West Hollywood will consider putting a measure to raise the city’s sales tax on the ballot as early as June as part of a complex strategy to get the L.A. County Metropolitan Transit Authority to include the city in its west side rail extension plans.
The measure, proposed by Councilmember John Duran, was approved by the Council in a four-to one-vote, with Mayor Lindsey Horvath voting no. The Council also voted last night to appropriate $200,000 to hire consultants to organize and implement a lobbying effort to build support for a light-rail extension to WeHo.
The city has been pushing for such an extension for years. In 2010 it hired a lobbyist to try to convince the MTA to add a WeHo spur to the planned extension of the Purple Line. Two options the MTA considered in its Purple Line expansion study included an extension of the Red Line from the Purple Line’s Hollywood/Highland station into or near West Hollywood. That extension would run under Santa Monica Boulevard with stops at La Brea, Fairfax and San Vicente and a station near the Beverly Center. The MTA decided both of those options would cost more than it would receive from a half-cent increase in the L.A. County sales implemented in 2009 to fund the Metro expansion. The consultant hired by the city would organize local businesses and residents and civic and government leaders to press the MTA to consider connecting the Metro Red Line to West Hollywood and as well as its Crenshaw/LAX northern extension, which would provide easy access to the airport.
The first section of the Purple Line extension already is under construction, funded by a half-cent increase in the sales tax approved by voters in 2008 along with federal grants and loans. Now Metro must find funding for the final two sections of the project. In October, Gov. Jerry Brown signed legislation that will allow the MTA to put a measure on the ballot that would raise the overall sales tax in L.A. County, now 9%, to 9.5%, with the additional revenue going to fund its expansion plans. Because of the nature of the measure, it would require a two-thirds vote to pass.
Duran noted that the State of California has an overall cap of 10% on sales taxes. Of that, 7.5% goes to the state and 1.5% goes to the County of Los Angeles, with some portion of that revenue used to fund local programs. If West Hollywood residents were to approve an increase in the sales tax rate, pushing it closer to the 10% limit, the MTA would be limited in the sales tax increase it could seek to fund its rail expansion programs. Thus, Duran reasoned, it would be more likely to negotiate with West Hollywood to receive some of its tax increase revenue and extend its line into WeHo.
“This is the window of opportunity, and it will close,” Duran said. “Either we will be in it or we will be out of it.” Duran also noted that the money raised by the tax increase could be used for other purposes if the city is unable to strike a deal with the MTA. For example, said Councilmember John D’Amico, it could be used to fund affordable housing.
John Leonard, the city’s head of revenue management, said a sales tax increase of .25% would generate about $4 million in revenue for West Hollywood in its first year. Sales revenue in the city typically grows 4% a year, and a city staff report said that means such an increase could generate $175 million over 30 years.
The Council voted in June to support Metro placing its sales tax increase measure on the ballot next year, likely during the November general election. If West Hollywood were to put a measure before voters before that, it would have to get the support of at least two-thirds of them for it to pass.
Horvath said she couldn’t support Duran’s proposal because she feared it would be seen negatively by the county officials with whom the city is trying to negotiate for support for a Metro extension into WeHo. “I think this presents challenges to building relationships,” she said.