MID-CITY : MTA Plans to Impose Tax on Businesses

“Metro Rail is coming” proclaims a new brochure distributed by the Metropolitan Transportation Authority to commercial property owners along the Vermont Avenue corridor--and it’s bringing a new tax with it.

It’s obvious that Metro Rail is on the way. Businesses near the planned stations, such as the one at Vermont Avenue and Beverly Boulevard, are already feeling the pinch as potential customers steer clear of the congested, noisy construction areas. But less well known is that a tax, or benefit assessment, will be imposed on the businesses to pay for a portion of subway construction costs.

The MTA plans to assess a one-time fee of 86 cents to $1.06 per square foot on commercial property within half a mile of Red Line subway stations, or smaller annual payments stretched over longer periods of time. The matter was first raised and debated during public meetings in 1989 and 1990, MTA officials said.

About 572 properties in the Vermont corridor from Beverly Boulevard to Sunset Boulevard can be assessed the tax, said David Sikes, the program manager.

The theory behind the fee is that subway stations increase the value of nearby property and benefit businesses by increasing their accessibility.

The MTA wants commercial property owners to share the projected benefits and pay for 3% of the construction costs for Phase 2 of the Red Line, which will follow Vermont Avenue to North Hollywood and is expected to open in 1998.

“The MTA is trying to have its cake and eat it too,” said Bruce E. Newmark, general manager of Midway Ford, at a recent meeting of the Vermont Citizens Committee.

Midway Ford is one of the largest property owners near the intersection of Vermont and Beverly and will be assessed at least $129,000, Newmark said. But a 50% drop in business on weekends, when construction is heaviest, and added costs related to construction could also cost the company at least that much, he said.

Moreover, a car dealership and service center is unlikely to derive any direct benefits from a subway, Newmark said. “People don’t walk up to a dealership to have their car serviced,” he said.

Operators of smaller businesses wonder if they can even survive through the subway construction.

“I hope it will be good when it’s finished, but so far it’s bad for business,” said Herman Artica, who has owned a sportswear store in the 3800 block of Beverly Boulevard for more than 15 years.

“There used to be restaurants and stores across the street, and a lot of the people who shopped there came to my place too. But they demolished those stores. No one comes by now because of the construction.”

The possibility of the subway’s future benefits does not impress Artica: “I don’t know if I will be here in three years.”

Some time this summer or fall, the City Council is expected to consider the MTA’s proposals regarding the boundaries and payment methods for the benefit assessment districts, Sikes said.

The next meeting of the Vermont Citizens Committee is scheduled for 6:30 p.m. July 19 at the Metro Rail Information Center, 972 N. Vermont Ave.

MTA information: (213) 620-7245; benefit assessment program: (213) 244-6588.