MTA: Saga of Bad Deals

One major question about the Metropolitan Transportation Authority has troubled everyone from riders rocking in the aisles of standing-room-only buses to distant bureaucrats and overseers in Washington and Sacramento. Why does the MTA have such a hard time providing adequate mass transportation for the people of Southern California? Now, a three-month investigation by Times reporter Jeffrey L. Rabin has provided considerable insight.

Essentially, the MTA’s sole mission, contrary to popular assumption, has not been moving people to where they want to go in the most efficient manner. The author- ity has developed quite a side enterprise in high and low finance for its executives and the politically well-connected.

What has gone on at the MTA is at least rank mismanagement and malign neglect. The MTA board has included every major elected local official (Los Angeles Mayor Richard Riordan is one). Were the lot of them asleep--or worse?

Several statistics show the depth of the problem. One is the MTA’s $7 billion of total indebtedness for the shortest and most expensive subway system in the nation’s history and for an MTA headquarters that looks as if it was designed for Donald Trump. The final cost of that monument will exceed $480 million.

There’s also the $360 million a year the MTA pays on its debt, equal to more than 30% of its operating budget. That represents the agency’s biggest single operating expense, and it’s the product of years of unchecked borrowing. It’s as if a family refinanced its home at a higher interest rate year after year. This legacy of debt answers a second major question. It explains why the MTA has no room to maneuver and can’t just order the massive bus fleet it needs. Those who ran the MTA and its predecessor agencies have mortgaged the region’s current and future transportation needs, having already borrowed against all of the MTA’s anticipated share of transit sales taxes for the next 31 years.

It took years to get to this subbasement. The issue now is how or whether the MTA can dig itself out.

The MTA’s debt has been structured in a way that dramatically increases the interest owed, the fees paid to consultants who set up the deals, and the costs to Los Angeles County taxpayers who voted for two local sales tax increases in exchange for improved mass transit. It’s the repeated and exotic financing that shows who has benefited to date: the high-finance wizards and bondholders; the high-level MTA administrators who not only weren’t minding the store but were filling their own personal money needs, and the elected officials who must now explain just why their pet projects received so much money with so little documentation. One is L.A. County Supervisor Yvonne Brathwaite Burke.

High-ranking MTA officials, including onetime Chief Executive Officer Franklin White, former acting CEO Linda Bohlinger, a former executive director and an ex-construction chief, enjoyed sweetheart real estate mortgages backed by public money. The public absorbed the loss when these so-called public servants fell delinquent or just stopped paying. Taxpayers lost $250,000 on just one condominium, owned by former MTA Treasurer Leslie V. Porter.

And just where are the financial reports and other records of the Transportation Foundation of Los Angeles, a nonprofit charity spun off from the MTA in 1996? The foundation has close ties to Supervisor Burke and her husband, businessman William Burke. It has been promised $800,000 in seed money directly from the MTA, but the state’s registrar of charitable trusts can’t find any of the reports that such foundations are legally required to file.

Of course, a state and federal investigation of the MTA is in order. One of the players mentioned in the Times stories on Sunday, investment banker Calvin Grigsby, faces federal indictments in a separate Florida case alleging bribery, money laundering and conspiracy. There is a federal probe already underway here on an unrelated matter involving MTA contracts. If notes in these two investigations haven’t been compared yet, they should be.

The first goal here is to wring some money for transportation out of this mess. The second is to go after those who might have cheated the public or broken the law, no holds barred.