Independent Oversight Promised With Last SANDAG Tax Hike Not So Independent
• SANDAG's TransNet measure to pay for infrastructure projects included the creation of an independent watchdog committee to oversee the funds.
• It's not clear, though, how independent the committee actually is, or how strictly they're policing the funds' use.
When San Diego County voters were asked more than a decade ago to extend a half-cent sales tax surcharge for 40 years to pay for new transportation projects across the region, the agency in charge of the project offered a sweetener.
An independent taxpayer oversight committee would look after the $14 billion that would flow into the county and pay for new carpool lanes, trolley extensions, bike lanes, bus stations and more.
The appointed seven-person citizen watchdog group would bring “an increased level of accountability” to the program and conduct yearly audits to ensure the money was spent as promised, voters were told.
Now, as SANDAG considers another tax increase, it’s not clear at all how independent the oversight committee actually is.
The current chairman of it also represents contractors making millions on the project and lobbies the very government officials he’s overseeing.
Officials say the arrangement doesn’t violate state conflict-of-interest laws, but experts still see problems with the situation.
The current chairman and his predecessor deny there is any conflict in part, they said, because the committee doesn’t police project costs like one might think – a defense which, itself, raises questions about whether the watchdog group is doing what it was created to do.
‘They Indirectly Benefit Without Question’
Brad Barnum heads the TransNet Independent Taxpayer Oversight Committee, a role that involves receiving staff reports, hiring and overseeing an auditor, advising public officials periodically – and, as needed – about the program’s efficiency and project costs, schedule and bond debt.
Barnum lobbies for 1,100 contractors, who he says perform 85 percent of the region’s commercial, industrial, general engineering and heavy highway construction.
A decent chunk of that work comes from SANDAG, and millions from the TransNet bond measure specifically, public records show.
AGC San Diego contributed $500,000 to help pass TransNet in 2004, and Barnum recently met with officials to discuss campaign strategy for a new tax hike and bond measure that may go on the ballot as early as this year.
“Rest assured, AGC is at the table … we have already met with SANDAG’s Executive Director, Gary Gallegos, and have had discussions with various San Diego City Councilmembers,” Barnum wrote in AGC’s July 13 newsletter.
When I met with Barnum in January, he told me: “I haven’t had any meetings with Gary Gallegos.” He also said, “I’m not lobbying for anything other than what’s in this (TransNet) ordinance.”
Asked to clarify his remarks, Barnum said only that his meeting with Gallegos “did not have anything to do with the current Transnet measure or ITOC.”
Martin Wachs, professor of transportation policy and ethics at UCLA, still sees cause for concern.
“They indirectly benefit without question, and the public interest would be better served if the participants in the oversight had no connection,” Wachs said. “It may be true they don’t get direct payments. I’m sure it’s true, but they do represent people that do get direct payments and that is stretching the notion of what is proper.”
Barnum said there is no conflict between his day job and TransNet oversight job.
“I take this job seriously,” Barnum said of his TransNet work. “If there is any inherent conflict I would step away. My expertise in construction makes me qualified for this job.”
Emails over the last three years show Barnum has invited SANDAG officials to political fundraisers, award luncheons and press conferences. He’s also sought less burdensome bidding requirements, support for more contractor-friendly legislation and offered to act as a liaison between the agency and his contractors to ensure compliance with new subcontractor listing laws.
The contractor group also hosted a mixer at the San Diego Yacht Club in the fall to highlight upcoming public agency bid opportunities. Officials from SANDAG, Caltrans, the city and county all made presentations.
This all happened while Barnum was supposed to be also questioning and analyzing TransNet spending decisions.
Barnum, who’s worked for AGC San Diego for 15 years, joined the TransNet oversight committee in May 2013, replacing his longtime boss, Jim Ryan, who retired from his job as CEO of AGC San Diego this year but is still employed there to consult on labor issues.
Ryan had been on the TransNet committee from its start in 2005.
The TransNet oversight committee bylaws bar members “from acting in any commercial activity directly or indirectly involving SANDAG.” It also prohibits “direct commercial interests or employment with any public or private entity, which receives TransNet sales tax funds.”
As written, that’s actually more strict than statewide laws governing conflicts of interest – except SANDAG added language in 2010 clarifying that committee members are only subject to the same level of scrutiny as any other public official.
Barnum and Ryan are paid by the nonprofit AGC San Diego, which gets the bulk of its revenue from members, some of whom receive multimillion-dollar TransNet contracts from SANDAG and other agencies across the region. Neither Barnum, Ryan, nor their employer get TransNet contracts, though.
That’s enough to avoid concern for SANDAG officials, who emphasize Barnum and Ryan’s professional skills and the committee’s advisory role.
“The authority to determine what funds are spent where rests with the SANDAG Board of Directors,” said SANDAG spokesman Jeff Stinchcomb. The watchdog committee makes “no final decisions about how TransNet funds are spent. It conducts audits, reviews programs and makes recommendations to the Board of Directors.”
Others who’ve studied public bond oversight committees still question the arrangement.
“You want someone who understands construction and finance, but you don’t want them to be too closely associated with the vendors getting the work,” said Carole D’Elia, executive director of the Little Hoover Commission, a state entity that provides independent government oversight.
D’Elia commends SANDAG for “putting an oversight committee in place because the state doesn’t require it,” but believes, “there needs to be a further separation … If that person is lobbying and attending fundraisers, there does appear to be a conflict.”
California law does require public officials to report their economic interests so the public can monitor for conflicts of interest. Barnum failed to report his employment and income on the state-mandated forms on three occasions – an error he said was inadvertent and would be corrected.
All in the Details
Ryan, like Barnum, is adamant his TransNet oversight was never in conflict with his day job working on behalf of contractors.
His reasoning reveals something telling about the way the oversight committee operates.
With roughly $557 million at their disposal this year alone, the TransNet program is a behemoth that involves two-dozen government agencies working to improve the region’s roads, bike and pedestrian paths and public transit systems.
On top of making sure Transnet is spending funds on the projects that it promised to voters, the Independent Taxpayer Oversight Committee is also supposed to ensure that the projects are being done efficiently. So, for example, if the ballot measure said Transnet would fund three new bridges, the committee would ideally make sure that three bridges – not one, not seven – got prioritized, but also that the three bridges were built in the most cost-effective and timely manner possible.
Even though the committee’s charge includes monitoring projects to ensure cost control and schedule adherence, Ryan said the group’s efforts never get down to that level of monitoring. Nor does AGC assist members with specific issues they’re having on the job.
“We have never gone down and tried to help a contractor out … We’re way too big to be hearing about contractor issues. These are big contractors that handle the issues themselves,” Ryan said.
Ryan said that if a contractor wanted to collect more or take longer on a project, for example, they’d have to deal with the city or agency that doled out the contract – not the oversight committee.
The rationale, however, raises some questions: Why doesn’t the group get down in the weeds of monitoring costs? And, would someone else pay closer attention?
Barnum did serve as project manager for the TransNet audit released in July. In that role, he was tasked with approving more than $200,000 in auditor expenses, email records show.
Boosting the Bond, Then Monitoring Funds
Wachs, the UCLA professor, said the contractor group can contribute to the bond campaigns, as AGC did with Transnet in 2004, but “To then allow them to oversee the expenditures and certify the propriety, that’s where it starts to get cloudy.”
“Having participants review the expenditure plans and oversee the whole program who have no connection to any potential contractors would be a higher level of independence,” he said.
Looking ahead at a new infrastructure bond, D’Elia with the Little Hoover Commission suggests SANDAG “should take a hard look at whether what they put in place in 2004 is adequate and consider bolstering its independence.”