Can $8.1M in infrastructure contingency funds pay for repairs on damaged MTA tunnels when neither extent nor cost has been assessed?

Remember that confidential December 2007 report commissioned by developer Forest City Ratner and provided to the Metropolitan Transportation Authority (MTA), which stated that portions of two subway tunnels were in critical condition and required repair "in the immediate future" and the "near future"?

The MTA, as I wrote in August, would not provide details concerning the amount of repairs completed or planned, or how such repairs would be funded.

Now we learn the repairs would be paid for via a contingency fund in the budget for the arena project, but the extent of the damage--nor, obviously, the cost of such repairs--has not been determined. And there's only $8.1 million available for Infrastructure Contingency.

That raises lingering questions about whether the contingency funds would be sufficient.

According to the Barclays Center Official Statement, prepared by Goldman Sachs for the tax-exempt bond deal, a document called the Transit Improvement Agreement--yet unseen--lays it out.

Deterioration not known

From the Official Statement:

In addition, as part of the Transit Improvements, RailCo is obligated to reinforce and repair at its own cost and in accordance with standards and procedures set forth in the Transit Improvement Agreement any subway tunnel structural support members that are found to exhibit a twenty-five percent (25%) or greater section loss and that are in the load path of the Transit Improvements. The Arena Developer has performed some preliminary testing on the support members within the subway tunnels to determine their structural integrity, and such testing indicated that some columns had deterioration in excess of twenty-five percent (25%); however, neither the final quantity of columns with more than twenty-five percent (25%) deterioration nor the level of deterioration of untested columns is known. Funds for such tunnel support repair work will be provided for out of contingency funds in the budget for the Arena Project. The total cost of the Transit Improvements, which estimate is based on bids on so-called "ninety percent" (90%) construction documents, is anticipated to be approximately $71.6 million, $3.2 million of which has been contributed and $68.4 million of which is remaining.

(Emphasis added)

Note that the total cost of the Transit Improvements, $71.6 million, covers items other than the damaged tunnels, including a new subway station entrance.

Contingency funds

How much is available in contingency funds in the budget for the Arena Project? The total is $53.1 million, including $19.7 million in Hunt Contingency (the construction company), $25.3 million in Owner's Contingency, and $8.1 million in Infrastructure Contingency.

The latter seems a rather small sum for tunnel repairs.

About the Related Infrastructure

The Arena Project ($904.3 million) is separate from the Related Infrastructure ($195 million) and the latter would not cover the damaged tunnels. The document states:

The Related Infrastructure will include the following work necessary for the development, construction, equipment and operation of the Arena: construction of a temporary rail yard in order to move most of LIRR operations off of the Arena Premises; excavation and relocation of sewer pipes and water mains from Fifth Avenue and Pacific Avenue to permit construction of the Arena Project and to service the Arena; demolition of existing improvements; environmental remediation, and the rebuilding of the Carlton Avenue Bridge which links Atlantic Avenue and Pacific Street on the East side of the AY Project Site, between Sixth Avenue and Vanderbilt Avenue. Parking to service Arena patrons on a nonexclusive basis will initially be provided on the eastern side of the AY Project Site, on Block 1129 on the Borough of Brooklyn Tax Map (“Block 1129”), to service the Arena. See “ARENA MANAGEMENT AND OPERATIONS⎯Project Leases and Agreements⎯Parking Easement.”