By Jorge Casuso

June 14, 2024 -- The City Council took steps Tuesday to enliven the struggling Third Street Promenade by waiving, then lowering, sidewalk dining fees.

In a swift 6 to 0 vote, the Council proposed changes to the current dining ordinance, which sets fees far above those for competing venues in neighboring cities.

The item, placed on the agenda by Mayor Phil Brock and Councilmembers Oscar de la Torre and Lana Negrete, was prompted by a letter sent last month by Downtown Santa Monica, Inc (DTSM).

"We're trying to invigorate the Promenade," Negrete said, adding that on weekends you "can see what happens when outdoor dining is more vibrant and feels more full."

"It will help bring the Promenade back," Brock said.

Under the proposed changes, the City would temporarily waive all outdoor dining license fees for new and existing businesses for one year.

In the second year, the monthly sidewalk dining rate would be set at $1 per square foot, less than half the current minimum of more than $2.

"By reducing outdoor dining fees, Santa Monica can level the playing field and create a more attractive environment for businesses compared to neighboring communities," DTSM CEO Andrew Thomas wrote in the May 20 letter.

"We firmly believe that implementing the proposed reduction in fees reflects a strategic approach to enhancing the appeal of Downtown Santa Monica as a destination for dining and entertainment."

A "thorough fee study" by DTSM staff found that Santa Monica's monthly sidewalk dining rates are between $2.30 and $4.09 per square
foot, depending on location and alcohol service, Thomas said.

That compares to far lower rates in Beverly Hills, where fees range from $1 to $1.75 per square foot, and in Culver City, where the fee is $1.08.

The monthly rate in West Hollywood is $1 per square foot, with an additional monthly fee of $1 for restaurants that serve alcohol.

The proposal is supported by brokers with commercial listings on the Promenade who say "it is especially difficult to convince restaurants to sign a lease," Thomas wrote.

"Coupled with imminent increases in the minimum wage to $17.27 per hour, escalating operational expenses, and shortages in staffing, our existing businesses require additional support," Thomas wrote.

The reduction in fees would provide relief for exiting restaurants and "signals to prospective businesses that Santa Monica is committed to creating a favorable environment for investment and growth," he said.

City Manager David White said the lower fees would cost the cash-trapped City "a couple of hundred thousand dollars" a year in revenues.

But he said that "spurring economic activity on the Promenade" by lowering fees "is a worthwhile option to pursue."

Negrete noted the the loss in revenues "will be made up by increased business."