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Grass-Roots Growth

The crowds, the floats, the TV cameras that throng the annual Christopher Street West parade and festival are gone until next year, and West Hollywood, home of one of the largest gay pride celebrations in the U.S., is back to business as usual.

And business-as-usual is booming.

Buildings that stood vacant for years are being spruced up, and new enterprises are moving in. Applications for building plan approvals are up 23% over last year. Developers are competing to put ambitious projects on the city’s few remaining undeveloped parcels along Santa Monica and Sunset boulevards.

Like other parts of Southern California, the bounce-back is being fueled by the state’s rebounding economy. But in this city of 38,000, small, innovative businesses are especially responsible for the boom.

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“We’ve never had a lot of chain companies in here,” says Don Savoie, executive director of the West Hollywood Chamber of Commerce. “A lot of them are locally owned mom-and-pops--or pop-and-pops and mom-and-moms, as we like to say here.”

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Undeniably, the city’s reputation as a gay haven is good for business. The annual pride parade and festival brings more than 300,000 visitors to the city for a weekend each summer. That translates into estimated revenue of $18.7 million, according to a study commissioned by Christopher Street West, the nonprofit group that sponsors the event.

“It’s probably the single most anticipated event in West Hollywood,” said Ray Reynolds, the city’s community development director. “It’s a very big sales weekend in terms of retail. It’s a big bump in our economy. Hotels are booked, and salespeople look forward to it.”

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The event is mainly a regional draw, according to the study, which showed that more than 90% of those attending either the parade or the festival (a paid-admission exhibit area) are from Southern California. About 36% of parade-goers come from Los Angeles, 12% from Van Nuys, 10% from Inglewood, 9% from Long Beach and 4% from Pasadena. Visitors from Northern California and other parts of the U.S. make up less than 10% of the total.

Of those surveyed, 72% were males, 44% were between the ages of 34 and 44, 52% were college graduates and 56% had incomes of between $25,000 and $74,999, prime demographics that sales folk love.

Moreover, the demographics of parade-goers closely mirror those of the city’s residents, of which 53% are male, 50% are between the ages of 25 and 44, 44% hold college degrees and 46.5% have incomes of between $25,000 and $74,999.

The gay parade helps put the city in the spotlight once a year, Reynolds said. But he added, “It alone doesn’t bring anybody in to start a business in West Hollywood.”

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But the city does not rely simply on gay demographics to lure businesses. It has taken concrete measures to make West Hollywood attractive to budding entrepreneurs: It has no utility tax, no parking tax and no entertainment tax.

Utility taxes typically add 10% to the utility bill paid by a business owner. And when that business owner is engaged in a phone-reliant enterprise, such as new media, the costs can mount, Savoie said.

Without a utility tax, West Hollywood has attracted several multimedia businesses, such as Ticketmaster Group, which moved its online services division there last year. There are also a number of multimedia companies occupying suites in buildings along Sunset Boulevard.

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The absence of a parking tax, which is based on the number of spaces reserved for each business, and the absence of an entertainment tax, based on individual admission fees to clubs, means the city appeals to nightclub owners. And some of the city’s biggest clubs--House of Blues, Key Club (formerly Billboard Live) and Red Rock Cafe--are not gay-oriented but draw hip heterosexual crowds.

And the city’s geographic location, bordered by the Hollywood Hills and Beverly Hills, makes it a prime Westside locale.

All those factors combine to make West Hollywood a prime starter for innovative new businesses.

“The businesses we have here are more unique--boutique or specialty,” Reynolds said. “They’re not the lowest-common-denominator shops in retail.”

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One of the city’s newest examples is Urban Epicuria, a prepared-foods haven on Santa Monica Boulevard. The store’s 43 employees prepare fresh foods in a large, on-premises kitchen and bakery, package it to go and provide meal “accessories,” such as wines, beverages, plates, utensils, candles, picnic baskets, gourmet mustard and other condiments.

The store occupies 2,000 square feet in a building previously used by Arrow Market that had sat empty for two years. Owners Wayne Davis and Gail and Alan Baral spent more than a year defining the concept of their store and raising more than $1 million from investors to get it off the ground.

“We looked around the Westside, but this specific site met our criteria,” Davis said. “It was the perfect site with the demographics of the area and West Hollywood a name that people recognize.”

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Another new enterprise, the China 1 restaurant, has opened in a building on Santa Monica Boulevard that had been vacant for years after its previous restaurant tenant, Palette, closed.

Stonewall Gourmet Cafe, meanwhile, is appealing to gays and lesbians as a gathering spot and coffee shop that its owner, Michael d’Addio, hopes to parlay into a chain.

The new businesses are of a piece with the city’s general economy, which focuses on entertainment, hospitality, arts and design--all of which react very positively in an economic boom, Reynolds said.

“This is our opportunity to catch up on things we lost in the early ‘90s during the slump,” he said. “The empty storefronts are filling all over, and we’re riding that wave.”

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Times staff writer Vicki Torres can be reached at (213) 237-6553 or at vicki.torres@latimes.com.


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