MTA's $1 Billion Development Scheme

According to Fleming, 10 of his colleagues took money from Lowe Enterprises. Fleming, who made number 11, was also conflicted because he is “of counsel” to the politically well-connected law firm Latham & Watkins, which had represented Lowe Enterprises.

A quorum of seven board members was needed to push the project forward, and only Villaraigosa’s appointee Richard Katz, a former state legislator, and John Fasana, a city councilman from suburban Duarte, were totally free of entanglements with Lowe. So an MTA staffer suggested a loophole they had used for years without much notice: the lottery-based vote, which, says Fleming, staffers actually call “The Hayden Procedure.”

On September 27, a board secretary placed the 11 names of the conflicted members in a box: Villaraigosa, Molina, Los Angeles County Supervisors Mike Antonovich, Yvonne Burke, Don Knabe and Zev Yaroslavsky, Santa Monica City Council Member Pam O’Connor, Long Beach Vice Mayor Bonnie Lowenthal, Glendale Mayor Ara Najarian, Los Angeles City Councilman Bernard Parks and Villaraigosa appointee Fleming. She then randomly pulled out the names of Villaraigosa, Fleming, Lowenthal, Molina and Najarian.

Those five joined Katz and Fasana, voting unanimously to award Lowe Enterprises the exclusive right to negotiate the $1 billion project with the MTA. The developer must hold public hearings, complete an environmental-impact report, and win further approvals — but Lowe is in the catbird seat now, with the connections to push it through.

Hayden suggested to the Weekly that MTA lawyers likely dreamed up the loophole, and in a subsequent e-mail stated, “I’d like to see someone question the legality of [MTA’s] counsel advice. [It] seems to me the [drawing] straws vote still allows the MTA to be totally dominated by interest groups using contributions to drive funding.”

MTA spokesman Dave Sotero, informed that Hayden insists his law does not create a special MTA loophole, went quiet. Then he said he was “just repeating” what MTA’s legal eagles had told him and promised to “look into it further.”

Board member and attorney Fleming, told of Hayden’s denial, declared, “That’s news to me.” Fleming then complained about the law’s “low threshold” of $10, and the need for politicians to raise cash to stay in office. “What are you going to do? Not have a board with elected officials?”

Fleming says the 13 board members receive e-mails from MTA staff a week before every board meeting, informing them of their upcoming conflicts of interest. “We know several days in advance who’s conflicted,” the attorney says. “It’s no mystery.” Over the past two years, Fleming remembers the controversial loophole being used “two or three times.”

“The problem is,” he says, “what do you do if you don’t have the vote?”

Hayden retorts: “There’s ample room to appoint [MTA] board members who have nothing to do with contractors. You’re telling me there’s no one in Los Angeles who can’t fill that seat? Of course not.”

AT THE POORLY PUBLICIZED September 27 meeting, only MTA watchdog John Walsh disagreed with the plan. “This [project] is a traffic nightmare,” says Walsh, who has been credited over the years with blowing the whistle on the MTA’s blunders. “They’re plopping a project the size of Warner Center into the middle of NoHo, and there is no mitigation for the traffic, other than the Red and Orange lines.”

Walsh believes the Valley is set to become the next Westside with its endless bumper-to-bumper traffic. “The Westside is gridlocked out,” says Walsh, “so now the big projects are going to North Hollywood and other places in the Valley, and the same thing will happen there.” Although two related studies, conducted by UC Berkeley and Cal Poly Pomona, showed that 78 percent of residents who move into “transit-oriented” housing never use the nearby bus or subway, and merely add more cars to local congestion, board member Fasana counters, “Unlike the Westside, you have rail and buses” in NoHo.

There is, in fact, another motive turning the MTA into a big-time land developer rather than simply a less-than-successful people mover. “The MTA is operating at a deficit,” says Fleming, “so it’s very important to get the dollars we can by building these projects.”

According to Roger Moliere, chief of development for the MTA, Lowe Enterprises will pay $11 million in “guaranteed” ground leases to the transit agency.The MTA’s conflicted role, as a developer drawing thousands of cars into neighborhoods, and the entity that is supposed to relieve congestion, could explain why spokesman Sotero and MTA ethics officer Karen Gorman stumbled around for hours trying to explain who dreamed up the so-called Hayden Procedure.

Gorman, chief ethics officer for Metro, vaguely explained that “case law” — she couldn’t cite an actual case — as well as an obscure section of the California government code, specifically allows a “lottery-based” vote.

Gorman admitted the loophole was not “written in Tom Hayden’s law.” Yet she flatly dismissed Hayden’s suggestion that MTA lawyers may have fashioned it. “No,” she said, “it’s absolutely not true. It’s state law.” Board members Fasana of Duarte and Lowenthal of Long Beach gave different answers. Fasana cited Hayden’s law — as “explained” to him by MTA staff — and Lowenthal suggested that a ruling by the California state attorney general had created the loophole. (Attorney General Jerry Brown’s office couldn’t find such a ruling.)