CITY PUTS BRAKE ON MTA FUNDS\Agency rebuked for project delays, sinkhole.

Byline: Chip Jacobs and David Bloom Daily News Staff Writers

Los Angeles City Hall, skeptical about the troubled Metro Rail subway project and angling for leverage over future extensions, is stiffing the transit agency for more than $300 million, some of it owed for years, MTA officials say.

The city's refusal to pay its bills has put the Metropolitan Transportation Authority in a financial bind that could postpone the Metro Rail's North Hollywood segment and other regional projects, MTA officials contend.

The dispute also has divided the transit agency board, highlighting the deep political fissures between city and county officials over the subway project.

Los Angeles County Supervisor Michael D. Antonovich blasted the city's stance, saying its refusal to pay its share threatens funding for projects elsewhere.

"What you have is the fat lady eating all the chocolates and it's not fair," Antonovich said.

According to MTA officials, the city of Los Angeles owes:

$45 million for overruns on Metro Rail's downtown leg, which began operating nearly three years ago.

$61 million to $90 million in cost overruns under the funding agreement for the Red Line's second segment, with branches to Mid-Wilshire and Hollywood.

$200 million for the subway's third segment, which includes the North Hollywood spur, under informal commitments made several years ago.

The MTA wants a hearing before the City Council's Transportation Committee to address the issue. But the committee chairman, Councilman Nate Holden, has refused so far to schedule a hearing.

Holden said he won't set the payment issue for a hearing until MTA officials detail plans for the mid-city Metro Rail extension through his district - including when, where and whether the $491 million leg will be built.

"If they just want us to sign off, they've got to be nuts," Holden said. "When they are ready to move with (the extension), then we'll talk. They're just not ready."

City officials also are dissatisfied with the MTA's work on the Red Line's second segment between MacArthur Park and Hollywood, which has been held up by repeated construction mishaps, most notably last summer's Hollywood Boulevard sinkhole.

The city had agreed to pay half the cost overruns, up to $90.5 million, on that part of the project, and it now owes $61.5 million. But because of the sinkhole, some council members don't want to pay.

"I don't see the council supporting this," Bernson said. "We're not going to pay for negligence on the part of the MTA and their contractors. There was never any agreement to pay for waste or incompetence."

Because most of that tab is due under an agreement that expired four years ago, Los Angeles city officials have held up payment until a broader agreement is finalized, said Linda Bohlinger, the MTA's acting deputy chief executive officer.

As part of a complicated deal to nail down city funding for Metro Rail's third segment, MTA officials have offered to forgive up to $115 million the city owes in cost overruns on the first two sections.

Under that proposal, formally outlined in April and floated four years ago, the transit agency would get $200 million from the city over three years.

The third segment includes the Hollywood-North Hollywood leg that is under construction, as well as the Mid-City extension and one from Union Station into East Los Angeles.

Bohlinger warned that if the city continues to balk at its commitment, the agency won't be able to shuffle enough funds around to keep construction going. "We're in full swing with construction and the city's share is more critical," she said. "If the $200 million is not forthcoming, we'll have to delay the subway's third extension."

Supervisor Zev Yaroslavsky, whose district includes North Hollywood, said it's time for the city to pay up.

"The city has to make good on its obligations," said Yaroslavsky. "But somebody is trying to gain the upper hand by holding up the money."

Mayor Richard Riordan has yet to take a position on the $200 million proposal, partly because of concerns Los Angeles taxpayers could end up financing mistakes surrounding the sinkhole, said Assistant Deputy Mayor Steve Sugerman.

"The city is not going to pay for costs related to negligence and poor management (stemming) from the Hollywood Boulevard sinkhole," Sugerman said. "But if the MTA has legitimate cost overruns at the end of the project, the city will live up to its end of the bargain."