Meeting_Body
REGULAR BOARD MEETING
JUNE 26, 2025
Preamble
Motion by:
DIRECTORS HORVATH AND BUTTS
Evaluating Public-Private Partnership Opportunities for the K Line Northern Extension Motion
For over 15 years, Metro has consistently documented the clear need for a North-South rail line in the Central Los Angeles area to address high travel demand and alleviate congestion (Wilshire/La Brea LRT Extension Feasibility Study and Westside Subway Extension Alternatives Analysis, 2009). The Central Los Angeles area includes some of the busiest destinations and employment centers in Southern California. In February 2016, the K Line Northern Extension was included in the Chief Executive Officer’s “Operation Shovel Ready Initiative” list of projects for advancement through early stages of project planning. A subsequent Feasibility Study was initiated in May 2016 and following the passage of Measure M in November 2016, the Study was expanded to include an Alternative Analysis.
In November 2017, the Metro Board approved a uniform policy for determining when Measure M projects can be delivered earlier than scheduled, as allowed by the Measure M Ordinance. The policy identified a number of strategic acceleration inputs - funding resources and opportunities, regional partnerships, project innovations, et al. - to determine whether a Measure M project is a candidate for early project delivery (Board File 2017-0686). To date, the K Line Northern Extension is the only project to take steps to enter Metro’s Early Project Delivery process, and in July 2018, Metro completed a Feasibility/Alternatives Analysis which yielded five potential alignment alternatives. In August 2020, the Board authorized the award of a 30-month, firm fixed price contract to Connect Los Angeles Partners, a joint venture between WSP USA, Inc. and AECOM Technical Services, Inc., for environmental analysis (CEQA) and advanced conceptual engineering (ACE).
In July 2024, Metro released the Draft Environmental Impact Report for the Project which considers three potential alignments - La Brea, Fairfax, and San Vicente-Fairfax, all of which would be located fully underground. The Project would extend rail service north from the Metro Expo/Crenshaw Station to the new D Line, B Line, and potentially to the Hollywood Bowl, serving multiple communities from the LAX area, South Los Angeles and Inglewood to the Crenshaw Corridor, Mid-City, West Hollywood and Hollywood. It would link four Metro Rail lines and six of LA County’s top 10 busiest bus routes, resulting in the highest ridership of any light rail line in the country with almost 100,000 daily riders, 65 percent of whom are anticipated to be low-income. In response to initial community feedback on the Project, Metro is conducting additional technical analyses on potential seismic, groundwater, mineral rights, property values, and noise and vibration consideration and conducting additional community outreach beginning in June 2025.
Pursuant to the established Measure M Early Project Delivery criteria, project stakeholders engaged third-party consultants to conduct funding capacity (HR&A Advisors; Jones Lang LaSalle) and economic and fiscal benefits (Los Angeles County Economic Development Corporation [LAEDC]) analyses. As an example, according to LAEDC, the estimated construction expenditure of $14.8 billion for the San Vicente-Fairfax Alternative would result in a total economic output in Los Angeles County of approximately $22.5 billion. The construction of the project alone is estimated to support over 123,000 jobs over all phases of construction and generate labor income totaling $9.7 billion. In a scenario where the City of West Hollywood, City of Los Angeles, and County of Los Angeles create an Enhanced Infrastructure Financing District (EIFD) and contribute 50% of their incremental property tax revenues within one-half mile of the alignment, an EIFD could generate up to $22.2 billion (in 2025 dollars) over 75 years, pursuant to AB 761 (Friedman).
On May 7, 2018, West Hollywood’s City Council responded to Metro’s Early Project Delivery (EPD) Strategy Guidelines by approving Resolution No. 18-5055 and launching the City’s initiative to seek accelerated delivery of the Project. In March 2020, the Los Angeles City Council unanimously approved a motion (Council File 20-0046) in support of the Project’s acceleration and instructed City staff to begin analyzing the feasibility of an EIFD and other potential funding opportunities to support the development and delivery of the K Line project, as well as the construction of affordable housing.
Metro’s near-term financial forecast signals significant challenges ahead with a cumulative financial gap in Metro Transit of $100 million by FY27, growing to $2.3 billion by FY30, due to major cost drivers projected to outpace sales tax revenue growth. In addition, Metro is facing increasing capital project costs and tremendous volatility and uncertainty in the federal funding environment. Metro is conducting a comprehensive assessment of the structural funding challenges, including schedule and scope of projects and programs to mitigate the impacts of any losses or interruptions in funding. Understanding the financial challenges ahead, there is a need to explore alternative financing and project delivery methods to continue to deliver on the commitments made to residents in the form of Measures R and M.
While progress is being made toward reaching a locally preferred alternative and discussion and analysis of a proposed EIFD are underway, it is essential that Metro consider all opportunities to finance and deliver the Project. Public-Private Partnerships (P3) are long-term contractual agreements between a public agency and a private entity to design, build, finance, operate and maintain an infrastructure project, and can provide access to private capital, reduce costs borne by transportation agencies, accelerate project delivery, minimize project risk, and spur innovation. Given the location of the K Line Northern Extension, projected ridership, adjacent development opportunities, advertising potential, and other ancillary revenue opportunities, there may be significant market demand for a Public-Private Partnership.
Subject
SUBJECT: EVALUATING PUBLIC-PRIVATE PARTNERSHIP OPPORTUNITIES FOR THE K LINE NORTHERN EXTENSION MOTION
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RECOMMENDATION
Title
WITHDRAWN: APPROVE Motion by Horvath and Butts that the Board direct the Chief Executive Officer to:
Prepare an analysis of market demand for a Public-Private Partnership delivery model for the K Line Northern Extension. The analysis shall include, but not be limited to, comprehensive market, commercial, and financial analyses, as well as evaluations of cost, technical achievability, procurement, risk management, capital delivery / schedule factors, and operations of the alignment for a set period of time.
WE FURTHER MOVE that the Board direct the CEO report back to the Board with a status update in October 2025.