After coming across a $6.5 billion affordability gap — and going through 17 months of discussions with various jurisdictions and stakeholders around the state — Washington state’s Sound Transit system adopted a realignment plan on August 5, 2021, that will significantly readjust the delivery dates for the state’s transit projects that are not currently under construction.
Sound Transit — officially the Central Puget Sound Regional Transit Authority — had previously said that sharp increases in real estate costs and the rising prices of construction materials, compounded with the costs needed to conclude environmental reviews and subsequent project design changes, made projects too expensive to move forward at the dates that were originally planned.
A January 5, 2021, memo from Sound Transit Deputy CEO Kimberly Farley noted these issues, saying that “cost pressures continue across the region” and “advancement of our design work shows that real estate development and cost pressures have continued to outpace the assumptions in our cost-estimating methodology.”
A blog post from Sound Transit noted that “While estimated construction costs are up as we learn more during the project development process, the largest single cost driver is the need to acquire right-of-way while real estate prices continue to rise unabated, even during the pandemic, and new development occurs near projects.”
The transit authority noted an example that is impacting the West Seattle light rail extension where three parcels of land which were initially estimated to cost $76 million to purchase rose in price to an estimated cost of over $250 million — which would also include the relocation of 306 households.
There is hope that the federal government’s recently-passed $1 trillion infrastructure plan will provide some funding to help Sound Transit, but the delays will have a significant impact on the expenditures of the agency. A recent update noted that the changes will result in $130 billion in Sound Transit spending through 2046.
These changes could have an immediate impact on contractors involved in the various projects. In 2019, Sound Transit awarded contracts totaling more than $1.6 billion for the Lynnwood Link Extension light-rail project, with the board voting to give a $789.4 million contract to a joint venture made up of Stacy and Witbeck, Kiewit, and Hoffman Construction (SKH) and a $817 million contract to Skanska Constructors L300, a joint venture of Skanska USA Civil West California District and Skanska USA Buildings.
Materials prices have been a concern for the duration of the pandemic, but issues are heating up
The materials and supply issues affecting Sound Transit’s plans have been impacting contractors and owners worldwide throughout the duration of the pandemic — and such issues have become even more pronounced in 2021.
As per Levelset’s Samuel Votaw, a major problem in summer 2021 has been the price of lumber and steel. Lumber prices jumped to levels upwards of 300% between April 2020 and May 2021, while the price of hot-rolled steel rose to a record high of $1,825 in July 2021 — a 215% jump from its pre-pandemic levels.
These high prices are having a direct impact on projects like the Sound Transit delays, and people in the industry are taking notice as well. David Bernstein, an officer at State Steel Supply Company and Sioux Compressed Steel, noted that “I think most projects being built this spring are coming in a lot higher than folks are expecting,” while Ken Simonson, chief economist of the Associated General Contractors of America, added that “Contractors are being told they must wait nearly a year to receive shipments of steel and four to six months for roofing materials.”
Delays may stretch construction completion years past previously expected deadlines
The plan realigns the framework of the 2016 ST3 ballot measure, which added projects such as a West Seattle light rail system. The readjustment of project timelines will deliver most aspects included in the agency’s ST3 plan, but will add one to 10 years to each project’s estimated completion date.
For example, light rail may reach Seattle Center a full two years later than previously intended, and trains from Seattle to downtown Everett aren’t planned to arrive until five years later than their originally intended date.
The transit system currently services the Seattle and Central Puget Sound area in Washington state. Future projects that have been delayed include expansions to reach the system out to Tacoma, Everett, West Seattle, and Ballard as well as growing the bus rapid transit and Sounder commuter rail systems.
Kimberly Farley added that continued research by the transit system has shown that projects “are also seeing increases in construction costs as design advances and the scope is better understood,” but other transit board officials noted that the same research could also lead to more positive outcomes.
Claudia Balducci, a Metropolitan King County Council member who serves as head of the transit board’s expansion committee, directed the agency to publish an alternative schedule that would allow for the restoration of original timelines if the transit system solves its money problems. “Now the real hard work begins,” added Balducci.
Projects will be organized into four tiers based on the ambition attached to the individual plans. Tier 1 and Tier 2 projects will be treated more ambitiously in regards to completions targets “unless or until it becomes necessary to fall back to affordable completion dates that allow more time to generate the required revenues,” while Tier 3 and Tier 4 projects will be managed under slower, more affordable schedules — “unless the program affordability gap is eliminated for Tier 1 and Tier 2 projects, and then shrinks still further to allow Tier 3 and Tier 4 projects to be delivered more quickly.”
Some of the plans’ major schedule updates include:
- West Seattle Link (Tier 1 priority): Originally scheduled for delivery in 2030, but slated for completion in 2032 as part of both the affordable schedule and the “more ambitious” target schedule
- Everett Link (Tier 1 priority): Connecting Lynnwood to SW Everett, the project is being moved from delivery in 2036 to delivery in 2037 under both target schedules
- Sounder extension to DuPont (Tier 3 priority): Adding a Sounder line, this project is being moved from completion in 2036 to completion in 2045 under both schedules
Despite the impact on future projects, officials are hopeful that the realignment plan can keep in-progress work from floundering. According to the transit system, “for priority projects that face delays under current financial projections, the realignment plan also establishes more ambitious completion targets that are based on plans to intensively pursue additional financial capacity and to reduce costs.”
“Projects now under construction, including light rail extensions to Northgate, Lynnwood, Bellevue, Redmond, Federal Way and Tacoma’s Hilltop neighborhood, as well as the Puyallup Sounder garage, are not subject to realignment,” the statement clarifies. “We are poised to open all of these projects on schedule, almost tripling the light rail system in the next four years.”
As mass transit construction plans heat up nationwide, some projects have struggled
Though mass transit has risen in popularity in the United States — with the federal infrastructure plan giving a major boost to organizations like Amtrak — there have still been small roadblocks for agencies and companies looking to expand, like Sound Transit.
Brightline Florida, which is hoping to build a new passenger railway alongside central Florida’s State Road 417 to take riders from Orlando International Airport to Walt Disney World and the City of Tampa, recently ran into problems with funding and permissions from local officials.
A July 20, 2021, meeting of the Central Florida Expressway Authority led to a unanimous agreement to indefinitely delay the decision whether to allow Brightline to use its preferred route.
A consultant for the Central Florida Expressway Authority noted that while Brightline’s preferred route may end up costing $1.7 billion for its construction, the most commonly suggested alternative route could end up costing nearly $300 million more than Brightline’s preference.
Brightline has similarly intended to expand its services westward during the second half of 2021, after planning and developing its “Brightline West” project since 2005. The company entered a lease agreement with the California Department of Transportation in June 2020 to construct close to 170 miles of track, with the project itself set to begin construction later in 2020.
However, progress on this project was held back after Brightline’s parent company, Fortress Investment Group, stepped back from a planned $2.4 billion bond sale intended to generate financing for the tracks and stations — a delay which it noted was caused by pandemic-related market instability as it saw an $8 billion total cost for the project.