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Paving The Way To The Future

PR Department of Transportation to invest $2.4 billion over the next four years to improve access and open economic development opportunities for communities around the island.


May 31, 2001
Copyright © 2001 CARIBBEAN BUSINESS. All Rights Reserved.

Staying the course: DTPW construction program is on track. Plans include completing the Bayamon-Santurce stretch of the Urban Train by fall of 2003, and five major highway construction projects

Driving around the island, you may have thought that road and highway construction has recently come to a dead stop.

But you’d be dead wrong, a slowdown, perhaps, but not a stop. No way.

According to Department of Transportation and Public Works (DTPW) Secretary Jose Izquierdo, his agency’s capital improvement program (a.k.a. road and Urban Train construction) is right on track.

This coming fiscal year 2002–July 1, 2001 through June 30, 2002–DTPW will invest $628 million in road and Urban Train projects.

In subsequent years, however, DTPW’s construction program will be reduced significantly: $507 million in 2003, $292 in 2004 and $310 in 2005, for a total of $1.7 billion over the next four fiscal years.

Add another $692 million in operational, maintenance and capitalized expenses and, according to Izquierdo, that brings his department’s total projected investment in transportation infrastructure to a respectable $2.5 billion for fiscal 2002 to ‘05.

Of the $628 million to be invested this fiscal year, $596 million will be spent on actual construction–the rest goes to design, purchase of rights of way, etc.–down $47 million from FY 2001 levels and much less than the $724 million spent in FY ‘99.

The reason, according to Izquierdo is that the bigger ticket item, the Urban Train, is approaching completion.

For example, of the $628 to be invested this year, $286.7 million has been allocated for the Urban Train, an 11.7% decrease from FY 2001’s total of $324.7 million. According to Izquierdo, the decrease is due to the fact that most of the expensive construction (train stations and elevated sections) is already done, and as the construction moves forward, its costs will continue to decrease. The project is 78% complete.

For Izquierdo, the Urban Train is just one of several significant infrastructure projects under construction or in the pipeline that will improve access and bring economic development to communities around the island.

The five main projects to complete the island’s strategic network of primary expressways and scores of smaller road projects are also high on his agenda.

The five main projects are the East Corridor (formerly known as Route 66), the tunnels on PR-53 between Maunabo and Yabucoa, the completion of PR-10 between Utuado and Adjuntas, the extension of Jose De Diego expressway from Hatillo to Aguadilla, and the conversion of PR-2 into an expressway from Mayaguez to Ponce.

These five projects are estimated to cost in excess of $500 million. The exact cost to complete the East Corridor has not been determined yet. Izquierdo explained that the $500 million won’t all be invested before the next general elections, since at least two of the projects have completion dates beyond 2004.

"With the Urban Train and the five main projects, it means we have $500 million to $550 million left for the remaining transportation projects around the island in the next four fiscal years," said Izquierdo. "All these projects–both large and small–are important, because they are related to economic development. They’re not just a transportation issue. Their function is to improve people’s quality of life and to open up job opportunities, which translate into better wages and working conditions for those in less accessible areas."

According to Izquierdo, the economic development rationale behind the transportation infrastructure agenda is why the Calderon administration has assigned top budgetary priority to his department.

The Calderon Administration’s recommended total consolidated budget for the DTPW umbrella and all its related agencies–the Highway and Transportation Authority (HTA), the Public Works Directorate, the Metropolitan Bus Authority, the Drivers Services Directorate, and the Traffic Safety Commission–amounts to $1.216 billion, a 1.2% increase over 2001’s FY budget of $1.201 billion.

The HTA, through which most, if not all, of DTPW’s construction investment is channeled, will get the lion’s share, $809.5 million. The allocation is, however, $69.4 million less than FY 2001. (See chart) The reason again, according to Izquierdo is that the rate of construction, although still vigorous, is tapering off.

Interestingly, of the total $628 million DTPW will invest in transportation infrastructure projects this year, more than half–52.5% or $329.9 million–will be sent by Uncle Sam.

The Money & the Urban Train

How exactly will the DTPW spend the $2.5 billion projected for road infrastructure projects in fiscal years 2002 through 2005 will depend, in great part, on the Urban Train.

According to Izquierdo, the norm has always been that expressway projects cost the most money, and that’s why it is important that the actual cost of the Urban Train–the island’s most expensive and complex infrastructure project ever built–be established early in the process.

This will allow the DTPW to establish more clearly its transportation priorities for the next four years.

"That way I’ll have the necessary budget to do other projects around the island such as bypasses, widening of roads, and bridge replacements," said Izquierdo. "The mayors have already given us their wish lists and we need to establish our priorities."

Any cost overruns on the Urban Train project will affect the completion of other highway projects, since the money will come from the HTA’s funds–thus the importance of settling the cost of the Urban Train as soon as possible.

But the project’s cost is anything but settled. Based on the transition report, as of January 2001, the Urban Train’s first phase (Bayamon to Santurce) had a total cost of $1.675 billion, a summer 2002 completion date, and $250 million in outstanding claims from contractors, some of which are still being negotiated.

"In any construction project, money claims impact completion schedules as well," said Izquierdo. "When you sit down and analyze the project and the $250 million in claims, you realize it will cost more than $1.675 billion, and it won’t be completed by next summer."

Izquierdo’s new projections place the cost of the Urban Train’s first phase at $1.89 billion with a completion date of September 2003.

The first phase encompasses the construction of 16 stations along 17.3 kilometers (10.68 miles) of railways. Above ground, elevated sections make up 52% of the project, while 40% is ground level, and 8% is underground (the Rio Piedras section).

The Urban Train project was divided into seven construction contracts–Bayamon (ICA Miramar), Rio Bayamon (Redondo/Entrecanales), Torrimar (Siemens Transit System), Medical Center (Redondo/Entrecanales), Villa Nevarez (Redondo/Entrecanales), Rio Piedras (Kewit Kelly Zachary [KKZ]), and Hato Rey (Nesco/Redondo).

"From the start, the previous administration had setbacks with the Urban Train project. Facing a shortage of construction laborers, work began to accumulate and contractors got into difficulties," said Izquierdo.

Changes in design specifications during the construction process as well as construction deficiencies found in the project are some of the reasons for the claims. The issue now is, who is responsible and who picks up the tab.

Two years into the project, the Rossello administration renegotiated the contracts with these contractors, which Izquierdo described as a "good business decision."

"A series of decisions was made, and out of the seven contracts, four were renegotiated–ICA’s contract, and the three contracts with Redondo/Entrecanales," said Izquierdo. "As part of the negotiations, Redondo was removed from the contracts, leaving Entrecanales as operator, and new dates were set."

Because of those renegotiations, DTPW now knows the cost and scheduling for the four contracts involved. Work on these contracts is six to eight months behind schedule–which is not too much considering the size and complexity of the project–and according to Izquierdo, the contractors are complying.

Of the remaining three contracts, renegotiation of the Rio Piedras contract with KKZ is almost complete, while negotiations for Hato Rey (Nesco), and Torrimar (Siemens) are still being worked out. KKZ’s claim is for $105 million, while Siemen’s–the most important and critical one–is for $120 million.

Siemens’ contract not only involves the Guaynabo section of the project, but also maintenance, the installation of the railways, the project’s electrical system, and its controls. The German company will operate the system for five years.

Izquierdo hopes to have the contracts renegotiated by summer’s end. After that, completion of the project will move full speed ahead.

"Although I have begun to resolve some issues with Siemens, I can’t close a deal with them until I have finished with Hato Rey (Nesco) and Rio Piedras (KKZ)," said Izquierdo. "Siemens’ contract stipulates they will have the Urban Train in operation eight months after we deliver last station."

Despite the fact that Siemens is behind schedule, Izquierdo is confident that the first phase of the Urban Train will have a happy ending.

"In business, everything has to be win-win, otherwise it doesn’t work," said Izquierdo. "There is an extraordinary attitude, willingness, and commitment from all parties involved to bring the first phase of the Urban Train to a happy ending."

Another issue that Izquierdo must resolve is $165 million in federal funds on hold by the Federal Transportation and Highway Authority because of deficiencies found in the Urban Train project.

The Eastern Corridor Project

Besides the Urban Train, Izquierdo will focus his attention on five main transportation projects that will finish Puerto Rico’s strategic network, i.e., the two loops of expressways around the island.

And at the top of that agenda is the least likely candidate. You guessed it, Route 66--now renamed the Eastern Corridor project.

Izquierdo is very aware of the importance and the extraordinary growth the northeast region has experienced, especially in the tourism industry, and of the resulting traffic problems experienced in the area for years.

"Tourism is a clean industry, that produces many jobs. El Conquistador Hotel in Fajardo alone has 2,000 employees," said Izquierdo. "And we know the many man-hours people waste in PR-3’s congested traffic."

That was the rationale of the Rossello administration for building Route 66. However, the project ran into opposition from residents and environmental groups, became a political football in election year and was eventually halted in court.

Now obtaining permits for the entire project will start from scratch, said Izquierdo.

"One thing we have incorporated into DTPW’s programs is the early involvement of the communities affected by projects like this one," said Izquierdo. "We issue a preliminary Environmental Impact Statement (EIS), we hold public hearings, we review them, and then we issue the final EIS."

The DTPW held public hearings on the East Corridor project in several communities in May. The more input the DTPW receives, the more sense the final infrastructure will project have, said Izquierdo.

Izquierdo has taken two affirmative actions regarding the project, which agree with what the Rossello Administration concluded previously.

"We are removing the San Juan — Carolina section from the project’s master plan, because this section became connected when PR-26 (Baldorioty de Castro) was turned into an expressway," said Izquierdo. "We also concluded that the Carolina—Rio Grande section must be designed as an expressway conversion."

The East Corridor could simply convert PR-3 into an expressway, follow the original concept for Route 66, or be designed as a combination of both options.

The Carolina—Rio Grande section will be considered one project. As soon as the Environmental Impact Declaration (EID) process is completed, the DTPW will analyze which of the three alternatives is the better one.

"We are going ahead with this project with confidence and agility," said Izquierdo. "The EID will take some 15 months and we hope to start construction in two years."

The East Corridor project will take two years to build. A total of $140 million had already been invested in the original project, of which $60 million was in construction. The original project had an estimated price tag of $212.8 million. The final cost of the East Corridor will depend on the alternative that is ultimately chosen.

PR-53 extension, Maunabo—Yabucoa Tunnel Project

"Maunabo and Yabucoa are physically isolated towns, with no job opportunities or access to larger cities, therefore their development is strangled," said Izquierdo.

The solution? The original concept called for a direct tunnel between the two towns, at a cost of $400 million. Another concept envisioned an open road for $40 million.

"What we are going to do is a combination with four tunnels and sections of open road in between," said Izquierdo. "This alternative, which we are working on, has a total estimated cost of $150 million."

The entire length of the project will be 9.7 kilometers (6 miles), of which the tunnels will make up a total of 1.97 kilometers (1.2 miles).

DTPW officials have been meeting with members of the community to hear their concerns. One of their biggest citizen complaints was that they had not been previously included in the construction process. The community has been anxious to know about the project, Izquierdo noted.

The project is still in the planning and design stages, and no timetable is available yet.

Once completed, it will allow the towns of Salinas, Patillas, Maunabo, Yabucoa–on the southeastern part of the island–to connect with the east all the way to Ceiba and Fajardo, and with the south and southwest regions as well. This will open the doors for job opportunities and economic development to these isolated regions, Izquierdo added.

PR-10 Completion, Utuado — Adjuntas

"This project has a tremendous significance, because it will allow people from the northwestern part of the island to finally connect to the southern region," said Izquierdo. "PR-10 goes from Arecibo to Utuado, and from Adjuntas to Ponce, but the section between Utuado and Adjuntas is not connected."

The project’s importance lies in the fact that it will allow people from the Arecibo region to work at the $1 billion Las Americas Transshipment Port, to be built in Guayanilla—Ponce corridor. The PR-10 will be an important part of the road infrastructure network needed to support the transshipment port project, Izquierdo explained.

"Infrastructure is not an end, it’s a social, economic development tool, and its need must emanate from the people, not just individuals, but also businesses," said Izquierdo. "In this case it’s the transshipment port."

And for Izquierdo, the transshiment port’s importance is not in the port itself, but the fact that its ancillary value-added activity will make it a center for job creation, a window of opportunity for many people.

The PR-10 completion project consists of 11 kilometers (6.8 miles), at an estimated cost of $60 million. It is in the planning and design stages, with no timetable available.

PR-22 extension, Hatillo to Aguadilla & PR-2 conversion, Mayaguez to Ponce

These two projects are an important part of the Western region’s infrastructure plans to improve access to the area, bringing new economic development opportunities.

The first one, the PR-22 extension from Hatillo to Aguadilla, will have a length of 45 kilometers (27.96 miles), at an estimated cost of $223 million.

An environmental study and public hearings will be coordinated along with the Planning Board and the municipalities affected by the project, so that these can be included in the project’s master plan.

The process of issuing an EID and all the required studies will take three years. "Due to that fact, the project will be included in our master plan, but we won’t see it completed during the four year term," Izquierdo said.

The PR-2 conversion into an expressway from Mayaguez to Ponce–also called the West Expressway–entails the elimination of 14 stoplights and the construction of elevated intersections–at an estimated cost of $100 million. The project is in the design stage.

"All these projects are very important as part of our plan for the next four years," said Izquierdo. "And their purpose revolves around economic development. They don’t exist in a vacuum."

In addition to these main projects, Izquierdo is implementing an improvement program for secondary and tertiary roads islandwide. The program includes repaving, as well as the widening of roads and bridges.

There are 7,000 kilometers (4,349.6 miles) of roads under this program. Many of the bridges in the island’s interior are too narrow for today’s cargo trucks and vehicles, causing delays and inconveniences.

Izquierdo has $36 million budgeted for the program this year, and is requesting an additional $37.7 million to the Legislature. He hopes to get $100 million next year and another $100 million the following year.

"The more money I can get for this program, the more I can give to the mayors," said Izquierdo. "The money in this program will go a long way."

The biggest challenge

For Izquierdo, the biggest challenge he faces as DTPW secretary is not just completing the Urban Train project, but changing people’s mindset about public transportation, and integrating its different components to make it work.

"Finishing the Urban Train is indeed a challenge. The construction process, the technical aspect, is easy," said Izquierdo. "The real challenge lies in changing people’s cultural and social perceptions about public transportation, which will involve a process of education and public relations."

Izquierdo is optimistic that once people see the Urban Train in operation, they will discover its advantages.

And it’s the younger generation that makes Izquierdo so confident the Urban Train will work.

"It was our children who taught us about recycling and the use of seatbelts," said Izquierdo. "It’s not going to be easy, but if we start creating awareness now, the younger generation can influence or choices about mass transit too."

This Caribbean Business article appears courtesy of Casiano Communications.
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