DOWNTOWN LOS ANGELES - On the evening of Monday, Dec. 3, members of the Los Angeles Streetcar campaign team gathered at the whiskey bar Seven Grand. At about 8:30 p.m., when they learned that more than 70% of the Downtown residents who cast mail-in ballots had voted in favor of a taxation plan, they erupted into applause, said 14th District Councilman José Huizar.
The vote marked the successful culmination of a months-long campaign to convince residents within about three blocks of the proposed route to approve taxing area property owners up to $85 million. However, the $125 million project that would connect L.A. Live with the Civic Center is far from a sure thing.
With the local funding portion assured, streetcar proponents are now directing their attention to three other important steps, most notably seeking $52 million in federal funds. Huizar had that in perspective after the vote.
“This is just one piece of the puzzle,” Huizar said.
In addition to looking for government money, Huizar noted that the streetcar team needs to finish the environmental review process and come up with a 30-year operational plan for the project. The property tax does not go into effect until all three of those conditions are met.
“My job now is to fly to D.C., to get on the phone, to rally and advocate and [convince the federal government] that this is a worthwhile project to invest in,” Huizar said.
According to the City Clerk, 1,557 people voted in favor of the streetcar tax while 579 voted against it. The approval of two-thirds of the voters was required; the taxation plan was approved by 72.8% of those who cast ballots. The election results are expected to be certified by the City Clerk by Dec. 12.
While the vote allows landowners to be taxed up to $85 million over 30 years, streetcar proponents say they plan on collecting $62.5 million to pay for half of the capital costs, including engineering and construction. The overrun will cover the administrative cost of issuing the bonds as well as any unexpected construction cost increases, said Shiraz Tangri, general counsel for Los Angeles Streetcar Inc.
[Update: the remaining tax amount would cover the cost of issuing the bonds, two years capitalized interest and other administrative bond costs but not any construction costs.]
According to figures provided by LASI, property owners — whether of a condominium, an entire building or a lot — could pay as much as 16 to 45 cents per square foot, with the highest rates for those right along the route.
The average condominium owner would pay about $60 per year, with the majority of residential units taxed less than $100 annually. Commercial building owners would pay far higher amounts.
Streetcar officials said obtaining half of the funds from the private sector is a crucial step before they can try to get $52 million from the federal government ($10 million was obtained through the now-defunct Community Redevelopment Agency).
Thinking Small Starts
Tangri said LASI will try to secure all the federal funds through a single grant from the U.S. Department of Transportation’s Small Starts program.
“There may be other federal dollars we go after for planning issues around the project, but in terms of actual construction dollars it’s a single grant application,” Tangri said.
If that application is rejected, Tangri said the project is essentially “back to square one.”
“We can’t float the bonds obviously if we don’t have those dollars identified,” he said. “If we can’t get them from the federal government we would be looking for another source for that money, and at the moment there’s not any source even vaguely identified.”
The Downtown streetcar has twice been rejected for federal funds. In 2010, LASI sought but did not receive a $25 million U.S. Department of Transportation TIGER (Transportation Investment Generating Economic Recovery) grant. An application for a $37 million TIGER grant in 2011 was also unsuccessful.
Tangri sought to classify those failures as learning experiences.
“Part of the purpose behind the previous grant applications was to get federal agency feedback and input on the project, what they liked about it, whether we met their criteria,” Tangri said.
He said LASI expects to present the application for federal funding to the City Council in the first quarter of 2013. A decision by the federal DOT could be made by the end of that year.
Work also continues locally. On Dec. 12 the City Council’s Transportation Committee is expected to give the go ahead for the City Administrative Officer and Chief Legislative Analyst to begin work on coming up with funding mechanisms and other options for a 30-year operational plan. The full council also needs to approve the motion; Tangri said the public portion of the environmental review process should begin in January.
The streetcar tax had its share of opponents, as some property owners protested the process that only allowed area residents to have a say in the taxation plan. Landowners were not allowed to vote unless they also lived near the route.
Prominent stakeholders critical of the voting process included officials with Thomas Properties Group and Downtown Management, a company led by Australian businessman Joseph Hellen.
After the vote, Jim Thomas, chairman and CEO of Thomas Properties, declined to comment on whether he will fight the project. Greg Martin, vice president of Downtown Management, said he does not expect his company to challenge the results.
Contact Richard Guzmán at firstname.lastname@example.org.
© Los Angeles Downtown News 2012