Italian firm gets MTA rail deal

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The Los Angeles County Metropolitan Transportation Authority board awarded a contract Thursday to the Italian firm AnsaldoBreda for 100 additional light-rail cars, clearing the way for a new rail manufacturing plant that the company has promised to build with union labor in downtown Los Angeles.

The decision was a victory for Mayor Antonio Villaraigosa, who said the manufacturing plant would be a catalyst for his plan to attract clean technology companies to a four-mile industrial corridor along the Los Angeles River.

“This means that L.A. is going to be the center of green jobs in the nation,” Villaraigosa said after the vote. “This facility will not only provide rail cars for the MTA, but for the high-speed rail authority, for virtually every transit facility in the hemisphere.”


Though the board was not permitted to weigh the possibility of local jobs in its decision, the 8-3 vote followed impassioned speeches from union workers who said many of their colleagues were out of work and losing their homes.

Concerned about the company’s past performance, three members voted against it: Lakewood City Councilwoman Diane DuBois, Santa Monica City Councilwoman Pam O’Connor and L.A. County Supervisor Mike Antonovich, who favored seeking competitive bids.

“The MTA’s return to sleaze once again has hung the taxpayers out to dry by selling out to the incompetent highest bidder,” Antonovich said. “Breda has failed to deliver on time in two previous MTA contracts, and the current contract is already three years behind schedule in delivering certified rail cars.”

The negotiations dragged on for months because of the MTA staff’s frustration with the firm’s work under its base contract for 50 cars. In the new deal, AnsaldoBreda must reduce the weight of its cars, which are 6,000 pounds too heavy, and make them compatible with the rest of the fleet.

Art Leahy, the MTA’s chief executive, recommended against exercising the contract options. But just before the vote, AnsaldoBreda officials circulated an e-mail indicating that the firm’s parent company, Finmeccanica, would back AnsaldoBreda’s financial guarantees. In addition to a $300-million performance bond, the company offered a $75-million irrevocable letter of credit that could be used by the MTA if the company fails to perform. If exhausted, the fund would be replenished by the firm up to a cap of $300 million.

Villaraigosa and other board members said those financial terms were unprecedented.

AnsaldoBreda has contracted with the green-building firm Shangri-La Construction to build a 240,000-square-foot manufacturing plant on a 14-acre parcel of city-owned land at 15th Street and Santa Fe Avenue. Villaraigosa’s new chief deputy mayor, Jay Carson, previously worked for Shangri-La on the project, but has recused himself from projects involving his former company.


Cecilia Estolano, who is overseeing the rail plant project as chief executive of the Community Redevelopment Agency, noted that AnsaldoBreda has agreed to pay full-time workers at the plant a living wage, which would be at least $10.30 an hour. “It’s a major step forward for rebuilding L.A.’s economy,” Estolano said.

AnsaldoBreda Inc. President Giancarlo Fantappie said the MTA set “very, very tough terms,” but that the move to Los Angeles would position the company to compete for future rail contracts.