Hampton Roads new contract aims to set light-rail deadline, save millions

As the city ponders how to pay for light-rail budget overruns, the Hampton Roads Transit board took action Sept. 23 to help control project costs, The Virginian-Pilot reports. The board approved changes in the final large contract for rail construction that HRT President and CEO Philip Shucet said will allow the agency to avoid spending an additional "few million dollars."

The new contract sets a
guaranteed price, establishes a March 31, no-excuses deadline for completion
and provides a bonus for finishing early and a penalty for finishing late. The
deal is with Truland Systems Corp. of Reston for electrical systems, including
the overhead wires, crossing gates and lights.

The original August 2008
contract was awarded for $27.7 million. The changes bring the total to nearly
$41 million. The added costs cover safety enhancements, an upgraded
communications system, additional street gates and a settlement to resolve
claims by the contractor for delays in the construction schedule.

The state Department of
Rail and Public Transportation asked for the safety improvements and
contributed $6.9 million to help pay for them.

"This is key to keeping
us on schedule and on budget," Shucet said of the changes.

The electrical work is 60
percent complete.

The new agreement
penalizes Truland $2,500 a day for not meeting the completion deadline and
rewards the company with $25,000 a day, for a maximum of 31 days, for finishing
early.

The Tide light rail,
which runs from Newtown Road through downtown Norfolk to the Eastern Virginia
Medical Center complex, is expected to open in May. Over the past two years,
its price has jumped to $338 million from $232 million. The federal, state and
city governments, which are sharing the cost of the line, have all kicked in
extra money to help cover the gap. Norfolk, however, is ultimately responsible
for cost overruns. So far, the city’s share has been $54 million.

HRT needs $27 million to
$28 million more to finish paying for the project, and City Manager Regina V.K.
Williams said last week she’s unsure where the money will come from.

Mayor Paul Fraim said he’s
hopeful the construction won’t consume all of the budget. So far, a $10-million
contingency fund has not been touched.

"We are still talking
with our friends at the federal and state levels about additional resources,
and there may be some regional funds available," Fraim said. "And we, at the
city, have a couple ways to reach for money if we need to."

HRT’s latest cash-flow
analysis shows a $4.5-million payment from the city is needed in January or
work will have to be halted, spokesman Tom Holden said. HRT estimated the money
would be needed in December, but the cash flow for the project is fluid and
based on when work is completed and when invoices are submitted by contractors.

From February through
June, the city would need to pay $3 million to $5 million each month. The final
payments, due in July and August, would be less than $500,000 each month.

"The city has an
obligation to meet these scheduled payments for the completion of the work,"
Holden said.

"There has never been any
doubt in anyone’s mind that we would pay our bills in a timely manner," Fraim
said.