RTD Urged to Find Other Ways to Save Metro Rail Money

A ranking official of the Los Angeles County Transportation Commission said Friday the commission will urge transit district leaders to look closely at other ways to save money on the troubled Metro Rail subway project before taking the drastic step of terminating contracts.

“It is important to sit down with a contractor and resolve an issue before taking a drastic step like this,” said Richard Stanger, director of rail development for the county commission, which is providing 14% of the $1.25 billion needed for the first, 4.4-mile segment of the subway.

Stanger, along with other local officials, reacted to statements Thursday by an official of the Southern California Rapid Transit District, which is building the subway, that the RTD is considering canceling contracts to avoid cost overruns.

“It is obviously an extreme option which could have both benefits and risks,” Stanger said. “We will discuss it with them.”

Over Cost, Behind Schedule

Those risks include further delays and cost overruns for the so-called Metro Rail Red Line, which has spent about half the money alloted for the project that is only one-third complete and 18 months behind schedule.

A spokeswoman for the transit district acknowledged such action, if enacted, would be all but unprecedented.

“On very, very rare occasions we have terminated contracts,” said RTD spokeswoman Andrea Greene. “In the 25-year history of RTD we have terminated two contracts.”

But Greene insisted that the proposal was only one of many cost-cutting measures under consideration and not a sign of potential financial disaster.

“It’s merely a management tool being analyzed and explored,” said Greene, “just like any large agency would do when tackling a huge project.”

Still, the fact that transit officials are even discussing such a plan has angered some contractors, construction workers, transportation authorities and elected officials involved with the project.

“I think it would be a rotten deal,” said Frank Todd, president of the International Union of Operating Engineers, “and one that would cost them more money in the long run.”

Possible Legal Problems

“If they are trying to get out of potential cost overruns by terminating contracts,” added Assemblyman Richard Katz, (D-Panorama City), who has been active in the Metro Rail project, “they may be running into legal problems.”

City Councilman Nate Holden, chairman of the council’s Transportation and Traffic Committee, suggested the RTD may be using the proposal as leverage in negotiations with Metro Rail contractors over unsettled claims and change orders currently totaling almost $50 million.

“Either that, or they’re dumb enough to mean it, in which case we’re really in trouble,” Holden said. “You’d have to be a real novice not to know it will delay “completion of the project.”

Mayor Tom Bradley’s staff has decided to review the contract-canceling proposal, a spokesman said Friday.

As it stands, the Metro Rail “Red Line”--to run from Union Station through downtown to MacArthur Park--is the subject of four audits, including two independent audits requested by RTD General Manager Alan Pegg in response to a federal report that the Metro Rail project was in danger of running out of money.

Another audit is being conducted by the county transportation commission, Stanger said. The fourth was launched by the U.S. Department of Transportation.

“So far, we have a lot of questions and only partial answers,” said Department of Transportation auditor Larry Arata. He added that the RTD’s proposal to terminate contracts “is something we are going to look at.”