Investing in the Future

By Jorge Casuso

April 14 -- It’s been fifteen years since Third Street got a major overhaul, and Downtown officials think its time to polish one of Santa Monica’s prime destinations before the wear and tear starts to take a toll.

Worried that increased competition could siphon some of the 40,000 visitors a day who stroll the popular Promenade, officials are looking for ways to fund major improvements that will insure one of Santa Monica’s key economic engines keeps humming.

“It’s gone fifteen years without a major overhaul,” said Robert O. York, a consultant to the Bayside District Corporation, which runs the Downtown including the Promenade. “That’s a long time for a place that’s been successful.

“One of the critical points is that it’s much easier to maintain your success than it is to lose it and try to regain it,” York said. “You’ve got to maintain the healthier parts of the city, or you’re going to have problems down the road.”

Bayside Board Chair Bill Tucker agrees. “Our competitors in the area have some things that give them an edge,” said Tucker, noting that venues such as The Bridge and the Westside Pavilion have new, state- of-the art theaters.

“We have to keep evolving, too,” Tucker said. “We can’t keep static. The death of any district is remaining static.”

The first order of business, Bayside officials agree, is to come up with a list of needed improvements. That’s what the Bayside Board did on February 22, when it held a special meeting with property owners, business owners, residents and civic leaders to gauge Downtown’s most pressing needs and plan for the future. Among the top needs the group identified were:

• Managing the Downtown’s homeless problem, including addressing perceived safety issues,
• Improving the maintenance of sidewalks and alleys,
• Installing clean, convenient public restrooms,
• Improving the alleys, including addressing the odors from the trash bins and
• Improving lighting

“We’re going to have to decide if enhanced services are needed, and if they are, what are they?” said Kathleen Rawson, the Bayside District’s executive director. “My feeling is that we have to address the perception of safety and on-street maintenance.

“Our marketing fund lags far behind other districts, so we may be losing our competitive edge,” Rawson said. “We have an aging infrastructure, and we’d like to address that and increase the maintenance of the public areas of the Downtown.”

John Warfel, Bayside board’s vice chair, agrees. “We need to develop a list of areas where the Bayside District needs additional resources,” he said.

Obviously the cleanliness and the maintenance of the district is an obvious need, as well as upkeep on the infrastructure.”

To pay for the improvements, Bayside officials are exploring new assessments. But they caution that it is far too early to know how much will be needed and who will pay the bill.

“I think as assessments are considered, the first thing is to decide what the needs are and what the assessments would be used for,” Warfel said. “It’s premature to have discussions about who’s going to pay and how much until you know the needs and the magnitude of the assessments.

“There needs to be a strong sense of purpose for the assessments in order for them to pass, to get through,” Warfel said. “It needs to be clear. It needs to be transparent. The people need to know where that money’s going and why, not just today, but in the future.”

Bayside officials, Tucker said, must address three key issues simultaneously – what to do, how much it will cost and how to raise the money.

“You have to have a wish list, and at the same time say, ‘How much will this cost?’” said Tucker, who owns property on the Promenade. “At the same time you also have to say, ‘How much could this impact the person paying the bill?’ It massages back and forth to a comfortable place.”

One thing seems clear – the amount of money currently spent on operations is only enough to keep the Promenade going, but falls far short of the money needed to make necessary improvements, Bayside officials said.

“There are not enough resources available to maintain what we have in the condition we need to maintain it to keep it enjoyable for the people who use it,” Warfel said.

According to the City’s Finance Department, a total of some $4 million a year is spent on operations in the Bayside District. Of that, some $1 million comes in the form of assessments; the other $3 million comes from the City’s general fund, which received $3.773 million in sales taxes from businesses in the Bayside District alone last year.

Of the City’s portion, $2.1 million pays for security and traffic services, including 11 community service officers and seven officers on bike detail, although a full deployment is not always available, City officials said.

Another $1 million pays for Promenade maintenance, including maintaining the landscape, cleaning and picking up trash and making necessary repairs. Finally – $809,000 – goes to the Bayside District Corporation to manage and promote the Downtown area.

While Downtown officials say they appreciate the municipal funds that bankroll basic operations, they also note that in addition to the $6.669 million in sales tax the Central Business District – which includes the Bayside – pumped into the City’s general fund last year, it also contributed revenues in the form of business license fees ($3.35 million), property taxes ($3.3 million) and parking fees (nearly $4 million).

Finance officials note that while the general fund bankrolls the basic operations costs in business districts, such as the Bayside, additional improvements would normally come from increased assessments.

“If an area like the Bayside District would like an enhanced level of service, the common way to do that would be through the business improvement district,” said Steve Stark, the City’s finance director.

There are advantages to relying on assessments, rather than on monies from the general fund, Stark said. “Those dollars collected in an assessment district must be dedicated for that district,” he said. “If it’s just competing for general fund dollars, that goes up and down.”

If the City is facing a budget crunch, for example, it may choose to scale back maintenance in a business district before taking a drastic measure such as laying off workers, Stark said. “An assessment district is a revenue stream not impacted by the economy and the City’s general fund budget,” he said.

Downtown officials note that the numbers don’t tell the whole story.
“Beyond producing sales tax revenue, the Bayside provides a community center and entertainment district,” Rawson said. “Virtually everybody in the area visits Downtown at least once a month.

“We provide all sorts of necessary services, retailing, restaurants, banking and are an attraction for tourists,” Rawson said. “The Third Street Promenade is a crucial part of that experience.”

Tucker believes that when Downtown officials compile the list of needs, they should look at improving the area around the Promenade and not just focus on the main shopping strip.

“As long as we’re looking at what we have going here, we may want to look if the area needs to be enlarged,” Tucker said. “It may make more sense to include Macerich (the owners of Santa Monica Place) and go to Palisades Park.

“We want to look at the boundaries,” he said. “As long as we’re doing it, let’s do it right.”

If Bayside officials decide to pay for improvements with new assessments, it wouldn’t be the first time. In 1986, an assessment was tacked on to all business licenses in the central business district, which covers Second, Third and Fourth streets between Broadway and Wilshire Boulevard.

The fund, which is administered by the City with advice and recommendations from Downtown officials, is used for supplemental operations and maintenance and includes the budget for the Bayside District Corporation.

Twenty years earlier in 1966, an assessment was levied on retail businesses located within the boundaries of Ocean Avenue, Seventh Street, the Santa Monica Freeway and Wilshire Boulevard. Some 2500 businesses currently within those boundaries are assessed 1/15th of 1 percent of taxable sales per year up to a maximum of $1,000. The money goes for general promotion of retail business, including holiday decorations.

If the board decides to pay for the needed improvements with a new assessment, it must receive the blessing of those who will be paying and the approval of the City Council. Bayside officials, however, caution that it is far too early to predict how the assessment would work.

Traditionally, the three most common forms of assessments are based on gross sales, on property values or on property size, Warfel said.

“The assessment needs to relate to who benefits,” he said. “Once there’s a sense of what the assessments are for, then we can go forward and decide who is going to be most affected and then get community support.”

While Bayside officials caution that it is far too early to begin discussing how much money is needed and who will pay, they say one thing is clear – the Downtown needs to be not only maintained, but improved.

“If we’re going to be tending to our future, we need to address some of our shortcomings sooner rather than later,” Rawson said. “The success of these types of venues is cyclical, and we’ve been riding a very good wave. We’d be shortsighted if we didn’t look forward.”