Metro Rail Turf War Could End Up Costing $120 Million

A top Los Angeles County Transportation Committee official on Wednesday acknowledged that the agency’s turf war with the Southern California Rapid Transit District could add as much as $120 million to the cost of building Metro Rail.

While the two big transit authorities formally buried the hatchet this week, giving the commission more control over constructing the big subway project, Neil Peterson, the commission’s executive director, said the jurisdictional fight had delayed by six months the start of construction on the 6.8-mile-long second phase of the subway line.

“Time is money,” Peterson told reporters after Wednesday’s stormy commission meeting. He said the delays on the $1.4-billion second phase are costing $20 million a month, adding, “I am saying if we can’t make up for the time lost, it could cost as much as $120 million before the second phase is finished in 1998.”

Peterson predicted that--with the jurisdictional dispute resolved and decision-making streamlined--the way now is clear to make up for lost time.

Los Angeles City Councilman Nate Holden, who sits on the commission, disagreed with Peterson. He contended that the cost overruns cannot be made up.

“These cost overruns are going to hurt us, hurt the city of Los Angeles,” Holden said. Holden tried to sidetrack the compromise agreement between the two big agencies until the City Council had time to approve or modify the language of the agreement.

Holden’s persistent questioning of Peterson brought the potential $120-million cost overrun to light. It was the first time a price tag had been put on the costly jurisdictional war between the commission and the transit district. Technically both have had a piece of the project, and the lines of authority have been blurred by local politics.

The $3.7-billion, 17.2-mile project is funded by federal, state and local money. The RTD received the first federal funds to start tunneling the initial 4.4 miles under downtown Los Angeles.

After the project got off the ground, the state Legislature created the commission to oversee all rail projects in the county, including the second and third phases of Metro Rail that would extend the line from downtown through Hollywood into the San Fernando Valley.

Initially, it was assumed that the RTD would continue building the big subway project. However, the divided jurisdiction led to a turf war between the two agencies.

The commission last summer audited the RTD’s work on the first $1.3-billion phase of the project--from Union Station to 7th and Flower streets--and found the work was running $135 million over budget and was two years behind schedule. The RTD denied that the cost overruns were anywhere near that high and claimed that the commission was meddling in RTD business.

The commission moved to take over the project by creating the Rail Construction Corp., a non-project subsidiary to assume control of the final phases of the project. The RTD was offered three of the six seats on the new corporation’s board of directors, but the district’s board of directors refused the compromise.

That was in the late summer and fall. In the meantime, the differences between the commission and the district delayed other start-up decisions needed to get the $1.4-billion, 6.8-mile second phase of the project started, Peterson said.

All of these differences were worked out after months of negotiations, and the RTD board last week agreed to turn construction of Metro Rail over to the Rail Construction Corp. Under the compromise, the new corporation’s board would have seven members. Each agency would pick three board members and those six would chose the seventh, tie-breaking member. The RTD would contract with the new corporation to build the rest of the subway.

The commission was expected to routinely approve the agreement at its special meeting Wednesday, but then Holden raised the specter of cost overruns resulting from delays in settling the jurisdictional dispute. He asked the commission to give the City Council the right to review and approve the accord between two transit agencies.

He said the proposed contract between the RTD and the commission breached an existing agreement the city had with the RTD for construction of the project’s first phase. “We vote for this (compromise agreement) and we’re going to get into a big legal mess,” he said. Holden contends that any cost overruns will have to be paid with local transit funds that are needed to keep RTD bus service going.

While Peterson agreed that the cost on the project could go $120 million over budget if the work falls six months behind schedule, he said every effort will be made by the Rail Construction Corp. to bring the project in on time and within the budget. The lost time can be made up, he said, but even if there are some overruns, the money for those extra costs will not be taken from RTD bus service funds.

After rejecting Holden’s motion, the commission voted 9 to 1 to accept the compromise contract giving the RTD and the commission an equal voice on the Rail Construction Corp. board of directors.