May 20, 2024
Mr. Phil Brock, Mayor
and Santa Monica City Council
City of Santa Monica
1685 Main Street
Santa Monica, CA 90401
Re: Sidewalk Dining Fees in Downtown Santa Monica
Dear Mayor Phil Brock, Honorable Council Members, and Esteemed City Staff, The Board of Directors of Downtown Santa Monica, Inc. (DTSM, Inc.) is advocating for a reduction in outdoor dining fees in Downtown Santa Monica.
This proposed update aims to eliminate the competitive advantage that other communities currently enjoy over Santa Monica. Moreover, it underscores the city’s commitment to incentivizing investment, development, and business growth in the downtown area.
By reducing outdoor dining fees, Santa Monica can level the playing field and create a more attractive environment for businesses compared to neighboring communities. This adjustment aligns with the city's broader goals of fostering economic development and supporting the local business community.
To inform the discussion of the Board, DTSM, Inc. staff conducted a thorough fee study, comparing Santa Monica's monthly sidewalk dining rates with those of neighboring cities such as Culver City and Beverly Hills. The findings reveal a significant variance, with Santa Monica's current rates ($2.30 - $4.09 per square foot) notably surpassing those of comparable locations in Beverly Hills ($1.00 - $1.75 per square foot) and Culver City ($1.03 per square foot). Even when considering Beverly Hills' higher retail rental rates, their sidewalk dining fees remain substantially lower than Santa Monica's.
Category City of Santa
Monica
City of Beverly
Hills
City of Culver
City
Sidewalk Dining Rate
per SF (Monthly)
Depends on
location & alcohol
service
$2.30 -$4.09 per SF
Depends on
location
$1.00 -$1.75 per
SF
$1.08 per SF
Sidewalk Dining Rate
Per SF (Annual)
$27.60 -$49.08 per
SF
$12.00 -$21.00
per SF
$13.00 per SF
For context, DTSM, Inc. staff calculated sidewalk dining fees using one outdoor dining model with site conditions that can be found across all three cities. The example used was a full-service restaurant with the highest sidewalk dining rates per SF that serves alcohol and occupies 210 square feet of space in the public right of way. The fee comparison breakdown has been included below.
Category City of Santa
Monica
City of Beverly Hills City of Culver City
Location Third Street
Promenade
North Rodeo Drive Culver Blvd
Sidewalk Dining
Fees per SF
(Annual)
=$858.90
$4.09 x 210 SF
=$367.50
1.75 x 210 SF
=$226.80
1.08 x 210 SF
After conducting the initial fee study, DTSM. Inc staff reached out to the City of West Hollywood Community Development Department to obtain information about their monthly sidewalk dining fees. The City of West Hollywood confirmed that businesses using sidewalk dining in the public right of way pay a monthly fee of $1 per sq. ft. ($12 per sq. ft annually), with an additional monthly fee of $1 per sq. ft. for restaurants that serve alcohol. In total, a restaurant serving alcohol that is using sidewalk space in the public right of way is paying a monthly fee of $2 per sq. ft. ($24.00 per sq. ft. annually). In comparison to Santa Monica, the City of West Hollywood’s sidewalk dining fees are less than half of what businesses on the Third Street Promenade are required to pay. 1351 Third Street Promenade, Suite 201, Santa Monica, CA I 310.393.8355 I [email protected] In addition to the fee study, DTSM, Inc. staff reached out to local brokers that have commercial listings on the Third Street Promenade. We repeatedly heard that it remains challenging to lease space on all three blocks of the Promenade, and it is especially difficult to convince restaurants to sign a lease. Moreover, the brokers who provided feedback were in support of significantly lowering or eliminating sidewalk dining fees as a way to attract restaurants to the Third Street Promenade.
After extensive consideration, the DTSM, Inc. Board proposes the following changes to the current ordinances governing outdoor dining in Downtown Santa Monica:
For Existing Businesses:
● Temporarily waive all Downtown Santa Monica outdoor dining license fees for one year.
● In Year 2, establish the sidewalk dining rate at $1 per square foot per month, with annual CPI adjustments ranging from a minimum of 3% to a maximum of 5%.
For New Businesses:
● Waive all Downtown Santa Monica outdoor dining license fees for one year from the date of establishment.
● From Year 2 onwards, set the sidewalk dining rate at $1 per square foot per month, with annual CPI increases subject to a minimum of 3% and a maximum of 5%.
It is essential to acknowledge the challenges facing our Downtown district, particularly the task of attracting new dining establishments, especially along the Third Street Promenade. Coupled with imminent increases in the minimum wage to $17.27 per hour, escalating operational expenses, and shortages in staffing, our existing businesses require additional support.
We firmly believe that implementing the proposed reduction in fees reflects a strategic approach to enhancing the appeal of Downtown Santa Monica as a destination for dining and entertainment. It also signals to prospective businesses that Santa Monica is committed to creating a favorable environment for investment and growth and ensuring the long-term prosperity of downtown 1351 Third Street Promenade, Suite 201, Santa Monica, CA I 310.393.8355 I [email protected] businesses. We express our sincere gratitude for your thoughtful consideration of these recommendations and for your support of Downtown businesses.
Sincerely,
Andrew Thomas, CEO
Downtown Santa Monica, Inc.
cc: DTSM, Inc. Board of Directors
David White, City Manager
David Martin, Community Development Director
Jennifer Taylor, Economic Development Director
Haley Favre-Smith, Business License Administrator
1351 Third Street Promenade, Suite 201, Santa Monica, CA I 310.393.8355 I [email protected]