Come November, residents of downtown Los Angeles will vote on whether downtown landowners – from owners of individual condominiums to big developers – should have to pay special taxes for a new streetcar.
The taxes would generate about half the money for the $125 million line that would run on a four-mile circuit connecting thoroughfares such as Broadway with major destinations such as LA Live and City Hall.
The election was approved last week by the City Council, a move lauded by proponents of the streetcar system, including LA Live developer AEG and Councilman Jose Huizar, its chief backer. He called the vote a “another step forward for the streetcar.” But it’s far from certain the district will be approved.
While some landowners stand to reap big gains from plans to turn vacant properties into transit-oriented developments, others with properties blocks away from the proposed route might not be so receptive.
What’s more, even big office landlords are divided. At last week’s council meeting, Thomas Properties Group Inc., which owns City National Plaza, registered opposition to the tax, while Ernst & Young Plaza owner Brookfield Properties of New York has come out in support of it.
That division could turn into campaigns for and against the streetcar, pitting property owners against one another as they try to sway what’s likely to be a tiny pool of resident voters who will receive and send ballots back by mail.
The district would levy new taxes on properties within three blocks of the streetcar route for the next 30 years. The taxes would be based on the footprint – or the area at the base of the building – rather than the total square footage of buildings, which includes upper floors.
Properties within a block of the streetcar line would pay 45 cents per square foot, according to L.A. Streetcar Inc., a non-profit group lobbying for the streetcar. Properties one to two blocks away would pay 32 cents, while properties more than two blocks away would pay 16 cents.
Split opinion
Among the supporters of the tax is Evoq Properties Inc., the successor to the bankrupt Meruelo Maddux Properties Inc., once the largest landowner downtown. The company still owns six acres of parking lots and the five-story Desmond Building, all on or close to 11th Street, where the streetcar would run on its way from Broadway to LA Live.
Those properties are close enough to pay 45 cents a square foot, or about $131,000 in total annually. But Evoq plans to redevelop the Desmond into creative office space and hopes to turn its parking lots into residences, shops and hotels. It believes the streetcar will boost the value of those projects.
“People who live at, work at or visit these locations will pay a premium to be adjacent to the streetcar,” said Scott Denham, vice president of operations and portfolio management for Evoq. “Whenever we’re talking to potential investors or development partners, (the streetcar) is a big part of the story we tell.”
But other property owners are skeptical. Laurie Sale’s family owns a handful of low-slung retail properties on Los Angeles Street between Eighth and Ninth streets, three blocks from the streetcar line.
Sale’s buildings have a footprint of about 24,000 square feet. Because they’re at the end of the proposed taxing district, they would pay just 16 cents per square foot, for a new tax burden of about $3,800.
That’s not much money, but Sale said her buildings are mostly one- or two-story properties with small Fashion District retail tenants. Unlike, say, Brookfield, she can’t spread her tax bill out over dozens of tenants in 50-story office buildings. And unlike Evoq, she doesn’t know that a streetcar will help her properties.
“We’re three blocks away,” she said. “If I had a magic crystal ball that said this is going to be great, that would be one thing. But nobody has that crystal ball.”
Sale said she’d like to see money for the streetcar come from special taxes or fees assessed on businesses that would benefit more directly. For instance, she recommended a small fee on tickets for events at AEG’s Staples Center or an additional bed tax on large hotels near the streetcar line.
“There’s no sour grapes, we’d like to see a streetcar come through,” she said. “But we’d like there to be a more equitable way to come up with money to pay for this.”
