Report 2000-127 Summary - December 2000

Department of Transportation:

Inadequate Strategic Planning Has Left the State Route 710 Historic Properties Rehabilitation Project Nearly Without Funds and Less Than Half Finished

RESULTS IN BRIEF

For decades, the Department of Transportation (department) has proposed the State Route 710 extension to ease the traffic flow in Alhambra, Pasadena, South Pasadena, and a portion of Los Angeles. In anticipation of receiving approval for the extension project, the department acquired hundreds of properties, many of which were considered historic, that it assumed responsibility for maintaining. The department allowed these historic properties to deteriorate and did not focus on rehabilitating them until after local communities raised concerns in the mid-1990s. Once it began its efforts, the department did not use a strategic approach to ensure that it could rehabilitate and preserve the properties within the state funding that was authorized. Instead, it used a piecemeal approach and has spent nearly all of its funding to rehabilitate less than half of the properties.

From the beginning, the department's actions undermined the success of the project. After determining that it would need more than the initial $3.2 million in funding that it began receiving in fiscal year 1994-95, the department requested $16 million from the California Transportation Commission (CTC) in 1996 to complete rehabilitation of 81 historic properties. However, the estimates the department used to support its 1996 request were hastily prepared and did not adequately consider the interior condition of these properties.

Further, after the CTC approved the $16 million funding request, the department did not take steps necessary to ensure that the project expenses stayed within that amount. Rather than assessing the needs of the entire project and allocating its finite resources among the properties, the department focused its efforts property by property until funds were nearly depleted. Despite mounting evidence that current resources would not be adequate to meet its goals, the department did not sufficiently explore other options or notify the CTC until late in the project that it would not be able to complete the project with available funding.

Since requesting the $16 million in 1996, the department has identified additional historic properties along the State Route 710 corridor. As of October 2000, the department has rehabilitated only 39 of the 92 properties it currently has identified as historic and has nearly exhausted the funding it received to complete the entire project. In response to the department's March 2000 request for $22 million in additional funding, the CTC asked the department to develop alternatives for minimizing costs. The department identified two options. These options, both of which propose to mothball the properties, involve maintaining some to all of its properties as vacant properties. However, mothballing is not intended to be a permanent solution, and we noted specific concerns regarding the department's proposed options that must be addressed. Additionally, although it plans to do so, the department has not yet sent these mothballing proposals to the Office of Historic Preservation (OHP) for review.

Although it implemented certain cost-reduction measures, the department cannot demonstrate that it used the most cost-effective methods when performing work. This is of particular concern because of the significant amounts it spent rehabilitating the properties-more than $400,000 per property for those completed. The department cannot show that it fully explored its options and exercised discretion allowed by federal guidelines for the treatment of historic properties. In particular, the department did not use an approach that entails using condition assessments to identify and prioritize the features that define the historical character of each property and to focus the planned work primarily on those features that are most important in contributing to the overall significance of the property. Additionally, it could not demonstrate that it considered the technical and economic feasibility of various repair alternatives when performing work. Consequently, the department lacks assurance that all of the work performed was as cost-effective as possible.

Finally, the department relied on its contractor, the Department of General Services (General Services), to ensure that the work on this project complied with applicable codes. General Services appears to have a process designed to do so. Yet the department did not require that the process used be verifiable: It did not require General Services to document the key judgments it made throughout the process, such as identifying the specific code requirements applicable to the project. Thus, the department has limited assurance that those who worked on the project considered and applied properly all relevant codes.

RECOMMENDATIONS

To ensure that any future rehabilitation work that the department performs is as cost-effective as possible, the department should develop revised cost estimates for each property using condition assessments that assist the department in prioritizing its rehabilitation efforts. The department should focus its efforts on those historic features that are most important in contributing to the overall significance of the property and ensure that it takes advantage of the flexibility allowed by federal guidelines. Further, it should consider the technical and economic feasibility of planned work when determining whether it has considered the least costly yet acceptable alternatives.

If it pursues its mothballing proposals, the department should ensure that they comply with federal guidelines, and it should obtain approval from the OHP as to their propriety.

Further, in the future when faced with similar projects with funding constraints, the department should ensure that it assesses the needs of the entire project and prioritizes those needs. The department should notify funding authorities promptly when it becomes aware that existing funding will not be sufficient to meet project goals.

Finally, to ensure that future work on this and other projects complies with applicable codes, the department should develop a process to identify and evaluate all code requirements related to the project. The department should also ensure that it can demonstrate that the applicable code requirements have been considered and applied properly.

AGENCY COMMENTS

The department agrees with the report findings and plans to implement the recommendations. The Business, Transportation and Housing Agency believes that the report will be very helpful in improving the department's current and future rehabilitation of historic properties.


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