February 4, 2018

For Venice property owners, the bills have arrived — but promised services have not

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John Okulick and his wife, Marlene, shown on the Venice boardwalk, are among a group of Venice property owners who are suing to dissolve the area's new business improvement district, saying it has failed to deliver services. (Mel Melcon / Los Angeles Times)

John Okulick and his wife, Marlene, shown on the Venice boardwalk, are among a group of Venice property owners who are suing to dissolve the area’s new business improvement district, saying it has failed to deliver services. (Mel Melcon / Los Angeles Times)

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Marlene and John Okulick had never heard of a “business improvement district” when the letter showed up in the mail.

It touted the formation of a new group that would clean up alleys, improve safety and promote businesses in Venice Beach for five years.

The price? A new charge tacked onto their tax bill.

That letter was the beginning of an unusual battle pitting the Okulicks and others who own shops, apartment buildings and other properties in Venice against the newly formed business improvement district and the city itself.

More than a year after its founding, the Venice Beach Business Improvement District has done little but stirred up plenty of angst.

There are no cleanup crews or safety patrols. Community activists complain that nearly $2 million annually — which includes city funding derived from public property in the new district — is being controlled by an unelected board that looks little like Venice. They fear the new district will eventually become a tool to roust homeless people and privatize the public boardwalk, changing the face of the Venice they love.

The Okulicks and other unhappy property owners are suing the city and the new entity, trying to dissolve it. They argue that the Venice Beach Business Improvement District improperly folded in homes, apartments and other properties that will get little benefit from the new charges, but must pay thousands of dollars annually.

And they have accused its founders of “gerrymandering” the unwieldy district to rope in city properties and make it easier to win approval.

With the help of the city, “a couple of neighbors with large properties can increase your taxes by 50%,” John Okulick said, pointing to annual charges exceeding $4,000 for their property.

‘A confluence of events’

So far, the Okulicks and other property owners have been billed twice. In August, the new district got its first infusion of nearly $1.7 million. Yet as of January, the Venice Beach Business Improvement District had no website and no office. It had yet to turn in a required annual report on its plans, which city officials said could hold up future funds.

And the newly minted board of the Venice Beach Property Owners Assn. — the nonprofit contracted with the city to run the district — had met publicly only once. At that meeting, Venice resident and property owner Larry Perloff called the new entity “a total rip-off.”

“If I sound a little ticked, it’s because I am. Because I’ve been paying a lot of money and got nothing for it,” Perloff said.

At the meeting, district executive Tara Devine told attendees that cleanup and safety programs had been delayed by “a confluence of events,” most of them beyond board members’ control. She said they would eventually like to diversify the board, but cautioned it was a demanding position for a newcomer. Board President Mark Sokol, one of the owners of Hotel Erwin near the beach, urged the crowd to “give us a chance.”

“Give us our money back!” someone shouted in response.

Devine declined a request for an interview, saying that the group was trying to launch services by March and that “all of our resources are currently needed to reach that goal.”

She provided a timeline indicating that over the last year, the district had sought proposals for cleaning and safety services, sent out three written updates to property owners and started setting up “administrative systems.” At the January meeting, the board chose a cleanup company and a security firm.

Sokol assured property owners in a letter that any money that was not spent during the first year would be carried over and used to provide more frequent or intensive services in the following years. City Councilman Mike Bonin, who had championed the formation of the new district, said it was premature to judge what it had accomplished.

“I firmly hope the Venice Beach BID will help create a cleaner and safer boardwalk for everyone to enjoy, and I’m eager for it to begin its work,” Bonin wrote in an email.

Flashpoint in gentrification debate

But the delay has drawn scrutiny from City Clerk Holly Wolcott, who said her office is researching whether any of the money can be refunded to property owners.

The furor over the newly formed district is unusual, said Adrian Riskin, a blogger who has written critically about business improvement districts in Los Angeles.

For decades, California law has allowed the formation of such districts, which charge business or property owners an assessment for additional services in their area. The city is sprinkled with business improvement districts that provide sidewalk cleaning, safety patrols, business promotion and other services or improvements.

Some business improvement districts have been accused in court of violating the rights of homeless people or street vendors, but “most of them fly under the radar,” Riskin said. “People don’t know what they do.”

In Venice, however, forming the new district quickly became a flashpoint in the ongoing debate over gentrification.

The funky, bohemian burg where beachgoers can skateboard, shop for dream catchers or balance their chakras is now the stomping grounds of tech giants like Google. Rents have hit dizzying highs. Snapchat has moved in and the Venice Beach Freak Show has moved out.

Critics complain that some of the champions of the business improvement district have been sued by City Atty. Mike Feuer for allegedly running Venice Beach apartment buildings as illegal hotels, a phenomenon bemoaned by tenant activists.

“How is this acceptable with all of the power brokers in this city? Why is white-collar crime a nonissue when making deals that involve city officials at the highest levels and taxpayer money?” Margaret Molloy, a member of the Venice Coalition to Preserve Unique Community Character, wrote in an email.

Carl Lambert, a former Venice Beach Property Owners Assn. board member sued by Feuer, said in court filings that the building pinpointed by the city attorney was historically used as a hotel and was authorized for that use. Lambert declined an interview request.

Feuer also sued Andy Layman and Matthew Moore, another board member with the group, over a building advertised as the Venice Beach Suites and Hotel. In court filings, they have denied breaking the law.

At a City Hall hearing, business and property owners who backed the new district said they had decided to pony up more money to make Venice Beach cleaner and safer, not to eject the homeless or change the area’s bohemian feel.

“The last thing I and most of my constituents want is this place to turn into a Santa Monica Third Street Promenade,” Layman said.

Weighted balloting favors bigger properties

When the Venice Beach Business Improvement District ultimately went up for a vote among property owners, more people voted “no” than “yes.” But the new district was still approved because the ballots were weighted by how much each property would be assessed.

John Okulick stands outside a home located in the Venice Beach Business Improvement District. Its owner is among the plaintiffs suing to dissolve the district. (Mel Melcon / Los Angeles Times)

John Okulick stands outside a home located in the Venice Beach Business Improvement District. Its owner is among the plaintiffs suing to dissolve the district. (Mel Melcon / Los Angeles Times)

Bigger properties with more street frontage got a bigger say — and many of the owners of the biggest properties backed the plan. That included the city, which has properties that account for roughly a quarter of the Venice Beach assessments.

Not all Venice Beach properties were charged: State law barred the new district from incorporating buildings or lots in residential zones. But the new district did include homes that were deemed to be sitting on commercially or industrially zoned land, including affordable housing run by Venice Community Housing, which now must pay more than $10,000 in assessments annually.

“It’s super troubling that this very undemocratic process can impose this fee and strip resources away from a nonprofit affordable-housing developer in the middle of a housing crisis,” said Bill Przyluckiexecutive director of the group People Organized for Westside Renewal.

At the January meeting, Devine emphasized that usage can change frequently, saying “the key term in the law is zoning.”

On a balmy day, the Okulicks strolled out of their Hampton Drive art studio, past a stop sign branded with a sticker to read “Stop gentrifying Venice,” and down to the beach, consulting a map of the district. After walking along the famed boardwalk, they turned inland to study a Horizon Avenue bungalow shaded by rustling palms.

Roughly 2,000 miles away in Chicago, its owner, Louis Traeger, complains he is being charged more than $2,000 annually in assessments on the house. He joined the Okulicks in their lawsuit, arguing the new district provided no benefit to his property, which “has always been used as a residence.”

If Venice needs to be cleaner, “why doesn’t the city just spend the money?” Traeger asked.