Chain stores put under more scrutiny at City Hall
The surge of chain stores pop-ping up downtown has become such an issue that local officials are expected to consider tonight a law that would require corporations to prove they will fit in with the character here.
Though the goal is to preserve the flavor of the Third Street Promenade, some local business leaders said the proposed law could suffocate the marketplace on the pedestrian thoroughfare.
It’s the first time local officials will consider an ordinance that specifically targets “formula retailers,” or chain stores. By doing so, City Hall is venturing into legal territory tested only in a handful of other cities.
The proposed law would require chain stores to apply for a special permit to do business. In order to be approved for a permit, a chain outlet must prove it will fit in and contribute to the overall character of the Promenade based on a number of factors.
Some of those include the business must be able to preserve the unique character and ambiance of the Promenade, and it must contribute to a balance of local, national, and small and large businesses there.
“Right now a retail business on the Promenade can just be approved administratively, there’s no public hearing,” said Andy Agle, assistant director of planning in City Hall.
City Councilman Ken Genser said limiting the sprawl of chains is important because gone unchecked, an influx of chain retailers have taken over and threaten to homogenize the Promenade. However, some would argue they are already have.
“It could be anywhere, be it Des Moines, Iowa, or even Omaha, Nebraska,” Genser said. “In terms of serving a population, we (need to) have more variety and more uniqueness on the Promenade.”
Though Genser said limiting the chains is an ongoing task that requires constant monitoring, he added it’s worth the extra effort.
“I think if it’s done properly, it may make it a little more difficult. But I think the businesses will have a situation that’s more profitable because I think people will see Santa Monica... as a place they’re willing to pay to experience,” he said.
Business officials view the proposed law differently. They said the Promenade was-n’t built for small merchants and by limiting the growth of chains, City Hall is ensuring that vacancies on the mall will continue.
“Now that they have a successful Promenade they want to kill it,” said Barbara Tenzer, a prominent commercial real estate broker. “It doesn’t make sense from a business point of view... this is not a teeny-weeny town.”
Because the majority of spaces on the Promenade measure 50-by-150 feet, Tenzer said it’s difficult for independent merchants to thrive. Even when divided into two or three stores, the spaces are still difficult to work with.
“What you have then is a store that is 16-or 25-feet wide and 150-feet deep,” she said. “It’s a nightmare for small retailers.”
Tenzer also pointed to the large chain stores that made the Promenade successful in the first place.
Earlier this year, the City Council passed an ordinance that limits new merchants on the Promenade to less than 50 linear feet of store frontage, unless they apply for a special permit. The intent with that law is the same, but there’s one major difference — it doesn’t target chain stores outright.
City Attorney Marsha Moutrie in the past has cautioned the City Council against adopting a law that targets chains because it could open the door for lawsuits. She had pointed to cities such as Santa Cruz, which passed a law based on the size of the business’ square footage rather than its type.
According to city documents, a formula business is a retail establishment that is required to have certain standardized elements. Those include services or merchandise, business name, decor, architecture, layout and worker uniform. The proposed law specifically exempts movie theaters, hotels, drug stores, grocery stores and automobile service stations.
Since first being cordoned off as a pedestrian-only mall, the Promenade has gone through various iterations.
At one point, there were too many restaurants and officials were worried retail outlets were being squeezed out. But recently, incentives for restaurants have been put in place to balance against the influx of retailers.
Genser said regulating the Promenade, which is a major source of revenue that fuels City Hall coffers, is a difficult task. He added that private malls such as the Grove off of Fairfax Avenue in LA have an easier job doing it because they’re private and are able to control their leasing.
Kathleen Rawson, executive director of the Bayside District Corp., the nonprofit charged with running downtown, agreed.
“It’s constantly a balancing act,” she said, adding that a majority of the Bayside board did not recommend regulating chain stores. “The Promenade is relatively developed as it stands now. What we’re going to be regulating... is the turnover factor and I’m personally concerned about that because what we’re going to be dealing with is longer-than-average vacancies.”
“What we’re going to be regulating... is the turnover factor and I’m personally concerned about that because what we’re going to be dealing with is longer-than-average vacancies.” — — KATHLEEN RAWSON Executive director, Bayside District Corp
Originally published in the Santa Monica Daily Press print edition on November 11, 2003. Read the original PDF.