SR-09-27-1983-11A
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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
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SEP 2 7 1983
THIRD STREET ~ffiLL
NORK PROGRAM
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City of Santa Monica
Department of Community & EconomlC Development
September 27, 1983
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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,
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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.
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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
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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
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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.
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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.
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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
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32
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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.