Transit Board Acts to Get Fuel Tanks Fixed : Hazard: North County agency fires contractor it says improperly installed the storage vessels.

North County Transit District officials will act next week to repair four underground diesel storage tanks after firing the contractor who the district claims installed the tanks incorrectly.

Ann Kulchin, chairwoman of the NCTD board, confirmed Friday that directors have voted to cancel the contract with Louetto Construction of Escondido for construction of the bus company’s Oceanside maintenance facilities.

The district’s action was taken at a closed session during the Oct. 11 board meeting.

Dwight Worden, attorney for the transit district, said the contract termination decision came after six weeks of trying to get Louetto to repair the damaged diesel tanks.

“We terminated the contract and asked them to leave the job site,” Worden said. “We feel there is a real danger here, with those tanks floating around loose. For six weeks, we have been trying to get them to come in and do the job right. Now we are going out and get some company that knows what it’s doing to finish the job.”

The transit district is the second public agency to have been held up by Louetto in recent weeks. Grading at the site of the Cal State San Marcos university campus has been delayed for a month because Louetto allegedly failed to pay subcontractors.

According to the transit district’s Oct. 25 board agenda, directors will be asked to empower Richard Fifer, NCTD executive director, to negotiate an emergency contract with another company to repair the “dangerous condition” at the San Luis Rey valley site off Mission Avenue.

The storage tanks, designed to hold 80,000 gallons of fuel for the 300-bus fleet, were installed incorrectly and have broken loose from their moorings, according to the staff report, which described the tanks as lying askew in a partly open pit, floating in ground water, “a dangerous condition.”

Transit district spokesman Peter Aadland said the board action Thursday would allow Fifer to bypass bidding procedures in order to remedy the situation quickly.

In a letter sent to Louetto notifying the firm of the construction contract cancellation, Fifer stated: “The inability of the district to use these tanks exposes the district to unacceptable fuel shortages, a concern of which you are aware and which is aggravated by the current crisis in the Middle East.”

Fifer said that the underground storage tanks are “in an unusable and dangerous condition,” and that bus company is forced to use temporary above-ground fuel tanks that hold only a two-day supply of fuel for the bus fleet.

Louie Pauletto, head of Louetto Construction, could not be reached for comment at his Escondido office or home Friday. A spokesman at the Louetto offices said that no company executives would be available for comment until Monday.

Worden said that Louetto removed the old fuel tanks that had given the bus company a week’s supply of diesel before installing the new tanks, which were not anchored securely and broke away from their underground anchorages.

“That is not the only reason we terminated the contract,” he said. “It was just the straw that broke the camel’s back. There have been numerous other problems.

“We will hire another contractor, and we will expect to be reimbursed from Louetto for expenditures above the original contract costs.”

Two bonding companies insure the transit district and Louetto subcontractors against losses if Louetto fails to perform, Worden said.

“If the system works right, bonding company money will finish the job for us,” he said, “and bonding company money will reimburse the subcontractors who were not paid for their work. Then the bonding companies will go after Louetto to recover the money.”

Worden said subcontractors had 60 liens against Louetto for failure to be paid for their work on the Oceanside maintenance yard.

“We paid Louetto a lot of money, but, for some reason, the subcontractors were never paid,” Worden said.

A subcontractor on the Oceanside maintenance yard construction project, who spoke on condition that his name not be used, said that the problems at the site went further the improperly installed underground fuel tanks. Subcontractors, including his own firm, had not been paid by Louetto, the general contractor, and had “walked off the job,” after weeks and months of seeking compensation without success, he said.

Now, the work, which was started in February, 1989, and was scheduled to be completed in January, is about 85% complete, Aadland said. The project involved building a state-of-the-art maintenance facility on the site where the transit district’s predecessor, the Oceanside Bus Co., had had its headquarters for several decades.

Meanwhile, Cal State San Marcos administrators said this week that they had been assured by an insurer for Louetto that another contractor will continue the grading by Oct. 28.