Struggling with vacancies and rents that have failed to rebound after the downturn, some Valley-area property owners are looking to trim back and they’re targeting business improvement districts. Landlords have started to rethink taxes they imposed upon themselves in better times, leading two Valley-area business improvement districts — Sherman Oaks and one in Burbank — to shutter after backers failed to drum up enough support for renewal. Property-based business improvement districts collect an annual assessment from property owners in order to provide additional services such as security, maintenance and marketing. The amount of the assessment varies based on square footage. The downfalls of the local business improvement districts have caused proponents to fret over neighborhood declines as the additional services provided by the groups evaporate. But landlords — who have sometimes questioned the districts’ effectiveness — say that, at the moment, it’s simply a struggle. “It’s very tough times right now,” said Farhad Nassi, who manages his mother’s roughly 3,000-square-foot vacant property on Ventura Boulevard in Sherman Oaks. In 2009, Nassi’s property resided in The Village at Sherman Oaks business improvement district. A landscaped median now graces Ventura Boulevard, courtesy of the district. The non-profit also paid for security cameras, trees, sidewalk cleaning, marketing and more. Now, it’s gone. In its final year, the Sherman Oaks district gleaned $234,114 between 66 individual property owners, according to the district’s 2009 annual report, billing landlords about 7 cents per square foot for their lot size and $22.30 per foot for their frontage along Ventura and Van Nuys boulevards. Burbank district to expire Burbank’s Magnolia Park business improvement district will soon join Sherman Oaks, expiring Dec. 31, after landlords voted down renewal earlier this year — in large part due to a tough economy and real estate market. In Burbank, retail rents in the third quarter were down 79 cents from the same period in 2007, according to Colliers International. Retail rents in Sherman Oaks dropped off 32 cents to $2.75, when compared with four years earlier. And average asking office rents in the Valley area were flat at $2.18 per square foot during the third quarter, ending 13 consecutive quarterly declines, according to Colliers. In Magnolia Park, the final vote tally was 54 percent to 46 percent against renewal. The district provided street cleaning, marketing and paid for events to drive customers to the neighborhood. A district only can be formed or renewed when a majority of property owners vote yes; the votes are weighed based on the amount owners pay for the assessment. Ira Lippman, the district’s chairman, said many office property owners — with large swaths of square footage — turned against the district as they looked to shave costs and deal with vacancies. Lippman, owner of the Jelly Bean Factory and Peggy Woods Pet Emporium, paid about $1,100 per year for his assessment. “The most visible (loss) will be we won’t have sidewalk cleaning,” he said. Landlords and business owners have various opinions on how much impact the districts have. As evidence of success, the city of Burbank pointed to about 30 businesses that moved into Magnolia Park during the district’s five years. Assistant Community Development Director Ruth Davidson-Guerra said owners of office space may not have seen as many benefits as retail landlords, because they’re not as reliant on foot traffic. “People seem to be mindful of every single dollar,” she said. ‘This isn’t a trash can!’ Despite tough economic conditions, some districts have been renewed in the Valley. Property owners in Granada Hills voted this year to, once again, tax themselves. And Canoga Park’s business district was renewed in 2009. In Sherman Oaks and Burbank, some landlords have expressed a desire to do the work themselves. But Leslie Elkan, the president of the former Sherman Oaks business improvement district, says it’s not a solution because landlords rarely rise to the task. On a recent brisk afternoon, Elkan strolled past dirty sidewalks and empty store fronts marked with graffiti and then stopped in front of a pot overflowing with napkins, plastic cups, bags and a pack of cigarettes. “This isn’t a trash can! That’s a flower pot!” she said, standing on busy Ventura Boulevard. That disarray wouldn’t have happened several years ago, Elkan said. An army of maintenance workers — paid for by the district — wouldn’t have allowed it. With a poor economy, Elkan is now asking for less. A new proposal would cut in half the annual assessment paid by landlords and limit services to maintenance. Facing an April deadline for a 2013 renewal, the real estate agent and landlord still doesn’t have enough property owners on board. “We are fighting an uphill battle,” Elkan said. Jay Friedman, owner of Lazar’s Luggage Superstore, on Ventura Boulevard has voted for renewal of the Sherman Oaks district. The former district secretary said he understands landlords face a tough economic decision. But, he said, they should invest in their properties and neighborhood. “We can’t let it deteriorate,” Friedman said. Nassi, who said his Sherman Oaks retail space has remained vacant for two years, is unsure whether his family can afford the additional assessment. “I will talk to other landlords and see how we are going to decide,” he said.
