Palo Alto residents who pay into billions of dollars in Santa Clara County sales taxes funding BART's extension through San Jose hit a milestone Wednesday, Aug. 12, when VTA and its tunnel contractor signed a renegotiated deal locking in a target price for the project's roughly $3 billion tunnel.
VTA General Manager Carolyn Gonot and Matt Scott of Kiewit Shea Traylor, the joint venture building the tunnel, signed what VTA calls the Amended and Restated Agreement for the project's tunnel scope, according to VTA's project blog. The deal rolls the contract into a single document, sets a target price and identifies what VTA describes as "opportunities for significant savings."
VTA did not disclose the target price.
The signing is notable because VTA nearly parted ways with KST. After receiving repeated bids that exceeded twice the tunnel budget, VTA announced in June 2025 that it would seek a new tunneling contractor, Engineering News-Record reported. The Aug. 12 agreement reverses that course, keeping KST on the job under a renegotiated framework.
Why Palo Alto residents are paying for it
BART Silicon Valley Phase II is a six-mile, four-station extension from the Berryessa Transit Center through downtown San Jose to the city of Santa Clara. Its budget has ballooned from $4.7 billion in 2014 to an estimated $12.7 billion as of mid-2026. Palo Alto residents help fund the project through Santa Clara County sales taxes: the 2000 Measure A and 2016 Measure B together contribute $4.5 billion, drawn from the 1.625% local sales tax rate county residents pay.
The November 2026 regional transit sales tax measure, if approved by voters across five Bay Area counties, would send an additional $264 million annually to VTA by 2031.
Oversight concerns linger
The contract comes amid scrutiny of VTA's management. A June 2026 Santa Clara County Civil Grand Jury report found that VTA's board "failed to exercise its obligation to provide the strategic direction needed for a successful project." The report also flagged that federal funding approval remains "highly uncertain" given current political conditions. VTA plans to apply for a Full Funding Grant Agreement with the Federal Transit Administration by the end of 2026; the feds are expected to contribute $5.1 billion.
BART itself has clashed with VTA over the project. In August 2025, BART assistant general manager Shane Edwards wrote to Gonot that VTA's actions represented "serious breaches of process," KQED reported.
"At this stage in Phase II, my top priority is to keep the project on the critical path and receive full funding so that the project stays on schedule," Gonot said in a March 2026 profile in the Silicon Valley Business Journal.
What's next
Crews are building the tunnel boring machine launch structure at the Newhall Yard site near San Jose's airport, an excavation reaching more than 130 feet deep. The boring machine itself is being manufactured in Germany. VTA targets completion by 2037, though a federal oversight consultant projects 2039.
