Winds of Business Blow Hot, Cold in Santa Monica : Report Sees Commercial Climate Improved, Calls for Speedier Procedures

After a yearlong study of Santa Monica’s economic climate, a Chamber of Commerce task force has concluded that the city is stuck with a reputation of being anti-business even though cooperation between local government and business interests has improved considerably in the past few years.

The blue-ribbon panel of 17 business leaders and public officials has recommended that the city and the chamber establish an Economic Development Council to address the city’s business image problems and devise economic strategies.

The task force also recommended that the city enact laws to streamline building permit procedures and protect developers’ rights.

The chamber’s Economic Development Task Force will formally present its 38-page report to the City Council within the next month, said Christopher M. Harding, chairman.

Mayor Christine E. Reed said Tuesday she had not had time to study the report in detail, but that her initial reaction was that it was “a positive addition to the debate over economic development” in Santa Monica.

However, she said she is not sure the city needs another city-funded committee to advise public officials on economic issues. Santa Monica already has several joint projects with the chamber and economic development advisers on the City Hall staff, she said. “I’m not saying it’s a bad idea, but I’m not entirely convinced we need another one of these committees,” she said.

Former chamber president Martin Gottlieb said he set up the task force last January in response to fears that the city “is perceived as a being a very negative business climate.”

Gottlieb said the need for the study was emphasized by last year’s departure of Santa Monica’s largest private employer, General Telephone Co., which moved its corporate headquarters, with 2,200 employees, to Thousand Oaks. Company officials said they decided to move mainly because Westside housing is so expensive that it had become difficult to attract employees here.

“Assuming the perception was true that we did have a negative business climate, we wanted the task force to come up with some recommendations on how we could turn that around,” Gottlieb said.

The task force surveyed local businessmen and economic development programs around the state as part of its yearlong research. It also conducted a confidential survey of top executives of major businesses currently or formerly located in Santa Monica.

The report said that Santa Monica’s business reputation was tarnished because the city adopted an “adversarial role” with the business community several years ago.

“More specifically,” the report said, “Santa Monica’s business image has suffered from enactment of rent control in 1979, retroactive application of the 1981 building moratorium . . . and the adverse publicity generated by these events.” Santa Monica’s rent control law is viewed as one of the strictest in the nation, and the 1981 building moratorium brought to a standstill commercial projects that were already under way, such as Welton Becket Associates’ Colorado Place.

The city’s image problem was accentuated by its adoption of a General Plan housing element in January, 1983, the report said. The element has drawn intense criticism from developers because it requires apartment or condominium projects with as few as three units to provide affordable housing in conjunction with the developments. As a result, Harding said, only a handful of multifamily projects have been built in Santa Monica since 1983, defeating the element’s purpose of providing affordable housing.

“Santa Monica developed the unfortunate reputation of a very difficult place to conduct business, and has been referred to as ‘the People’s Republic of Santa Monica,’ ” the report said.

But “substantial progress” has been made since 1983 through the leadership of the late Mayor Ken Edwards and former City Manager John Alschuler and others in the public and private sectors, the task force said.

As evidence of the improved climate, the report cites the 1984 approval of a land-use element, which is part of the General Plan that will serve as a guide for zoning throughout the city.

The land-use plan was adopted unanimously by the City Council and with widespread community support, contrasting dramatically with the still-controversial housing element approved in 1983, Harding said in an interview.

As further evidence of a “developing spirit of cooperation” between the city and the business community, the report points to the formation of a Convention and Visitors Bureau co-sponsored by the city and the chamber. Also, the report notes that there is significant business representation on the boards of city corporations formed to oversee development of the Santa Monica Pier and the Third Street Mall.

But in spite of progress, the task force warned, “Santa Monica is still suffering from its ‘anti-business’ image.’ ”

“Thus,” the report concluded, “it is important that the city and business community work cooperatively to address the economic development problems and opportunities of the future, and avoid the acrimony of the past.”

The task force recommended:

- That the city and the chamber jointly form a Santa Monica Economic Development Council composed of public and private industry representatives who would develop an economic strategy for the city and review city practices affecting economic development.

The council would serve as an adviser to city decision-makers, with “modest” funding from the city and the chamber. Similar councils in other cities have annual budgets averaging $45,000, the report said.

The economic council would be prohibited from participating in political activities and from advocating specific projects, the report said.

- That the City Council enact a “permit streamlining act” requiring expeditious city decision-making on development applications. “As with the state streamlining act, projects should be deemed approved if the city fails to meet the local streamlining requirements,” the report said.

- That the council adopt a vested-rights ordinance providing “a clear policy against changing development rules in the middle of the game.” The law would subject a project to the rules applicable at the time plans are filed; subsequent changes would not affect the project as long as the applicant proceeded in a timely manner, according to the task force recommendation.

- That city officials and the business community review and “thoroughly revise” the city’s controversial housing element and the so-called “inclusionary housing” rule requiring affordable housing even in small projects. This requirement unduly restricts the development of new housing in Santa Monica, the report said.

- That the city develop programs to encourage existing businesses to stay in Santa Monica and new ones to locate here. Efforts should include an outreach program to determine the needs of major Santa Monica businesses, the task force said.

- That when the city adopts new zoning ordinances based on the 1984 land-use plan, it publish a new guide for property development explaining development-approval processes.

- That the city expedite development of several public projects, including the pier, the airport and the Third Street Mall. The report said that the Civic Center should be given a high priority because development of a hotel and convention center there would attract tourism and enhance the economy.

Public officials on the task force are Mayor Reed, former Mayor Nat Trives, City Manager John Jalili and Mary Lee Gray, senior deputy to county Supervisor Deane Dana. The late Ken Edwards also served as a member.

Members from the business community are Harding, Gottlieb, Pete Barrett, Bob Gabriel, Laurie B. Heyman, John V. German, Oscar Katz, Dave Lederer, Ted Lennon, William S. Mortensen, Tom Wafer and Ernie White.

Public officials did not vote on the task force findings and recommendations because they might eventually have to act on the report as part of their official duties, Harding said.