Beverly Hills architect Paul Murdoch has spent hours on contract working up space calculations and preliminary exterior designs for a pair of rail stations planned in Los Angeles County.
But unlike most rail stations, there’s a good chance these may never be built. That’s because the stations planned for Palmdale and Burbank are part of the state’s multibillion-dollar high-speed rail project that is facing mounting criticism over soaring cost projections – now officially at $77 billion for the entire San Francisco to Los Angeles route though it could go as high as $98 billion – and whether it will ever be able to operate profitably.
“It’s very difficult to tell if the project is going to go forward into Los Angeles,” Murdoch said.
Nonetheless, Murdoch’s small 10-person firm Paul Murdoch Architects, which designed the recently completed Flight 93 Memorial in Shanksville, Pa., jumped at the opportunity to work on the project and even sought out the work. And he hopes his $45,000 contract eventually turns into something much bigger.
“It’s an essential part of our strategy as a small business because it combines our experience on both high-profile projects like the Flight 93 Memorial and on cultural and community-oriented projects,” he said.
Murdoch is not alone. According to the California High Speed Rail Authority, 57 other small businesses in Los Angeles County have also received contracts or subcontracts to work on the rail project, including Pasadena-based firms Sapphos Environmental Inc. and Ramos Consulting Services Inc.
Large Los Angeles-area companies have also gotten a share of the work, including Century City-based engineering and infrastructure firm AECOM, Pasadena-based Parsons Corp. and Sylmar-based Tutor Perini Corp.
AECOM spokesman Michael Chee said the company completed more than $50 million worth of work on the project between 2002 and 2016, including planning and preliminary engineering for segments north of Merced and in the Altamont Pass leading into the Bay Area. Much of that work was performed by contractor URS Corp. before AECOM acquired that firm in 2014.
Work continues
In all, according to the rail authority, nearly $5 billion has been spent in the years prior to and including 2018 on project development and construction-related activities; of that, $1 billion has gone to project development work similar to what AECOM and Paul Murdoch Architects have done, and $3.9 billion has gone to construction-related activities, mostly along a 120-mile segment in the Central Valley between Fresno and Madera, where construction began about five years ago.
That’s where Pasadena-based Ramos Consulting Services has focused its rail line work; the firm is overseeing and coordinating utility relocation services necessary prior to the start of construction.
Principal Armando Ramos said he is used to working on complex utility relocation projects, such as for the $1.7 billion Metro Regional Connector subway project in downtown.
“You might think the job would be easier in the more open space of the Central Valley,” Ramos said. “But it’s just as challenging because, unlike Los Angeles, you have to deal with a whole host of irrigation agencies, each owning their own pipelines that have to be moved.”
Ramos said he is not overly concerned about the possibility that the project could come to a premature end.
“Even if the project were to be stopped, we’ve already developed expertise and resources that can be used on other projects,” he said.
Sapphos Environmental’s work also involves coordinating with multiple agencies. Sapphos President Marie Campbell said the firm is a subcontractor to Kansas City, Mo.-based prime contractor HNTB Corp. and has the task of ensuring an 87- mile segment of the project extending north from Shafter in Kern County is in environmental compliance.
“We not only have to certify that permit conditions are being met, but if there is even the slightest change in the project – say a 60-foot shift in the alignment – then we have to go out and get numerous addenda to the permits,” Campbell said.
She added that at any point in time, up to half of the firm’s approximately 50 employees may be working on the high-speed rail project; at those peak times, the work can account for up to one-third of Sapphos’ overall portfolio.
Campbell said her firm has dealt with project uncertainty before, most recently in 2012 when the loss of a federal tax credit for wind and solar projects prompted several projects to be postponed or shelved.
“You just have to adjust when things like that happen,” she said. “We’ve adjusted before, and if this project were to go away, we would adjust again.”
Project diversity
The key, according to one infrastructure expert, is for companies involved in the project to make sure they don’t become too dependent on it.
“No question that if you are a small business, having this project on your resume is a great bonus, especially in this era when infrastructure investment has become so crucial,” said Rudy Salo, partner in the Los Angeles office of Boston-based law firm Nixon Peabody. “But there’s a risk in allocating too many of your firm’s resources into this project, given the uncertainty over its completion. It’s a matter of risk versus reward.”
From a broader economic perspective, the contracts flowing to local companies are giving a boost to the local economy, according to Christopher Thornberg, founding partner of Westchester-based Beacon Economics. The multiplier for these types of construction projects is typically between 1.5 and 2, he said, meaning that for every dollar paid in contracts to local companies, another $1.50 to $2 is generated at supporting businesses.
“But that’s the gross impact,” Thornberg said. “The net impact is looking at whether those dollars are being spent in the most worthwhile manner or whether those dollars are best spent in other ways.”
