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Council approves exchange of Prop A transit funds at discount, asks staff to seek better offers and report uses of remaining funds
Summary
The council approved selling $2 million in Prop A funds in exchange for $1.5 million for general fund use, and directed staff to seek higher offers and return with options for using about $16 million in restricted transit funds.
The West Covina City Council voted May 20 to approve an exchange of Proposition A funds, authorizing staff to sell $2 million in Prop A local return funding in return for $1.5 million in general fund dollars.
The exchange drew questions from residents and councilmembers during discussion. Public commenter Doug Ford and several councilmembers asked whether staff had sought competing buyers and whether the city was getting the best price for the funds. Staff reported the dollar-for-dollar exchange is a common practice and that other cities often accept a discount (staff cited typical exchange rates in the 702590% range). Acting Finance Director Maria Luisa said the city annually receives roughly $2.7 million in Prop A funds and that the city also holds a combined set of local-return balances (Measure M, Measure R, etc.) totaling about $16 million.
Council action approved the exchange but included direction to negotiate better terms where possible, to contact other agencies (council members suggested West Hollywood, Long Beach Transit and others) and to return with a report on allowable uses for the roughly $16 million in transportation-restricted funds. The motion to approve item 6 included a specific instruction that staff bring back options for how the Prop A/local-return funds could be used; that part of the motion passed along with the exchange approval.
Why this matters: Proposition A and other local-return transit funds are restricted for transportation uses. Selling the right to those funds converts them to unrestricted general-fund dollars but at a discount; council discussion centered on whether the city should instead spend its Prop A/local-return funds directly on transit projects (bus stops, ADA access, pavement improvements) rather than exchanging them at a 25% haircut.
What council approved: Approve the exchange of the city's Prop A allocation for $1.5 million in general fund dollars this fiscal cycle while directing staff to pursue higher offers, report back on allowable uses for local return funds, and present options to expend the remaining balances.
