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# Tax breaks given to downtown businesses
- URL: https://www.smdp.com/tax-breaks-given-to-downtown-businesses/
- Published: 2002-03-30T16:00:00.000Z
- Updated: 2026-10-23T00:11:59.000Z
- Author: Andrew Fixmer
- Tags: Business, Downtown, #archive-import

*City’s financial windfall will go toward more housing*

Low interest rates combined with the highest possible credit rating have created a financial windfall for the city.

And officials this week have decided to re-invest the money back into Santa Monica.

Tax breaks will be given to downtown businesses, nearly $2 million will go towards a new library and $7.5 million is earmarked for new affordable housing projects.

“It took a while to figure out how to do all of this,” said Mike Dennis, the city’s finance director. “But it’s a quadruple win for the city.”

Because Santa Monica has a very small debt burden it was awarded the highest possible credit rating, which gave the city access to credit at very low interest rates.

The Federal Reserve has cut interest rates to the lowest point in 40 years in an effort to stimulate the economy. In response, the city has decided to issue bonds at the low interest rate to pay off bonds issued in 1992 at higher interest rates.

618,“There are relatively few bond issues we enter into because the city chooses to finance projects as they go,” Dennis said.

City officials wanted to give downtown business owners a break by lowering the tax to one-tenth of its current rate for the next fiscal year. After that, the assessment will return to its current rate.

The tax is based on the size of the business and its relative location to The Third Street Promenade, but typically reaps about $1.1 million a year for the city. The assessment is based on a sliding scale — owners on the Promenade pay the most while businesses further away pay less.

“We’re thrilled,” said Kathleen Rawson, executive director of The Bayside District Corporation. “It’s wonderful, unexpected news.”

Rawson said downtown property and business owners pay an extra assessment to the city for extra police protection, more maintenance and added municipal services.

Some business owners say the tax break is welcome news. Many of them report being severely impacted by the economic recession and the fall-off in tourism since the Sept. 11 terrorist attacks.

“We’re in the exact same state as most retail districts around the country,” Rawson said. “Its been a weak couple of months, but hopefully tourism will pick up and we’ll pull out of this slump we’re in.”

Many property owners welcome the tax break, but some said it was too little to make a real difference.

Bill Tucker, who owns between 30,000-40,000 square feet on the Promenade, said in one 7,700-square-foot office building he would save about $4,000 this year.

3AB,“I would compare that to Bush’s $600 refund,” Tucker said. “I think it’s nice but its not going to make a huge impact, and its not going to increase business in our downtown that much.”

The city will have an additional $2 million after refinancing, Dennis said.

“We’re going to capture some savings up front and use those savings to finance the creation of the new library building,” Dennis said.

That’s good news for Santa Monica Library supporters because costs for renovating the library came out to be almost $2 million more than originally anticipated.

Increased property tax revenue from the Ocean Park Redevelopment Project area, which is from Ocean Avenue to Main Street and Ocean Park Boulevard to Neilson Way, paid down old bonds and allowed the city to issue $7.5 million in new bonds. The money has been slated to pay for new affordable housing projects in the area.

*Originally published in the Santa Monica Daily Press print edition on March 30, 2002.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/033002.pdf?ref=smdp.com)