Trade, Travel and Tourism Committee - Aug 06, 2024 02:00 PM

e Tracy Park chair of the committee Mr clerk if you would kick us off please call the role council member Park pres council member mcosker here council member Delon council member price here and council member soda Martinez here five members in air great thank you Mr clerk so that brings us to public comment members of the public wishing to give comment can sign up at the kiosk in the back you will be given one minute for general public comment and up to two minutes for multiple items so with that we are going to go ahead and get started um I'll call a handful of names you can come line up here at the podium at the microphone Donald Harland darte de Leon Armando Munoz Barry Johnson which name which name are you under uh Sergeant DTE Deon okay what would you like to be heard on uh I would like to speak on item number six and the general public comment please two minutes go ahead thank you um for number six I have a concern because this is about La uh police department uh about their equipment use I actually saw that one of the CBS documentary uh when the corter ask our chief Rambo uh who is uh inspecting the luggage in the LA Port uh for the drug Chief Rambo directed to TSA and TSA direct the same question to the DEA and the da redirect the question back to Chief Rambo so right now there's a reason that in the LAX Airport nobody checked airport uh checked the luggage checked the bags so Los Angeles airport become the epidemic of the drug trafficking that is absolutely not possible not acceptable so I just I'm just concerned that our LAX police department continue to be solved continue to be woke continue to be weak they they bow down to criminal instead of enforcing and catch those drug uh drug criminals drug traffickers I that's my concern uh go down to the uh general public comment I'm here to support our council member Kevin Delon uh this is a trade and travel committee so my concern is when we have the Olympic right here here and then when we have the whole world walking around the sko walking around the Figaroa so what what are we going to do is this the face we're going to show the whole world let's come to Los Angeles sko let's come to the Los Angeles airport let's have a free drug in the community college or whatever so we need to bring the volume down oh I'm sorry I apologize translator I hear you uh so this is not the face we need to show to the world we need to support Kevin deon's District we need to make the skill roll to become the new West LA this is not the face this is not the street this is not the drug we are showing to the whole world okay even though Kevin Deon Contin to uh ignore me I support Kevin Deon no matter what thank you very much Sergeant D thank you all right next speaker come on up I think I called Donald Harland Armando Munoz and Barry Johnson hi which name did you sign up under hi um arand Munos and what would you like to be heard on or a comment all right you've got one minute go ahead thank you um arand MOS I've been working at the airport for the past 14 years um I work lax I'm also a proud member of seu local US ww um we've been here coming here for a while now it's a little bit more we year uh we're here to urge you to not only stand with us but to do everything you can to ensure that the living wage ordinance is pushed forward and as soon as possible as we all know tourism is booming in Los Angeles and we will keep growing as we prepare to host the global events like the 2026 World Cup and the 28 Olympics unfortunately the people who make tourism possible ales airport and hotel workers are struggling we do not earn enough to pay rent during an an an un percentage housing crisis and healthc care cost is spiring out of control and faster than health coverage can can we keep up many of us are struggling to survive in the city current living wage Transit workers are often faced with house insecurity and many of us are forced to work two jobs I ask council members on this committee that do what everything you can to make sure that we get those report out and we raise the limit wage as soon as possible thank you thank you Mr all right if I've called your name please come up and start getting in line I'm gonna call a couple of other names to come get in line Jeff Bri Jose carpena Josh Chris Christensen Donald Harland I've already called Barry Johnson Barry Johnson Mr Johnson what would you like to be heard on number 11 all right you've got one minute go ahead I'm the um government Affairs chair for the neighbor neighhood Council we just came across this um motion and Council file and we will be doing a CIS in opposition to it um we the motion itself says the Hilton Universal City hotel is in the city of Los Angeles and has some of the highest occupancy levels in the city given its am amenities and proximity to Universal Studios we feel that with the current budget um that the LW Angeles city of Los Angeles is facing that there should not be funds given to a profitable Hotel developer to add an additional Tower to their site we're not opposed to this uh addition but the money coming from the city we are opposed to thank you all right thank you Mr Johnson Mr Haron are you here all right Jeff Bri Jose carpena je Jeff Mr Bri all right what would you like to be heard on uh number 11 okay you've got one minute go ahead please good afternoon my name is Jeff Bri I'm a 20-year member of the Iron Workers Local 433 we strongly support Council to move forward item number 11 Universal Hilton for full city council approval this project will bring veterans apprentices and folks who need a second shot in life and who are starting their careers in the Building Trades to work on this tour ISM project for the city of Los Angeles our apprenticeship is currently training 1,277 apprentices and they need this on the job experience our journeyman members are the best skilled and trained Workforce in the country who have passed their rigorous apprenticeship to get their JW card there this project is a game changer not just for our members but for this city vote Yes to move item 11 forward thank you so much I'm gonna call a few more names puppet Josh Christensen jovon Houston lissandro Pressa in any particular order all right Mr puppet what do you want to be heard on Wow all the goddamn items General public comment so let's see here number 11 that's a good one that's a lot of campaign donations there so did you bring your bag all you developers you got to bring a large bag because the money that you got to spend to pay these off at a project like this that's right yeah hotels and expansion what are you going to do with all the homeless around the hotel you goingon to get rid of them who the going to go to your hotel if you gotta drop your your your Uber over uh feces and piss and rats with lice and skibbies ew curan e that's what we have in the valley surrounding this place just a hole filled with homeless criminals Kevin's never been there I mean you got to go there sometime you got to go up the 101 freeway and look at this Universal hold it's not Universal City it's Universal City hole that's what it is and the parking have you seen what they charge a park over there I went there one time to get a cup of coffee and I came out with a bill to park 10 times larger than the cup of coffee just a bunch of scumbags and this is the Tracy Park problem in her little mind you know and then of course Hugo look at him look what you reduced this great man to be sitting there a puppet in a chair texting away probably talking to a developer on a text chart you know I'll CPR that later so so what is the rest of this I got cd15 in the bucket head big old large head over there trying to figure out what am I doing here Harbor what a piece of the harbor the harbor how the are you GNA ship anything into the harbor you come in within three miles they want you to turn your diesel motors off and put them in silent electric motors first you told them it was natural gas now it's got to be electric batteries how the are people supposed to ship their in here we're not compliant with other world ports I keep telling the Chinese Mexico I tell them go down to Mexico and drop that up and then truck it up here under NAFTA remember NAFTA you can use those guzzling diesel dirty trucks and ship that north to south and south to North I keep telling them see this is Tracy Park method you want to have it both ways do you want to make money do you you want to save the city from going bankrupt or do you want the cleanest city in America the most bankrupt city in America with no businesses that's what you're going to choose and it's like I told Kevin about that that gas Tower Hotel deal where you trying to sign that lease they will County wants to buy it for 100 million less than your lease shame on you guys finally Hugo find your soul again they're taking it away from you next speaker please hi what name did you sign up under please Josh Christensen Mr Christensen what would you like to be heard on item 11 please all right you've got one minute go ahead thank you Josh Christensen with the Western State's Regional Council of Carpenters representing 990,000 men and women in the carpenter scope of work in the trade um we uh asked that you push us for project forward and it'll put opportunities for apprentices to go to work and for our members to go to work and and New Opportunities there are schools within that area where they have our Career Connections programs this is be a great project to be able to transfer right out of high school out of taking a uh Carpenter program uh and and transferring right into a trade be able to uh to make some money and to be able to eventually hopefully buy their houses soon close to their families where they grew up so again we're we're we're asking for support on this project and push it through developers done a good job to uh to make sure that good wages are are being paid on all the all the Scopes across the board so again we uh we support this project and thank you thank you Mr Christensen next and I'm going to call a couple more names folks can start lining up Maria Vasquez Mark Davis Rafael Leon hi what name are you signed up under hi Javon Houston Miss Houston what would you like to be heard on uh general public comment okay you've got one minute go ahead hi my name is Javon Houston I'm an airport worker at Los Angeles International Airport it has been 48 5 days since we came to you guys it's time for airport workers to be on the Forefront we have been waiting on you Tracy to move this onto the agenda we're tired of you hiding behind the city and we want to move forward and get airport workers what they deserve we are struggling to pay our rent we're struggling to feed our families please don't make us wake any longer thank you thank you Miss jovon next person if I've called your name just step up and tell me what name you've signed up under lisandra pra okay what would you like to be heard on uh general public comment all right you've got a minute go ahead good afternoon my name is Leandra pra and I work at parodies for parodies at LAX since 2022 I'm also a proud member of Unite Here Local 11 I'm a resident and voter in district 15 I'm a cashier at my company and I make 1974 per hour the policy to raise the a wage for tourism workers was introduced over a year ago uh every week that goes by without this policy workers like me are losing over $200 per week these policies very uh critical to solving the cost of Li crisis in La I'm back again to call you to do everything in your power to make sure this policy moves forward airport workers can't wait any longer thank you thank you next speaker if you can just come up Tom what name you signed up under uh general public Maria Vasquez okay you've got one minute go ahead Miss Vasquez hello councilman my name is Maria Vasquez like I said I work at LAX and I'm a proud member of SEIU usw as um all my co-workers and all my um brotherhoods and Sisterhood we are here struggling on a daily basis of our uh end meets which means our paycheck uh we've been here uh every year and L luckily we haven't got our trophy of getting our 25 we are in very important of asking of pushing this this isue was too very important to all airports and hotel workers who continue to make this economic run it's time to rise weight now to all airports and hotel workers because workers deserve to have decent liveable wages in La we have been waiting long enough and it's not fair thank you thank you ma'am if I've called your name just step up and let me know what name you signed up under good afternoon Mark Davis all right Mr Davis what would you like to be heard on uh item number 11 okay you've got one minute go ahead my name is Mark Davis with the Hilton Universal City we're proposing a building a new expansion into our new our current hotel site of adding 395 rooms uh we're currently busting at the seams not able to satisfy the current demand uh for the hotel with the Trans guests preferring to stay closest to the theme park Universal Studios Hollywood we annualize in the mid 90% we cannot create any more jobs uh we can't give the city any more TT without more inventory so we hired CV to do a study preliminarily and they have estimated that this project would create a new $30 million of TT for the city after the subvention rebates just as importantly CBR says this will create a thousand construction jobs also 200 plus permanent jobs we all know how jobs how important jobs are in the LA market for good living wages we also are partners with the project labor agreement and Unite Here neutrality we support that and we really need your support in this project thank you thank you Mr Davis I have Leandro Pressa and rapael Leon on the list come on up either one of you hi good afternoon uh my name is Rafael Leon and I've been working for the uh for flying food for the last 12 years and we went to strike for a better wages and a health insurance I believe that I was fired against because I was I was fired by the company because I was making 1910 my co-workers and I at flying food we are still not making enough yet flying food made $61 Million last year it is time that you backed up the workers that make LAX a company at LAX successful we deserve the living wage and we are going we are not going to stop until we get what we deserve thank you thank you Mr Leon Leandro PR are you here do you wish to be heard okay that was everyone on my list who signed up just double check that's everybody on my list is there anyone else here who wants to give public comment anyone I'm gonna close it going once going twice all right that concludes public comment thank you everyone with that we will go ahead and turn to business and unless there is uh an objection from any of my colleagues I would like to move items three through 11 on consent colleagues any objections objection okay hearing none then Mr clerk if you would please call the role thank you madam chair council member Park yes council member mcoser yes council member Delio council member price and council member soda Martinez yes that's five eyes and these items are approved on consent all right thank you so much Mr clerk that's going to bring us to item one and I am gonna have you read the item but I think Mr Price may need to recuse on this one yes I do mam chair need to recuse myself my wife uh has had some involvement in this project and out of an abundance of caution recuse myself all right thank you council member price we will let you know when we are done with this matter um um with that then Mr clerk if you would please read the item thank you item number one is a board of airport Commissioners report relative to a change order to a contract with lax integrated Express Solutions LLC for the land slide access modernization programs automated people mover project at Los Angeles International Airport and AD administrative exemption from the requirements of SQL pursuant to Article 2 section 2i of the city of Los Angeles SQL guidelines all right thank you uh with that I'm going to ask our colleagues from uh lawa to come up to the table and as they do I'd like to kick us off with some opening remarks um colleagues this project was approved and broke ground before many of us on this committee including myself were even elected to office and yet we have had to navigate its challenges and numerous setbacks project delays change orders and the tens of millions of dollars cost overruns and moving targets at this point the impacts from construction have tested just about everyone's patients and of course fixing the Horseshoe remains everyone's top priority um as the representative for the district that calls LAX home as well as a community that regularly deals with airport impacts from traffic from congestion from noise these delays have been extremely frustrating further that many of the delays and costs were the result of Permitting challenges within our own City departments and other jurisdictions adds to the frustration but today is a new day and in spite of these challenges I see this as an opportunity to learn and to draw lessons from our experiences to ensure that what delayed this project doesn't happen again because the people mover isn't the last project at LAX by any means uh nor is it the only Public Works project in Los Angeles at LAX will soon be breaking ground on Concourse zero terminal 9 and elevated Road roadways while across town we are actually preparing to expand and modernize our City's convention center with Rising costs and covid market and labor ship some of what occurred after this deal was struck could not be predicted but I do believe that we've learned some valuable lessons about how to structure a public private partnership bet biders and potential contractors allocate risk and contingencies better defined covered claims create more efficient and less costly resolution procedures and much more so that's why separately I'm going to be introducing a motion to to ensure that the problems we encountered with the APM won't occur on other modernization projects at LAX or other major capital projects that we as a city may do in the future when we make these Capital Investments where delay and cost overruns get uh in the way that simply can't be an option and our investments can't be held hostage so I I really also want to commend everyone at lawa for their effort effs to resolve this Myriad of challenges and Mr arur I know you stepped in as a newcomer to this right in the middle of what has been at times a very contentious project I do believe that once completed the automat automated people mover will be transformative eventually connecting the entire region to LAX reducing conest congestion at the airport and in local communities which is of course heavily impacted by airport trael IC where we need to mitigate carbon emissions and create a world-class travel experience for residents workers and visitors so I do believe that today's action will bring us One Step Closer by providing that transparency and that accountability and certainly the certainty that we've needed so really excited to hear the update today and with that lawa the floor is yours thank you thank you chair Park members of the the committee my name is John arrian I'm the Chief Executive Officer of Los Angeles World airports I have my colleague Jake Adams with me Jake is a deputy executive director for lawa and he's actually been leading this uh program since its Inception and uh I'm going to embarrass Jake here a little bit he didn't know this but he's about to figure it out uh he actually was on a round the world uh sailing trip where he had uh quit his job and had a boat and was sailing around the world when he got the call that this project was finally going to happen and he came back for this to do this this for his City so Jake has been at this for a lot longer than I have so I just want to make sure everybody knows that so so uh so thank you very much for the opportunity to to present this settlement uh I'm going to cover uh the past settlements and change orders because there has been a history here as as the chair mentioned we're going to go briefly through the the current claims and what we're resolving here we're going to talk about the structure uh and then I'm going to explain the benefits of this and and why in in my judgment and my staff's judgment this is the best thing for the city right now so uh chair Park actually alluded to this uh there there has been a history of of claims here we've paid uh you can see a little over $330 million in previous uh claims and change orders uh have already been uh paid and adjudicated and and addressed in a delay of more than 457 days that has nothing to do with this settlement that is water under the proverbial proverbial Bridge from previous settlements you can see some of the reasons on the leftand side as as chair Park uh mentioned some of this was you know other other City agencies that uh that struggled to meet some of their commitments and and I want to stress that you know our city brothers and sisters uh they this was not city employees not trying hard there were people trying very hard there were covid and other things that that were legitimate impediments U to their success but nonetheless we had made commitments to the developer based on the commitments we received from other places in the city and when the city couldn't honor those commitments it became LA's responsibility to monetarily uh make the developer whole so I just want to stress that our city brothers and sisters are are I wouldn't blame people here there's there's a lot of issues and I'm happy to unpack that if anybody wants to and and these projects of this size these are incredibly complicated projects uh in a in a very difficult Place uh to do work uh from a regulatory perspective from a physical perspective you know this is one of the most complicated projects of its kind uh so it is not unusual to have things that are unforeseen happen I want to stress that a lot of what's happened here is is pretty normal for a project of this size although still uh difficult to understand and and I and I appreciate that the the current claims when we started this global settlement process several months ago uh there were over since the beginning of the project more than 200 separate claims and relief events uh more than 100 were still outstanding early this year when we when we changed our approach to this and you can see some of the reasons for those claims again on the left uh escalation the change in cost of materials uh during a project uh exacerbated by covid in this case uh you know additional management and and oversight uh traffic I don't have to tell people in this room that traffic in Los Angeles can be a challenge we know that the airport's impact on on council member parks Community is already difficult projects like this make it harder so we do what we can to mitigate those traffic impacts and that's turned out to be more difficult uh than we expected and you can see there's a variety of other events there but bottom line what's important for the council to understand is when we began the settlement process we had over 100 different moving parts that we were trying to negotiate simultaneously and it was challenging to to address that what we came up with is a global settlement structure uh and essentially what we have said that you know from the beginning of the project till May 31st of this year this $550 million will resolve all the claims that have been filed should have been filed would have been filed anything that happened in that period of time it is it is a global settlement uh with a couple of very minor exceptions we thought this was really important because what's happened over time is that our teams are spending more time uh preparing to litigate and exchanging letters and doing all the things that parties do uh when when they're in a disagreement uh and we're not focused on building the train which which angelinos so desperately need and deserve so by resolving all of these claims it will allow the entire management team on both the lawa team and the developer links team to put 100% of their focus on delivering the train and that brings me to the second bullet point in Council M Park you know I remember during my confirmation process um I think it was the first second and third question you asked me was when the train was going to be done at the time I told you that I I could not give you a date for that because I did not have a solid date uh we had not had a what I would call a true project schedule in many years of this project so it was difficult for us to to manage the project a key part of these negotiations was the globalness of the settlement and the certainty of the date uh that that we're going to deliver this project uh that new date is December 8th of 2025 uh and we believe that we have uh a a reasonable opportunity to hit that date and I and I will get to that later uh we also required some organizational changes from links uh to change the structure of their team and and some of their management uh that has been done we have a new escalation process uh a very senior executive escalation process I actually lead a call personally every Friday morning at 9:00 a.m. Pacific with the CEOs of the parent company compies who own this developer the global CEOs uh and every Friday we resolve what has transpired since the last Friday and you kind of nothing happens over you know we don't let anything Fester over the weekend you know kind of like uh if you've been married a long time don't go to bed mad uh We've really put that in place and that's designed to avoid this that these problems festering and growing as they have uh as they have in the past uh and as I mentioned the exclusion from the settlement a key exclusion is what are called inefficiency claims and some elements of covid claims uh the inefficiency claims I'm not an attorney uh but these are not a contractual claim but they're a common law claim that are typically brought by developers at the end of the job uh so we do expect uh significant claims from the developer uh it's difficult to tell at this point uh what the magnitude of those claims are be or in our judgment uh what the uh what the documentation for those claims will be uh but we expect significant addition claims to come the terms of the settlement I'd say 550 million total settlement uh $200 million uh is a payment that will flow assuming the council approves this shortly after Council approves this the full Council approves the settlement we will flow those funds uh that is designed to put cash back into the developer uh they have uh drawn down most of their contingencies and cash res reses and so some subcontractors are not getting paid so there are actually disputes within the joint ventures that the developers have created there are internal disputes within those joint ventures in our judgment those are not healthy for the project and are going to create additional risk so we want to get some of the money flowing through the partnership to make some of those subcontractors whole and get people working again uh the balance the remaining $350 million we've structured at Major Milestones uh We've chosen Milestones uh that are important and challenging Milestones to hit and we believe that if they are making progress on these Milestones it will show us that they are confidently managing the project and are likely to to deliver by the December 8th date uh and you can see that we reserved the last uh approximately $15 million payment for when they actually hit the PSA date that December 8th date uh the rest of the money will not flow until then so we've attempted to balance you know the developers need for funding and the subcontractor's need for funding uh with our need to make sure that there is adequate progress being made and that that we have Milestones that we can manage them closely to um the reasons that we're doing this again I want to say we we looked at several different Alternatives our staff developed a total of four Alternatives uh the other three Alternatives that we obviously rejected uh in our assessment would have added uh one to three years to the completion date uh in between1 to3 billion dollar also and those other Alternatives were uh both uh less certain uh and more risky uh so we rejected those and we went with this settlement uh we believe the settlement will establish schedule certainty uh I want to stress I was asked if I can guarantee that this will be delivered and uh there are very very few things that that John arriman can guarantee and this is not one of them uh this remains a very very complicated project uh we're entering a phase where we're moving from the construction of the guideways and the tracks and the the stations and the vertical circulation that connects the system to the airport uh we're moving into the actual train testing phase there are trains up on the tracks now we received our last four cars just last week uh but this is a new phase for us and this these are complicated systems with millions of lines of computer code that all have to work together and the other thing that is uh happens to us in this phase is uh you know we are used to uh being sometimes the 800lb gorilla uh we are uh we've just met a CPU uh who is a uh Statewide I would say thousand pound something more fearsome than a gorilla maybe a saber-tooth tiger uh and they are our regulator when when we turn this train on uh we will be operating on day one the largest automated people mover in the state of California and CPU is very interested in how we operate that we're actually going to be a Regional Transit Authority so we're working with the regulator that we don't have a history with an experience Jake and his team have for the last several years been building a relationship with them a building block approach to that but we're about to enter the phase where they're going to be telling us if they like our train or not and so this is a risky phase that that we haven't been in before and candidly we don't have a lot of influence over a CPU it's the other it's the other way around uh as I mentioned before this is going to allow our management team seem to really focus clearly on delivering the project which of course is the most important I mentioned the developers and the subs uh we do think that if we don't do this settlement if the settlement is not approved we are likely at some point to be in a significant litigation with the developer uh we judge that uh to be risky from a Time perspective also from a financial perspective once judges and juries get involved obviously uh there's a lot of uncertainty introduced so we think that this negoti ated settlement uh is by far uh the best uh opportunity for us and again we've got unforeseen conditions uh that are still possible I mentioned the regulatory challenges and and links uh links uh council member mentioned you know learning lessons from this and and we have learned several lessons and we look forward to sharing those with with our our Brethren across the city um they made some choices in in how they organized the project that I think we know now are problematic uh and we still have concerns about their structure so we are working very closely with their management team as I mentioned we're having weekly meetings we have required changes to the senior leadership of their project team uh we have made changes to our own team uh but we know we still have 18 months uh of work on a very very complicated and difficult project but I believe that this is the best alternative out of the Alternatives that that we have available to us uh you know the the least worst option in in many ways but but I really believe that with what we've learned with what we've changed uh that we can deliver this train in December and bring something that Los Angeles I mean this has been I don't have to tell you all in this room I you all live here I'm the new kid uh Los Angeles deserves this train the airport deserves this train your District delives this deserves this train council member Park and we're going to deliver the train uh so with that I will end my comments and take questions thank you right Mr Aran thank you for the comprehensive presentation here and I I I just really want to begin by again commending you for your leadership and your vision on this um one of my questions to you today was going to be what are we doing to add the transparency and the accountability and to prevent these types of issues from repeating and I just want to tell you that I appreciate your Forward Thinking and your Visionary leadership in rectifying that through your CEO meetings in in addressing these claims earlier at the project level and then escalating them through the executive team to get them resolved without having to get us mired down um in this other more expensive process and I really think that making the changes to the project management teams was important as well because this isn't just the next 18 months this is many decades into the future and I think that the level setting that has gone into this is really important to give us a refresh to set some actual deliverables and deadlines and to bake that conversation and collaboration into what we're doing to move forward um so I just want to commend you and thank you for that um because we have at least one new member who's present here I'm wondering if you can just to refresh our memory and for Mr D own's benefit may not have been following along as closely before um this isn't the first tranch of payments that we've made to settle there are change orders dating all the way back to 2001 and um contingency changes and things like that that have been made so can you just give us sort of the executive level view of what claims have already been paid in the past compared to which ones are covered in this settlement compared to what handful of claims May remain for the future so I can sort of conceptually think about what buckets have been so so I would say that what has been the the I guess the past $330 million wor the claims were what I would say you know kind of typical claims that tend to happen the volume was not typical but the the nature of the claims was somewhat typical I'm going to ask Jake to jump in here because he's got for more expertise in this area than I do uh you know the volume of the claims was a little bit unusual and as we talked about the claims related to other City agencies I would say was unusual uh we expect that to be much better going forward forward we we've actually worked uh extensively and I want to commend the general managers of of of BOE of DBS uh of BCA and I apologize I'm getting the Acron I'm learning them but we we spent the last year actually looking at Lessons Learned and working with those agents we have a brand new mou uh that we believe will largely avoid those types of problems going forward so I think some of those claims that came in the first trunch of the $330 million were were not likely to see again because we've the has has come together uh and made changes the the claims that that I would say that you know are the the most difficult to predict right now are the inefficiency claims because that's a very broad uh a broad bucket of of claims and they're not there are no contractual remedies again they're not part of the contract they're a common law claim uh so that I think would be the the biggest category of claim that is still you know kind of hanging out there I suppose and and waiting for us that that that's what we think okay um so this initial tranch of the 200 million that you'll be paying out that is primarily going to go into the subcontractors to get the project moving and people literally back at work again it it will go I mean just to be legally clear it will go to Lynx that's the developer links has indicated to us that they intend to flow that down to their subcontractors to make some of them whole to get them working again and some of these Subs are actually close to finishing their portions of the job and that lyx is hoping to close them out settle with them get them paid and get them moving so we do judge that that a lot of that money should go to the subcontractor but I just don't want to mislead anybody you know once the money goes to them we don't have any legal way to tell them where to put the money we we can go with what they've represented us and what we believe will help the project and and I would expect them to do it because it's in their best interest okay so will the 50 million in new contingency be enough to con to cover risks moving forward we hope so yes okay um one of the things that I noticed and this is on page Pages aren't numbered but it's item four in the um the board report indicates that uh links will submit a practical resource loaded schedule for the complete performance of the project etc etc when can we expect that we already have that you have it okay good and they will we will not uh even if Council approves this even the full Council approves this in the coming weeks we will not I will not actually execute that change order until we are 100% satisfied that they've given us a proper schedule that Jake and his team have evaluated that schedule analyzed it and are confident that is a legitimate schedule that they can deliver the project on great and Jake I have no doubt that you and your team will be looking very closely at that have already all right good um so I heard you Mr acrian loud and clear when you said word you personally can't guarantee the December 8th 2025 completion date for the people mover and I hear you light loud and clear my eyes are wide open about this life and unforeseen things happen I know we will work diligently toward this um but let me remind you we have the World Cup and many other events uh coming as well as the Olympics in 2028 and so aside from some of the things that we've discussed here um are there any other tools or thoughts that we can bring to ensuring that we are going to hit that Milestone you know Council thank you for the question I really think it's the diligence of the team uh and you've several time been kind enough to to give me credit for vision and things like that uh I I want to stress that this team has been doing this for years and years and years and we've got a really we have Mike Christensen our uh AGM uh for development We've Got Jake we've got the entire team so I believe that we have the I believe the laa has the right team in place I think we have the right management focus on that right now I believe that we have Link's attention and I believe that we're set set up as best we can uh to deliver the project but it's going to require all of us working very very hard uh for Council I mean one thing that is is important is you know these developers uh you know they're these are you know multi-billion dollar Global corporations who are in it for the money that's you know that's what they're there for that's that's their job that's what they do for shareholders it really when we've been negotiating with them it has helped us to be able to represent that you know the city is not pleased so you know we are we we liberal use you know uh you know conversations that we have with council with the mayor to tell the developer that Los Angeles has very very high expectations for this project and we expect them to execute so the fact that you know we've been in negotiations and I've been challenged on things that I've said and I said you guys can press the test and knowing that that you know that you were focused on it I mean again in my confirmation hearings I heard it from the the three members of the committee who were on at the time the three of you sitting here I heard it from the mayor I heard it from boak so being able to say that the entire city is Unified and the importance of this has helped us deal with this developer so I would ask you to just keep that Focus keep the keep the pressure on on myself and my staff hold us accountable that is our job to deliver this for Los Angeles and we take it very seriously all right well thank you that's all the questions that I have Mr arran again congratulations on the hard work to you and your entire team uh and for your leadership on this and I'd like to give my colleagues an opportunity to ask questions Mr Vice chair um no I have no questions thanks very much much for the report and for the for the briefing on this I I don't have any additional questions those are excellent questions the the point is really really well taken um chair that this is not just a settlement of two parties that have a beef and then they walk away this is not a divorce we're going to be together for years and years to come so the uh I I think it is clear that what we are settling is the the bulk of what are well everything that is the in dispute now and the bulk of what can be in dispute over money but we haven't changed any of the relationships for operations going forward correct I I would say we've begun to change those relations with Council that's an excellent point uh we've actually had uh we've had the executive teams in we've had some meals we've had a lot of meetings and I would say we are changing we're changing the tone and tenor of a relationship because we have to to deliver it as a partnership it's it's starting to change it's going to take a while to get it back to where I think it should be I appreciate that it it's a a cultural shift or change in how the parties operate with one another on an interpersonal level but as far as the operations of the train itself one at one point you said we are going to be operating the largest you know automated people mover around actually we're not going to be right it's going to be our our contractor that's a fair point I misunderstood your question yes so this is a design build Finance operate maintain so they will be Opera and maintain a to your point we're essentially married to them for the next 25 years and they will be operating the Train on our behalf we actually are the RTA because of the way the regulation Works we're the we are the actual Authority so CPU will hold us accountable but from on a day-to-day basis that's correct this this joint venture this special purpose vehicle called links will be operating the Train on behalf of lawa CPU is can be unpredictable as to how they how they react to us collectively who who Bears the responsibility for making sure that we are fully in liance over the next 25 years with the the Pu the the Pu my understanding again I'm not an attorney my understanding is the Pu will hold lawa accountable essentially myself if I'm the head of the RTA uh we have then contractually you know laid that responsibility off on links but at the end of the day it still rests with us so we still have to oversee links and make sure that they're doing what they need to do to keep us on the right side of the track so to speak with with CPU so we we continue to be the which makes sense the regulated agency we have a contractual relationship with the operator the in as much as that we have a strong and clear private agreement with the operator then we can turn to the operator and have hold them liable for any any regulation any change in regulation any uh any action that pu takes against us I I think if it was a change in regulation and that would you know if it's a change in regulation that that's not their fault I think that would probably end up being our financial responsibility the way the contract is written uh but you're correct over time if they fail to meet their obligations for availability you know time service level commitments that they have met that they've contractually made to us uh we can withhold payments we we're making availability payments to them over the next 25 years and we can withhold uh all their part of those payments if they fail to meet certain objectives and the price set for the oper ations are clear today going forward for the next 25 years that's correct they were negotiated up front great thank you so much thanks for all your hard work I Echo the sentiments of the of the chair thank you council member thank you council member Mr sod Martinez thank you so much uh Madam chair um and thank you for the always leading us on this difficult subjects uh seem to come T3 a lot I think a lot of the questions that you answer that you asked uh were many of the ones that I was thinking and also uh you know to to John I you've been on the job for seven months uh eight months and this was like one of the biggest priorities that this committee had asked you I know you worked very diligently on this um you know and it's it's unfortunate like we we're all we're all new to office you're coming into your job you're sort of dealing with you know the things that were left behind right so I appreciate the uh you appro approaching in this way uh I really like the the global settlement money and claims let's just put it all in one bucket let's stop going uh uh you know one by one I think that's great getting the weekly calls with the CEOs to just cut through management and let's get to Brass tax I think that's great uh and also tying at the money to to the Milestones including the last bit of money is when it's passenger ready I think you've done a great job in negotiating this I guess just for for this committee uh what what do you think Lessons Learned have we come come out of this are you personally have come out of this like how are we going to do things differently because we got a lot more uh Bond money to to invest in uh and hate to be in the situation and other projects that are just as big thank you for the question I I think uh I think there's some lessons learned I wasn't involved in putting together the transaction and kind of the structure but I think there are some lessons that we could probably draw there that that that lawa team would love to work with with other City colleagues to apply to other projects perhaps a Convention Center or others uh I think uh yeah I I I think that just moving moving forward it it's going to be about the the reset excuse me the reset of the relationship and and the management attention I think it's difficult to judge a project and during covid there were many things that happened but but I think looking back on it I think there were times and we probably could have pushed you know we haven't had a good schedule in quite a while uh and you know contracts you know lawyers write contracts and the parties think that everything's really clear and you know until you get to a dispute and then you realize that there's you know sometimes language discrepancies and and I think that uh I think in hindsight we may have been able to enforce our contractual rights a little bit better and a little bit earlier uh I think we we potentially could have been more aggressive on that although that's easy to judge it's you know these it's like a relationship I mean sometimes you push sometimes you don't so I think I think perhaps enforcing our contractual rights uh a little bit more aggressively would have been helpful and and I do think at some point that the trying to negotiate more than 100 individual claim was just really really complicated and difficult there's just too many moving Parts in the in the in the system and systems just don't they they start to fail like that so I think that simplifying it and and as you said council member kind of putting it all in one bucket and just doing one number I think that was a big unlock for us that that got us to this point so I think that's why we put the weekly calls in place because some things just festered and should have been sorted out some of these claims were two or three years old they just you know we get it 80% done and then say okay we're almost done set that one aside and pick up the next one and so nothing was really getting done there were just kind of loose ends on a lot of things so I think that by just putting in one bucket and being really deliberate about that I think that helped us as well and I think it will help us going forward this these weekly calls to make sure that things don't you know go go longer than a week yeah no I I think you you've really structured in a way where we can focusing on getting the thing open right getting a passenger ready so but yeah so thank you so much for for doing what you're doing look forward to actually you just reminded me of something passenger re are really good thank you so much for saying that council member uh the PSA date is December 8th uh if they deliver us the Train on December 8th we are highly unlikely to put that into passenger service two weeks before Christmas uh you know we just generally at a yes so for a uh you know we generally will lock down it company most companies I'm sure that I'm guessing the city does this no major changes get made be kind of November 15th and January 15th because that's a really busy and an intense season for us so if they deliver the train to us ready to go on the eth we will likely put it in passenger service and bid delay January just to be clear if they deliver it early uh we have a contingency to put it in place before Thanksgiving but our best estimate right now is it would likely be in service in January of 2026 not 2025 so thank you for reminding me of that I neglected to say that for sure thank you okay speaking of trains how many of them are there and where are they currently 40 40 44 trains and they are all parked at LAX right now at our uh maintenance and storage facility on the uh corner of um Airport Boulevard and the centry cool and colleagues if you haven't had an opportunity to go and take a look at this and see it I had recommend we would love to have you come out yeah the last four cars I said arrive last week I got a text from Jake I think at 5:30 on Wednesday morning saying the cars were here and he had a picture so I think he was out there at least yeah he was Jake was waiting for the last four trains at 5:30 ready to see those fin trains well congratulations on that we're really excited Mr Deon thank you very much uh Madam chair uh uh John Jake I I I chew on page seven I believe it's page seven the uh bullet uh number four the global settlement benefits and the remaining risk I I appreciate sort of eyes wide open walking into this and sort of kind of breaking it down so I agree with all of my colleagues here today with regards to um it is probably the Least Complicated and the best way to to deal with all of the remaining you know litigation that exists uh with the the $200 million that I think are still pending and my understanding the $330 million that's already paid out or is that still pending no the if the council approves this we would pay a total of $550 million a $200 million payment would flow you know almost immediately after Council action and then the balance of the 350 would flow per the schedule on the uh that that Mr Adams just pulled up there okay what I want to do is uh no pun intended dig in a little deeper uh with regards to um you had stated that this is pretty normal and I know that a lot of big uh infrastructure projects it has become normalized the number of change orders unforeseen um major obstacles hitting a a natural gas pipe or whatever may be you know I know that you know for decades and decades when it comes to Metro we've seen a lot of headlines and a lot of litigation and US Federal investigations and so forth you know whether it be contractors would be Municipal governments or whether it be uh joint you know uh project agreements with various uh levels of government um what I want to do perhaps maybe Jake may be more institutional in this case since you were with Justin arachi when he was here at the helm um is can you dig in a little deeper with regards to the change orders and why the or exorbitant number of change orders that we've had with regards to the People Mover um and more specifically um I didn't mention who's who's who's to blame if there's any blame so because I'm I'm kind of hearing $550 million payout close to half a little more than half a billion dollars and it's sort of kind of this is part for the course this is sort of normal I know change orders are normal in big Public Works infrastructure projects it is part for the course but this is I kind of believe an exorbitant amount of money I I applaud the global settlement on the back end and how to settle land is playing with pun intended with LA but I want to dig in a little deeper on that so what I what I said was I don't think I said that this was normal and expected I said it's not unusual on a complex project like this to have these types of change orders and relief events and claims the volume on this is unusual so if I wasn't clear on that I apologize the volume is a little bit unusual on this as opposed to you know the the who is to blame you know there are literally over 200 different ones and there would be different apportionments of blame for each one of those uh so I don't think it's possible to go into you know who's to blame for each change or but would say it's a there's a combination of events I think there are you there are change orders that the owner changes their mind I mean you're remodeling your house you want to paint the room white and then you say I want to paint it blue if that's after you've signed the contract there's going to be a change order for that and there's so there's things that you know these contracts were signed seven years 2018 2018 so six years ago so things changed so that that's that's that happen so there are those types of change orders uh during covid obviously there were you know labor challenges there were you know regulatory challenges with State restrictions and so there were you know there were many many covid related uh claims uh during covid with the dislocation and the global Supply chains the cost of materials uh spiked wildly so there are material increases so there's there's literally probably dozens of different individual you know reasons that you could ascribe um but in general they have come to create a quite a large number and and I don't disagree with you if I were a member of the public I mean I'm you know in my perch I'm not pleased with the amount of additional money that we have spent uh I do think you know one of the Lessons Learned when when council member s Martinez asked me uh you know what we could learn I think one of the other lessons I could have mentioned is you know we we paid approximately $2 billion doar to buy the job six years ago it was never a$2 billion job so part of this is you know there are there are different business models let me ask let me ask and you were sure I that so we uh we picked the lowest bidder knowing that the number that they bid it was completely unrealistic I I wouldn't I don't think we knew that at the time I can't I can't I wasn't here at the time so I don't I'm not saying that we did choose the low bidder as I understand it they were they were the lower of the bids but I don't think staff you know deliberately thought this was unrealistic Council number that's not accurate and and let me go back to you said when we make change orders when we paint that when we paint the house or we want the house a certain cor color and we perhaps we paint it but we go for a different color that that the owner makes his or her mind in this case right change orders who who's the owner in this case we are the owner of the we are the owner of the project lawa is the owner of the project the lawa okay so where the you made a point here uh which I wrote down which I I I agree with you um typical claims again going back you know it is the typical many ways but the volume in this case is unusually high um which we agreed to right that the volume is incredibly high in terms of the change orders yes I think they volume of change orders is high could you give me some give us some insight as to why the number of change orders of volume were so high in this case so just so we can have some some color to this so we can understand so again I think a a variety of uh of reasons one of the challenges you know on the the the 286 million and authorities having jurisdiction change orders the delivery method for this project is not something that is typical for the rest of the city that our other City agencies deal with so in some cases it was a uh and again if Jake can correct me here but you know kind of a square peg in a round hole in some cases so we're asking other City agencies to you know kind of interact in a way that they're just not used to so that created some challenges that we've now addressed with our new myus so again a variety of of ways it you can't put you kn

2024-08-11 18:39

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