DOWNTOWN LOS ANGELES - When the Downtown streetcar finally gets rolling, customers will have to pay a nominal fee for each ride. Downtown property owners, however — including those who live in condominiums — will have a much larger tab: They will be asked to shell out a cumulative $62 million.
The City Council on Wednesday, June 27, approved the formation of a special tax district for the project that is now estimated at $125 million, including support facilities. Rates will vary depending on how close the property is to the streetcar; the route will connect Bunker Hill and L.A. Live, with a principal spine on Broadway.
Property owners closest to the streetcar tracks would pay 59 cents per square foot annually, with the assessment based on parcel size rather than a building’s overall square footage. For example, if a 10-story structure was on a 10,000-square-foot lot, the tax would be based on that ground level figure, not the 100,000 total square feet of space in the building.
For condo owners the parcel size determinant still holds, with individual fees determined by the size of the residence — unit owners will pay on a proportional basis of their home compared to others in the building. Shiraz Tangri, general council for Los Angeles Streetcar Inc., the nonprofit overseeing the effort, said the average condo owner will likely have an assessment of $100-$200 a year.
Fees fall for those further away from the route. Those in the second zone, or tier, would be assessed 41 cents per square foot. Property owners furthest away but still within the assessment zone would be charged 20 cents per square foot.
People whose property is about three blocks or farther from the streetcar would not be taxed.
In the program that is similar to the assessments paid by property owners for business improvement districts, money would be collected as part of property taxes.
The borders for what is known as Community Facilities District 9 would encompass a large section of central Downtown, roughly bounded by Temple Street, Pico Boulevard, Los Angeles Street and the 110 Freeway.
The tax district would aim to collect $62 million for the project over an expected 30-year assessment. So far the effort, which is a key part of 14th District City Councilman José Huizar’s Bringing Back Broadway plan, has secured about $10 million from the now-defunct Community Redevelopment Agency.
Officials with LASI hope to secure another $52 million from the federal government. However, the project has already missed out twice on large federal grants.
Despite the council approval, the work is not close to done. Registered voters living in the tax district (including those who rent units) will have to cast ballots in support of the assessments. Tangri said a vote on the tax district will take place by the end of the year.
“We’re asking people to invest in Downtown and we’re asking them to invest in their properties,” he said. “We think they’re going to get a very robust rate of return.”
However, those who own property within the proposed tax district but do not live within its borders will not be able to cast a vote, Tangri said.
He said that is because of a provision in state law that mandates that if there is any contribution from residential property owners, then people living within the tax district must vote instead of just property or landowners.
Tangri said approximately 25% of the annual tax is expected to come from condominium owners.
In order to pass, the streetcar would require a two-thirds approval from voters, Tangri said. The fee proposal could be hard to reach, as Downtown stakeholders are not speaking with one voice on the project.
Carol Schatz, president and CEO of the Central City Association and the Downtown Center Business Improvement District, said that many Downtown property owners are split on the project. At a May meeting, the DCBID board heard from property owners about their concerns, which Schatz said range from the route to the tax and, in particular, not being able to vote on the matter unless they live in the area.
“We have a divided group of property owners on this,” Schatz said. “What really bothered many property owners is that they are the ones paying for it and they have no say about whether the district would go into effect or not.”
A DCBID board vote on whether or not to support matter was also split, she said.
Paul Rutter, co-chief operating officer for Thomas Properties Group, which owns City National Plaza on Flower Street, said he is also concerned that property owners who do not live in the area can’t cast a ballot.
“That’s just not fair,” he said. “We’re very concerned about anything that would increase our operating costs. We’re hesitant for any additional assessment that has to be passed down to our tenants.”
Still, the project has some strong supporters, among them Eric Shomof, whose family owns properties that would be taxed in all assessment tiers, among them the Milano Lofts, the King Edward Hotel and the Baltimore Hotel.
“It’s not cheap, but it’s the only way to bring the streetcar to Downtown,” Shomof said.
Shomof, who is also a member of the LASI board, believes the initial expense will be worth it because of the financial benefits of a streetcar.
A study last year commissioned by the city found that the project would generate 9,300 jobs, $1.1 billion in new development, $24.5 million in annual tourism-related spending and $47 million in new city revenue in the next 25 years.
Also in support is Steve Needleman, a LASI board member whose properties include the Orpheum Theater and the Anjac Fashion Buildings.
“Surely not all, but overall I think property owners in Downtown understand what this can bring to the area,” Needleman said.
Contact Richard Guzmán at firstname.lastname@example.org.