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$100,000 in forgivable loans going to shops hurt by Loop Trolley construction

$100,000 in forgivable loans going to shops hurt by Loop Trolley construction

Loop Trolley construction

Construction workers with Right Way Traffic Control pour concrete to set the westbound tracks of the Loop Trolley along Delmar Boulevard in University City on Friday, Nov. 6, 2015. The 2.2-mile fixed-route electric trolley will link University City and Forest Park. Photo by Huy Mach,

UNIVERSITY CITY • Costs associated with the Loop Trolley now include $100,000 in forgivable loans to Delmar Boulevard businesses that saw a downturn due to its construction.

The University City City Council last week approved kicking in $50,000 to fund the loans to struggling shops. That’s in addition to the $50,000 already put up by the Loop Special Business District. The loans are erased after three years if the businesses are still operating on Delmar.

So far, five businesses have been awarded a total of $52,000, officials said.

Construction on the 2.2-mile trolley line between University City and Forest Park began in earnest this spring. In the Loop, the trolley will share Delmar with cars, similar to a bus, pulling out of traffic at designated stops.

For months, Delmar was ripped up along the main drag of the Loop, making it difficult for customers to find parking and navigate the construction zone. The bulk of the major work on the road wrapped up in November, a couple of weeks ahead of schedule.

The trolley’s cost originally was estimated to be $43 million, but has climbed to $51 million. The 18 percent spike is attributed, in part, to street paving and landscaping costs.

The St. Louis County Council last month approved a $3 million allocation that will allow trolley developers to qualify for matching federal funds required to push the project toward completion. That money is coming from a voter-approved sales tax to finance transportation projects.

Supporters say the trolley is spurring development, including millions of dollars in improvements to the Gotham apartments at Hamilton Avenue and Delmar Boulevard, and will be a boon for businesses when it brings in visitors. They also say that even with the additional costs, the trolley is being built for significantly less than streetcar lines in other cities.

Critics say the trolley duplicates existing mass transit — a MetroLink line runs between Forest Park and Delmar Loop stations — and that the project’s cost is too high. One business owner blamed the trolley project for forcing him to close last year, saying customers stayed away because the construction made it a nightmare to get there.

Under the loan program, the maximum amount each business can get is $12,000. The amount allocated to each business varies based on demand for the loans and percent of demonstrated loss of revenue, according to University City.

Three businesses have received $12,000 each: Sunshine Daydream, a Grateful Dead-inspired shop with wares including tie-dyed shirts and incense; Sole and Blues, which sells clothing, shoes and accessories; and Phoenix Rising, a gift shop.

Rocket Fizz Soda Pop and Candy Shop got $4,000.

And a $12,000 forgivable loan to Baked T’s, a clothing printing shop, has been approved but not distributed.

“Part of the attraction of the Loop is the foot traffic,” said Dan Raskas, who owns Baked T’s with his wife, Debbie. “The biggest impact that we saw from the construction was that the foot traffic was much less than it has been in the past.”

He said they will put much of the forgivable loan toward promoting the business, which has been in the Loop for more than five years. He also anticipates more traffic snarls when the trolley’s overhead lines eventually are installed.

“Anything we can do to make it more convenient for customers to come to the Loop is a positive thing,” Raskas said of the trolley, adding that it will bring people there without consuming parking spots.

Michael Rohrbacker, co-owner of Rocket Fizz, said the construction isn’t solely to blame for the slowdown in Loop business last year. It’s his view that poor weather hindered construction as it simultaneously tamped down the sidewalk traffic that sustains Loop shops and eateries.

Rohrbacker said he and his partners began looking into a forgivable loan as word of the program spread along Delmar Boulevard late last year.

“I’m glad the city is doing this,” Rohrbacker said. “It beats going to the bank.”

He is also willing to give the trolley a chance to prove itself as an asset to his and other Loop businesses, saying it will be a “nostalgia boost.”

Efforts to reach other business owners who secured loans were not successful. All are in the 6300 block of Delmar Boulevard, except for Sunshine Daydream, which is at 6608 Delmar.

Fund reserves from an economic development retail sales tax are being used for the program, according to a document submitted to the City Council by the city’s community development department.

“If people look long-term, they will think this is a good use,” said Joe Edwards, who owns several businesses in the Loop and is chairman of the board for the Loop Trolley Transportation Development District, of using those funds to help businesses. He said none of the money for loans is coming from the city’s general-revenue fund.

The money can cover basic business expenses such as payroll, inventory, utilities, taxes, marketing and covering rent or mortgage payments.

The loans are a smart economic move, said Dan Wald, treasurer of Loop Business Improvement District, which is a special taxing district designed to improve the Loop retail area.

He believes businesses weren’t prepared for the reality of trolley construction after nearly a decade hearing about the trolley in the abstract.

“The bottom line is that it’s a good, proactive thing,” Wald said. “It’s easier to keep a tenant than to replace one so anything you can do is positive.”

Andrea Riganti, University City’s community development director, initially would not tell the Post-Dispatch which businesses received the loans.

“For privacy considerations for our retailers, we will be respectful of releasing names,” she wrote in an email to the Post-Dispatch on Friday in response to questions about who received the forgivable loans.

She then apparently contacted businesses that had received loans before sending another email reiterating her refusal to release the information requested by the newspaper until checking with the city attorney.

“You did not disclose the type of article to be written (which I acknowledge is not required with a public information request) which has greatly concerned businesses contacted with a ‘heads up.’ I will honor these business’ (sic) request to ensure this information is an open record before responding to you,” Riganti wrote.

A few hours later, she released the names of the businesses that received the loans and their amounts in response to a formal open-records request.

She said the businesses’ applications and financial information had been turned over to a “third-party reviewer” and had not been retained by the city.

University City Councilwoman Paulette Carr was among the yes votes to allocate the $50,000 for the loans. But she and other council members questioned why taxpayers are compensating businesses harmed by a quasi-public project.

She said several Loop merchants have told her that business has dropped by half since the work began on the trolley.

“They’ve already been damaged,” the councilwoman said. “The question is whether they can hang on until the construction ends. They may have taken down the (traffic) cones. But I don’t think a lot of these businesses are out of the woods yet.”

Carr’s misgivings about the project — she was not a member of the council when the trolley was approved — have since given way to resignation.

“It’s here,” she said. “Now we have to do what we can.”

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Steve Giegerich is a reporter for the St. Louis Post-Dispatch.

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