West Hollywood Takes First Step Toward Funding the K Line

West Hollywood’s City Council voted unanimously Monday night to start the process of establishing a special financing district that could help pay for the Metro K Line Northern Extension — and then split 3-2 on whether to even discuss the state housing law that’s expected to reshape the neighborhoods around it.

The 5-0 vote directs City staff to begin negotiating with Los Angeles County on the terms of an Enhanced Infrastructure Financing District, or EIFD, one of the key conditions Metro attached to last month’s approval of the San Vicente-Fairfax route. The Metro Board said West Hollywood and the county together need to fund at least 25 percent of the project’s capital cost. Monday’s vote was the City saying it’s ready to start figuring out how.

What it isn’t: a commitment to spend anything. No dollar figure was approved. No district was formed. Staff said the paperwork alone will take 12 to 18 months.

What the heck is an EIFD

At the risk of losing you, here’s the abridged edition. BTW: thanks to Councilmember Erickson for asking someone to explain it in layman’s terms and Mayor Heilman for putting on his professor hat and helping out. Under California’s Proposition 13, property taxes are based on what a property was worth when it was last sold. A house bought 20 years ago for $500,000 is still taxed on something close to that number, even if it’s worth $2 million today. When it changes hands, the assessed value resets — and so does the tax bill. That jump in property tax revenue is called tax increment. It’s new money the City wasn’t collecting before.

The EIFD captures a portion of that future tax growth and puts it in a dedicated fund for the K Line. The City sets a boundary, and property tax revenue generated inside that boundary is set at today’s level. As properties turn over and values rise, the growth above that frozen baseline gets directed into the EIFD.

Nobody’s tax rate goes up. That was a point Staff had to make several times Monday night. The EIFD is its own separate financing authority, not the general fund. Social services, public safety, rent stabilization — that money isn’t in this conversation. Not technically. More on that later.

This takes a while

The first EIFD in California to actually issue bonds did so last year. That was West Sacramento, and it took them eight to ten years after the district was formed to get there. West Hollywood’s figure of 12 to 18 months is just to formally establish one here, and that’s if negotiations with the county move smoothly. There are mandatory public hearings with waiting periods built in by state law. A separate Public Financing Authority board has to be created. The county’s Board of Supervisors takes its own votes.

Construction on the K Line under the current Measure M timeline doesn’t start until 2041. That’s actually fine, from a financing standpoint — Metro still has years of environmental review, federal approvals, and engineering ahead of it. The idea is to get the EIFD collecting tax increment now, so the money’s there when Metro needs it.

The public had questions

Jonathan Finestone, president of the West Hollywood West Residents Association, was unhappy with how all of this has been explained. “You guys have done a downright shitty job of telling people what this is gonna cost, how you’re gonna pay for it,” he said.

Anita Gaswami asked the City to release its financial models so residents can see the assumptions. Victor Omelczenko called it the free rider problem — most of the line runs through Los Angeles, he said, so why is West Hollywood taking on the financial risk for stations that are basically LA job centers?

Remember that “not technically” from earlier? This is what residents were getting at. The EIFD doesn’t touch today’s general fund. But future growth in property tax revenue — the money that would otherwise help the City keep up with rising costs for services over the next 75 years — gets redirected instead. Kyle Brazeal, a West Hollywood resident who said he moved here from Chicago specifically because he loves transit, put it plainly. “The city of West Hollywood not only has to pay their share of the construction costs, but we are committing to 75 years of financing costs,” he said. “That debt service cost replaces human services.” He said he still wants the train. He just wants the math shown first.

Steve Martin, a West Hollywood resident since 1979 and former mayor, said he’d seen something like this before. He was one of the votes that created the City’s Eastside Redevelopment Agency, which also redirected tax dollars and drew plenty of opposition at the time. “A lot of my supporters did not support it,” he said. The agency worked well until the state dissolved redevelopment statewide in 2011. “I think this is gonna work out,” he said.

Councilmember Meister had some of the same concerns. She’d wanted a study session before the vote. She also wanted to know whether she could reject a deal she didn’t like when it came back to council. Senior Planner David Fenn said yes, she could — at multiple future stages.

“If I don’t like the deal you come back with, I can just vote no at that time?” Meister asked.

Fenn said she was correct and that she — or future council members — would have multiple opportunities.

Supervisor Lindsey Horvath, who was on the West Hollywood City Council back in 2018 when it first committed to pursuing an EIFD, was at Monday’s meeting and addressed the council before public comment. She was no small player in any of this, especially as it came down to the wire before last month’s Metro vote. Word is, she gives Heilman much of the credit for saving the day, but she played an instrumental role in helping to negotiate the compromise that got the Metro Board’s March 26 route approval across the finish line — talks she said stretched into the early morning hours before the vote. Monday night she framed the EIFD as “an investment of your city’s future dollars for a public community benefit today” and rattled off what the K Line brings: more than 10,000 union jobs, $9.7 billion in labor income, 125,000 jobs within walking distance of future stations. “I want to see this in my lifetime,” she said.

The resolution passed 5-0.

But wait, there’s more

The unanimous vote was done. Then Heilman made a second motion.

Residents had been raising SB 79 all night — the state housing law that’ll change what can get built near transit stations. Heilman wanted Staff to come back with a discussion of whether West Hollywood should do what some other cities have done and delay it in certain neighborhoods, particularly around single-family areas near future station locations. The train’s decades away. The zoning changes aren’t.

Erickson wasn’t having it. The council sent a support letter for SB 79, he said. Opening that conversation now, he said, is setting people up to expect something this council already committed against.

Byers said the Zoning Improvement Program has it. That’s where it belongs.

Two votes for the motion. Heilman and Meister. Erickson, Byers, and Hang said no.