santamonica

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Santa Monica landlords once derisively labeled the city “The People’s Republic of Santa Monica” because of its highly restrictive, pro-tenant rent control laws.

But now the city could use a new nickname: “Boomtown.”

The 8.3-square-mile city has some of the lowest office vacancy rates in the Los Angeles area as well as some of the highest hotel occupancy rates. And the jewel of its central business district Third Street Promenade, which attracts shoppers from around L.A., as well as throughout the world has almost zero vacancy.

“This is the best Santa Monica’s ever been,” said Larry Kosmont, president of Kosmont & Associates Inc., which produces an annual survey of the best cities in Southern California in which to do business.

While many L.A. County city governments are facing budget shortfalls and having to cut back on services, Santa Monica is enjoying growing revenues and spending that extra money on capital improvements around the city.

City officials are planning to install new bicycle paths, plant new greenery and add athletic fields to public schools for local residents to play soccer and other sports on afternoons and the weekends.

The city is also moving forward with its “Downtown Streetscape Plan,” which is intended to help the streets surrounding Third Street Promenade garner the same retail success that the promenade has.

The plan, which is expected to cost between $6 million and $7 million, includes converting Broadway and Fifth Street from one-way to two-way streets, widening sidewalks on Broadway and Santa Monica Boulevard and adding new trees, lighting, street furniture and public art to a 28-block area.

“The promenade’s a success, but we can’t just rely on that linear, three-block area of the promenade,” said Santa Monica Mayor Pam O’Connor. “We have to make sure that our vitality is shared by the entire downtown.”

The city’s adopted spending budget for the 1997-98 fiscal year is $282 million 10.3 percent greater than last year, with the extra money coming from higher revenues from sales tax, hotel occupancy tax, business permits and other sources.

Hotel bed taxes, for example, are expected to generate $13.3 million in 1997-98 up from $12.7 the previous year.

“That has gone up significantly,” City Manager John Jalili said. “It has exceeded all of our expectations.”

City officials also expect a 9.1 percent growth in revenues from licenses and permits; an 8 percent growth in revenue from service charges for school programs, sidewalk repairs and assessment districts; and a 9.7 percent growth in revenues from use of public property, such as swimming pools.

The total estimated city revenues for the 1997-98 fiscal year are $258.8 million a 13.7 percent increase from last year.

The additional money will go largely toward capital improvements such as the Third Street Promenade project.

O’Connor also attributed the financial success of the city to its fiscal conservatism the fact that, as a policy, it never spends one-time funds, such as state or county grants, on ongoing programs.

“We’re very religious as a council and a community by saying that we fund ongoing programs with ongoing expenses,” she said.

Matthew May, a partner with the Santa Monica commercial brokerage firm Madison Partners, said the city is the hottest place on the Westside for new retail stores, as well as for the location of companies in the entertainment industry.

“Santa Monica has had a reputation as the worst city in L.A. to develop in,” May said. “But, ironically, there’s more being developed in Santa Monica than anywhere else.”

Jalili, O’Connor and other Santa Monica city officials attributed the city’s success in attracting entertainment companies, office tenants, retail stores, restaurants and a healthy tourism industry to the city’s dedication over the last two decades to public art, green space and other amenities that make the community more livable.

Those are the same things, they say, that have given Santa Monica the reputation as an undesirable place to develop, because of higher fees and stricter building regulations.

“What some businesses say is, ‘Gosh, golly, if I do business in Santa Monica, you guys have so many regulations,'” O’Connor said. “But I think it’s worked to create the kind of environment that people want to live in, people want to work in and that is part of that success.”

Kosmont, who studies the cost of doing business in different cities, agreed that Santa Monica’s amenities help it attract business.

“One, Santa Monica is divinely blessed because of its (ocean-side) location, but beyond that the city has made an investment in public furniture and public art,” Kosmont said, “The city has a good look to it. It attracts tourism, which attracts retail. It attracts businesses.”

But Kosmont also added that Santa Monica is a relatively expensive place to do business. It has a 10 percent utility user tax much higher than the 7 percent Burbank charges and the 6.5 percent Torrance charges, but lower than the 12.5 percent the city of Los Angeles charges.

“None of the older cities like Santa Monica are a bargain in terms of taxes. But they also tend to be high-service cities,” Kosmont said.

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