Businesses and developers have decided to fight back against a November ballot measure in Santa Monica that would place strict limits on new commercial projects in the coastal city.

A coalition of businesses, apartment renters and environmentalists has formed to oppose the measure, saying it would do little to ease Santa Monica’s traffic problems. They also say it would undercut attempts at long-term planning and would drive lease rates higher for many city businesses, not to mention dissuading developers and construction lenders from doing business in Santa Monica.

The initiative, placed on the ballot by residents who want to reduce traffic, would cap commercial development for 15 years at a total of 75,000 square feet per year. That’s roughly the size of a single typical three- or four-story office building. It covers almost all types of office and retail development as well as hotels and restaurants.

Because the measure is retroactive to the beginning of the year, it would halt or delay several projects now going through the city approval process, including a 153,000-square-foot office building that would serve as offices and post-production facilities for Lions Gate Entertainment and a 75,000-square-foot hotel proposed near the Third Street Promenade.

“If this measure passed and the amount of new space coming on line is capped, it would be much harder for businesses to expand in the city and many businesses would face huge rent increases when their leases renew,” said Tom Larmore, an attorney with the Santa Monica law firm of Harding Larmore Mullen Jakle Kutcher & Kozal LLP. Larmore is also former chairman of the Santa Monica Chamber of Commerce.

The chamber board voted last month to oppose the measure, which is called Residents’ Initiative to Fight Traffic, or RIFT.

The measure has also generated opposition outside the city, from the Los Angeles County Business Federation and the Beverly Hills/Greater Los Angeles Board of Realtors. The Business Federation, made up of 73 business organizations throughout the county, is concerned that it will lead to similar measures in other cities throughout Southern California. Redondo Beach voters in November will decide on a measure to force citizen referendums on all major development proposals.

“Biz Fed chose to weigh in because of our concern around the precedent that it sets and the potential to spread,” said Tracy Rafter, the organization’s chief executive. “We feel like these measures are just job killers.”

The Realtor association said that, among other things, the measure would dry up the market for construction lending in Santa Monica. “It will become a total crapshoot as to which commercial projects will fall under the cap and be able to proceed, so no one is going to lend in the city,” government affairs director James Litz said.

Some environmentalists are opposed because the measure would restrict long-range planning and may curtail mixed-use transit-oriented development. Some renters’ advocates are concerned the initiative could intensify pressure to build market-rate condos, which are not subject to the cap. That in turn could displace moderate-income renters.

The measure’s backers dismiss the opposition claims as overblown. And they want immediate relief on the traffic issue.

“We already know what unrestrained growth has done: It has driven up the rents for all businesses and driven out small independent businesses,” said Diana Gordon, a retired attorney and a leader of the Santa Monica Coalition for a Livable City.

Gordon and other RIFT proponents say the rush toward major new commercial development has intensified in recent years.

“Someone has to stand up and say ‘No’ to all these massive developments and that’s what we’re doing,” Gordon said.

Essential facilities, such as hospitals, are excluded from the cap; smaller projects under 7,500 square feet would also be exempted.

Projects to stall?

The measure would pose a particular problem for Jack Walter, who owns a two-acre parcel near Colorado Avenue and 28th Street with several old one-story commercial buildings. Walter wants to develop a 153,000-square-foot project of offices and post-production facilities. Lions Gate Entertainment, which has its corporate offices a block away, has reportedly agreed to use most of the space.

Walter won his initial approvals earlier this year; all that’s required now is a building permit.

“I’ve spent nine years and more than $500,000 on lawyers, environmental consultants, engineers and environmental documents and have gone through the city approval process,” he said. “Now, if this passes, we might have to wait years to get a building permit.”

Initiative proponents counter that it’s precisely this type of project that they intend to stop.

“That project is a huge development that had its approval rushed through in violation of existing zoning laws,” Gordon said. “When people raised objections about all the extra traffic that would be generated by this project and other huge projects, their concerns were ignored. We were left with no other choice but to go to the ballot box.”

Michael Farzam, one of the owners of the Travel Lodge and Pacific Sands hotels on Ocean Avenue near Santa Monica Place, wants to tear down the aging hotel buildings and replace them with a 164-room, 75,000-square-foot Travel Lodge. The project is going through the city approval process.

Farzam hopes to open the new hotel in 2011, but the ballot measure would set back the project by at least two years.

“There are other projects ahead of us that would use up the square-footage allotment,” Farzam said. “So we would have to wait until more square footage opened up under the cap.”

Holding up the project would result in increased construction costs, he said, as well as loss of income.

Shortage of space?

Ballot measure opponents believe the need for more office space in specific industries especially medical office space would go unmet, driving up rents and pushing businesses out of the city into nearby communities. This could generate even more car trips as physicians unable to get office space around St. John’s Medical Center or Santa Monica UCLA Medical Center would have to jump in their cars to make their hospital rounds.

One business owner concerned about the prospect of rising rents is John Bohm, president of Acceptors Inc., a company with offices in Santa Monica. Acceptors buys and leases industrial space mostly outside the city, so its business wouldn’t be affected. But its rent rates might.

“We are concerned that office space will be squeezed and that our rent will skyrocket,” Bohm said.

Initiative backers say this is unlikely. They contend rents have soared in Santa Monica because older commercial buildings with cheaper rents are being torn down to make way for big new buildings that charge much higher rents.

“If you limit the amount of old buildings that get torn down to make way for new towers, then you will see rents stabilize as commercial tenants would be able to stay in these older buildings,” said Jeff Segal. Segal was speaking as a longtime resident of the city.

But illustrating how the measure can divide personal and professional interests, he emphasized that his company, Segal Enterprises, which owns office buildings in the city, has not taken a position.