Project Finance

New Jersey Will Repay Just 35% Of Halted Rail Job's U.S. Funds

In a deal between the U.S. Dept. of Transportation and New Jersey, the state will have to repay only $95 million of the $271 million that USDOT had disbursed for early phases of a commuter-rail tunnel that Gov. Chris Christie (R) cancelled last year. The nine-mile-long Access to the Region's Core (ARC) tunnel was to run under the Hudson River from Secaucus, N.J., to midtown Manhattan. But Christie killed the project in October 2010, citing what his office said were billions of dollars in overruns and new cost estimates. USDOT had wanted the Garden State to repay all $271 million. But last December, New Jersey's two U.S. Senators, Democrats Frank Lautenberg and Robert Menendez, reached a deal with DOT that the state would have to repay only $143 million; that figure was trimmed to $95 million under the final agreement, which Transportation Secretary Ray LaHood announced on Sept. 30. The deal also calls for New Jersey to spend about $128 million in federal highway funds on “transit-related” projects, LaHood said.

Corruption

Concrete Firm Manager Admits To False Product Certifications

A Maryland man pleaded guilty on Sept. 19 to federal charges of falsely certifying that concrete used on highway projects in the state had met specifications, federal and state officials said. Rod J. Rosenstein, U.S. attorney for Maryland, said Santos Eliazar Rivas, director of quality control for Frederick Precast Concrete Inc., had certified that precast-concrete structures had met specifications. According to the firm's website, it is based in Greencastle, Pa. Rosenstein's office said some Frederick Precast products had fewer steel rebar rods than specified in their frames and others had wire mesh instead of the specified steel rebar. The U.S. attorney said these structures “were materially weaker than if they had been produced according to design.” Rivas faces a maximum penalty of five years in prison and $750,000 in fines. A spokeswoman for the Maryland State Highway Administration said the products at issue included drainage structures and manhole covers on two major projects, but that flaws “were discovered while projects were under construction … and certainly not under traffic.”

Companies

Michael Baker Acquires Firm Despite Investor's Concern

Michael Baker Corp., Pittsburgh, announced on Oct. 3 that it acquired RBF Consulting, an Irvine, Calif., engineering and environmental firm, for about $50 million in cash and stock. Baker says the purchase will “significantly expand” its presence in western infrastructure markets. RBF, with 540 employees, had $103 million in 2010 revenue. It ranked at No. 104 on ENR's list of the Top 500 Design Firms. Baker says it had about $500 million in total 2010 revenue. The announcement comes just weeks after one of Baker's largest shareholders, New York City-based hedge fund Starboard Value LP, chastised the design firm to cut costs rather than continue its acquisition strategy. Baker had acquired JMA Studio Architects, Las Vegas, in June. Starboard, which owns 6.3% of Baker, did not respond to ENR queries on its reaction to the announced transaction. However, a Baker spokesman said on Oct. 4 that the design firm had not received any communication from the shareholder since the deal was announced. He added that RBF's co-chief executives will retain their titles “for the immediate future.”

Federal Funding