MCA Can Derail Red Line Link With Signature

As transportation officials gear up to extend the Metro Rail Red Line subway from downtown to the San Fernando Valley, a potential roadblock to the historic 13-mile link looms on the horizon in the form of a giant “Black Tower.”

MCA Inc., based in its Black Tower headquarters in Universal City, has the power to jeopardize funding needed to build a proposed Red Line station across the street.

By hinting that it may use that power, MCA is making some Metropolitan Transportation Authority officials nervous, and whether the threat is perceived or real, critics say the entertainment giant may try to pressure the city for special favors and demand top dollar for the MCA property that transportation officials must acquire to build the station.

Thanks to a little-known provision in a 10-year-old state law, MCA can, with a simple signature, withhold nearly $6 million in property assessment fees that would be used to build the station. In so doing, MCA would take with it an additional $2 million other property owners would pay in assessment fees and perhaps derail the perception that there is solid private-sector support for the project.

“A single signature, that’s all it would take,” said David Sikes, the MTA manager in charge of setting up the districts that levy the assessment fees. “If MCA votes to withdraw, it’s going to create a problem.”

Called benefit assessment districts, such districts, if approved by the Los Angeles City Council and Los Angeles County Board of Supervisors, would essentially impose taxes on commercial property owners who would benefit from Metro Rail.

Although some MTA officials downplay the threat of MCA dropping out, characterizing it as an unlikely “worst case scenario,” they concede a lot is at stake. The loss of $8 million is a comparative drop in the bucket next to the $2.76-billion Valley extension, but there is the fear that if MCA chooses not to participate, other property owners throughout Los Angeles may choose to fight the assessments totaling $75 million.

Furthermore, transportation officials are worried about the precedent MCA would set by rejecting one of the districts that took years of legal battles to establish, and that are expected to help produce the matching funds required under a funding agreement with the federal government.

“It could jeopardize the rest of the program, and our funding commitment to the federal government,” said Linda Bohlinger, director of capital planning for the transportation authority. “That was a big selling point to getting our multibillion-dollar commitment” from the federal government.

Bohlinger said the government could renege on its promise to pay $2.63 billion to help fund various Metro Rail projects, including the Valley extension, if local officials cannot live up to the funding agreement.

If the assessment districts fail to generate enough money to secure matching federal funds, any shortfalls would come from other projects, such as a cross-Valley rail line and one in Pasadena.

But if the MTA has a lot to lose by MCA opting out, MCA may have a lot to gain by staying in.

Transportation officials are negotiating with the company over the purchase of millions of dollars worth of MCA real estate for the site of the proposed Universal City Station. Negotiations not only include what price will be paid for eight separate parcels, but could include who will have the right to develop them, which would be worth millions more.

And besides having at least two projects in the pipeline that are dependent on city approval, MCA has a lawsuit pending against the city over development rights on about one-third of its 400-acre spread.

“MCA is carrying a very big stick, and they’re probably using it to put pressure on MTA, the city of Los Angeles and L.A. County,” said a source familiar with the company. “It’s sort of a high stakes game of chicken: Who’s going to blink first?”

Lawrence Spungin, president of MCA Development Co., denied such allegations, saying his company is willing to pay its share of the Metro Rail costs, but only if it is convinced it would benefit from the project.

“So far, we’re not convinced,” Spungin said.

He said the station would add to traffic congestion in the area and that, as currently planned, it “would be more a detriment than a benefit.”

MCA officials have been more candid about the subject in the past. Former vice president Albert A. Dorskind told The Times in a 1984 interview that if Metro Rail planners continued to insist that MCA pay for the improvements called for under the district, “we’ll be in court a long time.”

MCA can vote itself out because when the districts were approved by the state Legislature in 1983, a last-minute amendment allowed property owners to vote on whether to participate in such districts if 25% of the property owners signed a petition calling for an election.

Two districts gathered enough signatures to force an election: Mid-Wilshire, which includes three stations along Wilshire Boulevard, and Universal City. In order to abolish a district, property owners controlling more than 50% of the assessable property in a district would have to vote against it.

In the case of Mid-Wilshire, where some property owners support the project and others oppose it, it’s difficult to predict how a vote might go.

But in Universal City, MCA owns more than 70% of the assessable property in the district and therefore would decide on its own.

State Sen. Diane E. Watson (D-Los Angeles) said she led an effort to remove the election provision from the law in 1984, but that it died before reaching a vote because of opposition in the Assembly.

“It’s really unfortunate that power politics prevailed inside and outside the Legislature,” Watson said in an interview. “Somehow MCA got out of it. They had some people carrying their water on the inside.”

Councilman John Ferraro, whose council district includes the proposed Universal City station, expressed surprise that MCA has the power to vote itself out.

“I don’t know why they have a complete veto power over that,” Ferraro said. “There’s an advantage if they have.”

But Ferraro planning deputy Renee Weitzer said while MCA may use its advantage to work a favorable deal with MTA over the specifics of the construction of the station, she said the company would get no concessions from the city regarding future development of its property.

“I think they just want to get some stuff out of MTA,” Weitzer said. “But we’re sticking to our guns on development rites.”

Besides owning nearby Universal Studios and CityWalk, the entertainment conglomerate owns undeveloped land, some of it in the city of Los Angeles, near Cahuenga Pass.

Despite the possible funding conflict with MCA, transportation officials are moving forward, for the first time in a decade, with plans to extend the Red Line from downtown, through Hollywood and into the San Fernando Valley.

In May, U.S. Secretary of Transportation Federico Pena came to Los Angeles to officially hand over a $1 billion down payment toward the federal government’s contribution to Red Line extensions, including the Valley line.

In so doing, Pena gave transportation officials the green light to begin construction on the 13-mile rail that by the year 2000 will link MacArthur Park to North Hollywood.

With construction slated to begin in fall 1994, the MTA this month is preparing to purchase, or in some cases claim by imminent domain, properties around the 11 future subway stations that will make up the Valley extension.

Some MTA officials are confident that property owners, including MCA, realize the benefits of Metro Rail and agree to pay the assessments. The subway will bring customers to their doorsteps, MTA officials say.

As for the assessment districts, they must still be formally approved by the City Council and Board of Supervisors.

A proposal to create the six benefit assessment districts expected to pay for the Valley extension has been sitting in the City Council’s transportation committee for three years, while a legal battle over the constitutionality of the districts was being waged.

Approved in Los Angeles Superior Court in 1987, the districts were ruled unconstitutional in the state Court of Appeal in 1990, before being reversed yet again by the state Supreme Court. The battle ended in June, 1992, when the U.S. Supreme Court refused to hear the case, thereby upholding the decision of California’s high court that the districts were legal.

The resolution is expected to go before the City Council and Board of Supervisors next year. Once the districts are finalized, Mid-Wilshire and Universal City property owners will have 60 days to hold an election to decide whether to participate.