The Los Angeles City Council on Wednesday agreed to fund its $96-million share of the next phase of the Metro Rail project, after strictly limiting the city's liability for any cost overruns on the $1.4-billion segment.
The agreement forged with the Los Angeles County Transportation Commission after weeks of bargaining is expected to clear the way for the commission to apply to the federal Urban Mass Transit Administration for $667 million. That would provide 46% of the projected cost to build the next 6.6 miles of the subway, extending the line to Hollywood Boulevard and Vine Street.
The commission is the funding authority for the entire $3.7-billion rail line, which is designed to run from downtown Los Angeles 17.3 miles to North Hollywood. By the terms of the funding agreement, the city will pay 6.6% of the costs over the next 10 years, using its share of a half-cent sales tax approved by county voters in 1980 to pay for rail development.
The council also committed the city to share in any cost overruns on the next 6.6-mile segment of Metro Rail construction. However, in the agreement approved Wednesday, the city's liability is limited to 5% of the over-budget costs up to a maximum of $90 million.
With expenditures headed for $300 million a mile as the first phase of the project approaches the halfway mark, cost overruns have become the focal point of a growing controversy involving the city, the Southern California Rapid Transit District and the county Transportation Commission.
Construction on the first 4.4-mile segment of the project from Union Station to MacArthur Park at Wilshire Boulevard and Alvarado Street is under way by the transit district. The job is estimated to be $135 million over budget and nearly two years behind schedule, according to a commission audit. Transit district officials, while agreeing that costs have gone up, say the commission's numbers are exaggerated.
The commission--which has overall funding authority on the project--and the transit district are locked in a struggle over which agency will control the budgets and construction of the next phases of the big subway project.
There is already concern that the second phase of Metro Rail construction--extending the line from MacArthur Park 13 miles out to North Hollywood--will run over the projected $2.5-billion cost by as much as 15% or $338 million, officials report.
To contain these escalating costs, the commission has created a cost-reduction panel and is considering ways to scale back project expenditures without reducing the miles of track or number of stations.