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# City Hall should stay out of the business of business
- URL: https://www.smdp.com/city-hall-should-stay-out-of-the-business-of-business/
- Published: 2003-09-16T15:00:00.000Z
- Updated: 2026-10-25T01:01:07.000Z
- Author: David Pisarra
- Tags: Opinion, Promenade, #archive-import, Homeless

The President has proclaimed this week to be “National Small Business Week.” In its press release the White House said, “The success of small businesses in America reflects the innovation, determination, and hard work of the American people. During Small Business Week, we celebrate the entrepreneurs and business people who create goods, services, and jobs, and bring opportunity and economic prosperity to communities throughout our country. We also reaffirm our commitment to helping more small business owners and their employees realize the American Dream.”

And evidently our City Council has decided that it is now time to agree with the President, at least on this issue, by limiting the size of new stores on the Promenade to only 50 feet of frontage space. This is in response to the current state of the Promenade, which now looks unsurprisingly like just about every other mall on the planet.

It’s ironic that in the same week that the council moved to limit the size of new stores on the Promenade, they were asked to grant concessions to Bubba Gump Shrimp, the new restaurant on the pier which at one time housed the locally owned, non-chain restaurant known as the Boathouse. Let’s take a quick trip down memory lane.

I am reminded of a July 6, 2000 statement by our own highly esteemed coun-cilmember Kevin McKeown who was quoted in Robert Scheer’s local L.A. column during the infamous Boathouse travesty. Quoting the column directly, “Councilman Kevin McKeown reports he is being inundated with e-mails that are all pro-Boathouse. But he was ‘already investigating this matter because personally, and as a Green (party member), I support small, locally owned businesses.’”

Not to leave out then Mayor Ken Genser, again quoting the Scheer article, “Mayor Ken Genser, who is the council’s liaison to the PRC, (Pier Restoration Corporation) told me, ‘I think it is appropriate for the council to monitor this situation.’ He added: ‘I would be absolutely disappointed if what ends up there is a chain establishment that can be found everywhere else and not something with its own unique character.’”

It has been three years since that column ran. Three years in which the council has had the opportunity to “investigate” to “monitor” and to protect our small businesses, our community and our lifestyle from the encroaching onslaught of corporate megastores.

I think they are acting a little late. They are trying to close the barn door after the horses have left.

The fact of the matter is, the rents on the Promenade have risen dramatically, mostly as a consequence of the influx of the major retailers. It has driven up the square foot costs on retail spaces that landlords are able to collect. That means a new business, which is limited to leasing a smaller space, must make more sales per square foot to pay the rent. It also means that they must have more customers flow through their businesses in order to make any money.

If the goal of this new legislation is to protect the smaller, more intimate restaurants, they have a task which is nigh on impossible due to the economics of the industry. The fine dining restaurants, which can charge more money for their fare, are also the kind of restaurant where people will sit and enjoy their meals. A good restaurant on average turns its tables two times a night. A fine dining establishment operates on approximately 30-35 percent cost of goods sold. — the food costs should be about 30-35 percent of the operating revenues. The rest is to cover the expenses of the restaurant, and allow for a small profit for the owner. They cannot charge enough money on the Promenade at a low level of business to pay their rent if it’s $14 or $15 a square foot.

The new regulation will have the effect of either preventing the establishment of new restaurants on the Promenade, or forcing the landlords to lower their rents to a level that will allow new restaurants to open. Considering that new restaurants have a failure rate of about 90 percent and the costs to set up the business could easily be $50,000, how likely is it that the rents are going to come down on the Promenade? Not very.

The cycle of all malls is pretty much the same. It’s the little guys that attract the population, then the landlords start to increase the rents so that only the big chains can afford to be there, then the little guys leave, then the population leaves. Then the big chains leave, then the landlords can’t afford to pay their taxes and the City Council asks, “what happened?”

I believe that City Council members do the best they can with the information available to them and their ability to understand it.

The problem is they are trying to solve an economic problem with a legislative solution. Here is where they don’t know what they are doing: They are relying on “staff” as usual, and I don’t have anything against the “staff,” but they are government workers, not business people. They don’t know what it is like to try to make the rent or the mortgage payment each month and not know where the money is coming from. They don’t know the emotional travails that a businessperson goes through, whether they are a landlord or a tenant.

What the council needs is a good dose of business reality. They should listen to the independent business leaders for information on how the real world works, or they should stay out of the business world, and focus on the important things — like making sure that we have a well fed, if ill behaved, homeless population. (David Pisarra is a partner in the Santa Monica law firm of Pisarra & Grist, he welcomes questions, and (310) 664-9969 or e-mailed at DPISAR-)

*Originally published in the Santa Monica Daily Press print edition on September 16, 2003.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/091603.pdf?ref=smdp.com)