LOS ANGELES — The Los Angeles County Metropolitan Transportation Authority will conduct a $452 million combination new money/refunding competitive sale Dec. 4 to pay for cost overruns on several projects.
The authority will price $318 million in new money sales tax revenue Series 2013-B bonds and $134 million in Series 2013-C bonds through a competitive sealed bidding process.
KNN Public Finance is the financial advisor on the deal. Nixon Peabody is bond counsel.
L.A. Metro’s board approved the bond sale last year to pay for cost overruns on highway projects and to pay for several rail projects the authority has underway, said Terry Matsumoto, the authority’s chief financial officer.
The massive I-405 widening project through the Sepulveda Pass is 15 months behind schedule and $75 million over its $1 billion budget, Matsumoto said. There also have been cost overruns to California Department of Transportation projects involving L.A. Metro on a half a dozen projects on I-5 near the Orange County and Los Angeles County line, he said.
Construction began in 2009 on the I-405’s new 10-mile car-pool lane designed to ease the notoriously congested freeway that links the Westside to the San Fernando Valley.
The troubled project, originally anticipated for completion in May, has faced a series of setbacks delaying completion until the middle of 2014.
The litany of issues on the I-405 widening project has included crumbling retaining walls, utility relocations, legal challenges, and efforts to avoid a county storm drain.
A debate between the Los Angeles Department of Water and Power and California Department of Transportation over whether a massive water line should be moved resulted in a stretch of the highway being moved 500 yards. That added between $7 million and $8 million to the cost of the project, Matsumoto said.
Original plans to replace the Mulholland Bridge by building a new bridge parallel and 50-feet south of the existing bridge and then demolishing the existing bridge were scrapped when the community objected. Instead, half of the bridge was torn down and rebuilt, followed by the other half-a-year later.
That proposal resulted in what was termed Carmaggedon Part 1, a partial shutdown of the freeway near the bridge for a weekend in July 2011. Part 2 occurred when the freeway was shut down in the same stretch again the weekend of Sept. 29-30, 2012.
“Constructing half the bridge while the other half is open is like living in the house during a remodel,” Matsumoto said. “The work hours are limited, because you can’t work during peak hours.”
L.A. Metro officials decided to sell the bonds competitively, in part, because of the authority’s high ratings AA from Fitch Ratings and AA-plus from Standard & Poor’s with a stable outlook from both for this sale.
The other impetus for selling the bonds competitively versus negotiated was that the authority had a strong field of bidders on the $138 million refunding it conducted in May.
“We had eight bids, which certainly got us the best price in the market that day,” Matsumoto said.
That shows “we have good market access and that the results of the bidding will get us the best price,” he said.