CATS: Coming Down the Line

First Phase of Charlotte's Light-Rail System Heading for Fall Completion

By Bea Quirk

Considerable excitement has justifiably surrounded Charlotte's development of a comprehensive, $4 billion light-rail system.

The city's planning efforts vaulted the project ahead of those in other cities for the critical federal funding necessary to build such capital-intensive systems. (For more information see “All Aboard - Light Rail Comes to Charlotte” and “Mass Transit: All Aboard?” in the May 2006 issue of Southeast Construction.)

However, as the $400 million-plus first phase has turned the corner into its last leg, some of the excitement has given way to negativity.

Controversy broke out this fall over construction of the light-rail line - called Lynx - when the Charlotte Area Transit System announced in September that the probable final cost of the 9.6-mi-long line - the first of several proposed - would reach $462.7 million, an 8.4% increase over the previous announced budget of $426.8 million. When completed in about 2035, the system is expected to cost more than $4 billion.

CATS and the City of Charlotte contend that it was design errors by California-based Parsons Transportation Group that played a key role in the latest cost overruns, although they acknowledge dramatic increases in the cost of concrete, steel and labor also contributed. Tension between the two date back to 2004, and CATS took Parsons off construction management in early 2005. Parsons received $38 million for its work as the designer of record and some initial construction management.

According to CATS public relations manager Jean Leier, Parsons submitted bid documents that were incomplete and required expensive change orders and field fixes; delivered poor plans with errors and omissions; and failed to coordinate design between contracts and packages.

CATS chief executive Ron Tober offered to resign over the latest cost overruns, but Charlotte City Manager Pam Syfert refused to accept it.

With the threat of a lawsuit pending, officials from Parsons and the city are otherwise staying mum. But in an Oct. 11 letter to Parsons, city attorney Mac McCarly wrote, "We are in the process of cataloging specific errors and omissions to comply with the notice provisions of the contract. That list is not yet complete, but when it is, we will send it to Parsons immediately."

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Less than two weeks later, Parsons responded in a prepared statement that read, in part: "It is clear to us that Parsons is wrongly being blamed for problems and costs resulting from decisions made by CATS in the face of tight budget constraints, an aggressive schedule and extraordinary economic conditions that drove up costs on all large public work projects."

It appears the war of words is at an end for now. "We have shared our concerns with Parsons, and in the months ahead, the various lawyers of both organizations will be talking to each other," Tober said in January. "But we want to wait until the project is done to see where we are and to understand fully the scope of the issues and concerns."

Tober adds that the recent cost increase "isn't bad in comparison to other projects, including highways."

He says the new cost figure has an 80% probability of being met successfully, as required by the federal government, but he is hopeful the final figure will actually be less. "We are making scope adjustments and doing value-added engineering," he says.

To meet the shortfalls, CATS is issuing more long-term debt than initially planned, plus there is a $16 million contingency fund, which Tober says, "We'll be careful about using."

Construction of the light-rail line is funded by a ½% countywide sales tax approved by voters in 1998. In addition to those funds, CATS received $200 million from the federal government and $107 million from the state.

While the final ramifications of the cost overruns are yet to be seen, CATS is moving forward to complete the South Corridor Line for a November opening after starting work in early 2005. The line connects the center city with Interstate 485 and runs parallel to a Norfolk Southern Rail line right-of-way along a major thoroughfare.

At the end of 2006, about 25% of the track had been laid. Signal houses and power substations had been installed. The $30 million vehicle maintenance facility opened in January, soon after the first 10 of 16 cars had been delivered and the start of test runs. Canopies began going up at some of the 15 stations as well.

Among the contractors are Charlotte-based Crowder Construction, which is building a parking garage at the I-485 terminus; Charlotte-based Edifice, which constructed the vehicle maintenance facility; and Archer Western Contractors, part of the Chicago-based Walsh Group, which handled road beds, bridges and stations. Archer Western has two contracts: $106.8 million for the roadbed facilities and trackwork and $44.1 million for building 15 stations plus park-and-ride lots. The Edifice contract was r $30 million.

Although the completion date is several months away, Tober says he has already begun thinking about lessons learned in preparation for building the next lines. One of the biggest hurdles was negotiations with Norfolk Southern, whose track runs just 40 ft away from the light rail line for about 3 mi. Contentious issues included the sale of land, spatial separations, operating rights, liability insurance and the use of flagmen.

But the greatest change Tober sees for the future construction is what he calls "using an alternative project-delivery system." For the South Corridor, CATS went with a design-bid-build system, but in the future, he says a construction manager-at-risk will be hired early in the process.

"You'll have one entity in charge of everything, and that will mean better design coordination," he adds. "The lack of coordination among design packages was the biggest issue we faced, and it cost us significant money."

In late 2006, the Metropolitan Transit Commission, the governing board of CATS, voted to begin efforts to pursue two additional lines - an extension of the South Corridor line from downtown to the University of North Carolina at Charlotte and a commuter rail line serving the northern towns of Mecklenburg County.

Although government funding was uncertain at the end of 2006, CATS officials are hoping to begin some initial work by midyear.

Positive Developments

Meanwhile, as the light-rail line progresses through this late-stage controversy, privately developed projects are rising adjacent to the track.

Tina Votaw, CATS transit-oriented-development specialist, estimated the value of new development going along the line at between $500 million and $1 billion.

That estimate may be conservative. In the South End alone, according to Charlotte Center City Partners, there is approximately $712 million of construction projects either proposed or under way. That includes 10 residential projects and more than 300,000 sq ft of retail.

"There is tremendous interest in the light rail corridor, particularly among developers who have witnessed or participated in the success of real estate ventures along transit lines in Washington, Denver, Portland, Dallas and other cities," observes Frank Warren, a Charlotte-based real estate consultant. "There is a growing share of the market that will pay a premium for urban amenities and convenience, and it's not just young professionals. Developers are capitalizing on two fundamental societal shifts - people placing higher value on time - reducing the commute - and the environment - saving the remaining resources."

The South End is an area-and a special tax district-just outside the center city. Its redevelopment from an abandoned industrial district to a neighborhood of businesses, residences and entertainment facilities began several years ago. It is where most of the new development along the line is occurring.

For example, Abbott Street Professional Townhomes-16 live/work units-will be completed this spring. The project is part of a larger development, Camden Square, which is being developed by MECA Properties and built by the Sidbury Group, both of Charlotte, with a price tag of more than $6 million.

Also, construction begins early this summer on what Charlotte-based Crescent Resources simply calls C, a mixed-use village at East Bland Street and South Boulevard that will have 420 residential units, 25,000 sq ft of retail and 10,500 sq ft of office.

To encourage development along the line, the City of Charlotte introduced in 2005 a new zoning classification called transit-oriented development. Votaw says the city is receiving two or three applications a month for this kind of rezoning, which allows higher density, relief on parking requirements and stricter streetscape requirements along the line.