Mayor Orders Repayment of Diverted Funds

Backing down in the face of federal threats to withhold $70 million in subway construction funds, Los Angeles Mayor Richard Riordan ordered repayment Thursday of nearly $1.1 million in airport revenues that an audit determined was improperly diverted to the city’s general fund.

The move came only days after federal transportation officials formally notified the city that auditors had found an improper diversion of airport funds to finance city operations. Congress last fall prohibited release of the subway money to the Metropolitan Transportation Authority if the city continued to tap airport revenues.

Federal auditors found that the city had taken airport parking and traffic ticket revenues, imposed excessive charges for services provided to the airport, and had rent-free use of airport property since the start of the federal fiscal year Oct. 1.

Riordan said in a letter to U.S. Transportation Secretary Rodney Slater that repayment of the $1.1 million, including interest, should “remove any impediments” to release of federal funds for continued Red Line subway construction.

The mayor and Slater met for an hour Thursday during Slater’s first visit to Los Angeles since becoming the top federal transportation official last month. During the meeting, Slater promised an expeditious consideration of the request to unlock the subway funds, said Riordan’s chief of staff, Robin Kramer.

Slater and Riordan, the most influential member of the MTA, also discussed the subway construction program and the importance of buses to transit-dependent residents of Los Angeles County.

In a meeting later with Times editors and reporters, Slater stressed that local officials must resolve competing interests about the future direction of mass transit improvements, pitting rail construction against better bus service. “Would we like to see more harmony and consensus? You bet,” Slater said.

Federal transit officials are reviewing a “recovery plan” submitted by the MTA in January to delay completion of the subway’s first link to the Eastside until 2004 and to the Mid-City area until 2009.