MTA May Expand Aid to Damaged Businesses

The Metropolitan Transportation Authority’s chief executive and board chairman agreed for the first time Wednesday to consider paying the rent of business owners who have suffered losses in the wake of Metro Rail subway tunneling in North Hollywood and Hollywood.

In a private meeting with 25 merchants and property owners at a Hollywood hotel, transit agency chief Joseph A. Drew said his staff would present a comprehensive program of economic assistance to the MTA board’s executive management committee next week.

Until now, the MTA has only occasionally offered money to businesses that are shut down as a result of cracks in buildings or streets near subway tunneling or construction. The new proposal to provide rent and low-interest loans would extend to merchants whose businesses have simply slowed--albeit dramatically--due to their proximity to subway construction.

Depending on its ultimate scope, the program could cost the transportation agency anywhere from several hundred thousand dollars to several millions, business and MTA sources said.

“I have a lot of compassion for their genuine problems,” said board Chairman Larry Zarian, often accused of acting imperiously toward business owners who appear at MTA board meetings. “I am not a cold person. I care. We said that we would go to the board with their plight.”

Members of the Hollywood Merchants Assn., which represents the owners of businesses on Lankershim and Hollywood boulevards, asked Zarian and Drew for a six-pronged aid program that includes:

* Full rent while MTA construction takes place within 200 feet of a property or when construction trucks or fences block access to a business.

* 50% rent when construction is 201 feet to 500 feet from a business.

* 25% rent when construction is 501 feet to 1,500 feet from a business.

* Similar compensation to landlords for vacancies.

* Business loans at 3% interest for which payment would be due only after construction ends.

* $25,000 grants to each block of businesses for mitigation efforts such as valet parking, advertising, coupons or public events.

Although Zarian and Drew did not specifically acquiesce to any of the requests, merchants were surprised and delighted after the unprecedented meeting.

“I have high hopes. For months I have felt like I have been going down a black tunnel, and now I see a little light out there,” said Doreet Hakman, owner of the Snow White Cafe on Hollywood Boulevard. Two months ago, Hakman threatened to go on a hunger strike to protest construction of the Red Line station at Highland Avenue, which she claims has so ruined the local ambience that her revenues are down by 75%.

She said she’s behind on her rent for the first time in her decade of operation, and near bankruptcy.

“We are desperadoes. We are in a coma, we need this transfusion,” Hakman said in the foyer of the famed restaurant that features 50-year-old murals of Snow White and the Seven Dwarfs.

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But state Sen. Tom Hayden (D-Santa Monica), a longtime critic of the project, mocked the proposed plan as little more than a “public relations campaign.”

“This is a reversal of the MTA’s past policy, which was to damage and destroy private property and then settle with the victims months or years later,” he said in a statement. “The real alternative is to stop the tunneling.”

The economic assistance, if it materializes, would likely only be a small down payment on the potential settlement of $2 billion in legal claims filed against the MTA over damage to structures and businesses. But Gerald Schneiderman, head of an organization coordinating lawsuits from 1,400 plaintiffs, said the move was a solid first step.

“This is about MTA officials for the first time taking responsibility for havoc they have caused and trying to be good, decent human beings,” Schneiderman said.

As an example of the potential for payments ahead, he pointed to the El Sombrero nightclub on Lankershim Boulevard, where the floor sank 15 inches in the wake of subway tunneling 60 feet below its front door on March 10.

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Schneiderman said an engineering analysis of the 20-year-old nightclub alone would cost $15,000. If it is determined that the soil below the club’s floor needs to be stabilized before the concrete slab is repaired, he said, the bill could shoot to more than $100,000.

Add that to the claimed loss of $40,000 in weekly revenues and the loss of goodwill from patrons who might move on to other clubs while El Sombrero is closed, and Schneiderman guessed that a court could sock the MTA with a bill totaling half a million dollars for a single business.

“For now, they’re giving me $5,000,” El Sombrero owner Isabel Lopez said. She added after the MTA meeting that she was told to expect more payments every week. “What am I supposed to do with that? It might sound like a lot of money, but with my bills, it’s like giving $5 to a child and shooing them away.”

Meanwhile, the MTA reported late Wednesday that Caltrans had not yet decided when tunneling could resume under the Hollywood Freeway. Digging stopped Tuesday after surveyors determined that the freeway had settled a fraction of an inch past the 3 1/2 inches allowed under the MTA’s permit with Caltrans.

MTA representative Mary Ann Maskery said the freeway remained safe to travel and the two agencies would continue talking today about the resumption of tunneling.