Rail project struggles to stay on budget, Fairfax Times, November 30, 2011

Project’s executive director says cost overruns could reach $150M

by Kali Schumitz, Staff Writer

Construction of the new Metro line to Tysons Corner and Reston is essentially back on schedule but project officials say they are are still struggling to keep the $2.75 billion project under budget.

If project managers are not successful in mitigating cost overruns by reducing costs in other areas, the project could cost up to $150 million more than was budgeted, according to Pat Nowakowski, the executive director of the project.

“$150 million is the worst case scenario,” he said. “We’re trying to do what we can to control the costs.”

This article accurately captures much of what MWAA presented to its Dulles Corridor Advisory Committee (DCAC)--comprising MWAA, Virginia, Fairfax, and Loudoun leaders--at its November 28th meeting.  Beyond the points in the article (click here to read in its entirety), the following important comments were also made:

•   In the financial update presentation, MWAA CFO Andy Rountree noted that, as a result of the LaHood agreement, Dulles Toll Road users would pay 53.9% of the total cost of the Silver Line or about $3.0 billion if the line is built at currently projected costs (which is unlikely).  This is down from 56% or $3.3 billion if the Counties had not agreed to take over part of the station and parking garage costs.  It will not provide significant relief from huge toll increases in the decades to come, and toll road users will still be stuck with 75% of any increases in line construction costs.
• Snowmageddon 2009 substantially delayed construction of the line and stations through Tysons Corner.  Originally scheduled to be built on a regular work schedule, construction crews are now working two 10-hour shifts six days a week.  (Comment:  This may enable the project to return to schedule, but the associated overtime will surely drive costs above budget.)
• Re-sequencing will enable reduction in the number of days of delay--most recently put at 180 days by the construction contractor.  MWAA's project director, Pat Nowakowski, noted that the reported delay had not made any allowance for the possibility of re-sequencing construction.  Some opportunities have been identified and are being pursued.  For example, there is a utilities issue in the locations for building two substations in the Reston area requiring movement of the utilities.  Building of these sub-stations has been re-sequenced such that other sub-stations will be built first.
• The Phase 2 contract solicitation will be delayed about six months to allow for the use of a Request for Information (RFI) to be issued and responses to be submitted MWAA CEO Jack Potter reported.  This had not been considered in prior planning.  MWAA is hoping that the RFI process may identify some cost reduction opportunities and, more importantly, opportunities for less expensive financing.  While not envisioning a true public-private partnership, MWAA hopes that private parties will be interested in offering lower-rate financing than is likely with a general revenue bond issuance. 
• Fairfax BOS Chairman Bulova expressed her appreciation for the regular ongoing meetings among the financing partners' staffs.  Apparently, this had not been the case historically.  The only stakeholders not yet allowed to participate are the people who will still pay for over half the cost of the Silver Line, the Dulles Toll Road users. 
• Loudoun BOS Chairman Scott York asked that, at the next meeting of the DCAC (December 20, 2011, I believe), MWAA give "a back of the envelope" estimate of the cost to build and operate a bus rapid transit (BRT) to the Silver Line's terminal station (Wiehle) in the event Phase 2 was not constructed.  His comment hints at Loudoun's continuing ambivalence about participating in the construction of Phase 2.  Even if it didn't participate, MWAA is committed to building the line to the airport.  This would further increase toll road users' share of the Silver Line's cost. 

After the DCAC meeting, I spoke briefly with Chairman Bulova about how the County planned to finance the $180-190 million obligation to build a station and two parking garages it had agreed to under the LaHood MOA.  She noted that the County is looking at all the possibilities.  She specifically cited an opportunity to use some of the revenue from the Commercial and Industrial (C&I) tax--a county-wide 11-cent tax on businesses for transportation purposes, which could lower spending on other public transportation needs--and noted that a bond referendum could be put on a future ballot for public approval.  She noted rather forcefully that there would be no increase in the tax ceiling for the Phase 2 special tax district--a tax on businesses along the Dulles Corridor from Reston to the airport.  She did not exempt the possibility that the County could pass through some debt servicing costs to MWAA and toll road users as permitted in TIFIA financing, although the size of Fairfax TIFIA borrowing will be small per the MOA.  It seems clear that Fairfax has not yet decided how it will finance its additional share of the construction of Phase 2.  

Here is a link to the presentations made at the DCAC meeting.