Businesses hurt by rail construction will be able to apply for grants or loans from the city’s transit mitigation fund if the Honolulu City Council passes a measure introduced by Councilman Joey Manahan.

The council created the transit mitigation fund two years ago but never appropriated money for it.

Last year, the council put $2 million into the budget for fiscal year 2018 in the form of property tax breaks to businesses suffering losses from construction along the rail line.

The administration of Honolulu Mayor Kirk Caldwell opposes the use of property tax breaks to subsidize businesses and the Department of Budget and Fiscal Services has yet to distribute the tax breaks or create criteria to determine which businesses are eligible.

Construction in Waipahu made it difficult for some drivers to access stores and restaurants along Farrington Highway. Anthony Quintano/Civil Beat

Manahan’s bill would require the department to come up with that criteria and a procedure that allows business owners to apply for some form of financial assistance.

Assistance could come in the form of the property tax breaks, which are set to lapse at the end of June if the budget department doesn’t incumber the funds. Assistance could also come in the form of tax credits or grants and loans. The council and the Caldwell administration will have to work out details in committee, Manahan said.

A spokesman for the mayor said in an email that the administration has no position on the bill yet.

“They weren’t crazy about it in the beginning so I can’t imagine their position has changed too much,” Manahan said. “That’s why we’re trying to encourage them to create this process. We had to do a bill at this point to get them to move on it.”

The council will take an initial vote on the measure Wednesday.

Installing rail pillars along Farrington Highway in Waipahu cut off access to certain stores and restaurants along the corridor. Business owners in the area reported a sharp decline in customers and revenue as a result.

Manahan said the city could consider reviewing the general excise tax receipts of a business as one way to determine revenue loss.

He cited the Los Angeles County Metropolitan Transportation Authority’s Business Interruption Fund as a potential model. In the last two years, Los Angeles’ Business Interruption Fund has distributed more than $11 million in grants to small businesses which were able to prove rail construction hurt their sales.

The grants cover  rent, utilities, payroll and other operating expenses and range from $500 to $50,000, depending on how much revenue declined during rail construction.

The Honolulu Authority for Rapid Transportation board of directors has also added $250,000 into its fiscal year 2019 budget request to aid businesses hurt by construction.

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