Norfolk council angered by new light-rail cost overruns

NORFOLK

A frustrated Norfolk City Council demanded answers Tuesday from Hampton Roads Transit head Michael Townes as to why the cost of Norfolk’s light-rail project rose $40 million over budget. Council members largely were displeased with his answers.    

City officials learned last week that the cost of the project, being funded by the federal, state and city governments, has risen to about $328 million, nearly $96 million over its original budget and $40 million more than what HRT said a year ago.

The dissatisfaction has spread to Virginia Beach, where Mayor Will Sessoms vowed  Tuesday not to pursue light rail as long as the  current management  of HRT is in place. Norfolk’s 7.4-mile light-rail project extends from the medical center at Colley and Brambleton avenues to the Virginia Beach border. Beach officials are considering a spur to Town Center and the Oceanfront.

“I would never recommend to the council or the taxpayers that we move forward under the current management,” Sessoms said.

HRT is doing a “transit extension study” on light rail for Virginia Beach. Beach Councilman Jim Wood, who heads the HRT board, said “if the current management of HRT does not change, I’m concerned that confidence in the extension study’s accuracy will be questioned.”

Townes’ future at HRT will be discussed today by the group’s executive committee. The committee can’t fire Townes but is expected to vote on whether to recommend his termination.

When asked if Townes should be dismissed, Norfolk Mayor Paul Fraim said he would wait until after the HRT board meets. But he added, “Right now there’s no accountability, and there needs to be accountability.”

Three Norfolk council members who asked not to be identified  said councilman and HRT board member W. Randy Wright told them   in closed session that he will recommend that Townes be terminated. Councilman Paul R. Riddick, the city’s other representative on the board, voiced support for  Townes.

During a sometimes testy 90-minute hearing of the Norfolk council, Townes cited poor oversight from consultants, delays caused by unforeseen problems in moving utilities, changes demanded by Norfolk State University and safety enhancements required by the federal government.

The problem is,  City Councilman Barclay C. Winn said, Townes cited virtually all of the same reasons a year ago in explaining a $56 million cost overrun.

“We were assured a year ago that we had our arms around this thing,” Vice Mayor Anthony L. Burfoot said. “Obviously we didn’t.”

The state and federal government will fund about $27 million of the overruns, city officials said. HRT officials hope to find funding for the rest. If they can’t, Norfolk’s taxpayers will be on the hook for $13 million.

Although the project is being built entirely in Norfolk, federal law requires that HRT manage its construction. Even with the overruns, the project remains the cheapest among  recent rail projects in the United States, at around $44 million per mile. A project in Charlotte, N.C., cost $48 million per mile, HRT officials said.

Wright, considered the father of the light-rail project, and Townes disagreed on how well HRT kept the city informed.

Townes said he told Wright in October that there would be cost overruns. Wright said he did not know until he heard rumors about it from Fraim in early November. Wright said he  asked for a meeting with Townes, who told him  Nov. 19 that there was no conclusive number for  the overruns  but that the project cost could range up to $340 million.

Townes said he  became concerned about potential overruns in July, when officials noticed “discrepancies in construction and scheduling documents.”

In October, he said, HRT began an internal review and discovered costs were spiraling. A consulting firm, AE COM,  was hired in November to analyze the problems, a process that is continuing, he said.

Townes said HRT was “served poorly” by another consulting firm, PBS&J,  which has been paid about $19 million to help run the project and control costs. PBS&J still is working with HRT on the light-rail project.

“It was apparent to you in July that you were running out of money,” Fraim said. “At that point, you were getting into the city’s checkbook. Somebody should have come to the city.”

Townes replied: “I wasn’t aware of these problems until October. I worked through the commissioner you appointed” to the HRT board, referring to Wright.

More than $30 million of the recent  overruns are in so-called “soft costs,” which include fees paid to consultants, legal fees and administrative costs. So-called hard costs, mostly actual construction , increased by about $9 million.

In all, HRT will spend nearly $100 million on light-rail soft costs, according to a handout provided by Townes. “That’s unacceptable,” Wright said.

 Townes and City Manager Regina V.K. Williams said they now have a handle on cost containment, in part because John Keifer, the city’s director of public works, is helping HRT oversee the project. Yet they  conceded that costs could rise again before the project opens in early 2011.

Riddick called the cost overruns “a hiccup, a bump in the road.”

“People are saying that fingers need to be pointed and heads need to roll,” he told Townes. “I support you and will do everything I can to get other commissioners to support you.” Pilot writer Aaron Applegate contributed to this report.

Harry Minium, (757) 446-2371, harry.minium@pilotonline.com