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Assessing Downtown Santa Monica’s Needs

Santa Monica Real Estate Company, Roque and MarkHarding Larmore Kutcher & Kozal, LLP  law firm
Harding, Larmore Kutcher & Kozal, LLP

Pacific Park, Santa Monica Pier

Santa Monica Convention and Visitors BureauWhen one lives in a city as breathtakingly beautiful and unique as Santa Monica, inevitably that city will be shared with visitors.

By Lookout Staff

June 13, 2014 -- With Downtown Santa Monica poised to undergo its most dramatic transformation in decades, property owners along Colorado and Lincoln boulevards will soon decide whether to expand the assessment district that raises some $3.5 million for enhanced services like pressure washing sidewalks and more speedy graffiti removal.

Since 2008, property owners within the Property Based Assessment District (PBAD) — which stretches from Ocean Avenue to Seventh Court and from the Santa Monica Freeway to Wilshire Boulevard — have levied on themselves a property assessment of between 80 cents to 7 cents per square foot.

The funds pay for Downtown Ambassadors, enhanced marketing of the area and the creation of community events, as well as other services not provided by the City.

Property owners within the district, which is divided into three zones, pay a rate based on the use and location of their property. Commercial properties in Zone. One -- Third Street Promenade -- are assessed the highest rate, since they receive the lion’s share of the services. Those along Colorado Avenue -- Zone Three — are among those who pay the least.

That could soon change with the long-anticipated arrival of the Expo Light Rail line.

In less than two years, the rail station being built at Colorado Avenue and Fifth Street will open, connecting Downtown Santa Monica to Downtown Los Angeles by commuter train for the first time in half a century, and with it will come 25,000 riders a day. That number could jump to 64,000 by 2030, according to public transit officials.

The Colorado Esplanade — a $10 million makeover of Colorado Avenue west of Fifth Street scheduled to begin this fall -- will widen sidewalks, reduce traffic lanes, improve bike facilities and offer a better overall experience for visitors to Downtown’s southern border.

The Expo Line and the Esplanade are “considerable improvements that are going to change Colorado into a much more pedestrian-oriented street,” said Brad Segal, president of Progressive Urban Management Associates (PUMA), which played a major role in establishing the assessment district. “It is going to require a higher level of services.”

That means the roughly two dozen property owners in the Colorado Avenue area will soon consider an overlay district to increase the level of services -- and, therefore, the amount they pay in assessments -- to accommodate the anticipated influx of visitors.

More visitors to the southern part of Downtown will mean “more fixtures and more surfaces to maintain,” as well as the need for more Ambassadors to help visitors find their way around, said Kathleen Rawson, CEO of Downtown Santa Monica, Inc. (DTSM).

Traditionally, the approximately 50 properties along Lincoln Boulevard have not been part of the assessment district. But their owners could soon get a chance to opt in.

“We’ve heard from a number of Lincoln property owners who would like to be part of what’s happening,” Segal said.

For those property owners, the service needs may be different or less intense, said Segal. While expanding the $1.3 million Ambassador program to the south side of Colorado may make sense, Lincoln business owners may only require some light maintenance and street cleaning.

From July 2012 through June 2013, the Ambassadors helped nearly 40,000 pedestrians navigate Downtown and referred nearly 70,000 visitors to local businesses.

During that same time period, the assessments covered the removal of 874 incidents of graffiti, 1,905 flyers and stickers, 331 “bulky items” and 11,113 pounds of trash from Downtown. The revenues also paid for power washing 2.1 million square feet of public streets, and three daily cleanings of public restrooms and elevators.

The increased services are having a noticeable impact on the area, Downtown officials said. They point to a poll of more than 800 residents and visitors conducted last October and November that found both groups noted an improvement in the area, citing cleaner streets and the presence of Ambassadors.

The number of residents who noticed it was cleaner rose from 41 percent in 2011 to 51 percent, while those who noticed that streets, sidewalks, lights and signs had been fixed rose significantly, according to the poll.

The first step is for property owners in each of the two areas to figure out what is needed. Once the needs are established, a consultant will work with the property owners to set exact boundaries and identify the services that will be provided and the level of assessments needed to pay for them.

In April, the City Council agreed to help fund a study that will eventually lead to drafting distinct business plans for the Colorado overlay and the Lincoln expansion. The process should be completed by the first half of next fall.

A petition will then be circulated in the two areas, Segal said. For the plans to move forward, a majority of property owners must sign the petition. Each signature is weighted based on how much the individual property owner would be assessed.

The petitions would then be delivered to the City Council, which would decide whether to authorize a vote by the property owners. Again, the individual property owners’ votes would be weighted based on the cost of the assessment.

And what about the rest of the district? In addition to Colorado and Lincoln, the Expo line could increase the demand for services in the rest of Downtown, Segal said.

Since the DTSM Board has the authority to raise the assessments as much as 5 percent a year, it would make sense to do that to keep pace with inflation and build reserves to help prepare for Expo’s arrival, Segal said.

“We really won’t know what the net impact (of Expo) is until we’re a few months in,” he said. “If you don’t use the reserve, you can always give it back to the property owners.”

That is what happened in 2011, when the Board decided to send a one-time rebate for assessment fees collected throughout the district. Since 2008, the Board has raised the assessment rates only once — by 3 percent last July.

For commercial properties within Zones 1, 2 and 3, those levels are a little less than 80 cents, 40 cents and 20 cents per square foot respectively, according to the City’s website.

Residential and governmental properties in Zones 1, 2 and 3 are assessed at about 56 cents, 28 cents and 14 cents per square foot respectively, while non-profits in Zone 1, 2 and 3 pay about 28 cents, 14 cents and 7 cents per square foot.

The growth of Downtown Santa Monica’s assessment district mirrors the increasing popularity of the funding model around California, which now has more than 100 such districts, Segal said.

The property-based model, which originated in the early 1990s, is primarily concerned with funding extra services to insure the area is a clean and welcoming environment for visitors.

“Virtually every major downtown” in the state has one, he said.

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