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Wednesday, Nov 30, 2022

Metro CEO Talks Covid Impact, Big Projects

Phillip Washington announced last week that he would step down as chief executive of Metro in May after six years overseeing Los Angeles County’s extensive bus and train systems.

Washington, 63, is the first Black executive this century to lead the vast Los Angeles County Metropolitan Transportation Authority, which has 11,000 employees and a budget of $7 billion.

During his tenure, Washington achieved some notable successes guiding construction of five rail lines and helping secure passage of a sales tax measure is expected to generate as much as $860 million per year in revenue for Metro for several decades. But bus ridership declined on his watch, leading to the first major overhaul of the bus system in 25 years.

Over the past year, Washington has had to grapple with the impact of the Covid-19 pandemic, which slammed vital sales tax revenue and forced Metro to institute strict sanitation and safety measures.

Last year’s Black Lives Matter protests also posed unique challenges, prompting Metro to renew efforts to improve the flow of construction contracts to minority-owned businesses.

Washington, a 24-year Army veteran before stepping into civilian leadership roles, sat down with the Business Journal just prior to his announcement. He talked about Metro’s adjustments over the past year, the agency’s multibillion-dollar construction projects and the possibility of a fareless future for riders.

What do you regard as your top accomplishments during time at Metro? 
One was Measure M. With its passage, the voters of L.A. County overwhelmingly approved the most ambitious public infrastructure capital program in North America. Another is the fareless system initiative. And a third is the SEED School initiative.
What is the SEED School initiative? 
The SEED School will be the first public boarding school nationwide to focus specifically on future workforce needs of the global transportation infrastructure industry. It will be open to all youth in Los Angeles County, but with a special focus on those who have been underserved educationally or have experienced housing insecurities or have a family member who is incarcerated.
How much is ridership down since the pandemic began? 
Our ridership has dropped sharply during the crisis. Prior to Covid, we were averaging about 1.2 million boardings per day. That dropped in April to about 300,000 boardings per day. Fare revenue dropped along with that. In recent months, we’ve been back up to about 650,000-675,000 boardings per day. It’s been a steady but slow increase. We’re hoping that with the vaccines that ridership will go back up. I would note we fared better in our percentage drop than many other major transit agencies.
What impact has the pandemic had on Metro’s capital spending programs? 
We have taken an incredible hit to our programs because of the dip in sales tax revenue brought about by business closures. Our primary source of revenue is sales tax. The two sales tax measures (Measure R passed in 2008 and Measure M passed in 2016) each generate about $860 million per year. Last May, we forecast that losses from sales tax dollars would be about $1.6 billion over two fiscal years; our total budget runs about $7.2 billion per fiscal year. We’re still tracking along that path, possibly a little bit on the higher end of that estimate.

What have you done to address this revenue loss? 
Early on, we instituted a simple system — a two-bucket process. In bucket one are projects that we thought we should and/or must continue. These are primarily projects in the construction and operations phases. In bucket two are projects in the planning stages. We presented a plan to the board to delay/defer the projects in bucket two for three months — not to stop them altogether, but to delay them a bit.
Has this affected Metro’s efforts to increase contracts with minority-owned businesses? 
We are continually taking steps to ensure that small and minority-owned business contracting goals are met. I don’t want to hear from our prime contractors that “We couldn’t find them.” We at Metro will help you find them. Not only have we met our goals, we have exceeded them. We have a reputation of being the best large (transit) agency in the nation at this.
What recent steps has Metro taken to boost participation of minority-owned businesses? 
We’ve done so many things. Lunch-and-learn sessions. Monthly workshops on how to do business with us. Prompt payment programs. Business summits. Meetings with primary contractors. Bonding programs — offering free services for minority-owned businesses and small businesses to build bonding capacity.
You mentioned a fareless system initiative. Can you talk to that? 
We’ve been looking at a fareless system initiative to help the entire system recover from the Covid pandemic. This would be a pilot program at first, but we see this as a longer-term permanent measure to assist the 70% of our ridership that is below the poverty line.
When is this slated to start? And what effect would that have on revenue? 
We are presenting a plan for a pilot program soon with the aim to start this early next year. It would be a phased approach, likely starting with those who are below the poverty line who currently pay steeply discounted fares. Then we see spreading this to students. And in the final phase, no one would pay fares — the system would be free for everyone. As for revenue, our farebox recovery only accounts for about 13% of our transit system operating cost. We feel we can make that up with increased federal funding.
What capital projects are at the top of your federal funding wish list? 
At the top is the Sepulveda Transit Corridor, from the San Fernando Valley all the way to LAX. This is probably the single most congested corridor in the entire nation, so that makes a strong case for this. Then it’s the West Santa Ana Branch project. That’s the light rail line from the Southeastern Los Angeles County communities, many of which are low-income neighborhoods, to downtown.

Why has the Crenshaw-LAX transit project seen so many delays?
I’m not satisfied with the work of the contractor (Walsh-Shea Corridor Constructors, a joint venture between Chicago-based Walsh Group and Walnut-based J.F. Shea Co. Inc.). I think they did not have enough workers on this project, and there’s a lot of redoing of work. We will hold the contractor to the best quality job that can be done. We’ve insisted on some rework in some areas. I meet with the contractor and the principals on a weekly basis. The project is 97% complete, but the remaining 3% is the most intricate. I believe this is the year that contractor will turn the project over to us and that it’s near opening. We will stay on them, but it has not been the ideal project.
On the Metro Purple Line’s Beverly Hills segment, has the contractor been able to keep the project ahead of schedule after the rapid progress enabled by the complete shutdown of Wilshire Boulevard last spring? 
As of this point, Section One (Koreatown to Wilshire/La Cienega in Beverly Hills) is 70% complete; Section Two (through Beverly Hills to Century City) is about 40% complete; and Section Three (from Century City to Westwood) is about 20% complete. We’re on track to open ahead of schedule for Section Two by about 2025 instead of 2026. We will have the whole project done by 2028 Olympics.
There are two proposals from outside parties to provide additional transit options to Dodger Stadium: Frank McCourt’s aerial tramway project from Union Station and Elon Musk’s Boring Co. tunneling project to connect to the stadium from a Red Line station. What’s the status of each of these? 
The aerial gondola project is moving along. We agreed to do the environmental piece of this, and that’s going on right now. As for the Boring Co. tunnel project, right now we are not currently involved.
That Boring Co. tunneling project initially looked so promising … 
The next steps are up to them. But I will say we are very interested in the tunneling technology that they say is five times faster than current technology. If that proves true, we are very interested in applying that technology to other future rail projects, perhaps the Crenshaw-LAX Northern Extension project (connecting the Expo Line to the Red Line in Hollywood). It has the potential to save a lot of money. This is exactly why I set up our Office of Extraordinary Innovation — to encourage people and companies to come forward with just this type of technology.
You mentioned that Metro has strived to meet and exceed minority contracting goals. How did the George Floyd killing and the Black Lives Matter protests impact this effort? 
This made me very adamant about ensuring equity in the services we provide to the community. The George Floyd killing only reinforced this for me. It’s one of the reasons why we stood up an office of race and equity. There is tremendous power to influence and inspire through infrastructure investment. We’re not just a bus and train company; we have an opportunity, for example, to look at affordable housing policies.
Have you felt an extra obligation as a prominent official to be a role model for members of the Black community? 
I have, yes. I’m incredibly blessed to be able to survive my upbringing circumstances, growing up with a single mother with six kids. I did not know my father. Now I’m able to be in a position to be a blessing to others. With the position comes an obligation for us, an opportunity to assist people on their way up — not just Black and brown folks, but all who need an opportunity. Also, we have to teach our Black and brown children to own well-intentioned failures — the mistakes they make as young people. So often, we see people try to do well, but they are only afforded one mistake, if that. Then they are shunted away. We need to do a better job of bringing them along.
What are your plans once you step down in May? 
I don’t have any plans beyond Metro at this time … Who knows, I may volunteer my time with the Veterans Administration as that is an issue near and dear to my heart.

Keep reading the Black Entrepreneurs Month Special Report.

Howard Fine
Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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