With AnsaldoBreda’s Exclusive Contract Expired, What Is Next?link: Curbed LA: Metro's Rail Car Deal is Dead, What About That Manufacturing Land Downtown?
by Damien Newton on November 3, 2009
A diagram of the rail car plant repeatedly promised by Ansaldo Breda. To see the full image go here.
Because the news broke on a weekend, the press reports on the dissolution of the talks between Metro and AnsaldoBreda on extending the exclusive contract to build rail cars for the agency were less-than-complete. Before the news of the verdict in the Christopher Thompson case broke, I was working on a F.A.Q. that would answer all of the questions that are being asked about AnsaldoBreda, the future rail car contract, and what's next for Metro and AnsaldoBreda. The full F.A.Q. is available after the jump. If you have any questions not answered, leave them in the comments section and I'll do my best to answer them by the end of the day.
What happened? I thought the Board and AnsaldoBreda agreed to a contract extension at the September Board Meeting?
While the Board had agreed to extend its exclusive contract with AnsaldoBreda for the construction of light rail cars, that extension came with some pretty hefty conditions. The most contentious of those was the requirement that AnsaldoBreda deposit hundreds of millions of dollars into a bank account that Metro could draw against everyday that the Italian Rail Car Company was late delivering vehicles. At the last moment, AnsaldoBreda requested that there be hard limits on how Metro could draw against the account. Metro didn't agree.
What happens to Metro's rail car contracts now?
Metro will need to open the bidding process for any rail car company to make a run at getting the contract for constructing the "Measure R Cars." We expect the contract competition to be announced at the next Metro Board Meeting. Back in March staff "warned" that it would take six months for the bidding process to come to its conclusion, so we can expect a contract to be signed early in the summer of 2010. If Metro had cut bait with AnsaldoBreda in March, we would have known for months who was going to be building our rail cars for the future by now.
Will this effect the Measure R Time Lines?
Maybe, but we don't know how.
On one hand, the ten month delay in putting the contract out to bid is a disaster. Cars will cost more and we basically wasted half of a year.
On the other hand, AnsaldoBreda's working relationship with Metro was so terrible, they were years behind on delivering cars that were too heavy to be used properly, that it's probably a good thing that they probably won't be making the cars for all of the Measure R projects.
So That's It? No More AnsaldoBreda in L.A.?
Like the villain in a horror-serial that won't go away; we haven't heard the last of AnsaldoBreda. First, they still have to complete their current rail car contract which should have been completed years ago. Second, Board Member Richard Katz, who was a supporter of AnsaldoBreda during some Board Meetings, blasted the Metro contractor in the press claiming they owe Metro some "free" light rail cars as reparation for their late performance in their current contract. AnsaldoBreda offered the cars as an attempt to soothe feelings and doesn't seem interested in following through on that commitment now.
Last, there is nothing to stop AnsaldoBreda from submitting a proposal in the open bidding process.
What About the Rail Car Plant Promised to Los Angeles?
The rail car plant, and the "good high-paying jobs" were only promised to Los Angeles as a bribe to earn approval from the Board. Poster Erik G. did yeoman's work tracking down the history of these promises, and I would bet that L.A. doesn't see a rail car plant built by AnsaldoBreda anytime soon.
Are There Any Winners in This Story?
In short? No.
The Mayor, his supporters, and unions were basically used by AnsaldoBreda to force a long-term extension of their exclusive rail car contract even though their performance level on their current contract is terrible. There has to be some egg on their faces.
AnsaldoBreda didn't get the contract, so they can't be viewed as winners.
Someone mentioned "taxpayers" as winners, but we lost in this debacle on two fronts. First, the cars will be "six months more expensive" than they would be if Metro had went to bid in March. Second, Metro can't legally consider where rail cars are built when awarding a contract. However, Villaraigosa repeatedly mentioned the carrot of created jobs as the top reason to move forward with AnsaldoBreda. He even put it in the statement announcing AnsaldoBreda and Metro weren't going to come to terms.
Let's hope the people reading the grant contracts in Washington, D.C. for the Mayor's ten-year plan don't read L.A. Streetsblog or any Los Angeles news source
Metro's Rail Car Deal is Dead, What About That Manufacturing Land Downtown?
Just
over a month ago, Metro announced that after over a year of
negotiations it had finally made a deal with Italian rail firm
AnsaldoBreda--LA would order 100 light rail cars from them, and they
would build a manufacturing plant downtown. The Community Redevelopment
Agency was thrilled. They put out a press release announcing that AB's proposed 240,000 square foot facility on the CRA/LA's land at 15th and Santa Fe
would anchor a CleanTech Corridor and bring nearly 1,000 middle class
jobs to the city. In May, the CRA/LA's board had approved an Exclusive
Negotiating Agreement with AB that activated when Metro approved its
contract with AB, which it did on September 24. The deadline to sign
the Metro contract, however, was midnight on October 30, this past
Friday, and guess what didn't happen.
According
to Metro's statement, AB demanded contract changes "within hours of the
deadline," including a cap on late delivery penalties. Like a petulant
teen, AB seems to have a problem with parameters in general--an
existing Metro order of 50 cars has only been a third delivered and is
three years behind. The cars that have come in are each 6,000 pounds overweight, which the LA Times says
"forced the MTA to reinforce some bridges." The new agreement threw in
two free cars for the trouble (Would those also be overweight?). Metro
points out that Measure R means the city needs a lot of light rail cars
quickly (and even quicker if the mayor's 30/10 plan
gets any traction), and they have been preparing to solicit additional
bids in case the AB contract didn't work out, saying "If all goes
according to schedule" they'll award a contract by next spring.
But now that this deal has fallen through, what will happen to AB's
lease of CRA/LA land? The September release said an environmental
impact report was already underway. The deal was for a 50 year lease on
14 acres of land, on which AB would build a green plant in partnership
with Steve Bing's Shangri-La construction company. CRA/LA president
Cecilia Estolano was quoted saying AB's $15 million rent prepayment
would allow the agency "to repay our loan on the entire [CleanTech
Manufacturing Center] site. We will own the land free and clear. This
deal has the potential to have the same, if not greater long-term, pos
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