RTD Settles Dispute With Federal Agency

A contract dispute that led to a threat by the Reagan Administration to withhold Metro Rail construction funds has been settled, officials said Wednesday.

“The cloud cast over this (project) back in May is removed,” said Joe LaSala, chief counsel for the Urban Mass Transportation Administration.

Several weeks ago, officials of the federal agency told the Southern California Rapid Transit District that it was in “technical breach” on a funding contract for the construction of the first 4.4-mile segment of the Los Angeles Metro Rail. The violation occurred when the RTD board decided to delay by several years collection of a tax on downtown businesses, said agency officials, who have strongly opposed the subway.

That tax would raise $200 million to help finance the $1.25-billion first phase of the project.

Could Sell Bonds

Federal officials contended that the tax postponement, brought on by protests of downtown property owners, meant that the RTD was incapable of meeting its financial commitment, a charge RTD officials denied. The local officials have said the transit district’s share of the construction funds can still be raised by selling bonds, which would be repaid when the tax is collected after 1992.

After negotiations with RTD officials, assurances from financial experts hired by RTD and protests from members of the California congressional delegation--including Republican Sen. Pete Wilson--Reagan Administration transit officials said Wednesday they are satisfied that the RTD is “currently” in compliance with the contract requirements.

RTD Assistant General Manager Al Perdon said the settlement “affirms what we believed all along” and the contract dispute did not cause any delay in the construction schedule.

LaSala said the Reagan Administration remains concerned that pending legal challenges could knock out the Metro Rail tax on business properties.