Major monorail partner pulls out of project

One of the two major partners in Seattle's monorail construction team has pulled out, worried that the financial risks of the project are too great.

After investing four years and more than $5 million, Washington Group International (WGI) decided earlier this month to withdraw from the Cascadia Monorail Co., a consortium of 29 companies, that is the sole bidder to build the 14-mile-long elevated railway from Ballard to West Seattle.

Boise-based WGI, among the nation's largest civil construction firms, likely would have supervised construction of overhead tracks and other structures. Its departure leaves Fluor Enterprises, the other lead partner, in charge. Hitachi of Japan would still supply its 100-foot long, two-car trains.

"These business decisions obviously involve a balance of risk and reward," explained Six Christian Silva, a WGI vice president who led the firm's monorail effort. "WGI's perception was the risk was too great, and considering the financial objectives involved, it had extended itself as far as it could."

"Our relationship with the SMP and our partners is completely amicable, and the decision to withdraw has been made by our management for strictly business reasons."

Several Seattle Monorail Project officials expressed confidence yesterday that the estimated $1.75 billion project will continue to go forward. The agency hopes to complete final negotiations on design and price with Cascadia sometime this summer.

"From what I've known, I don't think it's a problem at all. I think we're in very good shape going forward," said state Sen. Jeanne Kohl-Welles, a nonvoting member of the monorail board.

Fluor, listed as the nation's fourth-biggest contractor by Engineering News Record, is considered by some as rich and sophisticated enough to pull off such a complex mission.

"Fluor is as big and as aggressive and as capable, and I don't think WGI's pulling out means the project couldn't go forward with only Fluor," said state Transportation Secretary Doug MacDonald, whose agency has not been involved with the project.

Still, MacDonald, who is a skeptic about monorail technology, added that "people are going to be wondering why they left."

Car-tab tax

In 2002, Seattle voters approved a new car-tab tax to pay for the monorail. It is often called the most expensive construction project in city history.

The project has faced a number of financial obstacles including a shortfall in anticipated tax collections and skyrocketing steel prices.

Monorail opponent Henry Aronson expects renewed debate over whether the taxes earmarked for the Green Line would be better spent on other things, such as the Alaskan Way Viaduct.

"If a major national company withdraws from one of the largest construction projects because of a lack of confidence in the project, then the city building that project ought to have great concern," he said.

Cascadia submitted its original bid last August. Details of its proposed design, such as the column sizes and number of stations, have never been made public by the agency.

But The Seattle Times and other local newspapers have previously reported that Cascadia's initial offer was at least $200 million higher than expected.

An April 5 memo from SMP staff to Cascadia obtained this week by The Times confirmed that Washington Group International was leaving the partnership after nearly eight months of talks — and that the agency expected to get a cheaper, revised offer from Fluor.

Board member Cindi Laws said that Fluor appears more eager to take on the risk of entering the North American monorail market than WGI. She said that WGI's departure showed that "we are, in fact, negotiating hard. The bottom line is that we made it really clear, they have a price to meet or else."

Agency officials did not mention the shakeup during its board meeting on April 6.

Board Chairman Tom Weeks said yesterday that, to his knowledge, Cascadia's new management structure has still not been officially approved by the agency.

Push to reopen bidding

The news has renewed calls by Tom Stone, a consultant for Canadian train builder Bombardier, to reopen the bidding process.

Bombardier's team, which bailed out last year over strict SMP liability requirements, could regroup and submit a roughly $1.4 billion package that would be considerably cheaper than Cascadia's offer, Stone said.

"We believe we can build the right project at the right price. We don't want this to kill the project," he said. "We want to rebid."

But in a meeting last week, most monorail board members recoiled at the idea of a rebid after Executive Director Joel Horn warned that the process would take many months.

Horn remarked before that meeting that he's "99.8 percent, 99.9 percent" sure he can forge a deal with Cascadia.

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