Orange County transportation officials, worried about Placentia's deteriorating finances, balked at providing the city an emergency $5.6-million loan for its controversial rail project and instead suggested one for less than half that amount.
The Orange County Transportation Authority board said the agency would lend Placentia about $2.5 million, an amount secured by the city's expected annual share of gasoline taxes and a portion of proceeds from a transportation sales tax.
All five Placentia City Council members urged support for the larger loan, maintaining that the city should be able to borrow against more of its future taxes. But OCTA officials said that the city -- its finances strained by the troubled OnTrac rail project -- could not guarantee repayment of the full amount.
The city needs to complete the purchase of a former Office Depot site that it acquired as part of a project to lower 5 miles of railroad tracks into a concrete trench through town. Since February, Placentia has been paying about $700 a day in interest penalties on the property purchase while it tries to find funding.
Placentia officials blamed the financial problem on the city's failure to receive about $12 million of a $28-million state transportation grant because of recent budget cuts.
"We have to come to you on bended knee asking you for help," Councilman Norman Z. Eckenrode said. "We don't know what's going on in Sacramento."
A dozen speakers urged OCTA's help, including Craig Green of Citizens for a Better Placentia, a watchdog group that has been one of the chief critics of the rail project.
The group has argued that the $460-million project, which has included the reconstruction of 11 intersections, was bungled by OnTrac's high-priced executive director and his team of consultants. The city has spent about $17 million toward the project.
While OnTrac continues to be mismanaged, Green said, the city's request for a loan to pay for the Office Depot property is needed to avoid further financial calamity. The rail project has drained the city's reserve, leading to layoffs and a hiring freeze, he said. "I would like to ask this board to consider the reality of things," Green said.
Monday's discussion centered less on OnTrac management and more on the city's ability to repay an OCTA loan.
After several board members said they wouldn't support the $5.6-million request, one, Miguel A. Pulido, suggested moving ahead with an amount that OCTA could secure.
"I think we have to be a good neighbor and a partner" with the city, said Pulido, who is also a Santa Ana councilman.
"They're essentially borrowing against their own money. If that's what they want to do on behalf of their city, we ought to support them."
County Supervisor Tom Wilson, another board member, moved to send the details for a smaller loan to the agency's finance committee for review. The finance committee meets Wednesday.
City officials pledged to continue looking for other money to supplement an OCTA loan or replace it. The city is considering short-term borrowing using city-owned property or other city revenue as collateral.
Placentia has promised to pay Office Depot in full by Sept. 15, city spokesman Matt Rey- nolds said.
OnTrac was established in 2000 as a joint-powers agency to plan and build the rail project, which included lowering tracks along the Burlington Northern Santa Fe line through downtown for better traffic flow and safety.
Though envisioned as a multi-city project, Placentia is still the only OnTrac member. The board consists of two members of the City Council and the city administrator.
The Orange County district attorney's office last month opened an investigation into whether OnTrac Executive Director Chris Becker, formerly Placentia's public works director, broke state conflict-of-interest laws by influencing his hiring.
His contract with OnTrac, which originally promised him as much as $4.5 million for 10 years, has been revised twice and his annual salary lowered to $300,000.