San Francisco International Airpork

Jason Yuen and the airport advisory board keep tabs on the construction managers and make recommendations to the Airport Commission concerning those managers' fees. One member of the advisory board is Robert Luster, president of Luster CM Inc. of San Francisco. His firm is a partner in four of the interlocking private joint ventures that have contracts to manage elements of the master plan. Another member, Loren Smith, is a vice president of Parsons Infrastructure and Technology Group Inc.

As members of the advisory board, Luster and Smith are in charge of monitoring the quality of their own firms' work. They sign off on budget overruns, including fee increases for their own firms. Yuen says this is not a conflict of interest for the two construction managers. Luster, says Yuen, is so "high up" that he does not get involved in the daily business of his company, and can be objective and disinterested when voting on issues that affect it.

Neither Luster nor Smith returned telephone calls from SF Weekly. A Luster representative said that tying construction management fees to budget overruns is "an anomaly of the system."

The upper limit that construction managers overseeing SFO master-plan projects can charge is set as a percentage of construction costs. Therefore, every delay and change order that increases construction costs means that the total amount construction managers can bill also increases. As the master plan budgets have expanded, the Airport Commission has not punished the construction managers; rather, they have apparently been rewarded for failing to control costs. The commission has voted to nearly double the management consortiums' potential fee, from 5 percent to 9.2 percent of construction costs, bringing the projected fee to more than $196 million. So far, construction management fees are 150 percent above the $80 million originally budgeted.

The system in which construction managers and contractors supervise themselves, and gain with every cost overrun, has raised questions both large and small.

In January 1997, an airport auditor named George Suter flamed at SFO Associates, refusing to approve requests for reimbursement for valet parking tips and laundry for consultants who were already billing the airport $1,500 a day. He objected to "similar small sundry amounts for meals, paper towels, bottled water and the like." He axed multithousand-dollar requests for lunches and dinners submitted without copies of the restaurant bills. He killed credit card purchases, and a $2,612 bill for improper car rentals. He laughed at $22.25 for "donuts for meeting."

Regarding what he seemed to view as gouging, Suter wrote: "The amounts become incongruous in the context of the millions the airport is spending, and must be as embarrassing to submit as they are to turn down."

Swanson says he remembers Suter's rejection of SFO Associates invoices, but he cannot recall their ultimate fate.

Other internal audits reveal construction managers double-billing for office supplies, and seeking $125 an hour as reimbursement for copy machine clerks. One of the construction management joint ventures was criticized for change-ordering a $335,000 "procedures manual" that had not been authorized. The auditors also found that some construction manager time sheets contained $100,000 errors -- in favor of the managers.

The extra costs of the airport master plan -- now at about $1 billion and rising -- will be passed on to passengers through concession prices and a new "passenger facility charge" that, according to airport staff and public records, the Airport Commission is likely to use as a way to pay off its growing debt load. This tax -- ranging from $4.50 to $18 per round trip -- would be added to airplane ticket prices and generate up to $360 million per year, according to airport spokesperson Ron Wilson. In contrast, the commission has set the airplane landing fees -- paid by the airlines -- at one of the lowest rates in the country.

John Martin, the airport's executive director, has repeatedly and publicly insisted that the master plan is on time; public records show it is years behind the construction schedules as originally contracted. Martin's claim that the original master plan budget is not a billion dollars in the red relies upon redefinitions of the budget itself. In 1996, after the dominant construction contracts had been bid and signed, the airport suddenly revised the official budget from $1.9 billion to a $2.4 billion "baseline," a move that does not eliminate a half-billion-dollar overrun of the original budget. Since then, the airport has siphoned hundreds of millions of dollars from capital improvement funds originally intended for other uses into the master plan project. In reality, the master plan expenses long ago used up the revenue bond funds that were to fully finance it.

The president of the Airport Commission, Henry E. Berman, referred all questions about master plan costs and schedules to Martin. The commission's vice president, Larry Mazzola, refused to comment on cost overruns and delays.

But public documents make it clear that, to cover the $1 billion overrun on master plan projects, what was originally designed as an aesthetically grand glass-and-steel terminal building will be chock-full of concession stands. In the words of Rod Stewart -- not the rock star, but the retired air traffic controller who advises Foster City on airport matters -- "John Martin isn't building an airport. He's building a giant shopping mall."