Delay on Metro Rail Funds Sought : Holden Will Seek Greater Control by Council Over Project Costs

Los Angeles City Councilman Nate Holden said Thursday he will ask the full City Council to delay committing funds to Metro Rail’s second phase of construction until the city is given more oversight of the project’s soaring costs.

Holden’s move came as the council prepared to vote today on whether to approve another $277 million as its share toward the next leg of the subway line, which is already two years behind schedule.

But Holden, who chairs the Transportation and Traffic Committee, said that council members “need to digest” two new audits that detail major cost overruns during Metro Rail’s first stage of construction “before we give a blank check to Phase 2.”

Bickering by Agencies

Holden’s call for caution came a day after the Los Angeles County Transportation Commission, which owns the subway line, and the Southern California Rapid Transit District, which will operate the rail system, bickered over spiraling cost overruns for the 17.7-mile Metro Rail project.

Testily concluding that competing audits released by the agencies show a project “almost out of control,” Holden said he supported a call by Los Angeles County Transportation Commission officials for a single rail construction agency to manage the subway project.

The councilman also said he plans to ask the Los Angeles County district attorney’s office to convene a grand jury to determine if some Metro Rail contractors have submitted “fraudulent” claims for compensation.

Management Rapped

On Wednesday, the Transportation Commission’s audit criticized the RTD’s management of construction on the first 4.4-mile leg of the project, warning of $135 million in overruns and a four-month delay. In contrast, the RTD’s audit acknowledged inflated costs, but claimed they would be smaller, ranging from $64 million to $102 million.

During the three-hour hearing of his council committee, Holden criticized the Transportation Commission findings as “a subjective judgment.” The councilman said the audit’s figure of $135 million in overruns was “beefed up” by the conclusion that the RTD still had $61 million left in contingency funds.

In prickly questions to accountants who conducted the commission’s audit, Holden said that he “was not that impressed” with their results. The accountants, Holden said, had worked “to come up with a report that would justify (the commission’s) recommendations.”

But at the same time, Holden said that dismal figures contained in both audits strengthened the need for a single agency to manage the Metro Rail project. Neil Peterson, the Transportation Commission’s executive director, called Wednesday for creation of such an agency, but his demand was rejected by RTD officials as a “political move.”

Transportation experts said a sole rail agency could be created only if the two transit authorities agree to the move or if a state Senate bill reorganizing Los Angeles County’s transportation system is passed. The bill would merge the commission and the RTD into one agency.

‘Not Prepared to Vote’

Holden said that several council members have told him that until they are better able to resolve the discrepancies between the competing audits, “they are not prepared to vote” for $96 million in capital costs and $181 million in expected cost overruns for Metro Rail’s second phase.

Holden said the council would need a delay of at least a week until city Transportation Manager S.E. Rowe can review both audits.

But Richard Stanger, rail development director for the county Transportation Commission warned: “It’s been delay after delay since June, when we first put this before (the council). . . . That’s what escalates costs.”

The $1.4-billion second phase would extend two branch lines from the station being built near MacArthur Park. One would run to Western Avenue, the other to North Hollywood.

Concern About Claims

Holden said he is worried about massive claims for compensation filed by contractors who have gone unpaid.

“We should have an outside investigator, perhaps a grand jury,” the councilman said. Holden added that he had already met with district attorney’s officials and planned to provide them with more information about the claims, which he called “systematic.”