Meeting_Body
CONSTRUCTION COMMITTEE
OCTOBER 15, 2025
Subject
SUBJECT: PURPLE (D LINE) EXTENSION PROJECT SECTION 1
Action
ACTION: APPROVE RECOMMENDATION
Heading
RECOMMENDATION
Title
AMEND the Life-of-Project (LOP) budget for the Purple (D Line) Extension Project Section 1 (Project) by $154,000,000 from $3,353,879,593 to $3,507,879,593 using the fund sources as summarized in Attachment A and consistent with the provisions of the Board-adopted Measure R and Measure M Unified Cost Management Policy (Attachment B).
Issue
ISSUE
The Project has reached the final year of its anticipated ten-year duration and has entered the systems integration and testing phase. This Board action requests an increase to the Life-of-Project (LOP) budget which encompasses a settlement agreement with the design/build contractor, Skanska Traylor Shea (STS) that resolves all outstanding contract disputes and updates milestone completion dates. The increase also provides funding for other professional service contracts impacted by schedule extensions. Remaining contingency is limited but expected to be sufficient to support the final closeout of the Project.
Background
BACKGROUND
Section 1 of the nine-mile Purple (D Line) Extension Project represents the initial phase of three sections, all part of Metro’s Measure R Program. This section, entirely underground, encompasses the construction of approximately 3.92 miles of double-track heavy rail subway and introduces three new stations: Wilshire/La Brea, Wilshire/Fairfax, and Wilshire/La Cienega. Additionally, it includes the procurement of 34 heavy rail vehicles and the construction of a Maintenance-of-Way and Non-Revenue Vehicle Building at the south end of the existing Division 20 Yard (Location 64).
Wilshire/La Brea and Wilshire/Fairfax fall under the jurisdiction of the City of Los Angeles, while the Wilshire/La Cienega Station is within the jurisdiction of the City of Beverly Hills.
On July 24, 2014, the Board approved the initial LOP budget of $2,773,879,593. Subsequently, on November 4, 2014, Metro awarded a 107-month design/build contract (C1045) to Skanska Traylor Shea (STS), with Notice to Proceed issued on January 12, 2015. On February 26, 2016, the Board authorized an increase to the LOP budget, in the amount of $5 million, for an alternative design for the site placement of the Division 20 MOW and NRV Building. On August 27, 2020, the Board authorized a $200 million increase to the LOP budget to address differing site conditions, additional third-party and safety requirements, and scope changes. On May 27, 2021, the Board approved a further $150 million increase to cover tunneling risks and schedule impacts associated with the Wilshire/San Vicente anomaly. Most recently, on May 16, 2024, the Board authorized a $225 million increase, raising the LOP to $3,353,879,593, to fund settlement of multiple contractor claims along with real estate, professional services, and contingency needs. As noted in the May 2024 report, there remained a claim from STS, which was not included in the requested amount. This current action seeks to further amend the LOP to enable execution of a final settlement agreement, which resolves all remaining disputed items.
Discussion
DISCUSSION
Metro and the design/build contractor, Skanska Traylor Shea (STS), have reached agreement on a settlement that resolves all outstanding contract disputes and locks in the cost to finish the Project. This settlement follows years of complex construction that encountered differing site conditions, unforeseen third-party requirements, and scope adjustments. The agreement establishes revised milestone completion dates that support the advancement through systems integration and testing with reduced risk of further delay and no risk of litigation. As noted in the May 2024 Life-of-Project (LOP) budget increase, Request for Change (RFC-12) remained unresolved at that time. This LOP increase fully resolves RFC-12 as part of the settlement with STS.
The Project team is leveraging lessons learned from the recently completed Crenshaw/LAX and Regional Connector Projects, with experienced staff assigned to guide testing and startup. The settlement and budget amendment also include agreement with STS on updated milestone dates for contract completion, which include the remaining street-level activities.
Planned Project Completion
The Project has begun systems integration testing (SIT), building on lessons from Crenshaw/LAX and the Regional Connector. Metro has staff with prior startup and testing experience assigned to guide the work, and the contractor’s team brings direct experience from the Regional Connector.
Initial systems verification (SIT1) testing is nearing completion and full systems integration (SIT2) testing has started and is ongoing. Although much testing remains to be completed, staff anticipate that the project will open for revenue service before the end of Winter 2026. Under the settlement, Substantial Completion is scheduled for January 1, 2026, with City of Beverly Hills street restoration to follow by November 1, 2026.
Economic Benefits of the Project
The economic benefits of the Project have been calculated using the REMI TranSight modeling tool using year of expenditure dollars (YOE$). The model extends the economic impacts previously calculated by LAEDC beyond the construction phase and into the operations and maintenance phases and accounts for economic activity in addition to construction. This allows benefits such as travel time savings, emissions reductions, leisure time savings, and safety impacts, in addition to the economic stimulus from the public investment to be incorporated, as well as the impact from permanent operating jobs created after the Project is placed in service. REMI is the leading software solution for evaluating the total economic effects of transportation policy and is used by various other large transportation agencies in the nation as well as the Southern California Association of Governments (SCAG). The total Project investment (including capital, interest, and operations and maintenance expenditures) is estimated to generate about $5.2 billion in direct, indirect, and induced economic output for the Los Angeles regional economy through FY 2047. These figures consider this segment of the Project in isolation. The potential economic benefits that the Project creates for other components of the transportation network by increasing passenger trips and connectivity are not separately estimated. The Project is also expected to generate 30,600 construction jobs and 34,000 non-construction jobs (Each job is equivalent to a full-time position for a one-year period).
Metro’s Project Labor Agreement (PLA) and Construction Careers Policy (CCP) are applicable to the Project’s design/build contract (C1045). The Contractor is committed to complying with the PLA/CCP workforce requirements. To date, the Contractor is achieving the 40% Targeted Worker Goal (from economically disadvantaged areas) at 63.93%, the 20% Apprentice Worker Goal at 19.69%, and the 10% Disadvantaged Worker Goal at 11.66%. Female participation is at 4.15%, equivalent to a grade of C, and is anticipated to continually increase as construction progresses.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
This Board action will not impact established safety standards for Metro’s construction projects.
Financial_Impact
FINANCIAL IMPACT
The adopted FY26 Budget provides the necessary funds under Project 865518 Purple (D Line) Extension Project Section 1 and in Cost Center 8510 (Construction Project Management).
Since this is a multi-year capital project, the Chief Program Management Officer and the Project Manager will be responsible for budgeting costs in future fiscal years.
Impact to Budget
The source of funds for the recommended action is local Measure R 35% Transit Capital and Proposition C 25%. Since the increase exceeds the remaining amount of Measure R available to the Project, additional funding from other sources must be added to free up the full amount. Surface-level street construction costs not subject to the 1998 ordinance restrictions were identified to be paid by Proposition C 25% and free up Measure R. These fund sources are not Subregional Equity Program funds and are not eligible for Metro Operations.
Multiyear Impact
The sources of funds for the Project are capital funds identified in the recommended Funding/Expenditure Plan, as shown in Attachment A. With respect to the $154,000,000 increase. Attachment B shows the Measure R and Measure M Unified Cost Management Policy (the Policy) analysis and funding strategy required for cost increases to Measure R Projects. A projected breakdown of the cost allocation for the additional funding is included as Attachment C.
To comply with the Policy of the Metro Board of Directors, Metro staff has evaluated potential offsetting cost reductions, including scope reductions, value engineering, a shorter segment, and has determined these are not feasible. The source of funds to address the LOP budget increase is Measure R 35 Transit Capital and Proposition C 25%. The Measure R ordinance includes $4,074,000,000 that can be expended on the Project, and the Board has approved transfers of Measure R to the Westside Subway Extension totaling $415,391,156. Before the proposed LOP budget increase to the Project, the Board approved $4,456,568,328 of Measure R for the Westside Subway Extension Sections 1, 2, and 3, and for Division 20, leaving a balance of $32,822,827 that can be programmed on the Project. The remaining funding is from Proposition C 25%, which will reimburse prior, or pay future eligible street-related expenditures of the Project and of Westside Purple Line Extension Section 3. The Proposition C 25% programmed on Westside Purple Line Extension Section 3 will free up Measure R 35%, which will be programmed on the Project.
This report identifies additional funding resources consistent with the Policy approved by the Board in 2018. In summary, the Policy was developed in recognition that some projects would need additional funding, and the Policy provides a consistent and equitable process to ensure that financial impacts are limited to the local area where the project is located and do not have a region-wide impact.
The Policy defines a cascading list of actions that can be taken. Since the Project is so far along, actions such as value engineering or changes in scope are no longer feasible. Additional funding is the only option.
Equity_Platform
EQUITY PLATFORM
The Project is located in the Cities of Los Angeles and Beverly Hills. The LOP budget increase supports project completion to directly and positively impact the surrounding communities and the broader region by improving transit connectivity. The Project will provide opportunities such as improved mobility and access to employment, education, health, and other key destinations on the Westside and in other parts of the region.
While the Contractor made a 20.25% Disadvantaged Business Enterprise (DBE) commitment on the Design phase and a 17.00% DBE commitment on the Construction phase, the U.S. Department of Transportation has issued an Interim Final Rule (IFR) that makes changes to the DBE Program, including suspension of goals and enforcement, effective October 3, 2025. Metro is currently reviewing the IFR to identify necessary program and procedural changes to ensure full compliance. As such, while the DBE commitment is not a factor in the staff recommendation, there are 93 Metro certified small businesses participating in this contract. This is noteworthy since small businesses are vital for the economy as they drive job creation, foster innovation, and strengthen local communities.
Vehicle_Miles_Traveled _Outcome
VEHICLE MILES TRAVELED OUTCOME
VMT and VMT per capita in Los Angeles County are lower than national averages, the lowest in the SCAG region, and on the lower end of VMT per capita statewide, with these declining VMT trends due in part to Metro’s significant investment in rail and bus transit.* Metro’s Board-adopted VMT reduction targets align with California’s statewide climate goals, including achieving carbon neutrality by 2045. To ensure continued progress, all Board items are assessed for their potential impact on VMT.
As part of these ongoing efforts, this item is expected to contribute to further reductions in VMT. This item supports Metro’s systemwide strategy to reduce VMT through investment activities that will benefit and further encourage transit ridership once the Project is completed. Metro’s Board-adopted VMT reduction targets were designed to build on the success of existing investments, and this item aligns with those objectives.
*Based on population estimates from the United States Census and VMT estimates from Caltrans’ Highway Performance Monitoring System (HPMS) data between 2001-2019.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
This recommendation supports Strategic Plan Goal #1 - Provide high-quality mobility options that enable people to spend less time traveling.
Alternatives_Considered
ALTERNATIVES CONSIDERED
The Board may choose not to move forward with amending the LOP budget. This is not recommended as Metro would not be able to execute the settlement and complete the Project according to the current schedule.
Next_Steps
NEXT STEPS
Upon approval by the Board, the LOP budget will be amended accordingly per the recommendation.
Attachments
ATTACHMENTS
Attachment A - Funding Expenditure Plan
Attachment B - Measure R and Measure M Unified Cost Management Policy Analysis
Attachment C - Projected Breakdown of Cost Allocation for $154 Million
Prepared_by
Prepared by:
James Cohen, Senior Executive Officer, Project Management, (323) 900-2114
Sal Chavez, Deputy Executive Officer, Program Control, (323) 900-2188
Carolina Coppolo, Deputy Chief, Vendor/Contract Management Officer, (213) 922-4471
Reviewed_By
Reviewed by:
Timothy Lindholm, Chief Program Management Officer, (213) 922-7297
Ray Sosa, Chief Planning Officer, (213) 547-4274
