Four years ago, Cary Jordan moved his family restaurant Jordan’s Hot Dogs from Watts to Crenshaw Boulevard in Hyde Park, banking on a planned light rail line connecting the neighborhood directly to Los Angeles International Airport and the transit riders it would bring.

What Jordan didn’t bank on were the years of construction and trench work outside the restaurant’s entrance that have kept customers away. During the first year of construction in 2015 and 2016, Jordan said the commotion sent revenues plunging roughly 50 percent to about $40,000.

A grant program funded by the Los Angeles County Metropolitan Transportation Authority helped Jordan turn things around.

The program, aimed at mom-and-pop businesses, covers some of the lease, utility and other overhead costs to offset lost revenue during construction. It has a cap of $50,000 per year per business. Jordan submitted documentation of his revenue loss and received a grant of $25,000.

“Before I received the money, I was continually borrowing money from my family to keep the business afloat,” Jordan said. “That $25,000 enabled me to keep my doors open and to remain at this location during the construction,” Jordan said.

Since then, Jordan has received another $25,000 grant.

700-plus grants

In total, Metro’s Business Interruption Fund has awarded more than $18 million to 300 businesses since it began four years ago, according to a progress report on the program issued last month. The transit agency had budgeted $10 million a year for the grant program.

The fund first targeted businesses along the Crenshaw corridor impacted by construction of the Crenshaw-LAX rail line, then spread to the Regional Connector project in downtown and the Purple Line subway extensions in the Miracle Mile and Beverly Hills.

On Feb. 28, the transit agency’s board voted to expand the program again to include businesses impacted by Purple Line construction from Beverly Hills to Westwood. The board also voted to award a $1.6 million, two-year contract to the Koreatown-based Pacific Coast Regional Small Business Development Center to administer the fund.

Shalonda Baldwin, the transit agency’s deputy executive officer of diversity and opportunity, said the agency would like to be paying out more. In the four years the Los Angeles program has operated, Baldwin said the total grants have never hit the annual $10 million budget cap.

“There’s been a little less demand for the grants than we originally anticipated,” she said.

To qualify, a business must have been at the impacted location for at least two years, have no more than 25 employees and show documentation of revenue loss since construction began. Businesses generating more than 60 percent of revenue from alcohol sales are not eligible, nor are cannabis businesses nor chain-operated stores. The grants can be used by the businesses to pay fixed operating expenses including utilities, rent, insurance and payroll.

Subway impact

Of the $18.5 million in grants awarded in the program’s first four years, just over $10 million went to businesses along the Crenshaw-LAX Line. About $4.6 million went to businesses along the Wilshire corridor Purple Line subway extension, and nearly $3 million went to downtown businesses near the construction zone for the Regional Connector project.

Apollonia’s Pizzeria, located in a strip mall on Wilshire Boulevard a block east of La Brea Ave., first suffered revenue losses when utility relocation for the subway project began four years ago, co-owner Justin De Leon said. Losses deepened in 2017 as Wilshire Boulevard near La Brea closed completely during weekends for subway construction, he said.

De Leon said the pizzeria recently received its third annual grant of nearly $50,000 from the fund. “If we hadn’t received the grants, we probably would have had to reduce our operating hours, which would have reduced our revenue even further,” De Leon said.

Not enough?

One downtown business owner affected by the Regional Connector construction said the grant money has been helpful though not enough to cover all the revenue loss.

Andre Bonyadian, who owns and operates a Quiznos Corp. franchise in a strip mall in Little Tokyo, said that when construction began, his revenue plunged between 30 percent and 40 percent. Transit agency staff encouraged Bonyadian to apply for the program, and he received his first grant in 2016.

“That money came just in time,” Bonyadian said. “If it hadn’t come, I likely would have had to close the business.”

The funds weren’t quite enough to offset his losses, so Bonyadian said he’s adopted other cost-cutting measures, such as reducing staff and making his own produce pickups from nearby markets instead of having it delivered.

While Bonyadian was able to make adjustments to keep his business open, other business owners receiving the grants did not fare as well.

The transit agency said 82 percent of businesses remained open after 24 months of the initial grant award. That means 18 percent of the businesses — 38 in all — either closed or moved out of the construction zone.

One of the businesses that moved was the office of optometrist Steven Bae, which was originally in a strip mall on Wilshire Boulevard just east of La Brea Avenue and two years ago moved to Western Avenue in Koreatown.

Bae, reached briefly by phone, said the business interruption grant was not enough money to offset the loss in business. “It wasn’t enough, and I was forced to move,” he said.

Agency responsibility

Experts differ on whether direct payments are the best way to make up for lost revenues.

“Because it’s the transit agency’s construction activity that is causing the revenue drops among these businesses, the agency should bear the responsibility for offsetting this negative externality,” said Jerry Nickelsburg, director of the UCLA Anderson Forecast and an economics professor at the Anderson School of Management. “It’s the same principal as ‘polluter pays’: the entity that causes the negative impact should take steps to restore those impacted.”

Nickelsburg said the challenge is to get the payment levels right. “You don’t want to overpay or underpay,” he said.

But Matt Horton, associate director of the California Center at the Santa Monica-based Milken Institute, questioned whether the grants were the right solution since once construction is complete, the businesses are likely to draw more customers than before.

“With a grant program, there’s no direct financial return on the taxpayers’ investment,” he said.

“There are other ways to structure an assistance program so that the taxpayers do get a financial return, such as a loan program with repayments starting shortly after construction ends” or turning over a percentage of revenue to the agency for a set period once the rail lines open.