A U.S. Transportation Department official politely but firmly told Metro board members yesterday that if they do not sign almost immediately a painstakingly negotiated agreement to settle a $1 billion debt, they will lose subway construction funds.
Assistant Transportation Secretary Mortimer L. Downey came from the federal mountaintop to Metro headquarters to deliver that message yesterday after board members began to waver on whether to approve a document that took 18 months to prepare. It would resolve the biggest issue separating federal and local governments on Metro.
The board set a special meeting for 12:30 p.m. Monday to decide the issue. It will be only the second special meeting in Metro's 12-year history. If the agreement is not approved by the board, Metro General Manager Richard S. Page said late yesterday, "There will be an across-the-board chaotic effect on our construction program and on our credibility with the community and with Congress."
The immediate loss to Metro would be $275 million in federal construction funds that must be obligated by the federal government by Sept. 30 -- the end of the federal fiscal year. If those funds are not spent in Washington, they will be spent somewhere else. A condition of providing the money to Washington is a Metro board signature on the agreement, Downey and his staff members made clear.
As many as 400 of Metro's senior construction employes and consultants are paid with the federal money, and if it lapses, Metro will have no choice but to start firing some of them Oct. 1, according to officials.
Despite the 11th-hour scheduling of the vote, however, most Metro observers feel that the board will find the votes over the weekend to approve the agreement. "I predict we will approve it," Metro Board Chairman Jerry A. Moore said.
Like all Metro money matters, this issue is complex and has its origins in Metro's early planning days in the 1960s.
Congress permitted Metro to sell $1 billion in bonds to raise construction money in its early years. The bonds were guaranteed by the federal government, which means that if Metro could not make the interest payments, the U.S. government would. The interest payments were supposed to be made from fares collected on the new subway -- fares in excess of the operating costs.
That optimistic projection proved faulty as Metro does not begin to meet its operating costs from fares.
The federal government began looking to local governments for help in paying the interest and retiring Metro's $1 bill-on debt. Over 30 years, interest payments will total $2 billion. In December 1977, after months of preliminary negotiation, it was agreed in principle that the federal government would pay two-thirds of the bond cost and that Metro would pay one-third.
When that agreement was reduced to writing, however, the federal government sought guarantees from each of the eight local governments participating in Metro that they would pay the debt.The governments balked, maintaining that it was Metro's debt, not theirs. But Metro has no revenue-generating ability, short of fares.
The compromise that Metro officials worked out with local support was for Metro and the federal government to enter into an agreement for three years while some kind of "stable and reliable" revenue source could be found to guarantee the remaining years of the bond repayment schedule.
Metro would pay for the bond debt service out of operating costs, which are subsidized by the eight local governments. There would be no specific call on the local governments to pay the bonds.
However, in case Metro does not get adequate local subsidies, the federal government insisted, federal operating aid that goes to Metro as part of a national program would be held up.
That appeared to be the key problem yesterday, particularly with the two Maryland votes on the Metro board. To date, all of the federal aid for transit operating costs has been channeled to the localities, then to Metro.
Now, for the first time, Metro would have first call on that federal aid.
"It's simply a power issue," a knowledgeable Maryland official said yesterday.
Downey assured Metro board members that any part of the agreement could be renegotiated in the future except the part requiring Metro (the local governments) to pay one-third of the cost of retiring the bonds.
After Downey left the meeting yesterday, Moore said of the situation: "If you have me backed into a corner and are going to kick me upside the head, the only choice I have is which side of the head do I get hit on."