City officials can talk all they want about how Santa Monica is becoming more business friendly, but unless you’re Yahoo!, MTV or Activision, the reality is it’s far from it. If you are not raising Santa Monica’s profile as the hub for technology and new media, it seems as if City Hall could care less.
Despite efforts by the Santa Monica Chamber of Commerce and City Hall to work together to retain and attract businesses, streamline the permit process and make it more predictable, higher sales tax, fees and rents still make it difficult for many, mainly smaller mom-and-pops, to set up shop. Santa Monica was recently rated one of the most expensive places to do business in the nation in the Kosmont-Rose Institute Cost of Doing Business Survey, which looked at our 9.75 percent sales tax, business license fee and property tax rate.
Naturally there are more factors that come into play when deciding where to locate a business, such as location, amenities and access to a skilled labor force, and the Kosmont-Rose survey fails to incorporate them. That makes for an incomplete picture, but recent moves by the City Council help fill in the blank spaces.
In late November, the council approved even more fees for developers, this time to pay for staff to monitor affordable housing units and who is living in them. The request from city staff came after it was revealed that many affordable apartments were being rented to those who didn’t qualify. Apparently, city staff failed to properly monitor those units, much like they, and in large part the City Council, failed to properly monitor development agreements.
The housing fees — $170 for newly-constructed affordable units , $145 every time a new tenant moves into a unit and $135 per unit annually — add another burden for those looking to build housing in Santa Monica. A new apartment turnover could be as much as $450, and those fees cannot be passed through to tenants.
The fees are based on an hourly wage paid to city staff, plus benefits, to do the monitoring — at $57 an hour. That is outrageous. Why are we paying city staff that much money when an outside firm could do it for much less? It’s a waste and will only serve as another hindrance to the construction of much-needed housing for employees of future companies looking to relocate here.
Mandating the constructing of affordable housing is a stated goal of this community and one the City Council champions. Therefore, monitoring that housing should be paid for not by those building the units, but by those who demand they be built. If affordable housing is a priority in this town, then the taxpayers need to pay for the monitoring. If a developer is found to be out of compliance with the law, then fine them, but don’t put up another hurdle for them to leap over.
And now Councilman Kevin McKeown wants the council to find some way to preserve the Village Trailer Park either by declaring imminent domain or designating it a landmark. This comes more than four years after the developers informed City Hall of their plans to demolish it and build a mixed-use project with housing and ground-floor commercial. The developers have done everything they can to play nice, working with City Hall on a development agreement that would ensure some security for current tenants. Now efforts are surfacing to put a stop to it. Where were these efforts when the project was first brought forward? How much money have the developers sunk into this project with no return?
It seems that the powers that be know Santa Monica will continue to be an attractive place for businesses because of its beautiful weather, quality schools and proximity to the beach. There’s almost this air of arrogance within the power structure: “If you don’t like it, someone else will.” Well, Santa Monica lost Google because of a lack of office space. It almost lost Activision. Who knows what major company will consider leaving next? Without those mom-and-pops that help make Santa Monica what it is — the restaurants, the boutiques, and the start-ups — will Santa Monica be as attractive?
There are other beach cities that can offer many of the same amenities Santa Monica does, and with less hassle — just something to think about as we head into the new year. Santa Monica needs tax dollars to fund all the amenities residents and businesses enjoy. Continue with the arrogance and costly policy and the city by the sea could find itself under water.
