Determining the will to change downtown
DOWNTOWN — With the hope of remaining a premier destination on the West Coast, downtown Santa Monica will most likely have to reinvent itself, an undertaking that will require both community support and a whole lot more cash than what’s being invested now.
That’s why the Bayside District Corp., which manages downtown Santa Monica along with City Hall, last week hired a Denver-based consultant to help formalize a business plan that will design an organizational and financial structure. The plan could include a new special assessment or tax district that could be funded by property owners, businesses and residents.
The Bayside District Board on Thursday approved a $59,920 contract with Progressive Urban Management Associates (PUMA), which specializes in strategic planning for downtown organizations and the creation of business improvement districts to finance them. The firm has created and helped form business improvement districts in hundreds of revamped downtowns across America, including the French Quarter in New Orleans and Boulder, Colo.
In California, PUMA has managed improvement districts in nearly 20 cities, including Sacramento, Long Beach, Los Angeles and San Diego.
Brad Segal, president of PUMA, said while he has no preconceived notions of what the result will be here, he agrees with many business leaders that there are issues that need to be addressed if Santa Monica wants to remain competitive.
Phase one of the downtown management business plan, which could be complete by the end of the year, focuses on reaching out to the people most affected to gauge their willingness to financially support new services, as well as determine the political will for change.
“Downtown Santa Monica is a multi-billion dollar real estate and community asset,” Segal said. “The question is, what’s the best way to manage it?”
That’s the $60,000 question and Segal hopes to get the answer from the players involved — those with a vested interest in seeing downtown Santa Monica succeed economically and socially. He and his team will meet with downtown interests in roundtable discussions this fall to hear what they want, and if they are willing to pay for it. A direct mail survey will be given to business owners and residents downtown to assess their priorities and appetite for financially supporting new district services. Then individual meetings will be held with key property and business owners.
“We need community buy-in for the vision, but ultimately someone will have to pay the bill,” Segal said, adding that the key to success in shaping downtown Santa Monica’s future will be the ability to balance all of the interests, and his ability to listen to their concerns, desires and issues.
Last fiscal year, the Bayside District Corp.’s annual budget was $900,000, with $620,000 of that coming directly from City Hall. Revenue collected from assessments goes into City Hall’s general fund, a portion of which is then dispersed out to Bayside. City Hall annually collects between $2.2 million and $2.7 million from four different fees assessed to property owners and tenants downtown: BUSINESS OWNER ASSESSMENTS: $1 million ■ The central business district — which is retail businesses between Ocean Avenue and Seventh Street, from Wilshire Boulevard to the 10 Freeway — pays $200,000 annually for Bayside’s promotional fees. ■ Businesses between Second and Fourth streets, Wilshire Boulevard to Broadway, collectively pay nearly $800,000 a year, which pays for ongoing costs to maintain the Third Street Promenade.
PROPERTY OWNER ASSESSMENTS: $1.2 million to $1.7 million ■ Property owners pay an assessment that goes toward the debt service on bonds issued to make the original improvements to the Promenade, which is about $1.2 million a year. The assessment ranges from 23 cents a square foot to 79 cents a square foot. ■ Property owners who don’t provide on-site parking are collectively charged an in-lieu fee which brings in $550,000 annually. The fee, $1.50 a square foot, is assessed on properties that didn’t provide on-site parking when they were developed. The money goes towards parking programs, like improvements to parking structures. However, that money has not yet been spent.
City Hall also funds other support services for Bayside like $200,000 for special items like extra window washing or special events banners. The maintenance of the Promenade is funded entirely by City Hall, which is estimated to cost about $770,000 annually. City Hall also pays for a special policing district downtown.
Source: The city of Santa Monica and the Bayside District Corp.
There are more than 600 businesses located within the Bayside District and thousands of residents.
“I need to essentially be a good therapist,” Segal joked. “We hope to do a little urban therapy in Santa Monica.”
Segal already got an earful in February when he was hired by City Hall to help facilitate a meeting that was attended by about 40 high profile community leaders, property owners and business representatives. They gathered in a vacant retail store in the struggling Santa Monica Place mall, discussing the future of downtown Santa Monica, how to appropriately invest into its bread-and-butter — the Third Street Promenade — and more importantly, how to control the management of it.
IF IT’S BROKE, FIX IT Segal, who was paid $2,500 to facilitate the meeting, asked the group to outline downtown’s strengths and weaknesses. Following the exercise, which generated more negatives than positives, Segal asked the group to list improvements that would strengthen downtown. Then the group was asked how they would spend their money — if they had it — on those improvements.
Spending priorities included solving the homeless problem and its byproducts, redeveloping Santa Monica Place, improving maintenance issues, building more bathrooms and keeping them clean, and improving alleys. The lack of parking and access also was a top concern, as were outdated movie theaters and unkempt areas of the Promenade, particularly the alleys.
The biggest frustration property and business owners expressed in February was that the millions of dollars they pay in assessments each year isn’t enough to keep Santa Monica competitive: Maintenance on and off the Promenade is lacking, redevelopment is costly and City Hall’s funds are limited. Additionally, the revenue stream that’s channeled into the downtown area isn’t as transparent as they would like.
At the February meeting, Segal and the group agreed that Bayside’s revenue stream and the management of it isn’t as equitable as it could be. In addition, it doesn’t generate enough money for the area’s needs. A public/private venture may be needed.
Several cities across the country which have vibrant downtown areas are operated by multi-layered organizations that all have separate revenue streams. They include inclusive membership organizations where groups pay dues and provide leadership and operate as advocates; development corporations that promote small business development by working with private developers and the city; business improvement districts that are quasi-governmental and function primarily to provide services; events corporations that operate in an entrepreneurial role, orchestrating events and creating production companies; and finally, a parking corporation which privatizes public parking and contracts it out.
Segal will bring with him Kristin Lowell, a Sacramento-based public finance and engineering specialist, to help ensure that Santa Monica’s business plan complies with appropriate state and local legislation.
“Ultimately, the way state and local laws are written, it comes down to those who are directly affected (who will vote on a new assessment district),” Segal said.
There are numerous ways a new district could be formed and it might include a property-based formula, an extended downtown area that includes more people paying assessments, or the incorporation of a nonprofit organization. Still, it could be determined that the financial structure of the Bayside District just needs to be fine-tuned.
“I’m not predisposed to an outcome,” Segal said, adding that the process of identifying the issues and the future of downtown Santa Monica is still progress, regardless of whether a new district is formed or not. “This is the classic analogy of peeling the onion... how do we improve downtown Santa Monica as a civic asset for our residents, visitors and businesses?”
Bayside District Corp. Executive Director Kathleen Rawson agrees that the process is what’s important.
“It should be interesting,” she said. “I’m very energized by this process, and even if nothing happens, Bayside will do a much better job just because of this work.”
When the plan is drafted, community workshops will be held to get more community input. If a plan is approved, phase two will include putting it into practice, which will require another contract with Segal and a vote by those affected. City Hall will reimburse the Bayside District Corp. for $50,000 of Segal’s initial work. The goal is to have a new district in place by the end of 2007 or early 2008.
Originally published in the Santa Monica Daily Press print edition on June 26, 2006. Read the original PDF.