NEW YORK BUILDING CONGRESS
MTA CONSTRUCTION INDUSTRY WORKING GROUP MEETING
101 Park Avenue
Club 101
July 30, 2004
8:30 a.m.

SUMMARY OF DISCUSSION

Attendance:
Husam Ahmad, Richard Akers, Richard Anderson, Albert J. Bast, III, Marvin J. Bloom,
Bill Daly, Roland A. Ericsson, Neal Forshner, Frank Giallorenzo, Majid Hedayati, Steven Highfill, Mac Ismail, Mike Jones, Gregory A. Kelly, John Kolaya, Prasad Kudlapur, John P. Lekstutis, Anthony E. Mann, Francis McArdle, Eric Roehrig, Elliot Sander, Harvey Sands, Michael Sweeney, Kimberlee Toscano, Peter K. Tully, Robert Vecchio, Charles Williams, Alexandra Zetlin.

MTA Attendance:
Connie Crawford, Rob Hess, Linda Kleinbaum, Constantine Komandis, Stan Vonasek.

Building Congress President Richard T. Anderson called the meeting to order at 8:30 a.m. and expressed appreciation to the Metropolitan Transportation Authority for taking the time to brief the Working Group on the MTA’s Preliminary Capital Program.

Linda Kleinbaum thanked the Building Congress for providing this forum. She began the meeting with a powerpoint presentation highlighting the major components of the MTA’s Preliminary Capital Program. The 2005-2009 Capital Program emphasizes three components: maintaining the core program, increased security and system expansion.

Ms. Kleinbaum said the core program capital budget will increase to $17.2 billion. This funds not only the visible infrastructure, such as new buses, station rehabilitation, etc, but also the invisible infrastructure that keeps the system running efficiently, e.g. pump stations, track switches, etc. The MTA expects $4.5 billion of these funds to come from the Federal Government. An additional $1.4 billion will be realized from the MTA via asset sales, investment and surplus income. The balance will come from new revenues, new MTA debt, and State and local subsidies.

Ms. Kleinbaum noted that the MTA will be investing $500 million in the 2005-2009 Capital Program toward increased security to protect the system from terror threats. She discussed how the system has not grown in decades and how the 2005-2009 Program positions the MTA to begin expansion of the system to alleviate congestion and support regional economic growth. The major projects the MTA will undertake are East Side Access, the Second Avenue Subway, extension of the #7 Subway, and creation of a link from Lower Manhattan to JFK Airport. The total MTA need for system expansion is $4.2 billion.

Capital Plan Uncertainties
Mr. Anderson asked about uncertainties that pose obstacles to the MTA implementing the Capital Program. Ms. Kleinbaum responded that funding is the overriding issue. After funding, complacency about the Program can also be a threat. She stressed the need for those present to keep the pressure on the City and State to make this Capital Program a reality.

Bus Fleet Expansion
Regarding the expansion of the bus fleet through New York City’s taking over the private lines; it was asked how the takeover will impact the need for more bus depots, etc. Ms. Kleinbaum replied that the issue is not yet ripe for discussion. New York City is still in the process of structuring the deal with the private operators. Connie Crawford added that acquisition of the private bus lines is cost neutral to the MTA.

Tunneling Costs
There was discussion about bids for the tunneling for the expansion. The consensus was there is the capacity and expertise to build the tunnels at an affordable price but that in New York City a friendly business environment must be created.

Albert Bast emphasized that New York City is one of the most expensive places in the world to tunnel. He expressed concerns about surety rules and capacity, particularly how they prevent international companies from doing business in New York.

Mr. Bast also noted that insurance issues are becoming a problem for many companies. These companies, in many instances, cannot get the required insurance for these types of projects due to new fears about terrorism.

Design and Build Proposals
Harvey Sands noted that it is expensive to prepare proposals and suggested that the MTA consider payment of stipends to a “short list” of firms to help them carry the costs of the project.

Ms. Crawford said the MTA has discussed the issue of stipends, and although not adverse to the idea, decided that the first step was to cut back on the requirements on what goes into the bid as a means of reducing the cost of preparing it.

Mr. Sands added that the MTA needed to provide a more reasonable amount of time to prepare bids, stating that 30 days is too short.

Mr. Stan Vonasek noted that to assist in making the bid process easier and more cost effective for those bidding, the MTA has included steel price index language in all of their new contracts.

Retainers
Mr. Bast noted that the MTA’s system of releasing the retainers under old contracts is outdated and slow and that there is an over-abundance of retainage sitting in accounts that do not get interest.

Ms. Kleinbaum said that she would look into the issue and requested Mr. Bast get her a copy of a draft policy for the MTA to consider.

It was brought to the MTA’s attention that companies are audited for each task performed before getting their retainer returned and payment. Ms. Crawford thought that this seemed burdensome and agreed to look into the auditing policy and to get back to the Working Group.

Mr. Anderson thanked Ms. Kleinbaum, Ms. Crawford and the MTA for their time and adjourned the meeting at 10:00 a.m.

Prepared by,

Frank Giallorenzo
Vice President – Policies and Programs