First, they discovered the new higher cost last year!
Last year? Then what in the hell are they doing telling their own board of directors about it this year?
They also concede that they had built an inflation factor into the original estimates. That $40 million a mile was in Year 2000 dollars, estimated to increase at 4 percent a year. So by 2006, they were already estimating a cost of $51 million, by my calculation.
So even if the staff did get totally blind-sided by the new costs—meaning that they are idiots, which we will get to—that's still a jump of only 37 percent. So that would have put them in the hole more like $370 million, not a billion.
Back to the idiot factor. I looked at the U.S Bureau of Labor Statistics inflation index for heavy construction over this period of time, and I did find numbers that approach what the DART staff is claiming. In some of the years when they were supposedly inflating their costs by 4 percent a year, the costs actually went down. But a more recent surge would bring their per-mile costs to something like $63.5 million.
That's still not $70 million a mile. But maybe they have their own problems—reasons why their costs go up quite a bit faster than the national rate for their industry.
The point is, that surge started in 2004. That was almost four years ago now. The year before, in 2003, heavy construction costs went up 2.1 percent, according to the national index.
But then in 2004 the rate of inflation for heavy construction was 14.8 percent. The next year it was 15.3 percent. In 2006 it was 13.1 percent.
That's a jump of 43 percent in three years—more than three times what they were expecting. But it started almost four years ago. Why in the hell are they only telling the board about it now?
In an e-mail response, DART told me they were waiting for a more complete design and a "more accurate and current picture of our financial situation."
Bad decision. It would have been way better to warn Mom and Dad about the credit card bill before it arrived in the mail. Very bad decision.
But I wonder about Mom and Dad, too, if they're the DART board of directors. At one point in the taped meeting, DART Chief Financial Officer Sharon Leary is explaining cost estimates and time lines for the new route to Irving and DFW Airport. She tells them the original estimate was $643 million in 2010 dollars. Now they think the real cost will be $881 million.
But guess what! They actually only have $575 million in the budget for it. Waaait a minute. If the original estimate was $643 million, why don't they have $643 million in the budget?
Leary tells the board: "In the 2003 financial plan, we had to find $130 million in unidentified Phase II savings to make the plans work, so $130 million was basically pulled out of that project."
When a board member asked her what she meant, Leary explained, "We just said we're going to make cuts in certain projects...you have to do the same amount of work for $575 million as you were going to do at $643 million."
Wait a minute. What does that mean—do the same amount for $575 million as for $643 million? Make bricks from straw?
In my e-mail to DART, I said I couldn't make these numbers add up right. Their response was: "In 2003, approximately $720 million was cut from the Capital Line item of the 20-year Financial Plan." But, they say, "...we could not achieve the desired savings on the current rail expansion projects."
So they whacked $720 million out of the capital budget to make the budget work. But the board never had the political balls to go back to its constituent cities and warn them they were getting $720 million less railroad. So, pardon me, but haven't we just explained the bulk of the missing Big B?
Maybe a third of it is inflation. And the other two-thirds is explained by the missing balls. That means that for the last four years the DART budget and all those railroads they've been promising the suburbs have all been one big fat political lie.
You know, people don't just wake up one day and realize they've misplaced a billion dollars. I wouldn't try that line in court.
Yeah, and on my tape of the meeting I could hear this long soulful silence, which I surmise was the board of directors stroking its collective chin and thinking, "Hoo-boy. These chickens are comin' home to roost, and these are our chickens."
I'm sure there is plenty of blame to go around here, lots for the staff and lots for the board. But the idea of paying for this crap by delaying the downtown Dallas subway and second rail line is a dirty razor at the jugular of downtown.
Somebody needs to get serious.
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