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OCTOBER 9, 2009

BOARD OF DIRECTORS

ARTHUR T. LEAHY /<V""CHIEF EXECUTIVE OFFICER

CAROL INGE C/YCHIEF PLANNING OFFICER

1·405 HIGH OCCUPANCY VEHICLE (HOV) LANES FROMSR·90 TO 1·10

Caltrans has informed us that supplemental funding of up to $18 million may benecessary to close the contract for the 1-405 High Occupancy Vehicle (HOV)Lanes from SR-90 to 1-10. Initially, at the September Board meeting, we weregoing to request the first $8 million to cover Contract Change Orders (CCOs) forincreased items and to resolve a few major claims. However, Caltrans withdrewthis request to allow more time to negotiate with the contractor. Caltrans plans touse savings from other areas of the contract to cover some of these costs tocomplete construction and to defer the resolution and settlement of all claimsuntil after the contract is accepted through the normal administrative process.This Board Box serves to provide the Board early notification that additionaldollars may be needed to close this project.

BACKGROUND

The 1-405 HOV Lanes trom SR-90 to 1-10 was first initiated as two separateprojects, northbound HOV Lane from SR-90 to 1-10 (Call for Project (CFP)#6141) and southbound HOV Lane from 1-10 to SR-90 (CFP #6140). On July 26,2001, the Board authorized that the two projects be combined to create one 1-405HOV corridor project (CFP #2206) for the Design, Right-of-Way and Constructionof the HOV lanes. The design was completed in March 2004 and constructioninitiated October 2004.

On July 22, 2004, the Board programmed an additional $8.5 million in RegionalSurface Transportation Program (RSTP) funds and $1.5 million in Proposition C

25% to the project for design and safety features required to comply with updatedfederally mandated requirements. This action increased the total project budgetfrom $147.8 million to $157.8 million.

Caltrans recently notified us that supplemental funds may be needed as a resultof differing site conditions due to the inability of utility companies to relocateutilities prior to the contractor starting construction. The presence of the utilities,in particular a Los Angeles Metropolitan Water District (MWD) old water line,caused changes in design and staging operations and resulted in delays duringthe Construction phase of the project. Retaining walls and bridge abutmentswere constructed in order to protect the existing water line which runs along thefooting of the project's soundwalls and thus resulted in significant CGOs andalmost a one year delay to the project.

Caltrans was initially going to address the GGOs through a Board request forsupplemental funding. However, they have decided to work with the contractorto use project savings from other elements of the contract to complete the projectand then negotiate the remaining CCOs through the claims settlement process.

NEXT STEPS

The project is scheduled for construction completion in October 2009. Thecontractor will then have until March 2010 to complete the final estimatesdetailing all claims on the project. Galtrans will have 240 days after receiving theclaims to administratively resolve them with the contractor. During this process,Caltrans will work closely with us to resolve and minimize the amount in claimsand allow for the identification of an exact amount needed in supplemental funds .

1-405 HOV LANES FROM SR-90 to 1-10 2