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MCA’s tax-free rail benefits

MCA/Universal has cut itself a sweet deal. When the MetroRail station opens its doors on Lankershim Boulevard, a half-mile from the studio’s theme park in North Hollywood, undoubtedly the studio will profit from the added foot traffic — but they’ll do so without having to pay any benefit assessment tax.

“The compromise that was reached was that Universal would not pay benefit assessment, but would instead take that money and put it into building a people mover that would take people from the station up to the top of the Universal hill,” said David Miger, a rail planner for the Metropolitan Transportation Authority.

This compromise comes after months of saber-rattling on the part of MCA, which had been lobbying to have the station moved closer to the hill.

In the compromise agreement, MCA will commit up to $ 20 million to build the people mover — a transportation pathway that would primarily benefit the theme park, hotels and City Walk — but the wording is such that if the proposed mover is deemed unfeasible, the company simply won’t build it.

“But that unfeasibility would have to be something major,” Miger said.

Yet according to the agreement, it’s in MCA’s “sole discretion” to decide whether the construction of the people mover is either “feasible or justified.”

The fact that MCA will not have to pay benefit assessment is stirring up its own controversy, especially as businesses all along the MetroRail route are now having to pay such taxes.

“The agreement sets a precedent for the MTA to lose tens of millions of dollars in benefit assessment funds,” said Nick Patsaouras, who sits on the MTA board. “It eliminates over $ 6 million, the MTA benefit assessment program for MCA property, which would have offset the millions of taxpayer dollars to be spent to build a station at their doorstep.

“How can we ask the property owners along Wilshire Boulevard, Hollywood Boulevard, Vermont Avenue or even in downtown Los Angeles to continue to pay for MetroRail while MCA is exempted?” he said.

MetroRail officials, though, say that every commercial owner has the right to call for an election among their local businesses affected by each station to see if a majority chooses not to pay benefit assessment. In order to be eligible for this little-publicized policy, businesses have to schedule a vote early in the process inorder to be eligible.

In order to opt out, 75% of the affected businesses have to vote accordingly. Since Universal and Lucasfilm own 75%-80% of the property in this particular location, getting the vote was a piece of cake.

The few other commercial businesses in the same area will also benefit from not having to pay assessment taxes because of MCA’s powerhouse vote.

This compromise agreement between the MTA and MCA will also give the studio right of first offer if MTA decides to sell, lease or develop any of the land parcels around the station.

The MTA will also pay to build a six-lane road leading from Lankershim Boulevard, at Universal Terrace Parkway, across the 101 freeway to Ventura Boulevard — which again provides further access to the hill.

The studio conglomerate had been pushing to have the subway station moved to Cahuenga Boulevard, under the Hollywood freeway, but MetroRail officials had decided that it would be too costly and would push the construction schedule back more than a year.

As things now stand, the MTA will purchase five parcels of land that U owns on Lankershim (for about $ 8.3 million) and begin demolition either by the end of this year or early next year. But that time schedule is uncertain as MTA has yet to award a demolition contract.

If everything goes according to schedule, the station would open in July 2000 . MTA officials hope that Universal will have its people mover in place for the 2000 opening, but it’s still unclear whether the studio will even build the mover.

On Wednesday, MCA did not return calls about the matter.

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