COUNCIL VOTES $2 MILLION FOR NOHO MERCHANTS; BUSINESSES HURT BY SUBWAY CONSTRUCTION.

Byline: Patrick McGreevy Daily News Staff Writer

In a rebuke to the MTA, the Los Angeles City Council voted Friday to set aside $2 million owed by the city to the transit agency and use the money instead to help North Hollywood businesses harmed by subway construction.

Council members accused the Metropolitan Transportation Authority of dragging its feet in responding to merchants who have lost customers because of construction work and street closures.

``We think we need to do something if the MTA won't do it,'' said Councilman Richard Alarcon, chairman of the council's Transportation Committee. ``These people have been damaged. These people are in need of recovery as quickly as possible.''

More than 80 merchants along Lankershim Boulevard have been most affected by the subway project, which is scheduled to wrap up its above-ground work next month.

Councilman Joel Wachs, who represents part of North Hollywood, said the $2 million is desperately needed.

``It will be helping these businesses get on their feet again and survive for the future so they are not dragged down where they have to close their doors,'' Wachs said.

Councilwoman Jackie Goldberg, who represents Hollywood merchants who were granted a $16 million recovery plan by the MTA, said the proposal for the city to provide up to $2 million for North Hollywood is fair and reasonable.

The council asked the MTA three months ago to increase its $300,000 program to help North Hollywood merchants this year, especially since the transit agency closed a section of Lankershim Boulevard for five weekends.

Because the MTA did not propose an alternative plan, the council voted Friday to set up a North Hollywood Economic Recovery Fund, using money taken from $143 million in transit tax money that the city holds and was obligated to provide the MTA for subway projects before they were scaled back.

Chief Legislative Analyst Ron Deaton still must develop a program for allocating the $2 million.

Deaton said he is leaning toward business assistance programs to bring more customers into the area, such as creation of a Business Improvement District for beautification work, instead of direct compensation to businesses for lost revenue, which is what the merchants want.

James Albright, who runs the Haunted Studios Gilbert Costumes shop on Lankershim, said compensation for lost revenue is needed to help him and other merchants pay bills that have piled up because of the loss of business.

``We really need it,'' he said.

Ken Banks of the North Hollywood Community Forum said some businesses might not survive without help, including compensation for lost revenue.

``A lot of them are marginal, and they need this,'' Banks said.

Marc Littman of the MTA said the agency has been open to providing additional assistance to merchants, but he said Chief Executive Officer Julian Burke is still formulating an official response to the council action.

Although the City Council vote was unanimous, Councilmen Mike Hernandez and Mike Feuer voiced concern that the money was being taken from the $143 million without a comprehensive plan for how to spend the rest of the money, which might show that there are other higher priorities.