By SHELLY GARCIA Staff Reporter Every neighborhood that has tried to launch a business improvement district knows it can be a long, drawn-out affair filled with pitfalls and frustrations. And property owners in Tarzana are learning that the problems don’t necessarily end once the district is approved. Tarzana’s first round of financing since winning approval for its BID last summer was reduced by nearly 13 percent to pay for administrative fees charged by the city of Los Angeles to process the district. With a smaller budget than initially anticipated, the Tarzana Improvement Association will likely be forced to scale back its plans. “It’s not going to be quite what I was hoping,” said Gregory Nelson, the association’s president and an architect who drew up sketches for Tarzana’s beautification plans. “It’s a little bit frustrating.” A business improvement district is designed to assist commerce in a proscribed area by providing funding for such things as streetscape improvements and beefed-up security patrols. The funds are raised through voluntary tax assessments imposed on property- or business-owners. The city routinely charges a fee to process those assessments. And because the neighborhood’s district is smaller than most BIDs, the city’s processing fee is taking an inordinately large bite out of its budget. “Tarzana chose to focus on a very small area, and their budget is very small, so any fees they get as a percentage are much higher,” said John Lambeth, an attorney and consultant with Downtown Resources, the Sacramento firm that assisted Tarzana with its BID. “With budgets over $1 million, the percentage tends to be much less.” Tarzana’s initial BID assessment totaled only $22,012. After the city’s administrative fees of $2,824, the Tarzana Improvement Association is left with $19,188. By contrast, most other L.A. BIDs raise between $300,000 and $1 million and more, so the city’s fees are smaller. “Many of the BIDs are larger, and so the dent is not nearly as bad,” said Larry Kosmont, president of Kosmont & Associates, a real estate consulting firm. “In Tarzana’s case, it’s a significant amount of money, and it’s really unfortunate.” The difference means that Tarzana will have to forego some of its beautification plans, at least for now. The project was initially to include trees, benches and sculptures with a jungle theme to highlight the area’s origins as the home of Edgar Rice Burroughs, the creator of Tarzan. The sculptures will likely be tabled in the revised plan. “We’re not positive yet, but any $2,000 would give us a couple more trees and a couple more seating areas,” said Nelson. “It makes a difference.” Adding to the group’s disappointment is a relatively new restriction on how the BID must spend city monies. The Tarzana Improvement Association is relying on financing set aside by the city of Los Angeles through the Ventura Boulevard Specific Plan to bolster its BID efforts. The city’s contribution would add another $50,000 to Tarzana’s budget, but the money is subject to the Living Wage Ordinance, a regulation that requires companies or agencies working with city funding to pay employees $7.25 per hour with health benefits or $8.50 per hour if no health coverage is provided. That means that if the Tarzana BID uses its city funds to hire landscapers or other workers, the association or the contractors it employs must pay their workers a significant premium over the minimum wage of $5.75, a stipulation that would further reduce the district’s spending power. The living wage guidelines would not affect the money raised through the BID itself, and the city’s administrative fees are only a one-time charge, which will not be deducted from subsequent installments, but the stumbling blocks posed by both issues are nonetheless significant, BID officials say. To win approval for its BID, Tarzana had to narrow the area covered to a one-mile stretch of Ventura Boulevard from Reseda Boulevard to Crebs Avenue. If it can show merchants in that small area that their money is well spent, the Tarzana Improvement Association has a better chance of widening the BID to a larger area that will increase the budget and increase the impact on the community. “That’s where every $2,000 makes a difference,” said Nelson.