The Santa Monica City Council has unanimously approved zoning amendments designed to promote economic recovery in the downtown area, while adding restrictions that will require hotels and motels to obtain conditional use permits on the Third Street Promenade.
Santa Monica faces significant financial challenges requiring $60.5 million from reserves over five years to maintain current services. The city continues to struggle with economic impacts from Covid era lockdowns and recent wildfires affecting its tourism-dependent revenue streams.
Key revenue sources remain sluggish, with transient occupancy tax recovering slowly despite voter-approved rate increases in 2023. Hotel occupancy is lower than normal, sales tax figures have dropped and parking revenues remain below pre-pandemic levels.
Additional financial pressures include over $230 million in legal settlements related to former employee Eric Uller and potential federal funding cuts.
The amendments passed last week streamline alcohol permits beyond bars/restaurants, reduce restrictions on entertainment within restaurants and eliminate prohibitions on fast food and fast casual restaurants on the Promande.
The council rejected a staff recommendation that would have allowed existing pawn shops to relocate within the downtown area and voted to require conditional use permits for hotels, motels, bed and breakfast establishments, and liquor stores on the Third Street Promenade, reversing recent changes that had allowed such businesses to operate without special permits.
"I think we spent years on a downtown community plan and as far as I'm aware there's no crisis in secondhand baseball cards or diamonds that we need to address," Councilmember Dan Hall said regarding pawn shops on the street. "It seems like that would be against a decade of community input on what we want to see in our downtown."
Council upheld the permanent elimination of fast-food restaurant restrictions on the Promenade, despite initial concerns from some members about attracting distinctive locally owned businesses.
Steve Mizokami from City Planning explained that the fast-food prohibition had unintentionally restricted smaller businesses like ice cream shops and bakeries, and noted the difficulty in distinguishing between "fast food" and "fast casual" restaurants. Staff said the change allowed businesses like Yogurtland and Starbucks that had previously faced restrictions.
Councilmember Ellis Raskin supported lifting the fast-food ban, citing economic recovery needs. "I think that in this time of economic recovery, it's important to have that flexibility," he said.
The amendments also expand alcohol permit streamlining beyond restaurants to include retail establishments, bars, and entertainment facilities, with boundaries extended to Ocean Avenue for consistency.
City staff had recommended the changes as part of ongoing efforts to support business recovery in Santa Monica's downtown area, which has struggled with vacancy rates in recent years. The amendments build on previous interim zoning changes adopted since 2023 aimed at providing greater certainty and predictability for property owners and prospective businesses.