Meeting_Body
CONSTRUCTION COMMITTEE
JANUARY 15, 2025
Subject
SUBJECT: BEVERLY HILLS NORTH PORTAL PROJECT
Action
ACTION: APPROVE RECOMMENDATION
Heading
RECOMMENDATION
Title
AUTHORIZE the Chief Executive Officer to discontinue the Beverly Hills North Portal Project and initiate Project closeout.
Issue
ISSUE
On May 7, 2024, the City of Beverly Hills City Council approved a recommendation from City staff to discontinue the Beverly Hills North Portal (North Portal) second entrance/exit to the Wilshire/Rodeo Station. The City of Beverly Hills (City) cited the forecasted cost increase beyond the budget stipulated by a settlement agreement executed between Metro and the City on November 10, 2020, as its reason for discontinuing the North Portal.
Background
BACKGROUND
The Purple Line Extension Section 2 Project (PLE2) is the second of three sections of the nine-mile Purple Line Extension. PLE2 ranges from the future Wilshire/La Cienega Station (part of the Purple Line Extension Section 1 Project) to Century City. PLE2 is located entirely underground, primarily following Wilshire Boulevard, and includes the design and construction of approximately 2.59 miles of double-track heavy rail subway and two new stations, as well as the purchase of 20 heavy rail vehicles. The Wilshire/Rodeo Station is within the jurisdiction of the City of Beverly Hills, and the Century City Station is within the jurisdiction of the City of Los Angeles.
On November 10, 2020, in response to stakeholder feedback on the Memorandum of Agreement (MOA) between the City of Beverly Hills and Metro regarding PLE2, the City and Metro executed a settlement agreement that included a framework for developing a second entrance/exit to the Wilshire/Rodeo Station on the north side of Wilshire Boulevard. The scope of the North Portal, as described in the Settlement Agreement, included the design and construction of facilities inside and outside the Wilshire/Rodeo Station and included assistance from Metro to the City to ensure compliance with Metro Standards. According to the City’s Environmental Impact Report, the City described the following purpose for adding the North Portal: “Through the provision of the North Portal, the City seeks to provide enhanced passenger access to the Beverly Hills Business Triangle and minimize pedestrian crossings on Wilshire Boulevard, which is a prime local and regional destination and a key hub for tourism, shopping, and dining experiences bounded by North Santa Monica Boulevard to the north, Wilshire Boulevard to the south, and Crescent Drive to the east. North of Wilshire Boulevard in the station area is also a major employment center, and the City is seeking to support commuting workers in this area through the provision of a more convenient station entrance/exit that will minimize the need for pedestrians to cross Wilshire Boulevard to improve pedestrian access, reduce the risks of automobile/pedestrian conflicts, and avoid traffic congestion.”
The Settlement Agreement requires each party to contribute up to 50% of the total cost of the North Portal, which was estimated to be $78,500,000 at the time the Settlement Agreement was executed.
On May 18, 2022, Metro established a Life of Project (LOP) budget of $29,250,000 for the North Portal to satisfy the terms and conditions set forth in the Settlement Agreement. Metro’s contribution includes the use of PLE2 contingency to pay for modifications inside the Wilshire/Rodeo Station needed to access the North Portal. The North Portal scope of work outside the Wilshire/Rodeo Station footprint is not part of the PLE2 scope.
In March 2023, the City’s design consultant prepared an updated cost estimate for the North Portal, which calculated a significantly higher cost than the conceptual estimate used to establish the budget stipulated in the Settlement Agreement.
Per Article 2.4.3 of the Settlement Agreement, “the Parties shall determine whether they still desire to complete the North Portal and make financial contributions toward the North Portal…” The recent City Council action demonstrates that the City will not pursue the North Portal.
The Settlement Agreement also states: “If Metro determines to pursue the North Portal, but the City does not, then the City shall deposit the remaining portion of its half share of the Budget, if any, into the Project Account and shall have no further funding obligations toward the North Portal. If neither Party agrees to pursue the North Portal, then neither Party shall have further funding obligations toward the North Portal, and remaining funds in the Project Account shall be used to pay any remaining joint financial obligations and then returned to the Parties in accordance with Section 2.6.6.”
Section 2.6.6 of the Settlement Agreement states: “Once all invoices submitted by the Parties have been paid out of the Project Account and all other obligations relating to the North Portal are satisfied, any remaining funds in the Project Account shall be returned to the Parties in proportion to each Party’s respective contribution of funds to the North Portal project.”
Discussion
DISCUSSION
Metro and the City each made steady progress toward their obligations for the North Portal as stipulated in the Settlement Agreement up until March 2023. Major milestones completed are the following:
• September 2020 - Metro issued a change to the PLE2 design-build contractor to provide design services to modify the interior of the Wilshire/Rodeo station box to accommodate the North Portal which was in conceptual design by the City.
• October 2020 - The City received CEQA clearance for the North Portal Final Environmental Impact Report (EIR).
• August 2021 - Metro issued a change to the PLE2 design-build contractor to provide construction services to modify the interior of the Wilshire/Rodeo station box to accommodate the North Portal that was to be constructed by the City.
• October 2021 - Metro received NEPA clearance from the FTA to move forward with the addition of the North Portal based on the City’s EIR.
• September 2021 - The City released a Request for Proposal to procure engineering services for the North Portal final design and selected HDR Engineering.
• April 2022 - The City awarded the North Portal Design Contract to HDR after gaining City Council approval on April 12, 2022.
• August 2022 - HDR submitted the 15% preliminary design for the North Portal to Metro and City for review.
• January 2023 - HDR submitted a revised construction cost estimate based on the approved 15% preliminary design for the North Portal.
• February 2023 - Metro and the City met to discuss the findings from the North Portal design report and agreed on the revised construction cost estimate.
• March 2023 - The City’s updated cost estimate for the North Portal is published.
The City estimated that the revised total cost for the North Portal would be $134,200,000. This is significantly higher than the not-to-exceed amount of $78,500,000 indicated in the Settlement Agreement. City staff attributed this cost increase to several factors including an increase in construction costs over the past four years, a surge in demand for construction materials; increased prices due to more construction projects worldwide; ongoing supply chain challenges; and rising labor and transportation costs. City staff reported that the cost of labor has also increased due to the demand for skilled construction workers, particularly in high-growth regions, and the increases continue to be shown in the recent bids for various City Capital Improvement Projects. As a result, on May 7, 2024, the City Council approved their staff’s recommendation to discontinue the North Portal due to the cost exceedance. A copy of the City’s Agenda Report presenting their findings is provided in Attachment A.
The Settlement Agreement between Metro and the City stipulated that if total costs for the North Portal exceeded the budget and one party decided not to pursue the North Portal, the other party would be responsible to fund the entire cost increase if it continued to pursue the North Portal alone. Since the supplemental entrance was not required by Metro’s FEIR for the PLE2, it is recommended that Metro follow the City’s action to discontinue the North Portal and mutually cease further expenditures.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
This recommendation has no safety impact and does not reduce safety at the Wilshire/Rodeo Station.
Financial_Impact
FINANCIAL IMPACT
Metro has been contributing to support the design and construction of the North Portal through two project numbers: the PLE2 project #865522, which pays for the scope of work inside the Wilshire/Rodeo Station footprint that is needed to access the North Portal, and the Beverly Hills North Portal (BHNP) project #860522 which pays for Metro’s scope of work to review design and coordinate construction outside of the station footprint (work designed and constructed by City) to ensure compliance with Metro Standards and expedite cooperation with PLE2. As of October 2024, the PLE2 project #865522 has expended approximately $2,101,327, and the BHNP project #860522 has expended approximately $48,069. The PLE2 project #865522 has committed to spend $8,733,654 for current and remaining construction within the Wilshire/Rodeo Station footprint. No further expenditures are expected for BHNP project #860522 as the City has discontinued the BHNP. This recommendation will close the BHNP project #860522 and unencumber the unspent amount of $29,201,931 from the $29.25M LOP North Portal budget established in May 2022.
Impact to Budget
This recommendation will close the North Portal project #860522 and the unused funds will remain in Measure R 35% Transit to cover costs incurred on Purple Line Extension projects, including financing charges.
Equity_Platform
EQUITY PLATFORM
The purpose of the North Portal was to meet the requirements of the Settlement Agreement with the City of Beverly Hills, which is not an Equity Focus Community.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
The North Portal is recommended for closure and there is no implementation of strategic plan goals.
Alternatives_Considered
ALTERNATIVES CONSIDERED
The Board may choose to continue advancing the North Portal. This is not recommended as the City has decided to discontinue the North Portal and continued advancement of the North Portal would require Metro to provide funding beyond the current LOP budget for the increased North Portal project cost, which may continue to rise.
Next_Steps
NEXT STEPS
Upon Board approval of the recommendation, staff will work with the City to reconcile expenditures made by each party per the terms of the Settlement Agreement and close out the North Portal.
Attachments
ATTACHMENTS
Attachment A - City of Beverly Hills Agenda Report Dated May 7, 2024
Presentation
Prepared_by
Prepared by:
Zephaniah Varley, Executive Officer, Projects Engineering, (424) 551-4449
Reviewed_By
Reviewed by:
Timothy Lindholm, Chief Program Management Officer, (213) 922-7449
