Panel OKs Plan to Meet Overruns on Metro Rail

Los Angeles may have to pony up tens of millions of dollars more than previously expected to help cover potential cost overruns in building the Metro Rail project.

An “open-ended” financing commitment to meet such costs passed a key City Council committee Monday.

Along with the financing package, which is expected to be voted on by the full council Wednesday, the committee recommended that the council drop its requirement for the Reagan Administration to tentatively commit federal funds to extend the initial 4.4-mile commuter line to the San Fernando Valley.

The proposed agreement drew unexpected and harsh criticism from Councilman Zev Yaroslavsky, a longtime Metro Rail supporter, who warned that the contract could saddle the city with huge expenses for the project.

Tells of Shock

“I was frankly shocked by the content (of the agreement) as far as it affects the city,” said Yaroslavsky, whose district would include parts of the line. “The basic guarantees that the council sought were negotiated away--completely gone.”

Yaroslavsky, who sought unsuccessfully to delay action, complained that officials of the Southern California Rapid Transit District had refused to reveal details of the agreement until the last few days. He said the pact, part of a complex web of contracts between local and state agencies needed before construction can begin, is being presented as a “take it or leave it” proposition. “Right now, I’m not for Metro Rail if it comes down to that,” Yaroslavsky said.

After nearly two hours of debate, the committee voted 2 to 0, with Yaroslavsky requesting to be recorded as “absent,” to recommend approval of the agreement.

Leaves After Vote

Yaroslavsky left the meeting immediately after the vote. An aide said later that Yaroslavsky would be “fighting pretty hard” to stop the council’s approval.

As chairman of the council’s Revenue and Finance Committee, Yaroslavsky could become a formidable opponent of the project, although there were no indications Monday that his disapproval of the new financing requirement meant he that he would withdraw his support for the project.

RTD General Manager John Dyer and other Metro Rail supporters, including business leaders, argued that the contract was the best that could be negotiated with the Reagan Administration, which strongly opposes the project.

The Administration, under pressure from Congress, reluctantly agreed last month to release $225 million for the first 4.4-mile, $1.25-billion segment of the system. But Reagan appointees in the Urban Mass Transportation Administration required local agencies to make up cost overruns. The Administration has refused to provide an official acknowledgement that more federal funds may be available for segments needed to connect the downtown starter line to the San Fernando Valley.

Cost-Overrun Fund

The tentative agreement with the Administration requires the county Transportation Commission to set aside funds equaling 10% of construction costs--estimated at about $100 million--to cover possible cost overruns. That is in addition to the commission’s grudging agreement to cover a $203-million possible shortfall in federal funds and its $176-million local share of the construction costs.

But the commission, concerned about its potential liability, wants the city to put up half of the money for the cost overrun account. Cost overruns have been common on major transit projects in other cities, but RTD officials insist that because Metro Rail engineering and planning is so far along, such overruns are unlikely here.

Under the commission proposal, the city would have to set aside a minimum of $50 million between 1986 and 1993 for possible overruns, in addition to paying a previously approved $34-million share of first-phase construction costs. Beyond that, the city could also be forced to pay millions each year for an indefinite period to retire cost overrun debts.

Comrie’s Assessment

City Administrative Officer Keith Comrie said there is no way to know how much cost overruns might be, but he said “we fully expect” overruns on such a large job. A report by Comrie’s staff said the RTD has budgeted too little for contingencies and inflation. As a result, the city and county commission may have to cover overruns of $76 million, which they would share equally, the report says.

“None of us likes what’s happened at the federal level,” Comrie said. “We’re just trying to keep the package together by making an additional commitment.”