On or after March 10th, Monticello Avenue between Freemason Street and Charlotte Street will reopen to northbound traffic. Charlotte Street between Monticello Avenue and Saint Paul’s Boulevard will reopen to through traffic in both directions.

The east and west sides of the Monticello/Freemason intersection will close for light rail construction. All turns from Monticello Avenue to Freemason Street will be prohibited.

• Motorists heading east (towards the new Bank Street or MacArthur Center North parking garages) are encouraged to continue on Monticello Avenue, turn right onto Charlotte Street, then right onto Bank Street and continue to Freemason Street.
• Motorists heading west (towards Boush Street) are encouraged to turn left off of Monticello Avenue onto Market Street, then right onto Granby Street and continue to Freemason Street.

Motorists are urged not to block intersections.

HAMPTON

Cost overruns on Norfolk’s light-rail project have created a potential cash-flow crunch for the $338 million starter line, Hampton Roads Transit’s board learned Thursday.

The increasing costs rolled out over the past couple of months prompted the Federal Transit Administration to hold up $26.8 million of federal money already approved for the project, HRT President and CEO Philip Shucet said.

HRT needs the FTA to release those funds by April for the agency to be able to continue to pay the bills. 

“FTA is well aware that if you hit the wall on cash flow and stop work, you’re going to increase the cost,” Shucet said. “No one has an interest in that happening.”

Federal regulators have told HRT leaders they need assurances about project spending and financial stability before releasing more money. Specifically, the FTA wants to be sure that federal funds are going to pay only for enhancements to the project and not for tasks that went over budget. And authorities also want to know that HRT can fully fund the rest of construction.

Shucet said he’s confident the agency will be able to provide the documentation the FTA needs and that the agency will continue to pay its bills on time and avoid additional delays.

Last week, HRT released what it considers its final budget for light rail: $338 million.

“Now that we have a new cost-to-complete, we have another month of hard work ahead,” Shucet said. “We’ve got to get a financial plan in place that is credible. 

A report prepared by consultant AECOM indicates that the federal money is being held in two separate pots of $13.4 million each. 

One pot would be released when the FTA gets proof that no federal money will pay for cost overruns. The money can be spent on what’s known as “betterments” to enhance safety, security and livability. The other pot would be available when the FTA is satisfied that there are sufficient resources to finish construction. Light rail is expected to open in May 2011. 

Shucet said HRT is working to categorize each new cost as an enhancement or an overrun to present to federal regulators. HRT has financial commitments totaling $288 million, the previous light-rail budget. Of the $50 million in new costs, the state has agreed to cover up to $20 million. The FTA wants a plan for funding the rest. 

Shucet said the agency is working hard to identify the money from other federal and state sources. Norfolk, however, is ultimately responsible for any gaps. 

AECOM ’s report states that the FTA needs reassurance of Norfolk’s capacity to pick up the tab: “Reassurance is not the same as allocating funds. Reassurance does not prevent other funding strategies from being pursued.” 

W. Randy Wright, HRT vice chairman and a Norfolk councilman, said: “I would be surprised if this thing does not work itself out. I certainly understand what FTA’s concerns are and their rationale – they want to know there’s a means to the end.” 

In other HRT board business Thursday:

Shucet’s employment contract was modified to reflect his full salary. HRT is paying him $28,000 a month, and Norfolk is contributing another $12,000 a month. Shucet is working on a one-year consulting contract that can be renewed in six-month increments. HRT hired Shucet at the end of January to replace Michael Townes, who was pressured to step down.

A possible bus fare hike was set in motion. Studies under way show HRT’s $1.50 ticket is about 50 cents lower than similarly sized cities. While a new rate has not yet been proposed, the board set public hearing dates of April 22 and May 27 for possible changes.

But let me be clear: Going forward, we will not waver from our policy requiring localities to meet any local match requirements associated with future appropriations.  It is one thing to keep a prior commitment made and received in good faith.  But I do not want there to be any question about where we stand with respect to this matter in the future.”

HRT Chairman and Virginia Beach City Councilman Jim Wood said, “As was promised by HRT’s past president, the citizens of Virginia Beach can rest assured that the feasibility study will be funded without city dollars.  HRT should be applauded for its decision today.  Part of taking steps toward rebuilding public confidence requires honoring previous commitments.  Now we can move forward as partners.”

HRT Commissioner and Virginia Beach City Councilman John Uhrin agreed. “I’m pleased that HRT has taken this step to ensure the funds are in place to continue this important study. This goes a long way in restoring trust in the way HRT does business.”

For more information on HRT services, visit www.gohrt.com

VIRGINIA BEACH

After two weeks of furious lobbying, Mayor Will Sessoms likely has the six City Council votes needed to give Hampton Roads Transit $244,800 to move the Beach’s light-rail study forward.

The $6.6 million study has slowed because HRT is almost out of money for it. The City Council, scheduled to vote on the funding request Tuesday, had been under the impression that HRT was paying for it until agency officials asked earlier this month for city money needed to get a nearly $1 million federal grant.

Five people – Sessoms and Councilmen Glenn Davis, Harry Diezel, John Uhrin and Jim Wood – said they will vote to approve the money.

Councilwoman Barbara Henley, a light-rail supporter, hinted she will join them but said she will make a final decision Tuesday. She said the city’s comprehensive plan is built around increasing transit options, which the study is investigating.

“If we were to stop looking at transit, that means our comp plan is not valid,” she said.

Vice Mayor Louis Jones and Councilmen Bill DeSteph and Bob Dyer said they will vote against the funding.

Councilwomen Rosemary Wilson and Rita Sweet Bellitto said they are undecided. Bellitto was appointed by the council to fill the remaining term of Ron Villanueva, who is now a state delegate. Her first meeting is Tuesday.

Council members lamented the timing of HRT’s request. The city and its school division are facing an $84 million budget shortfall. City Manager Jim Spore said the city can come up with the $244,800 from a contingency fund.

The study is looking at the feasibility and environmental impact of extending the Norfolk Tide system across Virginia Beach to the Oceanfront. Without the city money, HRT would not get the federal money, and the study would halt, officials said.

The city is also trying to complete a $40 million deal to buy the old Norfolk Southern rail line for a possible light-rail corridor. The state has pledged $20 million but has not delivered the money.

Sessoms said that not giving HRT the money to keep the study moving would send a bad message to the state.

“I sure don’t want to give them excuses not to fund that $20 million,” he said.

He also portrayed the Navy, specifically Oceana Naval Air Station’s commanding officer, Capt. Mark Rich, as a light-rail proponent.

At Tuesday’s council meeting, Sessoms said he’d had lunch with Rich recently.

“The first thing on his agenda was we want to be tied to light rail,” Sessoms told the City Council. “Oceana, commanding officer, we need to be tied into light rail.”

Rich had a different recollection. He said light rail wasn’t the first thing they talked about and didn’t remember saying, “We need to be tied into light rail.”

“I don’t recall that exact combination of words,” Rich said. “The Navy is not trying to influence the city of Virginia Beach on light rail and is not trying to define the solution.”

He added, “We certainly support initiatives that go toward reducing traffic and making commutes easier and safer and that ultimately goes to military readiness…. A light rail that serves Oceana would certainly be of value to us.”

Virginia Transportation Secretary Sean Connaughton has ordered an investigation into Hampton Roads Transit’s business practices and light-rail project.

HRT’s new president and CEO, Philip Shucet, asked Connaughton last week to authorize an inquiry of the agency, which has amassed more than $100 million in cost overruns on Norfolk’s light-rail line.

Connaughton this week signed off on the investigation, which will be conducted by the Virginia Department of Transportation inspector general.

“There’s state money as well as federal money in the light-rail project so we need to ensure all the funds were properly allocated,” he said.

Shucet wants investigators to examine three issues: HRT’s business practices as they relate to The Tide light-rail project, HRT’s consultant selection process and HRT’s handling of a suspected embezzlement of $80,000, for which three employees were fired.

Shucet requested the review begin no later than April 1 and deliver an initial report no later than July 1.

“We will begin almost immediately,” Connaughton said. “We’ll work with Mr. Shucet and staff to establish time frames that meet whatever requirements that they have.”

Shucet took the helm of HRT on Feb. 1, replacing Michael Townes, who was forced to step down last month.

Over the past year, the cost of Norfolk’s 7.4-mile light-rail line ballooned 46 percent from $232 million to an estimated $338 million – the newest cost estimate that was announced on Thursday. Its opening is delayed until May 2011.

Click Here to view HRT Cost to Complete

Norfolk, Va. – Hampton Roads Transit announced Thursday that the final cost to complete
construction of The Tide will be $338.3 million and that passenger service will begin in May
2011.

The new figure comes after a six-month review by HRT and its financial advisor to identify costs
not fully accounted for in previously released budgets, including the additional time required to
design project changes and then complete construction.

The figure is based upon the work of AECOM, HRT’s financial consultant of record, an internal
assessment of the project conducted by HRT last fall, and a “bottom up” review that combined
previous efforts into a final cost.

“This is the review that has long been needed,” said HRT President and CEO Philip A. Shucet.
“The public now has a clear idea about what it will take to complete this important project and
when passengers will board. Our organization will own the responsibility of this work.”

The amount includes changes in three broad categories that affect the bottom line: hard
construction, such as those associated with actual building, soft costs, or those involving design
and construction and program management oversight. The third is real estate.

The reviews of hard costs found numerous examples of changes that were required and now
account for about $224.8 million of the total project cost. This figure includes the additional time
required to build project components after changes were made to existing contracts, extensive
underground utility relocation, system safety enhancements, and delays relating to the vehicle
maintenance and storage facility.

Soft costs, such as program and construction management fees, rose as the time to deliver the
project grew longer. Updated soft costs now account for $69.9 million of the total project costs.
As The Tide nears completion – it’s about 62 percent complete – the amount of hired help has
declined as HRT assumes a greater control over the project.

Higher costs associated with real estate, utilities and insurance now account for $30.8 million in
project costs. Some of the higher real estate costs are associated with the work required to obtain
a large number of temporary construction easements to allow workers access to property.

February 18, 2010 – Printable Version

NORFOLK

Hampton Roads Transit’s new president and CEO, Philip Shucet, on Saturday called for the inspector general to investigate the agency’s light-rail project and business practices.

HRT in recent months has been faulted for amassing more than $100 million in cost overruns on Norfolk’s starter light-rail line and for failing to pursue a suspected embezzlement of $80,000.

Shucet wrote a letter dated Feb. 13 to Transportation Secretary Sean Connaughton requesting a review by the inspector general’s office within the Virginia Department of Transportation.

Shucet specifically wants state investigators to examine three issues: HRT’s business practices as they relate to The Tide light-rail project, HRT’s consultant selection process and HRT’s handling of the suspected embezzlement.

“We need to look and see if there’s anything there and get it out on the table,” Shucet said in an interview. “This is a good thing to do for any new CEO – to have someone with skill take a broad look and tell you if there are any issues that warrant a closer look,” he added.

Shucet took the helm of HRT on Feb. 1, replacing Michael Townes, who was forced to step down last month amid charges of mismanagement and failure to keep city leaders and transit board members informed of problems with light rail and within the agency.

Over the past year, the cost of Norfolk’s 7.4-mile starter light-rail line ballooned 47 percent from $232 million to an estimated $340 million. Its opening has been delayed 18 months until mid-2011.

Shucet, however, does not trust previously released numbers and is working with his staff, aided by work from consultant AECOM, to produce a final light-rail budget that will be presented to the HRT board at a meeting Thursday.

He told the Norfolk City Council last week that he’s perplexed that nearly half of the light-rail budget is for “soft costs,” much of which is consulting fees. Soft costs typically account for 15 percent of road projects and 20 to 30 percent of light-rail projects, said Shucet, former Virginia Department of Transportation commissioner.

Shucet also wants answers surrounding the reported theft of $80,000 from bus fare boxes in Virginia Beach, for which HRT fired three employees but did not pursue criminal charges. At the urging of HRT board chairman and Beach Councilman Jim Wood, Virginia Beach police are now investigating.

Shucet, who has a reputation for fixing troubled companies or agencies, was hired by HRT on a contract basis to contain costs while finishing construction of the light-rail line.

In two weeks on the job, he’s made changes that he said will save more than $14 million in costs to the light-rail project. Shucet reviewed the changes Saturday morning with about 100 residents gathered at a meeting of the Norfolk Tea Party 2.

The most recent change occurred Friday when he appointed a project management team within HRT, thereby eliminating a layer of consultants and avoiding about $7 million in consulting fees.

“Nobody will ever manage a project better than the owner,” Shucet said. “There was a heavy layer of support through consultants, which perhaps was appropriate initially for an agency that really hadn’t managed a construction before.”

Shucet also consolidated two of the light rail’s largest construction contracts, resulting in an estimated savings of about $7.5 million.

Shucet promised the Tea Party an honest and open administration under his leadership. “If you tell the truth, you don’t have to manage what you said,” he said.

NORFOLK

Nearly half of the budget to build Norfolk’s light-rail starter line is “soft costs” such as consulting, legal and administrative fees, which is almost twice the norm for this kind of project, Hampton Roads Transit’s new leader, Philip Shucet, told the City Council on Tuesday.

“They just don’t make any sense to me,” said Shucet, who took the helm of HRT last week. “If I divide them by two, they don’t make any sense to me.”

Shucet said he’s still crunching numbers to grasp what went wrong. As former Virginia Department of Transportation commissioner, he’s accustomed to soft costs – expenses other than construction – of 15 percent to 18 percent of a project.

Former HRT president and CEO Michael Townes told the council in December that soft costs were 30 percent of the total project cost, which at the time was estimated at $328 million. Townes was pressured to resign last month amid spiraling cost overruns on the project.

“This is absolutely astounding,” Councilman W. Randy Wright, who serves on HRT’s board, said Tuesday. “It shows how poorly things had been managed.”

Vice Mayor Anthony Burfoot called the soft costs “outrageous.”

“I like the fact that (Shucet) is going to pull this thing apart like an onion to understand where it is and how we got there, then extract from that to get us on the right track,” he said.

The true cost of Norfolk’s 7.4-mile light-rail line is still not clear, Shucet said. HRT staff, with input from consultant AECOM, are working to develop a final cost-to-completion number and present it to the HRT board at a special meeting Feb. 18.

“It will be a number that everyone at HRT will own,” he said.

The previous HRT administration over the past several months estimated that the cost had risen 47 percent – from the original $232 million budget to $288 million, then to $328 million and again to $340 million.

“None of those numbers are reliable,” Shucet said. “We will determine a reliable number…. Our goal will be to stop the continued upper trend of this cost.”

The financial and construction challenges have pushed the opening date of The Tide, as the rail line is known, to late spring or, more likely, summer of 2011, Shucet said.

He said HRT is still searching for funds to complete the project. At $288 million, the federal share was $167.2 million, the state was contributing $67.1 million and the city, $53.7 million. The state has committed an additional $20 million, and federal authorities are expected to add $7 million. Norfolk could be responsible for the balance unless other funding is secured.

“The hope and intention is to hold the city harmless or absolutely as harmless as we can possibly do,” Shucet said.

A number of steps have been taken to contain costs. Shucet said they include consolidating the two biggest construction contracts, saving $7.5 million; ending the practice of open-ended task orders with no defined costs; implementing double work shifts downtown; and adding incentives and penalties in construction contracts.

Under Townes’ leadership, HRT’s lack of communication about light rail’s problems was seen as eroding the agency’s credibility.

“We are committed to a culture of communication and transparency,” Shucet said.

Mayor Paul Fraim told Shucet he was counting on openness: “Tell us the truth every time you come in here.”

VIRGINIA BEACH

A sometimes angry, sometimes resigned City Council was split Tuesday on a request from new Hampton Roads Transit chief Philip Shucet for about $245,000 to finish a now-delayed light-rail feasibility study for the city.

The council previously thought HRT would pay for the study, now estimated to cost $6.6 million, without city money.

Two council members said they won’t support giving HRT money, four said they reluctantly would, and four said they needed time to digest the news. HRT is asking for a decision at the Feb. 23 City Council meeting.

The city money, which Shucet called “critical,” is needed to match part of a $1.2 million federal grant that would keep the study going. Without it, the study would come to a halt, possibly ending the quest for light rail in the Beach.

Some council members said that was too great a risk to take.

“I’m not at all happy with having to come up with $245,000,” Councilman and HRT board member John Uhrin said, “but I still believe that the results of the study are important for the city.”

Mayor Will Sessoms and Councilmen Glenn Davis and Jim Wood, chair of the HRT board, agreed.

Bob Dyer and Bill DeSteph said they won’t support giving city money. Dyer called for the whole project to be delayed because of the bad economy.

Harry Diezel, Barbara Henley, Louis Jones and Rosemary Wilson said they need more time to decide.

“This is a lot of change for us to assimilate,” Henley said. “We’ve been telling the public that the city wouldn’t have to pay. All of this has now changed.”

The HRT study is looking at extending the Norfolk Tide line to the Oceanfront. The city has a deal with Norfolk Southern Corp. to buy a 10.6-mile right-of-way for $40 million.

City Manager Jim Spore said the city could use $244,800 from its contingency fund for the study.

Some council members indirectly criticized departed HRT chief Michael Townes, who they said told them HRT would not need city money for the study. Shucet replaced Townes. Council members also wanted to know how the project cost climbed from $4.3 million to $6.6 million and why they weren’t told.

Shucet said the $4.3 million represented only the consultant’s cost.

“What you apparently were not given was project management, legal services, ridership studies,” and several other costs, Shucet said.

So far, about $1.5 million has been spent on the study, money that is almost gone, he said. If the City Council approves the money, HRT could access the federal grant in April.

The study is now estimated to be finished between August and December 2011. The previous finish date was late 2010.

Shucet also faced questions about how HRT will come up with the $5 million the agency pledged to help buy the railroad right of way.

“We will keep our commitment,” he said. “I wish I could tell you with specificity how, but we will keep it.”

Posted on February 9, 2010 at 12:24 PM

******

NORFOLK — Light rail trains will be running in the spring or summer of 2011, HRT’s new CEO and president Phil Shucet told Norfolk City Council members Tuesday.

It’s the first estimate from HRT for completion of The Tide since a series of cost overruns and construction delays were revealed in December.

The project is 61 percent complete with major construction expected to be “substantially complete” in July.

Shucet said it’s still too soon to estimate how much it will cost to complete the project.

Shucet, on the job for a week, said that number will be ready next week and made public at the HRT commission meeting on Feb. 18.

“It will be a number everyone at HRT will own,” Shucet told council members.

Shucet is slated to brief Virginia Beach council members later Tuesday.