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CTA agrees to accept minimum $14.25 million in settlement over buses with alleged defects

Updated: May 10, 2013 6:44AM

The CTA has agreed to a settlement of a minimum $14.25 million in cash to compensate for a fleet of articulated buses that cost $87 million before the vehicles were pulled off the street for alleged defects and literally sold for junk.

CTA officials say they expect to get an additional $1.2 million after selling for scrap all 226 articulated buses provided by North American Bus Industries.

That would bring the minimum cash recouped from the failed deal to $15.45 million. CTA officials note that the agency got up to six years of service out of buses with a 12-year life expectancy.

The CTA originally agreed to buy the fleet for $102 million but stopped payment after the first $87 million, said CTA spokeswoman Tammy Chase.

Under a settlement announced Monday, the CTA will receive $9.25 million in cash, a waiver of $17 million in “pending claims” related to unmade payments and up to an additional $5 million in cash over five years or $10 million in parts and service rebates over five years.

Kevin Karl Peterson of Citizens Taking Action for Transit Dependent Riders described the settlement as “another CTA boondoggle.’’

“This is a very horrible thing being done to the riders of the CTA, because all that money came from riders of the CTA.’’

The CTA rolled out the articulated North American Bus Industries buses between 2003 and 2005. But it pulled them from the street in 2009, after a series of problems culminated in one of the buses cracking open at the joint connecting the back to the front. One bus union observer at the time called the resulting hole “big enough for a person to fall right through.’’

Chase noted that the articulated buses “did their job for many years” before the alleged defect in their structural and propulsion system was detected. Some logged as many as 275,000 of their anticipated 500,000 miles of service, she said.

The parties agreed to “compromise” to avoid the further expense of ongoing litigation, the CTA said in a news release. “The business decision was best for all involved,’’ the CTA said.

Steve Schlickman, executive director of the Urban Transportation Center at the University of Illinois-Chicago, said the case marked the first time in 33 years that he ever heard of the CTA having to “junk’’ a fleet of buses.

“It’s the only time in Chicago I ever heard of a bus problem being so serious that a manufacturer couldn’t fix it under the warranty,’’ Schlickman said.

The bus company sued the CTA for failure to pay at one point, and the CTA then countersued. However, a circuit court judge ruled against the CTA in its attempt to bring the parent company into the litigation as a party.

In May, a judge said the CTA could start selling the buses for scrap metal — something it’s done with just over 50 buses so far, Chase said.

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