Fastracks Costs : More Than Construction Inflation

Seeing Reuteman at the Denver Post arguing that the tax payers should give RTD even more money for Fastracks was annoying to say the least. Reutman's argument is based on the semi-false claims that RTD has been trumpeting this whole time. That is, the aren't getting as much in sales tax revenues as they told the voters they would and that their large construction cost increases were unforeseen. The problem is, these claims are only half-truths.

Earlier in this decade when RTD was getting ready to go to the voters we were seeing costs of commodities like copper and aluminum outpacing inflation. Steel prices were rising quickly back then. For example, Chinese consumption was increasing by 20% per year (about 1/2 of the total US annual output of steel). RTD had no business making the sort of cost assumptions back then that they did. They ignored what was happening then and they're paying the price today. It's not just that recent rises have been so steep, it's that they underestimated increases as they were happening 5-10 years ago. Recent increases make the situation that much worse.

We can see this in the West Corridor. The West Corridor was originally going to cost $508.2 million (RMN). Ac couple years after the vote, the cost had gone up to $744 million. That's a 40% increase. Even over a few years higher than projected construction costs would have not led to 40% more.

RTD trimmed down the costs for the West Corridor including reducing potential capacity by reducing station size and single tracking part of the line. That brought the cost down to $634 million. In the year since then the project cost for the West Corridor shot back up to $707.6 million (RMN).

RTD says that the lion share of that change was due to construction costs increases. How can that be? The Colorado Construction Cost Index went up 6.1% last year. Yet costs on the West corridor went up 12%. They've aleady made about $275 million worth of "cuts" on a line that was originally going to cost $508.2 million. There's more to the issue than just unanticipated construction cost increases.

RTD's Hail Mary Pass

I'm a little curious how an operation that's 80% funded by tax payers has "profits".

Denver Post :
"This is the largest developing market in public-private partnership infrastructure," said Crooks, who was in Denver last week at a national conference on public-private partnerships, or PPPs.

RTD expects private companies to bring at least $500 million of their own financing to the DIA train/Gold Line/maintenance center project.

In return, the private group would get a dedicated stream of payments from RTD for up to 50 years that would be structured to pay off construction debt, fund the operation
and maintenance of the trains and reward the consortium with some measure of profit.

West Corridor : 38% Over Budget

RTD's 12.1 mile West Corridor, part of the Fastracks project, is nearly 40% over budget. Last year RTD's budget for the line hit $744 million. They reduced it to by $634 million through several cost cutting measure such as :

• Single track the few miles of the line, reducing rush hour frequency to a train every 15 minutes instead of 5
• Number of LRT cars a station can hand from 4 to 3.
• Build less parking spaces (for example, one ramp is planned to have 400 spaces, half of the originally recommended 800).
• Building the rail bed to withstand 5-year storms instead of 100-year storms.
• Eliminating some stations
  

These weren't enough. As mentioned, costs have continued to rise back up to $707.6 million. This has prompted even further cost cutting measures by RTD. These include :

• Reducing landscaping at stations.
• Further dumbing down station design to make building them cheaper
• Delaying installing safety equipment such as security cameras and emergency phones.
• Reducing furnishing at stations.
• Delaying constructing pedestrian bridges.
• Reducing the capacity of the bike path that will parallel the line.

Sources

• http://www.denverpost.com/news/ci_9546240
• http://www.rockymountainnews.com/news/2007/Oct/26/rtd-cost-cutting-hits-sixth-avenue-segment-hard/
• http://www.rockymountainnews.com/drmn/local/article/0,1299,DRMN_15_5277508,00.html