By HOWARD FINE

Staff Reporter

Amid all the furor about funding shortfalls and tunnel trouble, the MTA is quietly completing work on five new subway stations in the east Hollywood area much to the relief of local business owners.

The five stations, which comprise the bulk of the $1.1 billion Vermont-Hollywood extension to the Red Line, are due to be open by the end of May 1999, when subway service to Hollywood is scheduled to begin.

Above-ground work at all five stations along Vermont Avenue and the eastern end of Hollywood Boulevard is now at least 95 percent complete, according to Metropolitan Transportation Authority Project Manager Alfonso Rodriguez. The actual stations have largely been built, the streets repaved and the final landscaping details are now being taken care of.

The bulk of the remaining work will take place underground, Rodriguez said. This includes the installation of cables, transformers and switches, as well as extensive testing of the railcars and emergency systems.

"That part, which is largely behind the scenes, was designed to be finished after the stations," Rodriguez said. "The point was to finish the above-ground work as soon as possible to minimize the disruption to the community."

That's good news for many of the area's business owners, who have put up with construction and torn-up streets for more than two years.

"We lost a lot of business during the construction," said Sylvia Gutierrez, manager of the Subway sandwich shop on Vermont Avenue just south of Santa Monica Boulevard. "On a lot of days, we closed early because we had no business."

Gutierrez said business has increased at least 50 percent since the repaving of Vermont was completed in June.

At the combination Union 76 gas station/Circle K store at the corner of Vermont and Beverly Boulevard, business is up about 30 percent over last summer, according to the manager, who credits the reopening of a parking lot next to the store.

A number of merchants say they expect business to pick up even more once the subway opens.

"We view this as a great opportunity," said Barry Hartsfield, a principal in the Tate Group, which owns the Red's on Hollywood hotdog stand at Hollywood Boulevard and Western Avenue, across the street from a new subway station.

Red's on Hollywood opened four months ago, and Hartsfield said his company specifically picked the site because it was near the subway station.

"We're hoping that a lot of people will be using the MTA," Hartsfield said. "We hope they will come out of the subway station, see our place right across the street and stop in."

But with few exceptions, the extension of the subway through Hollywood has not triggered the larger retail and mixed-use development projects that have long been talked about.

"We have not gotten a lot of response from developers, especially along the Vermont corridor," said Carol Inge, director of fixed-guideway planning and joint development for the MTA.

"A couple of years ago, we put together some pretty active marketing pieces and held conferences to promote the idea of public-private partnerships around the stations. But with the market as fragile as it was back then, developers were looking for MTA subsidies, which was not something the MTA could do financially," Inge said, referring to the billions of dollars in debts racked up by the MTA.

Rather, the MTA was interested in deals in which the agency would lease property around the stations to developers, who would then make annual lease payments, she said.

There is one major project that will be developed near a subway station TrizecHahn Corp.'s retail and entertainment complex at the corner of Hollywood Boulevard and Highland Avenue. The project, which is slated to be the home of the annual Academy Awards show, is scheduled to open in 2001, one year after the subway comes through.

As part of that deal reached last March, the MTA will receive annual rental payments of $246,000 during construction, from April 1999 through 2001. Starting in 2002, TrizecHahn pays $492,000 a year to the MTA, with minimum rent increases of 10 percent every five years. The base rent would be adjusted in 2015 to reflect the financial status of the project, according to the agreement.

Inge said the MTA has received some inquiries recently from parties interested in buying or leasing property around some of the new MTA stations, but she said those discussions are all in preliminary stages.

"I would expect the offers to pick up once the Vermont-Hollywood extension opens next year," particularly along the Hollywood Boulevard stretch, she said.

The Vermont Avenue segment might be a little slower to attract developer proposals, she said, because it has not experienced a pick-up in real estate activity similar to what is now going on in Hollywood.

"While the subway is likely to provide a boost to that area, it cannot fully counteract the market forces there," Inge said.

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