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Tuning Up Bayside’s Economic Engine

By Jorge Casuso

September 9 -- Take an early morning stroll down an empty Third Street Promenade keeping a careful eye on the surroundings, and you’ll notice things that get lost in the bustle of the crowds that flock to the popular strip.

Up ahead, a light pole needs painting, so does the trash can, which is dented, the top missing. There are cigarette butts in the cracks in the pavement where the grout is gone, and flaws in the concrete where it has been patched with asphalt.

“Things wear out,” said Kathleen Rawson, executive director of the Bayside District Corporation, which runs the Downtown, including the Promenade. “The area looks tired.

“We need the nuts and bolts, the bricks and mortar,” Rawson said. “The concrete needs to be replaced, the trash cans need to be replaced, the lighting has to be rewired, otherwise, we will have a major problem on our hands.”

The wear and tear from the treading of millions of feet each year is not only taking a physical toll on the 15-year old outdoor mall, it is threatening to tarnish its image as a major destination, said Bill Tucker, a property owner who chairs the Bayside District board.

“If it doesn’t look well maintained, if it looks like it’s patched up, which is what the Promenade looks like, it gives off a subliminal feeling that the place is old and deteriorating,” Tucker said.

“It may not be something you are going to point to, but it’s something people sense,” he added. “The capital improvements are what’s going to keep the Promenade a quality retail center, a place people want to visit.”

The call for improvements is not new. At a board meeting early last year, Bayside officials identified as their top priority the need to upgrade the Promenade, which they said looks tired and shabby when compared to sparkling new competitors, such as the Grove in Los Angeles.

The competing outdoor mall abutting the LA Farmers Market is not the only venue giving the Promenade a run for the visitor dollar. Retail developments in Culver City, new multiplexes in Century City and the Westside Pavilion and proposed changes to The Grove offer new options for the 40,000 to 50,000 visitors who frequent the Promenade each day.

During a presentation earlier this year, Jack Kyser, chief economist at the Los Angeles Economic Development Corporation, warned local business leaders that “competition for the consumer dollar is growing... and demand for Santa Monica retail is off.”

With competition stiffening, fixing and cleaning the streets and alleys and making sure they are safe has become critical to the future of Downtown, Bayside fficials contend.

“We’ve got a major community gathering place that has lacked any notable capital replacements since 1989,” Rawson said. “For the most part, we are not asking for capital improvements, but replacements and simple maintenance.”

While there have been several major capital projects slated for the Bayside District over the past several years – the completed Downtown Transit Mall, the new Main Library currently under construction and major improvements along 2nd and 4th streets beginning in early 2006 (see related story) – no significant money has been pumped into the Promenade, the area’s economic engine.

Strapped for cash during an economic slump, the City has cut back on major capital improvement projects over the past two to three years. In fact, the City’s list of projects currently in the pipeline does not include any in the Bayside District.

“It’s part of the overall assessments of what our capital needs are,” said Jeff Mathieu, Director of Resource Management. “Some were approved four, five, six, sometimes seven years ago. Some had matching grants, others there were long-term plans to do them.

“In the last three years, because of the overall financial (situation), we haven’t added any new projects unless there’s a safety issue,” Mathieu said. “In short, we’ve added almost nothing.”

Mathieu noted that the City allocates about $3.6 million a year to police and maintain the Promenade and that the City Council dramatically responded to the most pressing need identified by Bayside board members – parking – when it approved an ambitious $92.5 million plan to upgrade Downtown’s public parking structures and build new ones.

Bankrolled with earthquake redevelopment funds, the plan – which calls for retrofitting and redeveloping five public parking structures and demolishing the other three – will add more than 1,700 spaces in new structures.

“The Bayside District identified parking structures as the biggest need, and we heard that loud and clear,” Mathieu said. “We have found many different ways to utilize the redevelopment funds to replace the parking structures without adding cost to property owners.”

But the earthquake funds will not be enough to pay for the entire cost of the plan, which will likely top $200 million by the time it is completed in 2010, Mathieu cautioned. To bridge the gap, the City is looking at increasing property assessments and parking fees.

“There are other funding sources out there that may need the participation of property owners,” Mathieu said.

Property owners will also likely have to pitch in for capital maintenance projects in the Bayside. In the next year, City officials expect to receive a laundry list of projects Bayside District officials have earmarked for funding. “That hasn’t occurred yet, and that is a process that is still developing,” Mathieu said.

The projects will likely include new lighting for 2nd and 4th streets and public “satellite” bathrooms to replace those in the parking structures that will be replaced.

If the current bathrooms are “wholly inadequate” and will be needed for “three to four seasons” before the structures are replaced, “then it’s incumbent on us to do something about that,” Mathieu said. “It doesn’t make sense to renovate bathrooms in parking structures that will be replaced.”

The money to bankroll the capital improvement projects would come from Bayside property owners, either in the form of increased assessments (the City could issue assessment bonds for the district) or increased operations and maintenance fees.

“The current assessments are in 1986 dollars,” said Mathieu, who was charged by the City to help revitalize Third Street in the 1980s. “What they’re paying now is a fraction of the value they’re receiving. Recognizing the additional benefits, it seems highly appropriate to replicate what other cities are doing and boost assessments.”

Property owners also are paying old rates when it comes to operations and maintenance fees, Mathieu said. The fees are “now one time the equivalent of the business license,” he said. “It used to be five times” the amount of the license.

“That would be appropriate to allow an increase of maintenance or security personnel,” Mathieu said. “That is something that is there for the business owners to consider.”

At a meeting last year, Bayside Board members floated ideas to raise revenues to pay for capital improvements, including placing advertising directories in the public parking structures, increasing the rates paid by vending cart operators and lifting the caps on assessments so that large businesses pay more than small operators.

“We do not have the door closed to increased assessments,” Rawson said. “We will look at what’s possible and realistic. But we want control of how the money is spent, otherwise everything is subject to political will.”

Property owners – whose assessments currently pay for $608,700 a year in operations and maintenance costs and $188,000 for promotions – are cautious about being asked to spend more of their on money for improvements they believe the City should make.

“You can never spend too much money in keeping the area clean and updated,” said Dr. Alan Mont, an optometrist who owns property on the Promenade. “It’s a question of where is the money coming from?

“I think it’s unfortunate that the City has thrown money around that’s generated in the Downtown to other parts of the City,” said Mont. “If you look at the revenues generated by the Bayside, a lot of that money should be reinvested into the area.”

But City officials note that there is not a correspondence between what an area generates in revenues – the Bayside generated $27.8 million in sales taxes over the past year – and how much it gets back.

“It’s not based on how much revenue you’ve generated,” said Steve Stark, the City’s finance director. “These basic services are provided to all residents and businesses in the city. That’s how all cities do it.”

The Bayside is not alone in its capital needs, Mathieu added, noting that neighborhoods across the City need sewers repaired and infrastructures bolstered.

“The needs are serious, and they ought not to be weighed against the Downtown library or the Pico sewer system or a firehouse,” Mathieu said.

But Bayside officials say they are not arguing for getting back what they pump into the City coffers. They only want the City to insure one of Santa Monica’s key economic engines can continue humming along for the benefit of all.

“We’re not saying we want all the tax revenue to be returned to the district, we are proud to be a major contributor to support vital city services, but we cannot ignore these fundamental needs,” Rawson said.

“It’s shortsighted not to invest in what I think the Promenade is – an economic engine for the entire city,” Tucker said. “I know there are a lot of needs for the City, but I think it’s shortsighted not to reinvest in the economic engine. I think the City should be willing to take some of the money and say, ‘This is something we should reinvest in.’”

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