Hollywood Subway Cost Overruns Hit $79.1 Million

The Hollywood leg of the troubled Los Angeles subway project is expected to cost $79.1 million more than anticipated and to open months later than promised, according to Metropolitan Transportation Authority officials.

The cost overruns were brought about by everything from a 1.6-million-pound underestimate in the amount of steel required for a subway station to $700,000 in unanticipated costs for a rock art project at another station.

“The artist’s vision was to have these enormous fiberglass, concrete boulders hanging from the ceiling,” Stephen J. Polechronis, MTA deputy executive officer for construction, said Tuesday. “That rock work has proven significantly harder [than expected] to build and install.”

MTA officials said that they have made provisions to pay for the cost overruns in their plans for dealing with the agency’s financial crisis. They plan to borrow the money by selling more bonds, to be repaid out of the 1-cent-on-the-dollar sales tax levied on county taxpayers.

Local taxpayers are responsible for cost overruns on the subway project.

The cost increases, to be presented to an MTA board committee today follows a $123-million price increase in the project in 1996, much of it due to the recovery costs from the infamous Hollywood sinkhole a year earlier. The MTA is seeking to recover its increased costs for the sinkhole in a lawsuit against the fired tunnel contractor.

Some of the $79.1 million in additional costs are related to the sinkhole. But the MTA also is spending more than expected on private attorneys hired to represent the agency in litigation over the project and on construction managers who will need to stay on the job longer than expected.

The MTA is disputing about $70 million in claims by its contractors, and expects the amount to grow to more than $100 million. “The contractors feel they deserve more money,” Polechronis said. “In our opinion, they don’t.” But the agency set aside $20 million in the event that the contractors prevail in some of their claims.

The cost increase raises the total cost of the Hollywood subway extension to $1.7 billion, which includes the 2.1-mile extension from MacArthur Park to Wilshire Boulevard and Western Avenue that was opened in 1996 and the unfinished 4.6-mile extension to Hollywood Boulevard and Vine Street. That is $80 million more than the last budget revision made in early 1996 but $274 million more than the original budget approved in 1990.

Even with the cost overrun, MTA officials say the subway construction compares favorably to other large public works projects.

“Obviously, I’m not happy about having to bring an $80-million cost growth to this board,” Polechronis said. He noted that the board several years ago included nearly $70 million in enhancements. “If one were to take out the extraordinary cost associated with the sinkhole, it’s a little under 10%. While I’m keenly aware this is a big number . . . I don’t think it’s completely out of line with other major public works projects.”

MTA officials still expect the 6.3-mile subway extension to North Hollywood to open in 2000 and come in on budget--at $1.3 billion--although a major contract is $30 million over budget.

MTA officials now expect to open the extension from Wilshire Boulevard and Vermont Avenue to Hollywood and Vine in February of next year instead of this December as previously forecast.

The MTA has been working hard to mend relations with the Hollywood community. Its insurance company recently agreed to pay out about $8.5 million to settle virtually all of the lawsuits brought by hundreds of property owners after a stretch of Hollywood Boulevard sank in 1994. The MTA is likely to owe about $1 million in deductible expenses.

Tunneling on the Hollywood leg is finished, the track has been installed and the subway stations are nearly complete. Most of the remaining work involves installing and testing the electrical, communications and control systems, officials said.