Sep 1, 2010

Pasadena Star-News – Gold Line opens bidding on $450 million extension phase, tests new…

The Gold Line Foothill Extension Construction Authority opened bidding Tuesday on Phase 2A of the light rail's extension toward Azusa, a project officials estimate will cost more than $450 million.

Under a public-private partnership, the winning contractor will design, build and finance the project. The capital costs would be repaid through funds from Measure R, the half-cent county sales tax voters approved in November 2008 to fund transportation infrastructure improvements.

Phase 2A includes light rail alignment work, including on 11.5 miles of track; utilities; crossings and systems; six stations; several bridges; and a 25-acre maintenance facility that will service about 80 to 100 vehicles.

The Foothill extension, the first project to break ground under Measure R, is also spearheading a trend toward public-private partnerships in California.

The idea is to front-load the costs and build sooner in order to save money, officials said.

Measure R guarantees full funding for the Gold Line extension – minus a "gap" of $500,000 – but was scheduled for a completion date of 2017. With help from private investment, however, completion can be moved up to 2013, officials say.

"We knew we would get the Measure R funds on a funding stream over a nine-year period," said Habib Balian, CEO of the Construction Authority, "and we knew we could construct it in four."

Meanwhile, Balian said, the economy was slowing down, and Metro was seeing less revenue than the agency had anticipated.

"We looked at the spending curve if we built it in the most efficient way possible," said Balian.

After running the numbers, he said, the Construction Authority asked "what would happen if we financed that gap," realized it was feasible and that a public-private partnership would be "a wise way to proceed," he said.

Even compared with the interest Metro will have to pay back, the savings are dramatic. Advancing the project by three years, Balian said, will save around $80 million.

"This may cost $30 million or $50 million to finance, (but) it may cost $80 million or $100 million if we built it more slowly," he said, adding that a savings of around 4 million car rides each year is "probably more valuable than the money."

Bob Schraeder, business development manager for Shimmick Construction Inc., a short-listed company in the bidding that has previously worked with Metro on the Orange Line and Eastside Extension, said the design-build-finance concept is a new one for the United States.

"We refer to it as `gap funding.' It has not really been done before in the States," he said, adding that Shimmick's finance partner, Bank of America/Merryl Lynch, has experience in similar ventures.

Mike Aparicio, vice president of transit and operations in Los Angeles for Skanska, another short-listed company that won the first contract in Phase 2A for an $18-million bridge project, said "there are many potential public-private projects throughout California being talked about – but the Foothill Extension is one of the first that has matured to procurement."

Both Aparicio and Schraeder said they see a trend toward public-private partnerships gaining momentum in California and beyond.

"We think that in California public agencies look like they are embracing public-private partnerships as a viable alternative for delivery," said Aparicio.

Progressive owners, said Schrader, "are seeing how they can get the work built sooner, take advantage of the fact that construction costs have come down and contractors are hungry, and make up funding shortfalls."

Balian noted the bridge project awarded to Skanska came in well under the Construction Authority's estimate of $24 million.

The hope, said Schrader, is that the Gold Line project can be "a model for other heavy civil construction jobs that have gap funding."

Construction on of the extension to Azusa will be completed in 2014; to Montclair in 2019; and Ontario in 2021. Balian called it "lightening speed" for a project of its size.

Proposals are due Jan. 27, 2011, and the Construction Authority says it anticipates an award in April 2011.


626-578-6300, ext. 4444