Village’s small businesses face uncertainty

As the university prepares to present its proposal for The Village at USC to Los Angeles city hall next month, small business owners in the University Village are negotiating over the fate of their livelihoods.

Economic cycle · John Urteaga, the owner of L.A. Bikes, says he hopes USC will allow him to continue leasing a store at a moderate rate. – Rachel Bracker | Daily Trojan

A USC negotiator met with a representative of current tenants last Friday, but neither side has an estimate for when talks might conclude other than that they will before the university begins demolishing the UV, which could be as soon as this summer.

The city’s Planning and Land Use Management Committee approved a  proposal last week for the University Village to be demolished and the $1.1 billion Village at USC to be built in its place. USC expects the city council to give final approval on the plan in November.

Of the nearly 45 tenants not affiliated with USC, all but two will be on month-to-month leases by May, according to USC’s Real Estate and Asset Management Department. Those two businesses, Bank of America and Starbucks, will negotiate separately with the university. Forty other businesses, however, are unsure of their fate.

Business owners are asking for right of first refusal, rent subsidies if they return and financial relocation assistance. Some business owners said USC has already offered to provide an expert in relocating businesses to help them move.

USC’s first University Village proposal, known as the Specific Plan, did not have a provision for current tenants to have a spot in The Village at USC. In the last two months, however, several business owners have made a concerted effort to make their voices heard at the City Council’s PLUM meetings, with about a dozen business owners and several employees attending.

Their advocacy helped to bring about an Oct. 5 addendum to the Specific Plan, which stipulates that the university must negotiate with tenants in good standing before demolition begins and pursue good faith efforts to retain them.

John Urteaga, who opened L.A. Bikes in 2001, said his biggest concern is what the rent will be when The Village at USC re-opens.

“All I want is to come back and be able to rent the property at a fair rate,” Urteaga said. “USC could double the rate if they wanted to. I’d like them to give [current tenants] a percentage discount for the first few years we come back.”

Executive Director of Local Government Relations David Galaviz said the university is weighing the situations of business owners with new business hiring that would increase the number of total workers at The Village after rebuilding the property.

“We want to be sensitive to the needs of the current businesses and there is a public process that needs to be done in order for us to demolish The Village in the first place,” Galaviz said. “On the other hand, we want to be very sensitive to needs of existing tenants. There’s an incredible popular demand from who want to see the jobs provided in the village and see the economic development spurred by the new village.”

Rahmae Muhammed, who opened the restaurant Kebab Master last year, said financial compensation for relocation is necessary for her business to stay afloat. She said she worked five jobs to make the money to open her business in the food court.

“I’m only 29 and I’ve worked my butt off to open Kebab Master,” Muhammed said. “It’s hard because I’ll lose my money and that time. I want to feel happy and comfortable to build my business.”

Kristina Raspe, vice president of Real Estate and Asset Management at USC, said tenants have been aware of the university’s plans to renovate The Village since plans to rebuild the space were created almost a decade ago.

“Most of the tenants came to the village after we began planning for the redevelopment nine years ago,” Raspe said. “A lot of those who came to the [university] village and said, ‘we know you’re going to be tearing it down soon; We just want to see if it’s a viable market.’ It’s not correct to assume they are all long-term tenants.”

Raspe also said the leases hold tenants financially responsible for renovations that are part of doing business, although tenants receive a lesser rate for doing renovations that would be part of the university’s responsibility as landowners.

Wendy’s franchise owner Ketan Sharma said the out-of-pocket costs to build his business 22 years ago was about $1.5 million, a sum that took several years to pay off. He said that cost, paired with about $400,000 in renovations nine years ago and franchise fees, mean he has just recently began profiting.

“The most important thing for me is having my Wendy’s back in the newer [Village], knowing what kind of assistance I can expect from USC as far as relocating and how it’s going to be financed,” Sharma said. “I’ve contacted two people, but USC will have to follow up on this.”

Sharma said his discussions with USC over the future of his business, which predates USC’s takeover of leases in 1999, have made him tentatively optimistic.

“I’m excited about the project, but it scares me as a small business owner,” Sharma said.