CITY TO RE-EVALUATE SELLING LAX AFTER VOTE TO RETURN FUNDS.

Byline: Rick Orlov Daily News Staff Writer

Looking to put a dispute with the airlines and the federal government behind it, a reluctant Los Angeles City Council agreed on Wednesday to return $30 million to the Department of Airports.

At the same time, the 8-2 vote prompted a renewed call by some council members to conduct a new study into how much the city could make if it sold Los Angeles International Airport.

``It's clear we don't have control of the airport now, so we might as well look at selling it to see what we can get for it,'' said Councilman Hal Bernson. ``This airport has a major impact on all of Los Angeles and is a major burden on our streets, on our police, on all our services.''

But Councilwoman Ruth Galanter said she doubted the city would ever vote to sell the facility. A study conducted five years ago estimated the airport could be sold for about $1 billion.

The decision to return the $30 million - taken to cover past city investments at LAX and held in a special account - was a strategic move to try to improve relations with the Federal Aviation Administration and the airline industry, Galanter said.

``This is a tactical maneuver in a much bigger game,'' Galanter said. ``This is not the one we want to go to the mat over. We didn't do anything wrong, but we have bigger fish to fry.''

Galanter said the city is meeting with the FAA and the Air Transport Association to look at all the costs associated with the airport to see whether new formulas of reimbursing the city can be developed.

A spokesman for Mayor Richard Riordan said the mayor has not made a decision on whether to veto the council action.

``The mayor wants to closely examine all the implications of returning the money,'' said spokesman Steve Sugerman.

Chief Legislative Analyst Ron Deaton said a hearing is scheduled soon before an administrative law judge and an appeal - from either side - would drag matters out for several more years.

Councilman Richard Alarcon said he agreed with the city's right to keep the money, but should try to reach a middle ground.

``You've got to know when to hold them, know when to fold them,'' Alarcon said. ``I agree it's time to strategically pull back and recognize there is much more at stake here. The federal government banged a very loud gong and made clear . . . several sources of funding are in jeopardy.''

The city's relationship with the airline industry and the FAA has been sour for several years now, with the Department of Transportation threatening to hold back funds for other transit programs, including those of the Metropolitan Transportation Authority.

Galanter said the city hopes it can move on to other substantive issues, including future airport development, without allowing this matter to bog things down.

ATA spokesman John Ek said his organization was pleased with the city's action.

``This marks a new day for airline industry-city of Los Angeles relationships,'' Ek said. ``Our hope is we can work cooperatively with the city on endeavors they choose to pursue here or in Washington.''