Hollywood businesses seek ally in combatting tax: they fear assessment amid construction tumult, recession.

Some Hollywood business people -- afraid that Metro Rail Red Line construction and a new related property tax will drive them to bankruptcy -- are pinning their hopes for survival on their new Los Angeles City Councilwoman, Jackie Goldberg.

More than anyone, the councilwoman can influence whether the commercial property owners will be allowed to vote on the Metro Rail station "benefit assessment districts" proposed by the Los Angeles County Metropolitan Transportation Authority.

Even the Hollywood Chamber of Commerce, which in the past has supported the assessment district concept, has changed its tune as Hollywood's economy hit the skids.

"The chamber hopes property owners have some say in what the assessment is and how it is imposed," said chamber President Michael Dubin. "If owners get an opportunity to vote, the chamber would see it as a very favorable development."

The MTA board recently approved benefit assessment districts for Hollywood, North Hollywood and the Vermont area, disregarding the pleas of business people who said they want to vote on the issue.

Now the issue will go before the Los Angeles City Council, where Goldberg's opinion will carry the most weight because she represents the area involved. Goldberg won't say where she stands -- her staff is still studying the problem -- but she said she "personally tends to favor elections" and realizes that "as people are under siege, it might not be the time to tax them."

Goldberg apparently also holds the key to whether the MTA and the City Council will be sued by Hollywood merchants over Metro Rail.

Hollywood activist Robert Nudelman said 16 merchants have joined forces to hire a law firm to take on the MTA and the city in court over related environmental issues -- unless the elected officials agree to re-open hearings or to move the Hollywood Metro Rail stations.

The MTA is negotiating with property owner MCA Inc. to move a Universal City station closer to Universal Studios. Nudelman said MTA officials and City Council members have indicated a willingness to compromise in Hollywood too if Goldberg wants them to.

The threat of a Metro Rail-related lawsuit is nothing new to the MTA. The transportation agency has already faced eminent domain litigation connected with the subway system and recently emerged victorious in an assessment district case brought in connection with the first segment of Metro Rail in downtown Los Angeles. That lawsuit went all the way to the California Supreme Court, which affirmed the MTA's right to establish the districts. (The U.S. Supreme Court declined to hear the case.)

Now Hollywood business people say they have been hit so hard by falling property values, the recession and failed redevelopment efforts that many of them can't survive five years of Metro Rail construction -- let alone a tax to pay for it.

"This tax just adds insult to injury," said developer Gerald Schneiderman. "We're still not getting compensation for the five years of hell that comes with construction."

The MTA says commercial property owners will eventually benefit greatly from additional business generated by people using the Metro Rail system, and therefore should contribute to a benefit assessment district and be taxed for 29 years. The establishment of the assessment districts also is part of the MTA's grant contract for federal funds for Metro Rail, which could be jeopardized if the districts are struck down, added Linda Bohlinger, deputy executive officer of capital planning and the MTA.

"That's a bridge the MTA will just have to cross when it comes to it," said Dubin. "Just because you're a property owner (near a subway station site), it doesn't mean you have to be responsible for balancing the MTA's budget."

Back in 1990, when the former Rapid Transit District first approved establishment of the assessment districts, commercial landowners near the 11 planned stations along the 13.3-mile subway extension between MacArthur Park and North Hollywood were given 30 days to come up with enough petition signatures to qualify for elections on the assessment districts.

Within each of the six districts along the route, signatures representing 25 percent of the combined assessed values of the affected properties were required to qualify for a vote.

Enough signatures were submitted for the Wilshire and Universal City districts -- where properties are much more concentrated -- but not in the Vermont, Hollywood and North Hollywood districts, which are generally made up of smaller properties. (The Hollywood area includes two districts.)

"With Universal City and Wilshire holding elections, the only fair way is to allow Vermont, Hollywood and North Hollywood to vote too. It (disallowing the election) is grossly unfair to all the little business and property owners," said David Morgan, leader of the Hollywood faction of the Committee Opposing Metrorail Taxation.

Some property owners in the Hollywood district are calling for a new petition signature-collecting period. They point out that Hollywood's business and real estate environments have deteriorated dramatically since petitions were circulated three years ago.

"For owners here to lose their tenants and then have to pay the assessment -- when the Wilshire owners (presumably) will not -- is inequitable," said Aaron Epstein, who owns a 15-tenant market on the boulevard.

The Vermont, Hollywood and North Hollywood districts represent $39 million of the $75 million the proposed assessment districts are projected to generate toward the extension's construction.

Last year, the MTA's predecessor agency, the Southern California Rapid Transit District, sold $162 million in bonds secured by the Red Line's four-mile first segment's benefit assessment obligations. This year, property owners in that segment's two assessment districts began making the payments that will retire those bonds.