SANDAG Leader Steps Down Amid Scandal

After 15 years leading the San Diego Association of Governments, Gary Gallegos has announced plans to leave the agency by year’s end.

Scandal has consumed the agency for nearly a year after a Voice of San Diego investigation revealed the agency failed to disclose a series of major problems facing the agency’s sales-tax funded transportation program.

SANDAG last year went to voters promising a new tax, Measure A, would bring in $18 billion for countywide projects, even though its staff had already concluded the tax would bring in far less thanks to significant problems with an internal forecast. Staff brought the issue to executive leadership, who refused to act and did not disclose the issue to the public or the agency’s board of directors.

The agency is also running a $17 billion shortfall on TransNet, a sales tax approved in 2004, thanks in part to overstated revenue expectations on the 2004 ballot and a significant increase in project costs that agency leadership failed to disclose for nearly a year.

An outside investigation into the issue released last week, spurred by Voice of San Diego’s reporting, found that as the scandal unfolded, agency leadership encouraged staff to delete emails and hide documents so that they couldn’t be turned over in response to Public Records Act requests.

The law firm Hueston Hennigen released its investigation last week, and the board of directors voted Friday to review Gallegos’s job during closed session of an upcoming meeting.

Gallegos announced his plans to move on Tuesday afternoon to the editorial board of the San Diego Union-Tribune.

In a letter sent to SANDAG staff Tuesday afternoon, obtained by Voice of San Diego, Gallegos said he had been contemplating retirement but wanted to get the agency through the investigation and continue working on its major projects.

“I feel those goals have been achieved,” he said. “The independent examination found SANDAG did not intentionally mislead the public or the board regarding its forecasting.”

It’s true that the examination did not find evidence SANDAG’s overstated its revenue expectations intentionally – but it did find that agency staff knew about problems with the forecasts for years and leadership repeatedly missed opportunities to address them.

It also found nearly all of the agency’s forecasting staff had concluded before the 2016 election that Measure A would not collect $18 billion. Staffers in a December 2015 meeting outlined the forecast’s fatal problems and directly connected the problems to agency tax revenue, but leadership did not act and did not disclose the problems to the board or public.

SANDAG conducts regional planning and builds major infrastructure projects throughout the county. Its 21-person board is composed of elected officials from the region’s 19 jurisdictions, with the city of San Diego and county of San Diego holding two seats each.

Since 1988, the agency has collected the half-cent sales tax TransNet throughout the county to build transportation projects. It also uses that money to attract major grants from state and federal entities to pay for the full cost of those projects. Voters extended the tax in 2004.

Gallegos, 57, has been with the agency since 2001, running it through the victorious TransNet extension and the failed Measure A increase last year. Under his watch, the agency completed major projects like the widening of the I-15 freeway and purchasing the South Bay Expressway out of bankruptcy. The agency is in the process of building the Mid-Coast Trolley, a light-rail extension from Old Town to UTC, that will also be part of his legacy.

“Gary is the most talented government executive I’ve ever worked with,” said Steve Peace, a former state senator.

Before joining SANDAG, Gallegos was the director of Caltrans for the San Diego region. He took his expertise in freeway construction and financing with him to SANDAG – winning him both accolades and scorn from advocates on both sides of the highways-versus-transit debate that dominated his final years as SANDAG’s director.

Despite the last year of scandal, Gallegos will walk away with a significant recent win under his belt.

The agency had been sued over its 2011 regional transportation plan, with environmentalists and eventually then-California Attorney General Kamala Harris alleging the environmental report for the agency’s 40-year regional plan didn’t properly address the plan’s greenhouse gas impacts.

The challenge was intertwined with a long-running fight between the agency and an emboldened group of environmental activists who alleged SANDAG needed to commit more money to public transit in the region, and less to highway-building. SANDAG had the support of most board members and pro-business groups in town.

SANDAG lost at trial court in 2012 and again with an appeal in 2014. But the California Supreme Court ruled last month that the agency’s report complied with state law.

Scrutiny on SANDAG and Gallegos ramped up last week when the outside report the agency had commissioned confirmed Voice of San Diego’s findings and uncovered the steps the agency took to hide and delete public records.

In addition to reviewing Gallegos’ performance, the board voted Friday to consider implementing policy recommendations from the auditor, to consider investigating the TransNet shortfall and to conduct a forensic investigation into any record deletions.

The investigation focused narrowly on one aspect of VOSD’s reporting – the flawed revenue projections that went into Measure A. Investigators could not look into similar problems with TransNet’s revenue promises, or the decision not to disclose the $8 billion cost increase of TransNet projects. Witnesses told the investigators those issues deserved further investigation.

Gallegos leaves the agency in a precarious spot.

Assemblywoman Lorena Gonzalez Fletcher has proposed a bill, AB 805, that would substantially reform the agency’s board and governance structure, giving larger cities greater say in regional decision-making by allowing a representatives of a handful of jurisdictions to overrule decisions if the cities they represent constitute a majority of the county’s population. It would also institute a performance auditor and auditing committee for the agency. The bill would also give a significant boost to local labor unions.

Gallegos and the agency have fought hard against the bill, at the same time they tried to fend off a steady drip of new revelations from the revenue scandal.