Recent weeks have seen a number of major cities make moves involving the expansion of public transit. While these projects can bring a lot of benefits to contractors — often with billions of dollars being spent on improvement — there can be a significant amount of risk for contractors, who could face government schedule and payment delays.
Rail provider Brightline’s new Brightline West expansion — which is planned to connect Los Angeles with Las Vegas — took a major step forward this week after the company signed a memorandum of understanding with officials from the California State Transportation Agency (CalSTA) letting the company use 48 miles between Victorville and Rancho Cucamonga for the new rail line.
As the company moves into the construction phase of its plans, officials in both states seem to value what the company will bring to the area. Las Vegas city commissioner Michael Naft said of the state’s transportation issues that “We need to be looking at multimodal transportation options. Just adding a lane of pavement isn’t gonna solve all the problems.”
There’s not yet a timetable for the construction of Brightline West, but the memorandum of understanding now allows the company to work on designs for the extension, meaning getting contractors involved — for both the rail system itself and a station for which Brightline recently purchased land in Las Vegas — will be one of the next steps for the company.
Brightline’s Florida plans — which have so far seen their fair share of setbacks — are still growing even more, as the company recently outlined plans to spend $8 billion on an expansion from Miami to major cities in the central portion of the state.
Cegelis made it clear that the company is looking to build up operations around the country beyond just these plans, as well: “We see many other opportunities to expand this around the country. Florida is the start of this business, but we expect it to roll out to connecting other cities in this country.”
On October 4, 2021, an order by New York Governor Kathy Hochul pressed the New York Port Authority to look into rail expansion in New York City, and a number of city officials — like State Senator Michael Gianaris — are supporting the idea of a straight connection between LaGuardia Airport and Manhattan as long as it is done without urban displacement.
“That seemed to make the most sense to me, it achieves the goal of getting the subway system linked up with the airport,” said Senator Gianaris. “It keeps us from wreaking havoc on some of our local streets…New York can figure out how to engineer this.”
Though the plans need to be developed and approved, there’s precedent for an expansion like this to have a path forward — and thus be a significant project for contractors to look forward to. A similar plan proposed by former Governor Andrew Cuomo, which would have added a train from Manhattan to slightly past LaGuardia Airport, was previously approved by the Federal Aviation Administration and would have cost $2.1 billion.
Though these multi-billion-dollar transit improvement and expansion projects can offer great profit to the contractors involved, they can also carry risks, particularly when the projects are government-run.
“There’s a bit of a misconception that government projects are safer and more secure than private jobs. While it’s true that public projects tend to have more oversight, there are just as many risks (if not more) involved in government projects,” said Levelset’s Tom Scalisi.
A recent dispute between an Ohio contractor and the Erie Metropolitan Transit Authority led to the contractor filing a lawsuit against the transit authority, claiming over $1 million in damages and nonpayment after a dispute arose regarding over a year and a half of delays on the project.
Similarly, a major rehaul of the Washington Metropolitan Area Transit Authority’s Metrorail system led to significant holdups for contractors in 2018 and 2019, with “unforeseen problems” causing delays and eventually contributing to a June 2021 claim of over $2 million in nonpayment by a project contractor.
It’s important for contractors who work on any transit project for a government owner to keep abreast of the laws applicable in their state.
“Keep track of lien rights and bond rights,” advised Illinois construction lawyer Samuel H. Levine. “States and other governmental entities often require general or prime contractors to obtain a payment bond. Some states and governmental entities require a performance bond on a public project. The bond protects the governmental entity and subcontractors. A contractor needs to keep track of the time limits for service of notice on the bond and for filing suit to enforce a claim.”