Arbitrator to sort out big bill for light rail in Rainier Valley

To deliver light rail to Seattle's Rainier Valley, contractors for Sound Transit had to tangle with surprises. Crews ran into underground utility lines in places they didn't expect. Huge amounts of petroleum-contaminated soil had to be excavated and trucked off-site.

Now the bill is coming due.

The original contract for the 4.5-mile light-rail segment in the median of Martin Luther King Jr. Way was $114 million. But costs swelled, and Sound Transit has already paid $149 million to RCI/Herzog, the partnership that built the segment from 2004 to 2008.

Now the agency is expecting to pay an additional $23 million to $68 million.

The job took a year longer than expected. The contractor filed new claims of up to $130 million to compensate for extra work, overhead and profit. Part of that — about $17.5 million — has already been paid, but negotiations over the rest have broken down.

This afternoon, transit-board members unanimously voted to take their dispute to binding arbitration, with both sides setting a pre-determined range of $23 million to $68 million for the award. A panel of construction experts will hear each side's arguments and set the final price.

Arbitration would be faster and less expensive than forcing RCI/Herzog to sue, said Desmond Brown, Sound Transit's chief counsel. And the outcome should be more predictable, because court cases are heard "by juries who most of the time don't have expertise in construction," he said. Brown said arbitration is the norm in such disputes.

Sound Transit has been anticipating such a payout, said light-rail Director Ahmad Fazel. So the overall 14-mile project from Westlake Center to Tukwila should still wind up below budget — about $137 million under the $2.44 billion estimate, which includes financial reserves.

Still, every dollar spent is one less dollar available to build future light rail through Northgate to Snohomish County. The dollar range going into arbitration is similar to the cost of building one light-rail station.

Sumner-based RCI was acquired by industry giant Parsons in 2005. The company argues that government site information and design specifications for the MLK area were inadequate and it also is entitled to profit for added work, a Sound Transit report said.

Parsons issued this statement attributed to Dennis Quade, an attorney for its Seattle project: "The RCI/Herzog Joint Venture looks forward to finalizing the process by which its claims will be fully and finally resolved."

Sound Transit spokesman Bruce Gray blames many of the expenses on the contractor.

"The extra costs they have incurred on the project have been self-inflicted," he said.

Fazel said that although the job was very complicated, the contractor should have made a more efficient plan.

During construction, businesses and residents along MLK Way endured a sewer backup, unplanned electrical outages and bumpy traffic lanes. However, the final results — utilities, sidewalks, roads and train corridor in the median — "look great" and work properly, Fazel said.

Mike Lindblom: 206-515-5631 or mlindblom@seattletimes.com