MDOT director grilled on road warranties, rail cars

Gary Heinlein
Detroit News Lansing Bureau

Lansing — State Transportation Director Kirk Steudle pledged Wednesday to correct shortcomings cited in audits criticizing his department’s monitoring of road repair warranties as well as its leasing and refurbishing of unused rail cars.

Steudle said his department will either sublease the idle rail cars, costing the state $9.5 million so far, or end the lease. The rail cars are idled on siding near Owosso because proposed commuter train service between Detroit and Ann Arbor is delayed until at least 2017.

Besides steps the department agreed to take in response to the road warranty audit released Friday, Steudle said, regional managers now will be held accountable for completing reports to document the enforcement of road work warranties.

“The (warranty performance) audit was largely about our ability to document what was going on,” he said.

Steudle said he accepts the findings and “we have elevated the warranty oversight to our regional managers. We’re also putting into all of their annual performance reviews that all reports need to be completed” on time.

The transportation chief’s answers didn’t satisfy his strongest critics on the combined House-Senate committee, whose members plan to call transportation officials in for more discussion in 90 days.

“Who’s taking responsibility here, so I can report back to taxpayers?” said Rep. Triston Cole, R-Mancelona, describing the audit findings as “a debacle.”

Rep. Joseph Graves, R-Linden, accused the department of a lack of transparency in addition to problems cited in the rail car and warranty audits as “we’re asking our taxpayers’ hard-earned money to be spent on more road funding.”

The reference was to Proposal 1, a May 5 measure whose approval would increase the sales tax from 6 percent to 7 percent and trigger a $1.2-billion road repair plan Gov. Rick Snyder and lawmakers approved last December.

Steudle said Michigan’s program leads the nation and provided lawmakers with details of 3,338 warranties currently in force on road and bridge projects. He said even when considering projects the audit criticized, the department has successfully enforced about 95 percent of its warranties.

The department, while promising to better document and police its warranty program, noted that some of the cited road projects hadn’t actually been completed and others just lacked final reports.

The rail car spending also was defended. Steudle, department railroad specialist Tim Hoeffner and Southeast Michigan Council of Local Governments transportation planner Carmine Palumbo said the used rail cars were leased and updated for a planned “demonstration” project to see if there was sufficient demand for a permanent service that could be federally funded.

They said the startup got delayed when oversight of their plan was switched from one federal agency to another. Steudle said the cars were leased so the state wouldn’t be stuck with them if the project never qualified for federal funding.