During the holiday season last year, the Metropolitan Transportation Authority brought a Yuletide bonanza to Hollywood Boulevard – and a goody bag that could have filled a Winnebago-size sleigh.

There was a full-size Santa’s Village embellished with elves, imported mountain snow and turkey giveaways. Strolling carolers belted out Christmas favorites while flickering lights and 650 Douglas Fir wreaths adorned the background.

But Santa and his flourishes didn’t come cheap: The checkbook cheer cost taxpayers about $400,000, MTA records show.

A onetime outpouring for a blighted town trying to recapture its old glory?

Hardly.

The Christmas largess was just one sliver of the $2.1 million the agency has expended since fall 1993 to cushion the impacts of subway construction on businesses and residents throughout the world-famous thoroughfare.

Of that, about half the money, or slightly more than $1 million, financed such items as cocktail parties, holiday festivities, banners and free magazines, according to records obtained by the Daily News.

Critics of the so-called Hollywood Construction Impact Program, including several MTA board members, say those expenditures were a frivolous waste of taxpayer money that have done little to assist property owners and others inconvenienced by Metro Rail tunneling.

Besides the holiday trimmings, they cite the $25,000 the agency dished out for a star-studded cocktail party and $166,000 for temporary, mural-splashed construction fencing. Likewise, an outdoor eating festival planned for next weekend is getting $20,000.

An additional $14 million in the program has been set aside for future programs before Red Line cars rumble under the boulevard in three years.

“It’s an outrageous and unreasonable expenditure of public money,” said Nick Patsaouras, an MTA board member and San Fernando Valley businessman. “Mitigation measures are supposed to relate to construction impacts, not Santa’s Village and advertising.”

Added longtime area activist Robert Nudelman: “It’s another MTA disaster in Hollywood.”

Franklin White, the MTA’s chief executive officer, would not comment.

His aides said the program is being retooled to emphasize more nuts-and-bolts community programs linked to transportation, including better signage and cleanup programs.

“The spirit of the program is great, but some of the particulars need to be re-evaluated, and that’s what we are doing,” said MTA spokeswoman Andrea Greene. “The bottom line is that Metro Rail will be the catalyst for the rejuvenation of Hollywood.”

A lot of the rejuvenation has been necessary because of the MTA project.

In August 1994, Red Line digging caused parts of the boulevard to sink up to 9 inches. Structural damage from that mishap and others prompted 1,100 area property owners to sue the MTA with claims exceeding $1.5 billion.

Ten months later, tunneling work halted when a mammoth sinkhole near a Metro Rail staging area opened up the street and aggravated festering wounds about subway building in urbanized Los Angeles. A few weeks after the chasm appeared, investigators raided the contractor’s field offices, and the MTA pulled the company off the job.

Approved by the transit agency three years ago, the impact program was designed to help Hollywood Boulevard businesses and others grapple with less spectacular public works hassles – poor storefront access, traffic snarls, equipment noise and crime. Showcasing the area was also a goal.

Even so, preventing a repeat of the horror stories experienced by downtown merchants who lost their customers, and sometimes their livelihoods, to subway barricades and other obstacles remained paramount, transit officials said.

As proof of their efforts in Hollywood, subway officials point to several expenditures they claim have eased tunneling headaches.

Records show that the MTA has paid roughly $456,000 to a pair of private security firms that patrol Hollywood station-building areas, $330,000 for trolleys to ferry people around traffic bottlenecks, and $75,000 to clean streets, parking meters and other utilities soiled by construction. An unspecified amount has financed “Open-for-Business” signs for companies located near heavy construction.

But critics insist the MTA hasn’t done nearly enough to offset the adverse impacts of construction.

In an interview, Hollywood Councilwoman Jackie Goldberg upbraided the transit authority for refusing to release promised funding and largely misspending what they did subsidize.

Among other problems, she said, a $90,000 MTA street-lighting effort never materialized because it was so costly. Poor marketing, she and others said, killed the trolleys after only a few months of operation.

“And the Christmas party was a disaster, with a lot of money spent at the last minute,” Goldberg said. This program has “probably been the biggest frustration, other than the sinkhole, in my council life. I’ve thought they wanted to spend as little as possible so they can spend it on other things.”

Transit officials dispute that contention, saying the area’s fragmented politics and their own vast bureaucracy torpedoed the efforts. Many of the contracts, they add, were not competitively bid, because the goal was to get the work done as quickly as possible.

Said the MTA’s Greene: “What is extremely frustrating to us is that the merchants, politicians and residents backed these efforts at the time and then they turn around and attack us for doing what they asked for. First the agency is criticized for spending too much and then for too little. We have to work as a team.”

Under the original plans, the MTA was going to award mitigation funds at a $4- million-a-year clip, meaning an additional $6 million should already have been spent. Greene attributed most of the delays to “differences of opinions” within the community over what projects to back.

No similar mitigation account has been created for Metro Rail’s San Fernando Valley leg because city officials haven’t sought it, Greene added.

Meanwhile, Hollywood activists believe any goodwill the MTA once had has turned to resentment because of the costly marketing programs that don’t adequately target struggling shop owners and residents. They said they have unsuccessfully lobbied for better signs, soundproofing and low-interest loans.

Instead, critics argue, the money has flowed to organizations they say are politically connected, pointing to the nonprofit Hollywood Arts Council. Records show it has four MTA contracts, including a summer banner program and holiday promotional magazine valued at $102,000.

Oscar Arslanian, an executive member of the arts group, was also a member of a special citizens committee that submitted recommendations on how the mitigation account was to be parceled out.

“The MTA has bought friends and influence using this mitigation money – it’s a payoff to the who’s who of Hollywood. But it hasn’t helped the merchants,” said Doreet Hakman, the outspoken owner of the Boulevard’s Snow White Coffee Shop. “Not one penny went to alleviate their hardship.”

Arslanian said out of “conscience” he never would have voted on MTA Art Council contracts, and that much of the group’s transit funding went for efforts that predated Red Line tunneling. He also noted the citizens panel was ultimately disbanded by Goldberg because it was making so little headway.

Nonetheless, organizations that are, or have been been, the target of government investigations have also landed MTA community money, records indicate.

The Hollywood Chamber of Commerce, a longtime subway champion, received roughly $100,000 in contracts that financed a newsletter, Christmas lights and an Adopt-A-Block cleaning program. Three years ago, the booster group settled a lengthy state investigation alleging it had misappropriated $700,000 in royalties earmarked for maintenance of the landmark Hollywood sign and Walk of Fame.

Leron Gubler, the chamber’s executive director, said he believes the proposed changes in the subway construction impact plan represent a step in the right direction.

Gubler and Goldberg said they back proposals to revamp the mitigation plan though it’s still to be approved by the MTA board. The proposal would downplay holiday and marketing events and beef up free parking, sidewalk repairs, cleaning, advertising, signage and economic development.

Gubler sees light at the end of the tunnel. “I’m actually encouraged things will happen properly” he said. “The time for mitigation is now.” MTA EXPENDITURES

In the hopes of softening the impact of Metro Rail construction under Hollywood Boulevard, the Metropolitan Transportation Authority has spent $2.1 million out of a $16 million account on a host of various programs and events.