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DWP Pays for Business Disruption

Big infrastructure projects take chunks out of city streets – as well as the profits of small businesses along those streets. Los Angeles Department of Water and Power’s new Capital Projects Business Retention Program hopes to soften the impact with financial assistance to mom-and-pop shops if they can prove a financial loss from one of the utilities’ nearby construction projects. Earlier this month, the program paid out $191,000 to 13 merchants along Lankershim and Burbank boulevards in North Hollywood. More than half of the checks were for $18,000 – the program’s annual limit for a business. Five others exceeded $10,000. “This is a customer retention program,” said Amanda Parsons, the utility’s media relations manager. “If a business has to close down because of construction, they’re no longer a customer.” The River Supply Conduit 5 and 6 water line improvement project in North Hollywood is DWP’s first project that includes an annual allotment for the program. The $910,000 budgeted for the program will refresh each year till the project’s expected completion in early 2018. To be eligible for payments, companies must prove a decline in receipts for the time the project was underway, among other criteria. A second project, the Foothill Trunk Line Unit 3, has begun in Sunland and Tujunga along Foothill Boulevard and has allotted $887,000 annually for assistance. It is also accepting applications from retailers, Parsons said. These programs are a newer trend for large capital improvement projects that significantly disrupt business, said Larry Kosmont, an economic development specialist and chief executive of Kosmont Cos. in Manhattan Beach. The payments generally don’t fully offset the revenue losses, he said, but “anything is a help, even net of tax consequences.” The program idea came to the DWP from L.A. City Councilman Paul Krekorian, who also sits on the board of the Los Angeles County Metropolitan Transportation Authority, said his communications director, Ian Thompson. Krekorian saw that Metro’s Business Interruption Fund, similar to the DWP’s program, has helped small merchants, Thompson said. Krekorian’s district includes North Hollywood. The politician was likely aiming to please his constituents by presenting the idea, Kosmont said, but there’s no doubt large improvement projects hurt businesses. “The question is always in the eligibility standards as to whether these are a give-away or not,” he said. “My sense is that the councilman is on the right track to pursue this.” By including the costs in the projects’ budgets, the utilities can sustain the programs, Kosmont added. The DWP program is a pilot program. If more businesses embrace it, Parsons said, it could be expanded in the future. – Carol Lawrence

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