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SR-09-27-1983-11A ~ --/" - t , ~ //- /r tfOD t '1/0"- CJ 0/ C/ED:EF:BJS:sd Council Mtg. 9-27-83 SEP 2 7 1. Santa Monica, California TO: Mayor and Clty Council FROM: City Staff SUBJECT: Transmittal of Thlrd Street Mall Work Program for Council Action Attached for Council review and actlon is nThe Third Street Mall Work Program," a document WhlCh outlines a revitalization strategy for the Mall. The Executlve Summary of this document provldes a summary of the contents of the report and also proposes recommendations for Council action on September 27, 1983. Prepared by: Ernesto Flores, Economic Development Manager Barbara Stinchfleld, Carom. & Neighb. Servo Mgr. Department of Communlty and Economic Development //-A SEP %7 .. /I-A- SEP 2 7 1983 THIRD STREET ~ffiLL NORK PROGRAM ,~.~,,~-:: JlCio;x. ~_~ ~_', ~ be. C ------------.:' = _ --=_ =:::l a -~ :t:t:'iE..,~ f2TI:J~~a q 0 ~GliIL _uc-- 11],' ~'m-',; ~'~-"'<='~ r ~;, ,',', 'I,~ i I ,-' I')n. ,1'p:1t'-", ',~-,eqf:l, [flJ, g-: 1:...::._ ~~,~~,-.U;:rIJl;,U,_.J,.JI 11'1 ,i.:~l~;O'''C('}.. - '=7 ..J r - - -= - --.t u__,<;~' -, , '1'1-=;:\'''' ,,"C>, ., fff -~H IJ .cfEn:r<---"'O'57fij~Jy': '~Tp:,;:.~:-jlff,:cf~ ltf'''JjII ~Fif.im; 1!1 o..k --- ~-----""~-~~.1""_L\"I'~-~ - J =-+--: \.:.:.. _......~ --- .,,~ ~r;------1 ~J...., ~ ~----!.A., --_~ --- r" j City of Santa Monica Department of Community & EconomlC Development September 27, 1983 . . TABLE OF CONTENTS EXECUTIVE SUMMARY MALL PROFILE I. A BRIEF HISTORY II. EXISTING CONDITIONS A. EXlst2ng Arch2tectural and Physical Elements B. Existing BUS2ness Cllmate III. OPPORTUNITIES DEVELOPMENT STRATEGY I. GOAL STATEMENT II. IMMEDIATE REVITALIZATION EFFORTS A. PubllC Improvements B. Prov2sion of Capltal Resources to Mall Merchants C. Development of Deslgn GUldellnes D. Establishment of Third Street Development Corporation III. LONG TERM REVITALIZATION ISSUES A. Major Development Cholces B. Development of Implementing Mechanisms C. Development of "Third Street Development Program" IV. WORKPLAN AND TIMELINE RECOMMENDED ACTIONS ATTACHMENTS I. CASE STUDIES: LOCAL DEVELOPMENT CORPORATIONS .. :0, . . EXECUTIVE SUMMARY Introductl.on The attached "Third Street Mall Work Program" profl.les existl.ng condl.tions on the Thlrd Street Mall, l.dentifies opportunl.t1es for rev1tall.zation of the area, and recommends a specl.fic development strategy for 1mmedlate implementation. It was developed in response to very real concerns of Mall merchants, the broader business community, and community residents that the existing climate on the Mall not only discourages investment in the area but has resulted in a continul.ng physl.cal deterioration that prevents current users from full benefit of ltS serVl.ces. Summary Profile: The Th1rd Street Mall currently exh~b~ts clear s1gns of physical and economic decl1ne. Many build1ngs are 1n need of structural improvements, facades have been designed without the benefit of un1fY1ng architectural guidelines result1ng in a v1sually confusing environment, common areas do not relate well to ad]01nlng retail establ1shments, and the retail establ1shments themselves are prohibited from effect1ve merchandising due in part to the poor physical layout of Mall structures. In addition, accesslbility to the area 1S limited due to the lack of linking walkways from parking structures to the Mall. These factors, coupled with the competit1on from 1ts successful neighbor, Santa Monica Place, has resulted 1ll a declining bus~ness climate. While sales init1ally increased after the establlshment of the Mall 1n 1965, sales 1n recent years have not only declined but have lagged sign1f1cantly behlnd reta11 sales 1.n other areas of the C1ty. These obvious 1ndicators have prompted the bus1ness community and the City to take immediate steps for the Mall's reV1 talization. In attempt1ng to build a strategy that has a lasting impact, 1 t is necessary to first ident1fy those opportunities that presently eX1st and can be utl.ll.zed in both the short and long terms. Unl1ke many other decl1nl.ng commercl.al areas in other communities, the Th1rd Street Mall already possesses a number of assets WhlCh can be optlffilzed. These ~nclude: the proximlty to Santa Mon1ca Place and its reg10nal market; proxim1ty to future tourist-related and commerclal developments; the increasing 1nterest 1n the Mall as a center for publ~c art programs and other cultural events; and the existence of arch1tecturally slgn1.f1cant structures which can serve to un1fy the area and provide an overall design theme. In addition major public 1mprovements such as parking structures and freeway access are already 1n place. ~~v~!2E~~~! ~!f~!~~Y: The proposed development strategy addresses both these problems and opportunities. It proposes a a major revitalization effort designed to create a vital, pedestrlan oriented retail area which will serve as the focal pOlnt of the downtown area. This goal is based on a number of underlying assumptions: o that the current character of the Mall as a low-rise pedestrlan oriented retail area should be maintalned. o that neighborhood services currently utllized by Santa Monlca resldents, includlng low-income, IDlnority and senior residents, should be maintained. o that publIC interventlon will be necessary to ensure that exist1ng small businesses can continue to serve these resIdential needs 1n the face of increasing reg10nal competit1on. o that a successful rev1talization effort wll1 only occur 1f a major anchor(s) is added to draw users of a regional nature. o that expansion of the exist1ng redevelopment area must occur. o that the development program must build on the historical, architectural character of the Mall. o that 1mmediate improvements must be implemented but w1II only be successful lf additional long- term improvements are made. Conslstent with these major assumptions, immedlate revitalization efforts proposed in this report include: o publlC improvements to parklng structures and adJacent areas Including facade removal and 1nternal improvements to existing structures facade removal is currently underway: Phase I of addit10nal improvements to be 1mplemented by January 1984. o development of walkways or other 11nkages from the parking structures to the Mall -- to be implemented by May 1984. o prOVISIon of cap1tal resources to Mall merchants to ass1st 1n the renovation of eX1sting structures and business development loans -- to be implemented by March 1984. o development of design gU1delines to assist 10 the creation of a unlfied, well designed physlcal environment -- to be lmplemented by May 1984. o establlshment of the Thlrd Street Development Corpora- tlon to asslst in these immediate actlvities and to serve as the major implementor of the long-term revitalizatlon effort to include the establlshment of major anchors and the extension of the eXlsting redevelopment area -- to be lmplemented by January 1984. While these immedlate activitles will have a definite impact on the area within several months of approval of the Work Program by the City Councll, there are also a number of issues that will have to be resolved before proceedlng further with long range activlties. These lnclude: o making major development choices including the types and locations of major anchors, reopenlng of all or portions of Thlrd Street to automobile traffic. o establishment of necessary implementatlon mechanisms including the extension of the redevelopment area and a possible special assessment district. o the development of a "Third Street Development Program" WhlCh integrates the results of all immediate revitallza- tion efforts, current and proposed land use criteria and additional criteria WhlCh must be establlshed prior to the implementation of a long-term program. Recommended Actions: The attached report recommends that City Council (1) approve the lmmediate revitallzation efforts, directlng staff to implement them according to the attached workplan; (2) request that the Plannlng Commlssion and all othe appropriate boards and Commisslons review the additional long- term activitles and issues and transmit their comments within a 60-day period; (3) direct staff to prepare the appropriate documents for the establishment of the Third Street Development Corporatlon: and (4) author~ze the City Clerk to sollcit applicatlons for the Corporation's Board of Dlrectors. MALL PROFILE 1 I. A BRIEF HISTORY The Thlrd Street Mall was created by the City in 1965 at the behest of local merchants at a time when many cities were actively involved in the revitalization of their downtown areas by closing streets to created pedestrian malls. In developing the Mall, the City was able to retain the existing right of way without vacating or abandoning its interest therein. The street was closed and public improvements were planned and implemented at a cost of $700,000. Major construction costs were recovered through the enactment of a mall assessment dlstrict and no corresponding private sector improvements were required. However, the City did develop additional parking facilities in later years and a parking assessment district was designated to flnance these parking improvements. The area bounded by Broadway and Wllshlre and the centerline of Second and Fourth Streets came to define what is commonly referred to as the Third Street Mall. In retrospect, the establishment of the pedestrian Mall and related public improvements arrested the area I s immediate decline. Initially, the Mall's creatlon provided an increase in sales ~ however I the impact soon waned even as total sales for the city contlnued to lncrease. As a result of this decline, today the Mall continues to struggle for survival. No coordinated effort has been made in recent years to improve the area's economic cllmate and the consequences are obvious. 2 II. EXISTING CONDITIONS Overall, the Mall's appearance 1.S chaotic W1.th no un1.fY1.ng elements to give the area a unique character. Accessibillty from adjacent parking structures 1S limited, buildlngs are in need of structural improvements and renovation, and the physical layout of retail establishments is not consistent with the most current reta1.11ng strategies. Together these elements and the jumble of signs and haphazard advertlsements make the area look more like an aging commerclal strip than an inv1.t1.ng pedestrian retail area. The following sect1.ons w1.1l descr1.be these eXl.stl.ng conditions in more detal.l. A. EX1.stlng Architectural and Physical Elements 1. Building Facades: Beh1nd the unattractive facades, many buildings show elements of the Art Deco and Streaml1.ne Moderne architectural styles. In others, the original character of the buildings has been completely obscured. However walking along the Mall, one can see vestiges of these elements along the roofl1.nes. The Art Deco style can be identl.fied by styl1.zed mot1.fs and vertical, stepped massing of form. The lines of the Streamlined Moderne style are horizontal with curved corners that glve the impression of speed--an architectural response to the industrial and transportation deslgn of the 1920's and 1930's. In order to more fully evaluate the extent to which these styles exist on the Mall, modern facades need to be removed to evaluate the value of the1r architectural features. In some cases, storefronts may not reveal features of architectural or historl.cal interest and may requ1.re complete renovation. In 3 addition, many buildings may require substantial structural improvements to meet seismic and other safety standards: and in some cases where renovation is not economically feasible, removal may be necessary. Because of the h1gh bus1ness turnover rate, requests for permits to modify exterior facades on the Mall are rece1ved by the City on an average of one request per month. Addi t1onally, the potentlal future demand by developers for available space may create even more pressure to redevelop or renovate existing propertles. Currently, no design guidel1nes exist for preserving or complementing the area's arch1tectural resources. This 1S unfortunate g1ven the current renaissance 1n popularity of the Deco and Moderne styles and the possible role they could play in a revitalizat10n effort. 2. Physical Plan: The physical plan of the Mall does not meet current retailing standards. To maintain proflt margins, successful retailers must 1ncrease sales per square foot by creating a more efflC1ent use of space. Th1s can be achieved by reduc1ng the amount of square footage and storage space in each store, while 1ncreasing the amount of sales merchandlse on the floor at any given time. In add1tlon, specialty shops should have maX1mum frontage on the maJor pedestrian thoroughfares and l1mlted depth, giving them maximum exposure to shoppers. On the other hand, anchor department stores should be I1mi ted to prom1nent gateways with m1n1mal linear frontage along pedestrian corrldors. Th1S current merchandislng strategy contrasts with 4 that of the Mall where no anchors eX1st and spec1alty stores are very deep and narrow (75 I X 100 I), l1m1 ting exposure to pedestrian trafflc and leavlng large amount of underutilized space. The physical layout of the MallIs oren spaces has also resulted in reduced use by shoppers. The width of the Mall (801) does not encourage cross mall movement and 1S not conducive to window shopp1ng and strolling from one shop to the next. The placement of furniture and planters hinders v1s1b1lity and movement and the lack of sign1ng, block director1es or magnet attractions discourages shoppers from going beyond the1r immed1ate destinations. 3. Park1ng: Parking facl11ties are located behlnd the Mall to the east and west. Automobile access to these facillties is from Second and Fourth Streets. These parking structures can accommodate a total of 2,500 cars and are designed to allow for expansion if needed. However, currently the structures are rarely fllled to capaclty: on weekdays the three structures on Fourth Street are 80% filled and the three on Second Street are 50 - 60% filled. Ut111zation 1S even lower on weekends. The garages are not directly linked to the Mall and are poorly des1gned. Maintenance, secur1ty and ease of access are major problems. Shoppers uSlng the structures must walk through the alleys that separate the garages from the Mall and then walk back up the block to get to thelr destinat1on. In addition, the alleys are not deslgned or maintalned for pedestrlan use. The paving is 5 1n need of major repair, utility and trash areas are exposed, and 11ght1ng 1S 1nadequate. The comblnatlon of these factors tend to dlscourage shoppers. 4. Housing: Clusters of residential unlts and older hotels dot the area bounded by Broadway, Second, Wilshire, and Fourth Street. Generally, the buildings house retail on the ground floor w1th offlces and resident1al units above. Most are in need of substant1al repair and because of the1r generally large size, they have a substantial negative impact on the Mall's current lack of vlsual appeal. The 1980 census indicates that there are 16l residential un1ts within the Mall area, providing houslng for 162 predom1nantly lower income tenants, 20% of whom are over 65 years of age. The C1ty'S proposed Land Use Element encourages the preservatlon of this houslng stock and related neighborhood serVlces to the area's residents. B. Existlng Business Climate The bUSlness climate on the Mall is influenced by the eXlstlng physical condltions descrlbed above, the powerful presence of Santa Monica Place, and the uncertainty about future lnvestment on the Mall. Declining sales, and the vacancy and turnover rates are all indicative of a poor business cllmate. The followlng sections provide a more detailed description of these economic factors. 1. Business M1X: Of the 117 businesses found on the Third Street Mall dur1ng a staff survey in June 1983, four general 6 types of businesses account for 68% of the busine.sses (apparel, specialty stores, personal services and restaurants). With the exception of personal services, these types of businesses are also found at Santa Monica Place. As a result, Mall merchants are directly 1n competition with their highly successful neighbor. GROUND FLOOR BUSINESSES ON THE MAL I JULY 1983 NUMBER OF TYPE 0': BUSINESS BUSINESSES % APPAREl. 29 21 8 SPECIALTY STORES 30 22 5 PERSONAL SERVICES 16 12 0 RESTAURANTS 19 14_3 SOCIA.L SERVICES _ 7 DRUG STORES 3 8 FOOD STORES (OTHER THA"I GROC=:RY) 5 3 8 lI~!TED PR1CE YARIETY STORES 5 J 8 HOTELS, MOTELS _ 7 SECOND HAND STORES 7 MAt--UFACTU,ERS AND WHOLESALERS .7 VACANCIES 20 1..L.1....- TOTAL 133 99 8 Vacant or underut1l1zed space also contributes to the declining business climate. Twenty retail spaces, or 15% of all retail spaces ava1lab1e, were vacant when surveyed in June 1983. These figures understate the degree of unused space as they do not account for the total vacant square footage which could not be determined at the time of the survey including underutilized space on upper floors. In addit10n, some of this space is severely dilapidated and cannot be placed on the market. 7 Current rental rates for retail space on the Mall range from $1 to $1.50 per square foot compared to approxlmately $2.00 to $2.50 at Santa Monica Place. 2. Sales Volume: In 1982, annual sales per square foot on Thlrd Street were $70 compared to $129 per square foot for Santa Monica as a whole. ThlS dramatic difference is indicative of the non-competitive mix of buslnesses and merchandise and outmoded retall facil~tles. Alternatlvely, the sales different~al also indicates the vast untapped potential that exists for increasing sales on the Mall. Sales volume on the Mall dropped 9.8% from 1981 to 1982. The City as a whole, however, had an increase ln sales activlty of 5.6% during the same period. In 1981, the Mall represented 4.4% of the City's total retail sales, while in 1982 this dropped to 3.7%. Fourth quarter data for 1982 is equally as reveallng. ThlS quarter (October-December) is tradltionally a strong period for retailers due to the Christmas sales season. When compared to the fourth quarter of 1981, the city as a whole experienced a 9.2% increase ln sales volume, whlle the Mall had a decrease of 8.1%. This certalnly indicates a serious erosion of sales activity in the past year. 8 MALL RET~IL SALES 1921 AND 1982 1981 1982 % CHANGE APPA'<EL $5,640,200 $4,326,300 -23 3% SHOES 3,321,300 3,614,800 +06 9% . GENERAL 13,515,400 13,108,900 -03 0% SPECIALITY 5,893,100 5,165,300 -12.4% JEWELRY 1,967,700 1,286,200 -34 6% CAFES 1,779,500 1,562,000 -11.1% DRUGSTORES 2,422,900 2,396,200 -01 1% ALL OTHERS 1,872,500 1,445,:;00 -22 8% TOTAL $36,472.700 $32,905,000 -09.8\ Th1S decrease in sales volume has had a direct impact on Clty revenues. Businesses on the Mall currently generate less than 5% of the sales tax collected in Santa Monica. The amount of sales tax generated by the area dropped in both absolute dollars (from $364,727 in 19B1 to $329,050 in 1982) and as a percent of total City sales tax revenues (from 4.4% to 3.7%). 3. Man~~~ent: The Mall lacks a mechanlsrn for providing organized management services necessary for a competitive retail center, functioning like a traditional commercial strlp with each store setting its own hours and developing its own advertising and promotlonal activlties. Organlzed management, supported by a special promotion district, can establ1sh common hours of operat1.on, prov1de centralized promotion, maintenance and secur1ty services. When functions are centralized, shoppers have information on the retail center as a whole and can make better use of all its serVlces. Without these coordlnated services, the 9 Mall is less able to compete with other retail centers, lncluding Santa Monica Place. This service could be supported by a newly- created downtown promotion district. 4. Current Users: The City's recently completed Community Needs Assessment reveals that 87% of all residents surveyed report using the Mall to some extent. About 20% of those who use the Mall report that they do so very often. This data also lndicates that mlnority and low-income residents are frequent users. It 1S lmportant to note, however, that while a high number of residents do use the Mall, 47% of all respondents rated the area unfavorably. This rating reinforces the premise that existlng conditions on the Mall are in need of improvement and must include measures which not only attracts new users but also serves current users better. III. OPPORTUNITIES While problems currently exist on the Mall, strong economic and envlronmental assets are also present that could potentlally attract the reinvestment necessary to spark revitalization of the area. Located in the heart of downtown, and two blocks from the beach, the Mall is surrounded by one of the strongest markets in Los Angeles County. Moreover, the most costly public improvements (parking and freeway access) are already in place. Therefore from a development perspective, the Mall represents unique opportunlties for the City. Following is a discussion of these opportunltles. 10 A. Proximity to Santa Monica Place The prox1mi ty of the Mall to Santa Monica Place is an asset wh1ch 1S currently underutillzed. Santa Monl.ca Place attracts a broad range of shoppers from a reg10nal market and offers a range of goods and services whlch appears to meet the current demand. However, the Mall has the opportunity to serve th1s market by providing complementary goods and services in an environment Wh1Ch 1S visually different from the "contemporary" environment of Santa Mon1ca Place. This could be done by provld1ng complementary amenities such as galler1es, outdoor dl.nlng and entertainment in restored per10d structures and improved common areas; anchored by Santa Monica Place to the south and lncreased retail or hotel anchors to the north. B.Proxi~~!Y to Future Tourist-Related and Commercial Developments The Ocean Front Issue Paper, prepared in connection w1th the proposed Land Use Element of the C1ty'S General Plan, has recommended hotel development, as well as a mixture of reSl.dent1al and commercial uses, south of the Pier. In addit1on, proposed changes in the Land Use Element 1nclude commercial development directly east of the Mall. Future developments of this type which would result in both an increased demand for daytime retall shopping and evenlng, tourist-related services presents major opportunit1es for eX1st1ng and potentlal merchants. C. Growlng Interest in the Arts and Cultural Activities The growing interest in the arts and 11ve theatre also provides 11 an opportun~ty for the Mall to develop a special, arts- or1ented theme. The creation of the Arts Commission by the City has assisted in promoting the arts in Santa Monica, including the development of programs and resources to increase the community's 1nvolvement 1n a range of arts-oriented activities. The proposed "Public Arts Program" would provide opportunities for the 1nclusion of public art in the Mall's common areas and other future public improvement projects 1n the area. Underutilized upper floors could be converted to faCl11ties for artists while the common areas of the Mall could prov~de an excellent place for exh1bits and live performances. These uses would complement other entertainment-oriented services as well as meet the goal for a pedestrian-oriented commercial area. D. Existence of Arch1tecturally Significant Structures As mentloned earlier, a number of structures on the Mall are excellent examples of Art Deco and Streamline Moderne arch1tecture. The preservation and "unveil1ng" of these styles would further the necessary goal of providing a unique visual environment for the area. In addition, a number of buildings are candidates for h1storic preservation or landmark designation. Most also are 1n need of substantial repair and could be renovated through the use of recently enacted federal lnvestment tax credits. The result would not only be the historlC preservat10n of some of the largest bUlldings 1n the Mall, but also the structural upgrading of these structures for current and future tenants. 12 DEVELOPMENT STRATEGY 13 INTRODUCTION Merchants on the Third Street Mall, representatives of the Santa Monica Chamber of Commerce, concerned residents and C1 ty offic1als have all expressed the need for an agress1ve development plan which addresses hoth the significant problems facing the Mall and 1n turn cons1ders the range of opportunities Wh1Ch can be max1m1zed 1n revers1ng the Mall's decline. Three development strateg1es are available to the City 1n developing this plan: o The City can choose to limit its involvement 1n which case the full burden for achieving the Mall's recovery would be placed on the private sector. o The Ci ty can increase its own staff resources and through a program of full-scale public improvements attempt to revitalize the Mall. o The C1-ty and the private sector can implement a development strategy which stresses mutual cooperation and maximizes both private and publ1C sector resources. Th1S report presents th1S thlrd alternative -- the development of a pUblic/private partnership -- as the most viable strategy. It is an 1ncremental plan WhlCh proposes 1mmediate revitallzation activltles which will then serve as a pOSltlve base for additional long term efforts. Critical to the phasing and implementation of these actlvitles is the establlshment of a noo- profit development corporation, to be called the Third Street Development Corporation, deslgned to work in conjunction with the Clty and representatives of the buslness communlty to effect the necessary changes on the Mall. 14 I. GOAL STATEMENT The overall goal of the proposed revitalization effort is to create a vltal, pedestrlan-oriented retall area which will serve as the focal point of the downtown area. This goal is based on a number of major assumptions: o that the current character of the Mall as a low rise, pedestrlan oriented retail area should be maintained. o that neighborhood services such as drugstores and con- venience stores currently utilized by Santa Monica residents should be malntalned including services to low-income, minority and senior residents. o that public interventlon, including a possible special assistance program to small businesses, wlll be necessary to ensure that eXlsting businesses can continue to serve residential needs in the face of increasing regional competitlon. o that a successful revitalization effort will only occur if a major "anchor" is added to attract users of a regional nature. o that expansion of the eXlsting redevelopment area must occur for the purpose of assembling multiple parcels for major anchors as well as generatlng needed publlcly assisted financing. o that the development program must build on the hlstorical character of the Mallis architectural environment and this must be used as a marketing tool for the area. o that immediate improvements must be implemented but will only be successful if additional improvements are made as a part of an overall development program. The following sectlons identify those lmmedlate activities which can be implemented wlth currently allocated City resources in furtherance of these overall goals, summarizes the long-term revitalizatlon lssues to be confronted, and provides a detailed workplan and timeline for all activitles discussed. 15 II. IMMEDIATE REVITALIZATION EFFORTS Although a wide range of problems were identified earlier in this report, there are two critical problems which must be addressed 1mmed1ately 1n order to beg1n the restoratlon of economic viabl11ty on the Mall. Slmply, shoppers and tenants cannot easlly get to the Mall from the adjacent park1ng structures and then when they do arrlve, they are met with a visual environment which neither encourages consumer activity or private sector investment in the area. Therefore, three major act1vltles are recommended for immediate implementat1on: Public improvements to parking structures and adjacent areas; the provision of cap1tal resources to Mall merchants for improvement of facades and retail facil1t1esi and the development of design guidelines to serve as the arch1tectural and planning guide for the implementation of these and all other renovatlons and new construction on the Mall. These act1vit1es are detailed below. A. Public Improvements The major focus of public 1mprovements during this initial phase of the revltal1zation program 1S the improvement of parklng structures and adjacent areas. Improvements will he designed to afford greater access to the Mall, to lncrease securlty 1n the garage structures and alleyways, and add aesthet1c improvements to common areas linking the garages and the Mall. 1. Parking Structure ~mprovements: In 1982-83, the C1ty Council allocated approximately $ 75,000 for the removal 16 of parklng structure facades. ThlS project is underway wlth three structures completed and all remaining structures targeted for completion by the end of the current fiscal year. In addltion, the Council allocated $315,000 for additional improvements to these structures includlng: redeslgn of restrooms for greater user securlty and reduction of vandalism, opening of alley stairwells~ improvement of information and directional graphics and signing; improvement of overall malntenance, circulation and security; and possible alternative uses for the ground floor of the parking structures. The proposed design for these lmprovements will be submitted for reVlew by December of 1983. 2. Adjacent Structures: In order to link these improved parking structures with the retail area of the Mall, this plan proposes the construction of arcades or elevated walkways through or over existing or new buildings. Clty staff will ldentify several alternative sites for the walkways for acquisi tion or negotiated purchase to be funded with currently allocated funds earmarked for common area improvements. Efforts will be made to mlnlmize relocation and acquisition costs through the use of publlC easements, air rights leasing and development agreements. In additlon, staff will investigate the possibillty of constructing turnouts on Santa Monica Boulevard and Arizona to allow passenger loading and unloading, especlally for the disabled and elderly. A proposed deslgn will be presented to the Clty CounCl1 no later than March 1984 and will be funded initially from $200,000 allocated by Councll during the current 17 year for unspeclfled common area improvements on the Mall. B. Provis1on of Capital Resources to Mall Merchants A Mall Improvement Revolving Loan Fund will serve as the funding mechanism for the prov1sion of capital resources to Mall merchants during the inltlal phase of revlta1izatlon. This fund was approved 1n concept as a part of the City's 1983-84 Community Development Program to be capitallzed wlth $300,000 allocated by the Clty CounCl1 in the current year's budget ($150,000 from CDBG and $150,000 from Redevelopment Agency funds). This activlty will leverage private funds for the revitalizat~on of specif~c businesses inc1ud1ng loans for facade improvements, renovations, working capital, or lnventory acquisition. The intent is to prov1de caplta1 for those improvements which will eventually result in job creation and retention. Loan repayments will be used to replenish the fund and the participation of local lending institutlons will be sought to ensure the avallablllty of conventional financing and to make addltional sources of fundlng available. C1ty staff will define the basic parameters of the fund lnc1uding speclfic allowable uses, lending criteria, leverage ratios, ellglbility standards, equity contributlons, terms and security. Once designed, the program will be managed by the proposed Thlrd Street Development Corporation in cooperation with a local lending institution. Clty staff will monitor the program through the Department of Community and Economic Development and Council will reta10 oversight of lending activities through periodic reports 18 SUbmltted by the Corporation for reVlew. A specific proposal will be brought before the Council in December 1983 with actual lmp1ementation planned for March 1984. C. Development of Design Guidelines These proposed improvements to both publlC and prlvately-owned structures, coupled with the potential for increased renovatlons and new construction on the Mall in the future, make it essential that speclflc guidelines be developed for use by City staff, City Boards and Commissions and developers. The development of these guidellnes will ensure that physlca1 improvements lead to an aesthetlcally improved and architecturally compatlble shopping area while still allowlng for individual "tailoring" wlthin these broader guidelines. Due to the increased number of renovatlons on the Mall, City staff proposes to seek the development of these guidellnes immediately wlth the asslstance of a consultant currently included in the City's 1983-84 budget. The proposed gUldellnes wlll outline a design theme for the Mall that will apply principally to the improvement of existing facades and secondarily to new development, signing, lighting, street furniture and landscaping. They will also add res s possible uses for common areas. City staff wl11 review the Ci ty' s proposed Land Use and Circulation Elements and all relevant ordinances and previous Mall revitalization reports. Height, density and solar development recommendatlons included in the proposed Land Use Element will be reviewed for their impact on design gUldelines. With the partlcipation of the newly formed development corporation, the community at large, and City Boards 19 and Commissions at design and citizen participation workshops, the consultant wlll develop recommendations for staff review; staff wlll then present recommended guidellnes to the Council in March 1984 including the recommendatlon that an ordlnance be prepared for their implementation and enforcement. D. Establlshment of the Third Street Development Corporation Consistent wlth the overall development strategy of establishing a public/private partnershlp in this revltallzation effort, lt is essentlal that a quasi-public body, representing business and community interests, be establlshed by January 1984 to fully lmplement the short activities detailed above. In addition, the establishment of thlS body is critical to the development of comprehensive long-term revltallzation actlvities discussed later ln this report. l. Purpose of the Thlrd Street Development Corporation: The Third Street Development Corporation will provide a mechanism for the ongoing involvement of owners, tenants, residents, and the City in the revitalization of the Mall. The Corporation will make recommendatlons to the City council on the design and implement of an overall development program. It will be responsible for implementlng design guidelines, maintaining the support of the public and private sectors, ldentifying additional sources of public funding and private financing, and coordinating necessary Mall promotional activlties. 2. COEporate Structure: The Third Street Development 20 Corporation will be a non-profit, 50l(c) (3) publlC beneflt corporation established under the laws of the State of Californla. A nine-member Board of Directors will oversee the affa~rs of the Corporatlon and will be appointed by the City Counel1 to represent property owners, the broader business and resident communlty, and Mall merchants. The majority of Board members will be required to have substantial public or private buslness experience, includlng members with specific experience in retailing, lending and commercial leasing. Directors will serve staggered three-year terms to ensure continuity within the Corporation. The Board of Directors will select an Executlve Director whose appointment will be subject to approval by the Clty Manager. The requ~red qualification for thlS position shall be a rnlnimum of four (4) years of project management experlence in community development or redevelopment. 3. Speclfi~ Duties of the Corporation: The proposed duties of the Thlrd Street Development Corporation are summarized as follows: o Implement deslgn guidelines approved by the City Council whlch set the thematic design criteria for facade improvements, signage, lighting and landscaping. o Make recommendations to the City staff and Council on the development of public lmprovements including pedestrian walkways, landscaping and other improvements to common areas, circulation lmprovements. o Assume the management and coordinatlon of the Mall Improvement Revolvlng Loan Fund. o Implement a marketing and promotion strategy for the Mall to increase shopper awareness and investor interest in the area. 2l o Review the need for enhanced night-t1me security to encourage evening use. o Monitor enforcement of applicable City ordinances such as the Mall Lighting and Refuse Ordinance. o Propose revitalization area boundar1es. o Develop a "Th1rd Street Development Program" for the defined area as recommended in the proposed Land Use Element. oAssess long term development choices lncluding types and location of major anchors, reopening of Thlrd Street. o Assist in the extension of the eX1sting redevelopment area. o Develop for Councll consideratlon a Mall Improvement Assessment D1strict to finance future public improvements 1n the Third Street Mall area. o Identify and secure additional State and Federal funding and pr1vate financing for business development projects including renovation and new construction. o Develop specific public/private financing packages for new business development. o ASSlst private lnvestors and merchants in securing all necessary approvals, 11censes and permits. o Provide techn1cal assistance to existing businesses on marketing, inventory control, financial management and related business services. o Produce an annual program and financlal report for City Council reVlew and approval. o Call public hearings to solic1t public input regarding corporate activitles and to ensure citizen participa- tion 1n design and plannlng 1ssues. 4. Role of the City: The establishment of the Third Street Development Corporation in itself w1l1 not accomplish the revitallzation of the Mall. The City must continue to take an actlve role, using its municipal resources to create a positive environment for investment. As a partner, the City will provide the following: 22 o Establishment of development goals and deslgn guidelines including land use parameters relating to overall downtown development, specific Mall design guidel1nes, policies regarding public rights of way. o In1t1al capitalization of revitalization activities (Mall Improvement Revolving Loan Fund, operating fund for the Thlrd Street Development Corporat1on). o Development of Third Street Development Corporation Articles of Incorporatlon and By-laws to be similar 1n form to those adopted for the Pier Development Corp. o Public area improvements including parking structures, walkways and other necessary common area improvements. o A streamlined and stable regulatory environment. o Assistance with slte assembly or acquisition, if necessary. The Councll will retain the right of approval on the following: o Corporate articles of incorporatlon, by-laws, amendments o The Corporation's annual program plan and budget o Mall Design Guidelines o Third Street Development Program o Establishment of possible redevelopment area o Establishment of a Mall Assessment District o Financlng arrangements involving public funds o Leasing of public areas The workplan and timellne 1ncluded in a later section of this report further delineates the responslbilities of the City in worklng with the Third Street Mall corporation. These duties will be clearly described in an Agreement between the City and the Corporation and will be characterized in a way to ensure a smooth transltlon of responsibilities upon execution of that agreement. Once thlS has occurred, City staff will monitor 23 contract compliance and provide technical assistance as necessary. 5. !unding ~~ th~ ~orporat1on: The adopted 1983-84 City Budget includes $100,000 1n Community Development Block Grant funds for capitalization of the Third Street Development Corporation. These funds w111 cover necessary start up costs and operating funds for the first year of operation. Included in the 1983-84 budget is a one-t1me consulting cost for the development of the "Th1rd Street Development Program" which was poss1ble due to salary sav1ngs in this first year. It 15 projected that $lOO,OOO in City support for 1984-85 would provide for the ma1ntenance of current staffing and operating expenses. In future years, operating funds will be matched by the Corporation from other sources such as grants from private foundations who have historically provided startup capital and operating funds for community development activit1es (for example, the Local Initiatives Support Corporation), and proceeds from a possible Mall Assessment Distr1ct to be discussed later in this report. The proposed budget for the remainder of 1983-84 follows: 24 PROPOSED 1983-84 BUDGET Third Street Development Corporat~on SALARIES: Executive Dlrector (4 months) Clerlcal (5 months) Frlnge Benefits (17%) $13,332 -15,000 5,000 3,400 EXPENSES: Rent (5 months x 500 s.f. x 1.15) Utilities and Maintenance (5 months) 2,875 1,000 Operating Expenses and Office Supplles (telephone, insurance, postage, travel, equipment maintenance) 4,725 Furniture and Equipment 3,000 Promotional Actlvities (deslgn, advertising, printing, rentals) lO,OOO Contractual SerV2ces (legal, accounting, planning and marketing) (consulting for Third St. Dev. Prog.) 10,000 45,000 $100,000 Similar mechnisms have been developed in other communit1es to carry out similar revitalizat10n projects. Brief case studies of two of these -- the Highlandtown Revitalization Corporation 1n Baltlmore and the Downtown Development and Management Corporation 2n Lewlston, Maine -- are included in this report as Attachment I. 25 III. LONG TERM REVITALIZATION ISSUES With the establishment of the Third Street Development Corporation and the initiation of the previously mentioned activities designed to address some of the most immediate needs on the Mall, the stage will be set to expand revitalization activities to ensure that the overall effort will have a lasting 1mpact. However, it 1S important to note that thlS long term dlrection can not be determined until a number of cr1tical lssues have been evaluated and resolved. These issues were alluded to l.n the discussion of the specific activitl.es to be performed by the Thlrd Street Corporatlon, however they will be detailed further In the following sect1ons. A. Major Development Cholces As ment10ned previously, one of the most critical problems is the inaccessibility of the Mall and the lack of a "reason" for addlt10nal users to come to the area. This report recommends the development of a major anchor(s} in furtherance of this objectlve. These anchors might be a large department store, a specialty store complex with a large aggregate volume or a hotel. They must be located at critical gateways that will draw users throughout the area. In addltion to identifying and attracting these anchors, the option of reopening all or portions of Third Street must be considered. Obviously, these development decislons wlll impact subsequent dec1sions concerning the use of common areas, needed publlC improvements and necessary flnanclng mechanisms. 26 .-. B. Development of Implementing Mechanisms In furtherance of the major development activities to be implemented, various mechan1sms will have to be developed. 1. Extension of Exi~ting Redevelop~ent Area: Included in the 11st of major "assumptions" underlying this proposed strategy was the need to extend the existing redevelopment area to lnclude the Thlrd Street Mall area. This is necessary 1n order to assemble multiple land parcels for major anchors and to make public financlng mechnisms available. The timeline and workplan for accomplishlng this objective w1ll be carefully assessed by the Third Street Development Corporation and included in the proposed "Thlrd Street Development Program" discussed later ln this sectlon. 2. Establishment of a Mall Improvement Assessment District: Consideration wlll also have to be glven to how future public lmprovements wl1l be financed. A special assessment district could be established to support some of the proposed common area improvements such as the reopening of Third Street, repaving of alleys, installatlon and maintenance of publlC restrooms, landscaping, as well as marketlng and promotion on the Mall, and operat1ng funds for Third Street Development Corporation activitles. Property owners would be given the choice of paying for the improvements lmmediately or over time. Generally the later option lS chosen In which case the City would 1ssue bonds to pay for the improvements. It is not possible to project the specific amount of revenue that would be available from thlS assessment dlstrict until district boundaries and speciflc 27 1mprovements are determ1ned. However, in order to generate adequate revenues to support $100,000 in operating expenses for the Th1rd Street Mall Corporation as proposed 1n this report, an average of $14 per year/per linear foot (frontage) would have to be levied. Because special assessment d1stricts are not subject to the 1% property tax limitation or the Gann spending limit, the district may be initiated either by the City Councilor property owners lnvolved. Support by the majority of property owners within the proposed district is necessary. c. Development of Thlrd Street Development Program In order to respond to the recommendation 1n the proposed Land Use Element that a "Mall Specific Plan" be developed, such a document w1ll be produced, hereinafter called the "Third Street Development Program." This plan w11l integrate the results of the immediate revitalization activities, the proposed and existing design and land use criteria, and will further recommend spec1fic long term guidellnes. This document will lnclude 1) location and standards for land use and facllities including the size and location of parcels for major anchors; 2) the location of and standards for streets and other transportation facilities including additional pedestrian accessways; 3) standards for populatlon density and building intensity; 4) provisions for 1mplement1ng the City's Open Space Element; 5) design and cost1ng of addi tiona1 public 1mprovements and common areas; 6) alternative financ1ng mechanisms; and 7) market analysls of 28 existing goods and services. The creatlon of thlS document provldes a unlque opportunity for the City, the business community and Santa Monica residents to participate ln the speclfic decisions still to be made about a very important community resource. It comes at a time when substantial public resources are available in support of revitalizatlon actlvities, the Third Street Development Corporation wlll be available to garner private support and expertise to asslst in the Programts development, and revised land use criterla is avallable to serve as the basis for specific criterla in this area. The projected time line for Council approval of this plan in September 1984, reflects the intended "assertive" nature of the Program. It will provide definitlve and lmmediate guidance to the buslness community and the City ln making critlcal development decisions. IV. MALL ACTION PLAN WORKPLAN AND TIMELINE The followlng timeline identlfies the major actlvitles proposed ln thlS report, ldentifying the entities responsible for implementation and proposed deadllnes for completion. 29 NORKPLAN AND THiELINE ~ 00 ~ ~ .......... 00 co <.0 .......... .......... fil <"'1 r-l Z I I H <"'1 <"'1 M H M <"'1 M <:J' 00 "<I' co (Xl o::l' <:J' fil (Xl co (Xl co .......... co .......... .......... co co :2:: .......... .......... .......... .......... N .......... r-l N .......... .......... H <.0 (Xl 0'\ r-l r-l L'1 r-l r-l r-l <"'1 E-l p,. 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RECOMMENDED ACTIONS City staff recommends that the City Council (1) approve the proposed immediate revitalization efforts ldentified in this report, dlrecting staff to implement these activitles according to the attached workplan; (2) request that the Plannlng Comm~SS1on and all other appropriate Boards and Commissions review the additional long-term actl vi ties and issues and transmlt their comments within a 60-day perlod; (3) direct staff to prepare the appropriate documents to create the Third Street Mall Corporation, lncludlng Articles of Incorporatlon, By-Laws, and any other required documents; and (4) authorize the City Clerk to solicit appllcations for the Corporation's Board of Directors. 33 ~ l' . Attachment I CASE STUDIES: LOCAL DEVELOPMENT CORPORATIONS Highlandtown Revitallzation corporat1on (Baltimore, MD): ThlS non profit development corporation was created in 1974 to coordinate the revitalization of the Highlandtown commerc1al center, a 20-square block area of Baltimore. The once thriving commercial center was showing signs of competition from new shopping centers~ merchants and neighborhood residents joined forces with the Clty of Baltimore to stop the outflow of businesses and shoppers. The C1ty made substantlal publlC improvements lncluding sidewalk repalr, streetllghts, street trees, and a pedestrian plaza. With the assistance of the City, merchants and residents establ1shed the H1ghlandtown Revitalization Corporation which developed design gUldelines for renovation in the area that were subsequent ly codi f ied by City ordinance. The Corporation currently assists businesses in securing public and private financing for building renovations and other business lmprovements. Most of the renovation projects are complete and the corporation's current focus is management services. These include coordinating hours of operation, advertising, sales and special events and providing bUSlness assistance to less successful businesses ln the area. Since its creation, the Corporatlon has brought 30 new businesses to the area and saved five from failure. To provide ongo1ng financial support, the City plans to enact an ord1nance requiring each business to pay a special business llcense fee. The fees have been used successfully in other commercial neighborhoods in Baltimore. The Downtown Development and Management Corporation (Lewiston, Malne): This corporation was created by the City of Lewiston to coordinate the revitalization of the downtown commercial center. In 1978, the City and the corporation applied for and received a $3.2 million Urban Development Action Grant (UDAG) that ultlmately leveraged $26 mlllion in private investment. The funds were used to make public 1mprovements and to create a revolving loan program. The program provided funds at reduced lnterest and ellg1bility requlrements included the abillty of the business to secure at least 50% of the project funding from private sources. Most loans were made for building renovations and business 'J~ < . improvements. The Clty established design guidelines for the area WhlCh applied to all projects receiving any type of public funds. In addition, the City lnvested in public improvements lncludlng street 11ghts, repaved streets and landscaping. To fund the Corporatlon, a spec1al assessment district was establlshed by the City. All merchants and owners withln the distr1ct are members of the Corporation and elect ten Dlrectors. The City appolnts one Dlrector to the Board. In addition, the Corporat1on must secure Clty Council approval for its annual program and budget.