Lawndale Barters State Transit Funds for Cash : Financing: The city sold Proposition A funds to Glendale because they can be used only for transportation. The cash will be used to help balance the budget.

Lawndale is helping to pay for a new commuter hub--in Glendale.

Glendale is planning to build the hub at its historic Southern Pacific Railroad Depot by “buying” state transportation money--at a discount--from Lawndale and two other cities.

The deal approved by the Glendale City Council this week allows that city to virtually double its money, buying $976,415 in Proposition A funds from La Canada Flintridge, Cerritos and Lawndale for $500,000.

Those cities, in turn, get needed cash to help balance their budgets. According to state law, Proposition A money, allocated to cities based on population, must be used for transportation purposes. The law allows cities to barter their Proposition A money, though the use of transportation funds must be approved by the County Transportation Commission.

The exchange will allow Glendale to acquire land for parking at the 400 Cerritos Ave. depot, which will be a stop on the commuter rail service scheduled to begin in October between Los Angeles and the Santa Clarita Valley and Moorpark areas.

In the agreement approved Tuesday, Glendale will pay from 47.5 cents to 53 cents on the dollar for Proposition A money. Glendale Finance Director Brian Butler predicted that the rate may drop even further as the recession continues. “Cities are having difficult times and they need unrestricted dollars,” Butler said. “There are not that many cities that have a capital improvement program such as Glendale from which to draw.”

Smaller cities with lower allotments of Proposition A funds usually are forced to sell at a greater discount, Butler said. Lawndale, for instance, with a population of 28,000 and two square miles of territory, has tentatively agreed to sell $100,000 in Prop. A funds for $47,500 in cash. Glendale, the third-largest city in Los Angeles County--behind Los Angeles and Long Beach--has a population of about 190,000.

“It helps to fill the gap between decreased revenues and our expenditures so that we are able to maintain services,” said Lawndale Assistant City Manager Karen Stauffer.

She said the sale “could mean the purchase of a small piece of equipment or a supply of needed Xerox paper. Anywhere we can save and increase our revenues certainly is going to help.”

Glendale officials said buying Proposition A funds from other cities is part of an innovative financing plan. Glendale earns about $2 million a year in Proposition A money, but the funds are still not enough to meet the city’s transportation development plans.

The exchange practice “is not extremely common,” but it is happening more as cities struggle to balance tight budgets in the recession, said Los Angeles County Transportation Commission spokeswoman Cynthia Pansing.

Glendale first took advantage of discounted transportation funds last year when it bought $1 million in Proposition A money from Cerritos for $600,000, a 40% discount. That money also was used to acquire property for the transportation center.

Cerritos, which receives between $500,000 and $600,000 a year in its annual Proposition A allotment, was able to negotiate a slightly higher rate on the sale of funds--$252,500 in cash from Glendale for $476,415 in transportation money.

Cerritos Finance Director Rebecca Lingad said the city will use the money to build a trust fund to operate a performing arts center. She said Glendale outbid another buyer that had offered 50 cents on the dollar.

Even though the La Canada Flintridge City Council this week agreed to sell Glendale $400,000 in transit funds at half price, two council members Monday urged city officials to continue negotiations in an attempt to reach a better deal. La Canada Flintridge last year was able to get 60 cents on the dollar, selling $500,000 in Proposition A money to the fast-growing city of Santa Clarita.

City and regional officials said potential fund exchanges generally are advertised by word of mouth. But Glendale is considering advertising itself in municipal trade publications as a potential buyer.