Data centers contributing to Caltrain cost overruns?

And last fiscal year — which ended in June — the agency’s capital budget, which focuses on infrastructure projects, went from a previously anticipated estimate of $169 million to $236 million, as part of the updated estimate on the Guadalupe River Bridge project in San Jose. The agency plans to pull money from its reserves and other funds to help close the gap, but the total project price tag increased by about $107 million.

“We find ourselves in a situation where our jobs are coming in over which they are potentially fundable, even with some of the funding resources we have through various transportation authorities,” Caltrain Executive Director Michelle Bouchard said.

The agency also has plans to construct and make improvements to several other bridges and stations, including two grade separation projects in San Mateo and Mountain View, as well as updating the South San Francisco station.

Bouchard has previously admitted the agency has had to make changes to its capital infrastructure team after some of the massive project overruns, but there have also been macrolevel conditions contributing to the unpredictably high price tags.

In addition to spikes in labor costs — partially a result of skilled labor shortages and widespread use of unionized labor in California — Contorta Group Managing Partner Peter Rogoff said supply chain issues have not fully recovered since the pandemic, increasing construction material prices, and borrowing costs are still high. The problems are affecting projects throughout the whole state, not just Caltrain and the Bay Area. According to a report from Caltrans, the state transit agency, there was 108% growth in the number of Caltrans projects at risk of budget overruns between March 2021 and 2024, with more than a 600% increase in the estimated dollars at risk for those projects.

However, a surge in data center construction, largely propelled by high levels of artificial intelligence investment, is also contributing to delays and higher costs, Rogoff said.

“AI companies are now willing to pay top dollar to get them built quickly and quite frankly, public agencies really can’t compete with those private AI companies in terms of the price they’re willing to pay,” Rogoff said.

The Bay Area has one of the highest concentrations of data centers in the country, with about 160 operational facilities in the area. In Brisbane, some environmental advocates have expressed concern over a recently proposed two-level data center, part of a project that intends to close the Guadalupe Quarry. In San Jose, a recently announced initiative between the city, real estate developer Westbank and Pacific Gas and Electric aims to pair three data centers with up to 4,000 residential units.