Inflation raises cost of Santa Clara VTA BART to Silicon Valley Project by nearly $3 billion

Oct. 5, 2023
The cost of the project has risen from $9.3 billion to $12.2 billion; Santa Clara VTA is still able to fund the project but the project opening has been pushed back from 2033 to 2036.

The impact of inflation has boosted the anticipated cost of the final phase of the Santa Clara Valley Transportation Authority’s (VTA) Bay Area Rapid Transit (BART) to Silicon Valley Project from $9.3 to $12.2 billion. VTA management confirms the higher estimate remains within its means to fund the project.

“All major U.S. infrastructure projects are, unfortunately, impacted by extreme inflationary costs,” said Carolyn Gonot, Santa Clara VTA general manager and CEO. “The good news is the strong fiscal position of VTA and other funding sources provide a funding plan that can absorb the increase.”

Gonot noted the new estimated completion date was adjusted from 2033 to 2036 based on updated engineering and risk assessments.

Santa Clara VTA’s BART to Silicon Valley has various funding sources at the state, regional and local level that include the Transit and Intercity Rail Capital Program, Regional Measure 3, 2000 Measure A and 2016 Measure B. VTA is seeking a grant from the Federal Transit Administration New Starts Program to complete the project’s funding plan.

“New cost estimates for the BART extension fall squarely in line with what we are seeing across the nation. Cost factors including material prices, labor shortages and rising interest rates are being felt across all infrastructure sectors, not just transit and transportation projects. Market conditions continue to be challenging and dynamic,” said Peter Rogoff, former U.S. Department of Transportation Under Secretary, Federal Transit Administrator and transit CEO -- now a subject-matter expert in transportation infrastructure.

Although project costs are increasing, the anticipated local sales tax revenues of 2000 Measure A and 2016 Measure B are also increasing when compared to previous projections. The operation and maintenance element of the project is also seeing a benefit with increased 2008 Measure B tax estimates. Rogoff will make a presentation on the inflation trends at the next Santa Clara VTA Board of Directors meeting Oct. 5.

VTA built the first phase of the extension for more than $100 million under budget from Fremont to North San Jose’s Berryessa neighborhood, which opened in June 2020. Work is underway on the final phase, which extends the line six more miles, with four more stations through downtown San Jose into Santa Clara.

“We are doing everything possible as responsible stewards of taxpayer monies to maintain costs at every stage. We will continue to do so in the face of inflationary pressures and hikes in interest rates,” Gonot said.

Funding for the completion of BART to Silicon Valley will not take away from other planned Santa Clara VTA projects. Santa Clara VTA has projected a 10-year balanced budget for the agency without sacrificing service and is in a strong and healthy position to manage inflationary impacts.

Santa Clara VTA says the BART to Silicon Valley extension is among the largest, most important and most anticipated transportation projects in the United States. When completed in 2036, the extension will sustainably provide the future growth of Silicon Valley and the Bay Area with world-class public transportation.

The project will reduce traffic congestion, decrease climate change impacts, provide equitable transportation and create the transportation system necessary to address increased population growth and foster transit-oriented development, including new market value and affordable housing. It will also realize the decades long vision of “Ringing the Bay,”, with rail transit thereby enhancing connectivity of the various other transit systems serving the Bay Area.

When complete, the extension will include three underground stations (28th Street /Little Portugal, Downtown San José and Diridon) and one above ground station (Santa Clara). The four new BART stations are projected to have approximately an average weekday ridership of 54,000 by 2040, which represents 6.9 percent of total anticipated BART ridership. Projected ridership at the downtown San Jose station is 27,900. The Metropolitan Transportation Commission Plan Bay Area 2040 long range plan identifies the extension of BART service to San Jose and Santa Clara as the top priority for improving mobility in the region.