Cities to swap U.S. aid funds
Some cities have decided the best way to use their federal stimulus funds is to barter with other municipalities, prompting a warning Tuesday that some of these transactions are prohibited.
At least three Southland cities are proposing to swap their anticipated share of federal money earmarked for highway improvements for funds that they could use as they see fit. For example, city staff in Sierra Madre planned to ask the City Council on Tuesday for permission to trade $500,000 in stimulus funds for $500,000 in Measure R transportation funds from La Canada Flintridge.
Officials at the Metropolitan Transportation Authority, which is responsible for distributing federal highway and transit stimulus funds to agencies in Los Angeles County, said they had no objection to this kind of exchange provided the projects that are to receive stimulus funds meet the federal criteria.
But officials sent a letter to city managers and others Tuesday saying that efforts by more municipalities to take the bartering process a step further will not be allowed.
The tiny town of Bradbury, for example, has entered into a memorandum of understanding with Torrance to trade its $500,000 in stimulus money for $315,000 in cash for its operating budget. Officials in La Habra Heights and Irwindale said they are hoping to enter into similar arrangements with Westlake Village.
Both sides described the arrangements as a “win-win” proposition.
“We didn’t have a project that would qualify, so we traded it rather than just ending up with nothing,” said Shauna Clark, La Habra Heights’ city manager. “Although it sounds like a loss, it actually gives us flexible funding we can use for projects that we feel need to be done rather than . . . just federal highway projects.”
Carol Inge, the MTA’s planing officer, said the agency understood the predicament of cities that are too small to have qualifying projects or can’t meet the tight federal deadlines to get a project shovel-ready. That is why, she said, the MTA board decided Feb. 26 to allow dollar-for-dollar exchanges of federal highway stimulus money for less restricted Measure R funds approved by county voters in November for transportation improvements. But she said the board did not approve any other types of arrangements.
Although details of the federal allocations are still being worked out in Sacramento and Washington, MTA officials expect to receive about $800 million in stimulus funds for the county’s transportation projects, including at least $215 million for highway improvements, Inge said.
At least one analyst questioned why the MTA did not spend the money on its own projects instead of allocating it to cities that can’t use it.
“What this is all doing is dodging the intent of the [federal] legislation,” said Douglas Johnson, a fellow with the Rose Institute of State and Local Government at Claremont McKenna College. Even if Bradbury’s $500,000 share of stimulus funds ends up being used for a qualified project in Torrance, “Why should Torrance have to pay $315,000 to get that money?” he asked.
Torrance plans to use the money on a project to ease congestion along Crenshaw Boulevard, City Manager LeRoy Jackson said. (Torrance’s deal with Bradbury and other exchanges were first reported in the Pasadena Star-News).
Inge said the MTA board did not want to exclude cities, because they have been “great partners in getting funds out quickly to large parts of the county.” But she said the MTA was given just 150 days to allocate the money, which was not enough time to consider the merits of the projects submitted by 88 cities. So the board decided to allocate the money to cities based on their population, with a minimum of $500,000 for each.
Officials in some of the smaller cities said they had been doing these kinds of exchanges for years, particularly with federal allocations that frequently come with conditions they cannot meet.
When the MTA published a list last week of cities that had not submitted sufficient qualifying projects, La Habra Heights started hearing from cities with projects of their own to fund, Clark said.
“They call you or e-mail you and they offer you a trade,” she said. She described the discussions as a bartering process, but said the going rate was 62 cents to 65 cents on the dollar.
Irwindale City Manager Robert Griego said his office was contacted by six local cities. His town decided to work with Westlake Village because it offered the best deal.
“It also allows Westlake Village to complete an important project,” he added, “and that’s what the stimulus money is for.”
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A stimulus swap allowed by the MTA:
Sierra Madre: Gives $500,000 in stimulus money to La Canada Flintridge for road resurfacing.
La Canada Flintridge: Gives Sierra Madre $500,000 in Measure R local tax revenue to repair roads.
A stimulus swap not allowed by the MTA:
Bradbury: Gives $500,000 to Torrance for road improvements.
Torrance: Gives $315,000 for Bradbury’s general operating budget.
Source: MTA, local cities