U.S. Likely to Take Back $31 Million From MTA, Staff Says

In another potential blow to the beleaguered subway project, MTA officials reported Friday that the federal government has threatened to take back $31 million from the agency to penalize Los Angeles for diverting airport funds into the city treasury.

Metropolitan Transportation Authority board members were advised by their staff that U.S. Transportation Secretary Federico Pena is “very likely” to take back the $31 million in subway construction funds.

The MTA’s chief lobbyist urged local officials to call Pena and the Los Angeles congressional delegation and explain that the transit agency is an “innocent bystander” caught in the middle of a dispute between Mayor Richard Riordan and federal aviation officials.

The Federal Aviation Administration last month ruled that Los Angeles must return $31 million in Los Angeles International Airport funds it earmarked to help balance the city budget or face possible loss of other federal transportation money.

Legislation recently passed by Congress allowed the federal government to reduce MTA funding if money was found to have been transferred illegally from the airport to the city’s general fund.

A transit official said the loss of $31 million could delay the Metro Rail project. MTA officials already are considering slowing down subway construction after receiving less than half the federal funds requested for next year.

Riordan’s office was unaware of the threat until contacted by a reporter. The mayor was in Palm Springs and could not be reached, but an aide said Riordan would consult with city officials Monday on how to proceed.

Riordan has maintained that the fund transfer was legal.

“The mayor believes the taxpayers of the city of Los Angeles are the shareholders of the airport, entitled to those funds,” said Riordan spokeswoman Noelia Rodriguez.

Federal law prohibits the use of airport funds for any non-aviation purpose, but there is a dispute about whether old loans provided by the city fall into that category.

MTA staff learned about the threat after a meeting Friday with federal transit administration officials in San Francisco.

MTA Chairman Larry Zarian said it is unfair to put the transit agency in the middle of the dispute between Riordan and the federal government “since we have no power to determine the outcome.”

The MTA plays no role in the operation of the city-run airport.