Critics say railroad rush may lead to cost overruns

Scott Sonner

Thursday, May 27, 1999 | 10:16 a.m.

RENO, Nev. - Fearful of another boondoggle like the National Bowling Stadium, critics are denouncing a last-minute legislative attempt to aid Reno's rush to dig a railroad trench as an open invitation to massive cost overruns.

The bill, moving to a legislative conference committee as soon as today, allows for a controversial contracting method where bids on large-scale projects are accepted before an actual design is adopted.

The Washoe County Commission, several area lawmakers and local businessmen have been staging a late effort to derail the so-called "design-build" bill, SB475.

They say the only way to make sure the costs don't get out of hand is to have a set design in place before a contract is signed for construction.

"If you were really in a hurry and price was secondary, it could work. But the position of Washoe County is we don't want design-build," Washoe County Commission Chairman Jim Galloway said.

A similar "design-build" contract led to cost overuns at the bowling stadium, where the estimated price tag of $25 million ballooned to $50 million before it opened in 1995.

The bill is backed by Reno city leaders and the Association of General Contractors in Reno and Las Vegas.

It initially was proposed to help speed road construction to keep pace with explosive growth in southern Nevada. But Reno city officials believe it might prove useful in lowering the railroad tracks in downtown - expected to cost at least $200 million.

Under typical public contracting, an architect is hired to design a project and there is a second contract for companies to bid on the cost of constructing the design.

Backers of the "design-build" teams that handle both jobs at once say the process makes it possible to begin work sooner and take advantage of cheaper materials at pre-inflation prices.

"It quickens the process. If done properly, it may even save dollars," said Steve Varela, director of public works for the city of Reno. "Even Ancient Rome and Egypt used this technique. I'm not sure why some folks are critical."

The controversial plan to lower 2.1 miles of downtown tracks has been debated since before World War II. It would save the rail companies money by allowing trains to pass at faster speeds while eliminating downtown crossings that halt traffic and pose a danger to pedestrians.

Last summer, the city announced it had sealed a deal with the Union Pacific Railroad to contribute $61 million toward the projected $193 million project.

A group of downtown businessmen mounting a legal effort to block the project estimate the final cost will be closer to $400 million.

Reno Mayor Jeff Griffin said Galloway has tried to torpedo the project ever since he failed to beat back a measure the commission approved in March allowing for a slight increase in the local sales tax to help pay for the project.

"This is not an issue about the form of construction," Griffin said. "It is an issue with Chairman Galloway who lost a vote and has been attempting to find another way to derail the railroad project."

So far, the Senate has refused to accept an Assembly-approved amendment by Assemblywoman Vivian Freeman, D-Reno, requiring the local government accepting the bids to estimate the overall cost and set that estimate as a bid ceiling.

John Madole, executive director of the Association of General Contractors' Nevada Chapter in Reno, said the use of design-build is warranted for "an occasional project where all the appropriate safeguards are in place."

"There was certainly no intent to suggest every construction project should consider design-build," he said.