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Former Supervisor Aaron Peskin lays out Muni troubles

Letter to Muni Transportation Director Ed Reiskin, cc: City and National officials, May 28, 2013

12-page letter to Ed Reiskin, May 28, 2013

Summary of letter:

Addressee and cc's

May 28, 2013
Mr. Edward Reiskin
Executive Director, SFMTA
Re: Central Subway: North Beach Tunnel/Pagoda Extension Project

( Body of letter)

Aaron Peskin


SFMTA Board Members (
Dennis Herrera, City Attorney (
Brett Gladstone, Esq. (
Peter Rogoff, Administrator, FTA (
Leslie Rogers, Regional Administrator, FTA (
James Sampson, PMOC (
Calvin L. Scovel III, Office of the Inspector General (
Gabriel Metcalf, Executive Director, SPUR (

Excerpts from body of letter


"I write to respectfully request that you consider the entirety of this letter before proceeding with Central Subway Project’'s North Beach Tunnel Construction Variant and Relocation of the Tunnel Boring Machine Retrieval Site to the Pagoda Theater (Pagoda Extension)."

The San Francisco Municipal Transportation Agency (MTA) cannot legally proceed with the Pagoda Extension without a new or amended Board resolution because:

  • The lease with the Pagoda site owner is not effective without Federal Transit Administration (FTA) environmental approvals;
  • The existing Board resolution caps expense for the project at $6 million;
  • The construction contractor has submitted new costs and exclusions that will almost certainly exceed the $6 million cap.

Director Resikin has not gone back to the Board to secure a new resolution authorizing higher costs. By not doing so Reiskin and MTA risk the liability and criticism for an ultra vires act (exceeding their authority).

Contingency Funds and Cost Overruns (page 2)

  • The original contingency recommended by FTA in 2009 for the $1.6 billion Central Subway project was $330 million. This was done because of Muni's inexperience with large and complex projects, and its history of not completing projects on time and within budget.
  • The current contingency for the project is $65 million, nearly $100 million below federal requirements.

Project History: Lack of Staff Oversight, Qualifications, and Experience (page 4)

Many of the problems with the Central Subway stem from Muni's inexperience with large projects, and particularly from the ineffectiveness of Central Subway Project Manager John Funghi.

Faux Community Meetings (page 7)

"As a former elected official and community representative, I note that many members of the community have been less than satisfied with what they perceive as Mr. Funghi's evasive answers and less than forthright willingness to answer legitimate questions."

North Beach Tunnel Construction Variant (page 7)

  • MTA is constructing tunnels to North Beach using Central Subway Phase II funds as a way to predetermine a future third Phase rail extension north of the Chinatown station.
  • This variant was a late addition to the original plans in order to satisfy SPUR, a member-supported urban planning club.
"[The variant] is in fact Phase 3 infrastructure, in clear violation of state (CEQA) and federal (NEPA) [enviromental] law."
"[In the future] the existence of the Pagoda Extension will virtually establish the preferred alignment —– an alignment selected by MTA with no input from the public — other than SPUR ..."

The TBM Extraction Options (page 8)

  • At North Beach resident meetings, MTA offered several options for tunnel boring machine (TBM) removal, but despite the desire of those at the meeting to remove or bury TBMs at the Chinatown station, MTA would only consider the use of the Pagoda Theater site.
"When MTA’s outreach to North Beach was found to be woefully inadequate (as characterized by Board of Supervisor’s President David Chiu) MTA scrambled to quiet the outrage of the community while at the same time holding firm to its plan to embark on an unanalyzed, unplanned and unfunded Phase 3 extension while relying on dubious Phase 2 approvals."
"The MTA put forth only one alternative to the TBM extraction in the middle of Columbus Avenue –— burial of the parts near the Chinatown Station –— which it summarily dismissed with a vague, ambiguous and disingenuous analysis."
"Ed, you know that the selection of the Pagoda Extension was not community driven. It is being imposed on the neighborhood by the MTA in order to maintain SPUR’'s support for the project. Political support is no longer the imperative. Now the question is whether you will recommend cost cutting measures and project modifications to save the project as a whole so that it doesn'’t go down in American history as another wasteful '“Big Dig”.' "

The Options for Dealing With the TBMs That Have Been Ignored (page 9)

"The ultimate proof that the North Beach Variant has nothing to do with Phase 2 construction, but rather represents Phase 3 infrastructure being constructed to satisfy the concerns of SPUR, can be found in the facts surrounding the 3 options currently available to MTA for dealing with the TBMs in Chinatown, as follows:"
  1. Remove the TBMs at the Chinatown station site using cranes;
  2. Disassemble the TBMs and move them out at the 4th Street portal;
  3. Bury the TBMs beneath or next to the right-of-way.

Disingenuous Statements Expressing Concern for the Adjacent Businesses (page 10)

"I find the City’'s treatment of the owners of the businesses adjacent to the Pagoda property to be particularly disturbing."
"... the MTA is willing to cause the failure of a number of small businesses while enriching the owner of the Pagoda site with $3.15 million of Muni funds for a project that already is going to be over budget and behind schedule."

Conclusion (page 11)

"I have heard you say on a number of occasions that you consider the Pagoda plan for TBM retrieval to be a “win-win” situation ..."
"... to summarize, if you bury or extract the TBMs near the Chinatown Station you will achieve:"
  • Savings of approximately $80 to $100 million in Central Subway Project funds and at least $13.8 million in Muni funds, which will be sorely needed to help offset the cost overruns on the Project.
  • Elimination of months of construction, which will reduce the deficit in schedule contingency.
  • Reduction of the risk to the City of costly inverse condemnation damages to zero.
  • Reduction of the risk of damage to historic structures in North Beach to zero.
  • Saving North Beach businesses from extinction.
  • Elimination of detrimental impacts to parks and open space.
  • Leaving all businesses and residents in North Beach unaffected.
  • Reduction of the disruption of construction activity at the Pagoda site from three or more years to one year.
"As you know, two of the most important goals of professional construction management are cost containment and risk reduction. I submit that, viewed in this light and taking into consideration the points above, the Pagoda Extension option is a lose-lose."
"In closing, if you and the MTA actually believe that spending $80 to $100 million on tunnels that will be of no use or benefit for decades is “using your limited resources strategically” and will help convince the voters that you can be trusted to use their dollars “properly,” I submit that the MTA is in need of systemic changes with regard to both its management structure and personnel."

Read the complete letter to Ed Reiskin, May 28, 2013

Response from Ed Reiskin, July 27

Response from Ed Reiskin, July 27, 2013

Response from Aaron Peskin to Reiskin July 27 letter

Email response

July 28, 2013

Dear Ed,

Thank you for your professional response to my letter of May 28.

Former Mayor, Willie Brown (arguably still the Mayor today) wrote in today’s Chronicle: “News that the Transbay Terminal is something like $300 million over budget should not come as a shock to anyone. We always knew the initial estimate was way under the real cost. Just like we never had a real cost for the Central Subway...In the world of civic projects, the first budget is really just a down payment. If people knew the real cost from the start, nothing would ever be approved. The idea is to get going. Start digging a hole and make it so big, there’s no alternative to coming up with the money to fill it in”.

Ed, Mr. Brown is absolutely telling the truth. Mr. Brown (and Rose Pak) started this thing. I (wrongfully) aided and abetted it while in office. None of that is on you. What it on you is that you will have, under your watch, by your personal decision, exacerbated this problem many fold by extending the project to North Beach which will have additional, untold fiscal consequence for the SFMTA and the City of San Francisco. In the old days when the United States had a different federal political environment they may have paid the bill. Those days may well be over. Because of Senator Feinstein and Leader Pelosi I know many think that nothing has changed but frankly you should not be surprised if, as I have expressed to you, decisions like you have chosen to make end up having a profound, negative financial impact on San Francisco’s municipal finances.

I am sorry, even though I think you fundamentally share my concerns, that you have chosen to make a bad situation worse.

With respect,

Aaron Peskin

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