HRT's new contract aims to set light-rail deadline, save millions

NORFOLK

As the city ponders how to pay for light-rail budget overruns, the Hampton Roads Transit board took action Thursday to help control project costs.

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.

Last week, 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.

Debbie Messina, (757) 446-2588, debbie.messina@pilotonline.com