By Kevin Herrera
Daily Press Staff Writer

CITY HALL — An emboldened tourism industry, surging real estate sales and some unexpected money courtesy of the state has pumped an additional $5.5 million into the city coffers, leaving council members with more money to spend when they approve the mid-year budget next month.

While some of the cash is already accounted for — to cover increased costs for employee salaries — roughly $2.5 million will be left up to the discretion of the council, which will debate the issue at a meeting scheduled for Feb. 14.

The session is expected to draw more than 100 speakers, all lobbying for increased funding for their respective programs.

Aside from the possible showdown, additional revenue brings “tremendous relief for the city,” said Councilman Kevin McKeown. “The last few years we have had to enact some cost-cutting measures because of tight budgets, and we did an exemplary job of getting through that tough period without hurting services.

“Now we have a chance to revisit and extend things that excited us. It was frustrating because we had these good ideas but not the money to implement them.”

IT’S NOT GROWING ON TREES

Most of the new revenue — around $2 million — came in the form of property taxes, boosted by increased sales of homes and condominiums, the product of a robust market where properties in Santa Monica are now selling at an average of $940,000.

“We have been having record-breaking sales for the last several years, which has caused a major increase in the property tax base … generating tremendous amounts of revenue for cities,” said local realtor Jack Susser, president of ERA First Choice Realty.

The market for condos has been booming, outpacing the sale of homes last year, but forecasters predict the market may cool, showing only modest growth in 2006.

“But with Santa Monica, there will always be a good level of appreciation in home values and a relatively strong market,” said Dan Messel, a sales associate with Prudential California Realty.

MAIN ATTRACTION

Tourism is back in a big way, contributing $1.5 million in added revenue from taxes collected on hotels, known as the Transient Occupancy Tax — currently 14 percent of the nightly cost of one hotel room.

Since the terrorist attacks of Sept. 11, 2001, tourism here has steadily rebounded, generating anywhere from $30 million to $32 million a year in hotel room taxes, with an average room rate of $234.91 for 2005 and an occupancy level of nearly 79 percent, according to the Conventions & Visitors Bureau.

“Santa Monica has remained a top destination in the minds of travelers, and I believe with hard work and determination, that trend will continue,” said Misti Kerns, president of the bureau. “Our work has been very focused since 9/11 and with a small budget we must be very selective where we market to get the highest return on our investment.”

The city’s strongest markets continue to be the United Kingdom, Australia, New Zealand and Germany, according to Kerns. More Canadians and travelers from Latin America and Japan are emerging. Strong domestic markets like Chicago and New York are also experiencing slight growth while corporate travel is strong, with an estimated 3- to 5-percent growth overall in occupancy and room rates.

In efforts to keep the visitors coming, Kerns said the council should continue to invest in transportation, public safety and parks, as well as in advertising to promote the many amenities found here.

STAE GETS IT IN GEAR

The remaining large deposit of new cash comes via the state government, with the Legislature repaying roughly $1.5 million in vehicle licensing fees borrowed two years ago to solve the state’s budget woes. The repayment was not expected until sometime during the 2006-07 fiscal year, according to a city staff report.

The fee is charged to motorists once a year when they register a vehicle with the Department of Motor Vehicles. The money has traditionally been divvied up to local governments to be used to pay for public services such as libraries, police and fire departments.

While not as large as the previous contributions, an increase in the number of business licenses issued accounted for a little more than $900,000 of new revenue, followed by $536,470 from greater than anticipated revenues from the downtown parking structures. Increases in the use of natural gas in the amount of $54,379 has helped partially offset losses in electricity and telephone service revenue.

WHERE’S IT GOING?

Roughly $1.8 million will go towards salary increases due to changes in position for employees of Community and Cultural Services and Human Services. City staff has also recommended the council direct $1 million to digitize all planning records, and $180,725 for custodial services and maintenance.

The rest is up to the council to decide and many community groups and businesses are expected to lobby strongly for funding in the next few weeks.

Council members have already received numerous e-mails as well as petitions requesting funding, the latest being from kids who use The Cove Skatepark. They would like lights added along with lower fees, according to the petition. For resident youth, the annual registration fee for the park is $10, and a quarterly pass is $20. A day pass is $3.

The 18th Street Arts Center is also requesting more funding along with the Pico Youth & Family Center.

McKeown is looking to deposit some of the remaining $2.5 million into services for youth, with a focus on child care, more parks and playgrounds and the creation of an anti-violence program. He also hopes to invest in a cultural center and community gardens, not to mention dog parks.

“I would also like to look at a community energy independence initiative, which is something that staff has developed to make us rely more on solar power and conservation,” he said. “I would like to find a banker that would be willing to finance assumable solar equity loans where new owners of a home pick up the loan for installing solar panels. That way more homeowners may want to make this upgrade without a fear of being stuck with this major investment if they decide to sell.”

Councilman Herb Katz said he is still waiting for public comment before making any final decisions, but he is thinking of ways to invest the money into transportation, such as creating a shuttle system and traffic signal synchronization. He would also like to see funding for more dog parks.

“I’m prejudiced though, (because) I have two dogs,” Katz said. “I told (the council) ‘I am now a pain in your neck. I have another constituency.’”

Katz warned that just because City Hall has some money to work with, that doesn’t mean it has to be spent all at once.

“We have to be prudent,” he said. “Just because we have a windfall this year doesn’t mean we’ll have one next year. … I’d like to see some kind of reserve fund. You never know what will happen mid-year.”