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Downtown Officials Chew Over Restaurant Measure

By Gene Williams
Staff Writer

September 20 -- In an effort to preserve the precarious balance between restaurant and retail outlets on the Third Street Promenade, the Bayside District Board last week revisited a four-year-old City ordinance that has kept eateries from being squeezed out of the popular pedestrian area.

The interim ordinance -- approved by the City Council in late 2001 -- effectively placed a moratorium on retail expansion in the Downtown’s world-famous tourist destination by limiting the amount of retail conversion of existing restaurant space to 5 percent.

Following council direction, Bayside officials last Thursday weighed in with ideas for a permanent ordinance. Vice chair John Warfel said the stop-gap measure has worked out pretty well for everyone on the Promenade except landlords with restaurants on their property.

“People who already had a restaurant (on their property) could not lease out at higher rates to retail,” said Warfel, who helped in the study that led to the interim ordinance.

The result is that little or no new space has been created for restaurants, Warfel added. He hoped for a permanent solution that will be more “even handed.”

The interim ordinance has done a good job at keeping restaurants on the Promenade “but we still have incredible road blocks for restaurants coming in,” Warfel said. “We’re still missing that part of encouraging restaurants.”

City officials will have to work fast. The ordinance was extended for the last time in July, and permanent regulations must be in place by March, 2006 when the interim measure expires.

The restaurants deserve special protection, City officials argue, because outdoor dining is a key element to the Promenade’s success.

But although the interim measure has been effective, board members acknowledge an unintended backlash from landlords wary of getting stuck with restaurant-only use of their property.

A property owner would have to be “a pretty brave soul” to rent out his Promenade frontage to a restaurant under the rules, Board Member Barbara Bryant said.

Acting Planning Director Andy Agle asked for the Bayside District’s help Thursday to come up with a way to “level the regulatory playing field.” Agle hopes to have a proposal to take to City Council by January.

Although Agle didn’t leave Thursday’s meeting with any concrete recommendations, an idea floated by Board Member Rob Rader seemed to spark the most interest.

Rader suggested a possible solution might be to assess restaurants at a lower rate than other businesses on the Promenade, thereby encouraging landlords and restaurateurs to enter into agreements.

The board is currently reexamining how it assesses businesses in the Bayside District, Bayside Executive Director Kathleen Rawson explained. Assessments placed on businesses and property help pay for services in the district, she said.

It became clear that regulations were needed in the late ‘90s as restaurateurs were steadily losing out to well-heeled retailers who could afford higher rents, officials said.

Past ideas included subsidies for restaurants and other “preferred uses,” Warfel said, but this solution is fraught with obstacles and draw-backs. Setting guidelines to fairly administer the funds would be difficult, he said.

Thursday’s brainstorming session was “the first step in a series of steps that will lead to a recommendation to the council,” Rawson said after the meeting.

The board invited Agle to come back in the near future, while it considers the matter more fully.

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