July 16, 2013

Kansas City streetcar plan still on track with bids

Kansas City announced the apparent low bidder for the downtown streetcar construction management contract on the same day that lawyers sparred in the appeals court over whether the new streetcar taxes are legal and constitutional.

It was one step forward and one step sideways Tuesday for Kansas City’s downtown streetcar project.

On one hand, the city opened bids and announced the apparent winner to manage and build a new streetcar system that is supposed to run through the heart of downtown, from River Market to near Union Station.

On the other, lawyers sparred before a Missouri Court of Appeals panel over a case challenging whether the new downtown taxes to help pay for the $100 million streetcar project are legal and constitutional.

The appeals court ruling is not expected for several months. In the meantime, the city is proceeding with planning, utility relocations, streetcar vehicle selection and other tasks, all in hopes of possibly starting streetcar construction late this year.

“The hope is to have things in place to start construction as soon as possible,” public works spokesman Sean Demory said Tuesday. “When things are resolved on the legal side, we want to hit the ground running.”

To that end, the city chose Tuesday from three bidders vying to be the construction manager/general contractor on the job. The apparent winning bidder was a joint venture between St. Joseph-based Herzog Contracting Corp. and California-based rail contractor Stacy and Witbeck Inc.

The joint venture won the scoring on experience, project approach and preliminary price, beating out competitors Kiewit-Clarkson Infrastructure Co. and JE Dunn.

“It’s progress. It’s another milestone met,” said David Johnson, a downtown resident and spokesman for the neighborhood that includes the streetcar route.

Johnson said the apparent winner is highly qualified, has done successful projects in Portland, Ore., and Seattle and is now doing work in Dallas and Salt Lake City.

“There aren’t a lot of firms that have the precise experience that we need,” he said. “And they’ve got it in spades.”

Al Landes, president of Herzog, said his firm specializes in both heavy and light rail and has worked well with Stacy and Witbeck on a variety of projects across the country for the past 12 years.

The joint venture bid $50,000 for the construction management part of the job, far below Kiewit-Clarkson’s bid of $184,300 and JE Dunn’s bid of $198,000. The rest of the payment will be a percentage of the total negotiated construction price.

Demory said he expects the city will conclude initial contract negotiations with Herzog/Witbeck in about a month and the contract would then go to the City Council for approval.

Landes said Herzog/Witbeck would then negotiate with the city a final price to build the system.

“We have never not been successful in achieving a final contract given this process,” Landes said. “We have done it this way in other cities.”

Just a few hours before city officials opened the construction management bids at City Hall, lawyers appeared before the Missouri Court of Appeals a few blocks away in a case that could determine the financial viability of the project.

An attorney for two downtown property owners who oppose the streetcar taxes argued it would be unfair to forever deny them a chance to challenge those taxes in court.

But an attorney representing Kansas City said the deadline for such a challenge has passed, and the project should be allowed to move forward.

Attorney Mark Bredemeier spoke on behalf of property owners Sue Burke and Jeffrey “Stretch” Rumaner, who oppose the imposition of new property taxes and a 1-cent sales tax within the downtown streetcar district. Bredemeier asked the appeals court to reverse Jackson County Circuit Judge Peggy Stevens McGraw’s dismissal of his clients’ lawsuit.

McGraw ruled in March that Bredemeier’s clients missed the deadline to challenge the mechanism for imposing those new taxes.

McGraw said the public had an opportunity to file objections back in 2012, when then-circuit Judge Charles Atwell held hearings on the streetcar proposal.

Atwell found in April that neither the planned streetcar district nor its funding mechanism were illegal or unconstitutional. The district’s formation and new taxes were subsequently approved in two separate elections in which residents of the district voted.

But Bredememier told the appeals court that his clients don’t live in the district, weren’t allowed to vote, and had no idea that if they didn’t challenge Atwell’s ruling they would be forever precluded from challenging the taxes imposed on them.

“We believe our people have a right to their day in court,” he said, adding that legitimate constitutional questions remain.

But attorney Bob Henderson said the city followed the state law to the letter on how to set up such a special transportation district, and Atwell already considered and resolved the constitutional questions.

“You don’t always get to vote on a tax that is imposed on you,” Henderson said, adding that the time for further legal challenge under the statute had passed.

Appeals Court Judge Alok Ahuja grilled both sides during the hearing. He asked Bredemeier what the point of the Atwell hearing was if anyone could file a lawsuit long after it. But he also asked Henderson how much warning people really had that their chance to challenge the taxes would be limited.

While the lawsuit is pending, the city began collecting the sales tax April 1. To date, it has collected nearly $745,000 but is not spending that money for the time being. The property taxes would not be collected for the first time until late this year.

The city had hoped to issue $30 million in bonds in March but the lawsuit and ongoing appeal have put the brakes on that plan. If a bond issue is delayed to the point that interest rates rise, it could increase the overall project cost.

After watching the legal wrangling, Mayor Sly James said that, after 20 years of failed efforts, he believes it’s time for Kansas City to do what every other city its size or bigger has done, and get moving with a decent rail transportation system.

“We’re way behind the curve,” he said, adding that the streetcar plan is Kansas City’s best opportunity. If this effort doesn’t succeed, James suggested, Kansas City will “slip into second-class status.” But he said he has no intention of allowing that to happen while he is mayor.

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