The New York Times-20080129-Higher Costs May Curtail M-T-A- Work

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Higher Costs May Curtail M.T.A. Work

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Soaring construction costs could force the Metropolitan Transportation Authority to scrap plans for an architecturally ambitious glass-domed subway station in Lower Manhattan and lead to more than $1 billion in cost overruns for the authority's major expansion projects, officials said Monday.

The rising costs could slow progress on the three so-called mega-projects needed to expand the capacity of the public transportation system, including a Long Island Rail Road link to Grand Central Terminal, a westward extension of the No. 7 subway line and the first leg of the Second Avenue subway.

The news represents another setback for the subway station project, known as the Fulton Street Transit Center, which was envisioned as a central element in the recovery of Lower Manhattan after the terror attack of Sept. 11, 2001.

We're just in the middle of a construction inflation crisis, said H. Dale Hemmerdinger, the authority's chairman. And from our point of view as an agency that spends an awful lot of money, this is not good news.

Elliot G. Sander, the authority's executive director, ordered an immediate review of the budgets for the three mega-projects. The review will identify areas where costs can be cut and the projects scaled back, although he said that he hoped to keep cutbacks to areas that would not directly affect riders.

A back of the envelope calculation, Mr. Sander said, suggested that together the three mega-projects could see $1 billion or more in additional costs. The combined budgets for the three projects total $12.5 billion.

The problems were underscored Monday, during a round of authority board committee meetings, by the decision to drastically scale back plans for the Fulton Street Transit Center, a project to modernize and unravel a spaghetti bowl of interlinked subway stations in the vicinity of Broadway and Fulton Street.

Financed partly by federal funds earmarked for the post-Sept. 11 recovery of Lower Manhattan, the transit center was to be topped by an eye-grabbing glass and steel domelike structure called an oculus, which would direct natural light into the underground.

The center was also seen as the transportation authority's answer to the even more ambitious and costly PATH terminal designed by the architect Santiago Calatrava for the Port Authority of New York and New Jersey, a block to the west at ground zero. (Cost estimates there have also risen, to as much as $3.4 billion from an initial budget of $2.2 billion.)

Several underground portions of the Fulton Street subway project have been completed or are close to being finished, including a renovation of the platform and mezzanine serving the Nos. 2 and 3 trains.

The authority planned to finish the project by letting out a contract to cover the construction of the entrance building and oculus and several remaining pieces of the underground work.

But the authority received only one bid, of $870 million, far exceeding the $370 million the authority had budgeted for the contract.

Mysore L. Nagaraja, the authority's president of capital construction, said the authority rejected the bid and would now split the project into smaller pieces, in the hope of attracting more bidders and greater competition.

He said the underground portions of the work could be completed by late 2009, which will make the connections between subway lines fully functional for riders.

But officials said that it was unclear now what would go on top.

I'm sad to say that we cannot build the transit center as currently envisioned in this market with the budget that we have, Mr. Sander said.

As it is, even without a station building, the project will reach a total cost of about $930 million, which is nearly $30 million more than the authority has in its overall budget for the project.

It is not the first time the project has run into budget trouble. The cost of acquiring real estate to make way for the project rose to $157 million from an early estimate of $50 million.

The authority has already razed several buildings at Fulton and Broadway to make way for the project, and Monday's developments raised the prospect of the site's remaining virtually vacant above ground for an extended time, or of a much more modest entrance building.

Fulton and Broadway are the crossroads of downtown, and the transit hub as imagined was going to give Lower Manhattan something that it hasn't had, which is a visible transportation hub, said Elizabeth H. Berger, president of the Alliance for Downtown New York, a business group.

It's at the center of our future, and the project has to get back on track.

Mr. Hemmerdinger said that the rise in construction costs was being felt across the country in both the public and private sectors and that it was driven by a steep increase in the cost of basic materials, including steel and concrete.

Mr. Sander said that if the financial problems on the projects get worse, they could cause delays.

We don't want to repeat the mistake that we made on Second Avenue, for example, where we completely stopped the project in the '70s, he said. I think what happens if we were to have a real financial cataclysm, which I don't think we're facing now, what you would probably do is slow the pace of the projects down. I don't think we're talking about doing that in any kind of dramatic way.

[Illustration]PHOTO: Officials are making more modest plans for the Fulton Street Transit Center, shown in a rendering, in Manhattan. (PHOTOGRAPH BY METROPOLITAN TRANSPORTATION AUTHORITY) (pg. B4)