Audit Detailing Metro Rail Woes Sparks New Turf War

Reacting to an alarming new audit that shows Metro Rail at least four months behind schedule and $135 million over budget, Los Angeles County Transportation Commission officials moved Wednesday to wrest control of the troubled subway project away from the Southern California Rapid Transit District.

Neil Peterson, executive director of the commission, called for the creation of a single rail construction agency that would act as a subsidiary of the commission, supervising construction of Metro Rail and all other county rail projects.

The RTD, calling the move a “political” act, countered with its own audit that showed sizable, but smaller, cost overruns in the construction of the first 4.4-mile leg of the subway.

The dueling audits amounted to opening salvos in what could mean a bitter turf war between the two agencies over ultimate authority for Metro Rail’s construction. When completed, the subway will stretch from downtown Los Angeles to North Hollywood, a distance of about 16 miles.

Peterson said at a news conference that he also plans to ask members of a Metro Rail budget oversight panel to order major changes in the RTD’s management and planning of the subway program.

Commission officials said the Cost Reduction Panel has the authority to cut costs when budget overruns exceed 10% of their original estimates--the exact figure of Metro Rail cost overruns reported by the new county audit.

Although the county audit, conducted by the independent firm of Deloitte/Kellog Joint Venture, used the dry language of accountants to dampen its dire message, Peterson sternly warned that inflated costs in the Metro Rail project have already passed 10% of the $1.3 billion project.

“If we don’t take immediate control of the budget and project schedule, we have been advised that (the situation is) likely to deteriorate even more,” Peterson said.

Trying to blunt the impact of the county audit, the RTD responded by issuing its own figures showing more modest cost overruns of between 5% and 8% of the agency’s original budget.

“By our consultant study,” said RTD Board President Gordana Swanson, Metro Rail “will not be $135 million over the original budget but somewhere between $64 and $102 million. We make no excuses for this.”

Swanson questioned the commission’s figures, calling them “blatantly untrue statements.”

But despite the rhetoric, the RTD’s admission of cost overruns marked the first time the agency has admitted that major impediments exist to Metro Rail’s progress. In the past, the RTD has insisted that the project would be completed within its original budget and that subway service would start by September, 1993.

Instead, RTD officials acknowledged Wednesday that continuing difficulties could delay the start of service of the first leg of Metro Rail by as much as nine months. The RTD originally projected that the first phase of Metro Rail construction would be finished by April, 1992, then revised that date to September, 1993.

Swanson insisted that “a number of changes” would be necessary to minimize the overruns and delays. But she and other RTD officials said the Transportation Commission lacks “the expertise or quality to manage funding or construction for rail.”

In recent months, the agencies have escalated their criticism of each other over how deeply the subway construction project is mired in difficulties.

While the RTD has consistently defended its approach, the commission has insisted that control over the project should be withdrawn from the district. The commission has even gone as far as promoting a state Senate bill that would eliminate the RTD and place administration of Southern California’s transit lines in the hands of the county.

Joint Financing

Under current contracts, the commission will own the subway and the RTD will operate the lines. It is financed by federal and local agencies.

But Peterson’s call Wednesday to strip the RTD of its control of Metro Rail was the strongest yet.

“Unless we take action now, the potential for future problems is much greater,” Peterson said. “There’s no likelihood of change unless we make these changes now.”

Peterson said he hopes that the RTD will agree to his call for a new subsidiary agency. The agency would ensure “that 70 cents of every dollar is going to construction,” he said, “not 50 cents as is the case today.”

Before such an agency could be created, the commission would need either support from the city and RTD or the elimination of the transit district, a move being considered in the Legislature.

Even if those steps are not taken, Peterson said he is already taking steps to get action from the Metro Rail budget oversight panel. The panel, which consists of representatives of the Transportation Commission, the RTD and the city, can reduce costs if overruns exceed 10% of the original $1.3-billion budget.

Commission officials said that even if the RTD member on the Cost Reduction Panel disagrees with the need for action, the other two members can force the agency to make changes.

“The RTD has to go along with what the majority on the panel agrees to,” said Richard Stanger, the commission’s director of rail development.

Repeated calls to Los Angeles Deputy Mayor Mike Gage for comment on the city’s position went unreturned.

But City Councilman Nate Holden, who has in the past warned of cost overruns, blamed the RTD for Metro Rail’s problems, saying: “We have to hold someone responsible for mismanagement.”

The commission’s audit concluded that the RTD management of Metro Rail was riddled with duplicated effort and “worked against timely decision making.”

Adding to the political complications facing those overseeing the Metro Rail project are rising complaints from many of the subway project’s contractors.

Slow to Pay

The contractors hired to carry out drilling, tunneling, earth-moving and structural shoring-up work in the Metro Rail project have criticized RTD’s management for reacting slowly to their claims for more compensation for work already completed.

Webster G. Wiley, president of Foundation Excavation, a firm that handled all the excavation and earth recompaction for the subway’s main maintenance shop building, was pessimistic about the outcome.

“I don’t see how they can get it under budget,” Wiley said, expressing bitterness at claims for compensation that have gone unpaid.

“They hate each other,” Wiley said of the two transportation agencies. “They’re both clowns.”

Times staff writer John H. Lee contributed to this story.

DIFFERENCE OF OPINION

Comparisons between results of audits released Wednesday by the Los Angeles County Transportation Commission and the Southern California Rapid Transit District:

COMMISSION RTD Total estimated $135 million $64 million- cost overrun $102 million Percentage estimate of 10% 5% to 8% cost overuns above original budget estimate for completion of first leg of subway project Length of delay beyond 4 months 9 months RTD’s latest estimated date for subway service start (September, 1993)