Transit agency boosts subway route's tab; LACTC ups Hollywood-SFV link estimate $222 million.

The Los Angeles County Transportation Commission has inflated the price tag of Metro Rail's third segment by $222 million while also trumpeting construction of the Hollywood subway as part of a Rebuild L.A. jobs program, the Business Journal confirmed last week.

In approving its multibillion-dollar spending plan earlier this month, the LACTC's Rail Construction Corp. made it official by adopting a $1.31 billion budget for the 6.7-mile route that will link Hollywood and the San Fernando Valley.

Defending what appears to be a 20 percent differential, Metro Red Line builders stressed the previous figure of $1.09 billion was only a 1989 estimate, though the lower number was still being cited in press materials last year.

"When we put together our package for segment three last year, we did an end-to-end analysis and budgeted it at $1.3 billion based on current construction and land acquisition costs," said Rail Construction Corp. President Ed McSpedon. "There was no formal budget until now, and the federal government has approved it" in principle.

Separately, RCC officials are proposing their own plan to bolster the economy after April's riots, including a controversial method of advancing big construction contracts without having final specifications in place.

With groundbreaking on the line still months off, the $222 million cost escalation in its projection could jeopardize other rail and transit projects, some believe, and underscores again the difficulty of estimating major public works projects.

Notified of the differential, leaders expressed mixed reactions.

LACTC Commissioner Jackie Bacharach, a Rancho Palos Verdes councilwoman, said she had "no problem with the costs going up" because it is impossible to craft a budget until design and engineering studies are done.

But Jay Curtis, president of the Los Angeles Taxpayers Association, was less forgiving.

"From past government mismanagement, this is expected, but not acceptable," said Curtis, a lawyer with the downtown law firm of Baker & Hostetler. "I'm not saying there is any sinister activity going on, but it seems common practice for government to lowball the price, then come back and rake over the taxpayers later."

The subway's third segment will begin at the world-famous corner of Hollywood Boulevard and Vine Street, move westerly to Hollywood Boulevard and Highland Avenue and then stretch northbound through Universal City to the intersection of Lankershim Boulevard and Chandler Boulevard in North Hollywood.

Though funding agreements between Washington and the commission are still incomplete, the federal government is expected to pay at least 50 percent, with the state contributing $115 million in gas tax and bond proceeds and Los Angeles City Hall and LACTC making up the balance.

The $1.3 billion does not include the cost of two other sections, previously known as the Orange Line, added to the Red Line's segment three: a spur from Union Station into East Los Angeles and a $467 million leg from Wilshire Boulevard and Western Avenue to the Pico and San Vicente boulevards. The U.S. Department of Transportation has agreed to kick in $1.23 billion for all three sections but the commission has not parceled out the money yet.

Linda Bohlinger, the LACTC's director of capital planning and programming, said she was confident the agency's 30-year, $183 billion spending plan could support the $222 million difference without a boost in the sales taxes or a levy on property owners near subway stations.

Still, just last week, the commission voted to make up only half of the Southland bus agencies' $117.4 million shortfall, saying the full amount would have delayed scores of other projects, including the Red Line's segment three. RCC Commissioner Donald McIntyre predicted the $222 million differential would "probably slow future parts of the system," because there are finite resources and an unpredictable economy can eat in to sales taxes.

"There are lots of surprises when you estimate something and then find out what it ultimately costs," said McIntyre, president of the downtown business group, the Central City Association. "But I don't feel close enough to the engineering estimates to make an informed judgment."

The tab notwithstanding, LACTC officials are hailing a multi-point employment plan for Metro Rail's third segment as their way of helping to revitalize Los Angeles after April's riots and shoring up the anemic Southland construction industry. Among the major elements of the plan -- scheduled for commission board debate next month -- are:

* Moving up segment three's groundbreaking from 1994 to early 1993 or late this year, and its opening from 2001 to the late 1990s, by using standardized station designs to achieve economies of scale. Time would also be cut by boring tunnels first instead of waiting until the stations' completion to dig the tunnels.

* Simplifying the procurement process for small contractors, especially minority businesses, by clarifying contract language on issues like bonding guarantees and payments.

* Running double shifts on tunnel-mining and requesting that general contractors and building unions agree to increase the number of apprentices on the work sites. Also, expanding the number of employment information storefronts both along the subway route and into South Central Los Angeles.

"What we're trying to do is increase the cash flow and then turn that cash flow into jobs sooner," said McSpedon, the RCC president.

Overall, commission contracts provide 45,000 private sector jobs annually. Its Rebuild L.A. initiative, according to McSpedon and others, could add at least another 1,000, though it was unclear if those hurt worst by the riots would benefit.

Nonetheless, commissioners interviewed for this story all applauded the effort. But they denounced as unwise one element to speed up heavy tunneling and station contracts by "fast-tracking" them.

Specifically, RCC officials want to accelerate segment three contracts awards -- and the jobs they create -- by advertising for competitive bids without having "fully detailed plans, specifications and other contract documents" in place. After the contracts are awarded, the winning bidders would get the final design and construction details.

If allowed, fast-tracking would shorten the time between final design and contract awards experienced on the Red Line's first segment through downtown and the Los Angeles-Long Beach Blue Line. Yet, critics say, it could also create the type of cost overruns incurred in the past when subway contractors won huge change orders, mainly by arguing official blueprints failed to show the amount of boulders or toxic waste requiring disposal.

"There is this incredible rush to respond to Rebuild L.A. and I'm very concerned about it," said commissioner Bacharach. "If you fast-track, you lose the ability to control a project's costs and hold people accountable."

Commissioner Judy Hathaway-Francis, a La Habra Heights councilwoman, said she will also oppose fast-tracking because it would only invite cost overruns comparable to ones that put Metro Rail segment one $200 million in the red when the Southern California Rapid Transit District was building the subway.

"We need to know what we are buying into," she added.