THIRD STREET PROMENADE — Restaurant owners and Downtown business leaders on Tuesday slammed a City Hall proposal to raise rents for those who offer outdoor dining on public property.
The proposal, which still has to be debated and approved by the City Council, includes increases that would nearly triple rents for some restaurants, a substantial hike that many business owners said would force restaurants to close or stop offering outdoor dining to patrons.
Under the proposal, restaurants on Ocean Avenue with fully-enclosed patios leased from City Hall would see their rents jump from $1.90 a square foot to $5.83. Increases are more modest for restaurants without barriers to the public and located on streets away from Downtown, including Pico Boulevard, where a restaurant could pay $1.75 per square foot for space without a barrier instead of the current rent of 87 cents under the proposal.
The City Council in July questioned whether or not rents should be increased for those offering outdoor dining, especially those whose dining areas are fully enclosed. The idea is that locations with more pedestrian traffic are more valuable and restaurants should be charged more for using the public right of way for outdoor dining. Restaurants should also pay higher rents the more they enclose outdoor dining, as the enclosures essentially turn a public space — the sidewalk — into a private one.
Restaurant operators along the Third Street Promenade, one of the most expensive places to operate, said a sluggish economy and competition from Santa Monica Place eateries have hurt their bottom lines, some saying receipts are down anywhere from 9 to 20 percent.
A consultant conducted a survey of surrounding rents for restaurants and developed the preliminary pricing scheme, said Miriam Mack, City Hall’s economic development manager. Mack said the average outdoor dining license is issued for five years. Those renewing or applying for a new license would be subject to the new rents if they are approved by the council.
Restaurateurs, along with members of the Bayside District Corp. board, pleaded with city staff to postpone their presentation on the rent increases to the council to give the economy more time to recover. Some suggested recalculating the proposed rent increases, creating a more affordable fee scale, with increases tied to the Consumer Price Index, which helps measure inflation.
Jeff Decker, who owns The Yard on Broadway near Second Street, said outdoor dining needs to be protected because it “does enhance the [pedestrian] experience.”
“We maintain the sidewalk as if it was the inside of our restaurant,” Decker said, demonstrating how outdoor dining is beneficial to City Hall and the community.
West Hooker, co-owner of Locanda del Lago on Arizona Avenue in Downtown, said restaurants who offer outdoor dining are “adding something to the area,” by activating the street. Restaurants add flowers and furnishings, among other touches, to create a vibe. He asked city staff to lower the rents, keeping in mind that restaurants can’t use their outdoor dining areas 365 days a year because of the weather or other conditions.
Barbara Bryan, a member of Bayside and co-owner of the Interactive Cafe on Broadway, said City Hall must decide if it wants to nurture small businesses or just make money, creating a situation where high rents equal high turnover.
Patricia Hoffman, co-chair of Santa Monica’s leading political party — Santa Monicans for Renters’ Rights — who sits on the Bayside board as a representative of the community, spoke in favor of increasing the rents, particularly for those restaurants that use full enclosures.
However, Hoffman agreed the time is not right to introduce the new rents given the struggling economy.
City Hall currently manages 48 outdoor dining licenses, which generates approximately $318,000 annually, said Donna Rickman in the Economic Development Division.
The proposed rents are expected to go before the council during budget discussions early next year, with adoption expected in June. Council members have yet to weigh in on the rents, however, there is speculation that with City Hall facing budget deficits in the coming years, generating more revenue will be a top priority.