Follow the Money

By Frank Gruber

In the context of the Macerich Company's plans to remake Santa Monica Place, I have been thinking about two books that I have read in my effort to educate myself about planning: James Howard Kunstler's The Geography of Nowhere and William Fulton's The Reluctant Metropolis.

Kunstler's book is a great rant about everything that went wrong with America's built environment in the second half of the 20th century; e.g., Kunstler invented the word "crudscape" to describe the "highway commercial" development that afflicts most of America.

The most profound insight I took from Kunstler's book was that the places Americans like most -- from Sturbridge Village to Greenwich Village -- would now be illegal to build nearly everywhere in the country, as single-use zoning, large-lot zoning, over use of set-backs, excessive parking requirements, excessive street-widths, the lust for homogeneity and straightforward down-zoning, etc., have outlawed charm in most towns and cities, and mandated sprawl in rural communities.

The Charmont: Illegal today, Photos by Frank Grubber

Do you like the shops along Main Street and Montana Avenue, or the Aero Theater? Couldn't build them today, because of parking requirements. Do you like the Charmont and the Sovereign apartment buildings, or the Clock Tower Building downtown? Couldn't build them because of height restrictions, set-backs, parking, you name it.

The Clock Tower: Illegal today.

So my response to those who say the Macerich proposal violates current height restrictions is "so what?" Were those restrictions, reflective of what our town is about, or merely a reaction to a few ugly boxy buildings that were built in the 60s and 70s? Are they sacred?

It is true that Santa Monica has only one building 300 feet high, the height Macerich wants to build (Cesar Pelli's 100 Wilshire, which is, oddly enough, one of Santa Monica's most beautiful buildings), but we have many wonderful buildings up to thirteen stories. They have been part of our tradition since the 20s.

So let's keep our minds open about design.

The Reluctant Metropolis is subtitled "The Politics of Urban Growth in Los Angeles," and begins with an account of how, when Santa Monicans for Renters Rights took power in the early 80s, the City's new leadership confronted the "growth machine" in the form of Welton Becket's Colorado Place. By the end of the day, in author Fulton's words, after then SMRR Council Member Denny Zane had cut a deal, SMRR "had stared down the growth machine and gotten what it wanted: a smaller project, low-cost housing, and lots of social goodies." According to Fulton, the deal "represented the first time a local government in Los Angeles had translated sheer electoral power into direct leverage over a private developer."

Since then, Santa Monica has had a proud history of not subsidizing business. While many cities and towns ask prospective businesses what they want, Santa Monica's attitude toward business has been "what you got?"

In the book, Fulton has a chapter, "Welcome to Sales Tax Canyon," about the competition among three Ventura County cities, Camarillo, Oxnard and Ventura, to lure "big box" shopping centers to generate sales tax revenue to pay for municipal services after Prop. 13. These three cities do not have the deep and diversified economy Santa Monica has, and their desperate measures to entice the likes of Price Club, Wal-Mart and "factory outlets" would be comical if they had not been so . . . desperate.

One typical method of subsidizing these retail centers was to agree that taxes the owners of the center would pay would go to pay for the various improvements -- streets, landscaping, sewers, etc. -- the city built to benefit the development.

Back in the 60s and 70s, Santa Monica played this game, too. Whether the City had to do it or not, I don't know, but the City was faced with a dying downtown and it took some drastic measures. It built the parking structures, and converted Third Street to a pedestrian mall, but property owners paid for these improvements by forming an assessment district.

These improvements didn't work, however, and downtown Santa Monica continued to decline. (Santa Monicans Fearful of Change often nostalgize this period as a golden age of decrepitude, but the fact is that the pleasures of decline -- and there were some -- were enjoyed by only a few brave souls.)

To arrest the decline, the City established a redevelopment district for the ten acres that are now Santa Monica Place, and the Redevelopment Agency built the parking structures that provided free parking for shoppers at the new mall. The Agency got the money to build the parking structures by tapping into the future property tax revenues generated by the site.

Sound familiar? Can you say Santa Monica and Oxnard in the same breath?

Of course, these subsidies usually backfire. Oxnard is no better a place because of its factory outlets, and Santa Monica Place hammered more nails into the coffin of the rest of downtown, which was ultimately rescued by good design, good management, and movie theaters.

The problem with Macerich's proposals for Santa Monica Place is not the development, which is, as I discussed last week, merely a transfer of development authorized under the 1993 Civic Center Plan from one side of the freeway to the other, to create more open space. Macerich proposes to rebuild the same amount of retail as currently exists, and add some (but not too much) office space and 450 apartments and condos (150 of which will be dedicated affordable).

That's right: on-site affordable housing -- just what for 20 years the most "progressive" "housers" in town have wanted. Near jobs. Right out of SMRR and Democratic Club platforms. And the 300 condominiums, along with the other housing being built downtown, are just what the City needs to ensure that we can have continued economic success downtown without attacting more cars and regardless what competition we receive from future Groves and CityWalks.

The redevelopment also provides the opportunity to extend the Promenade to the Civic Center, to make streets friendlier to pedestrians, and possibly to create a new east-west connection between Second and Fourth.

If the City Council authorizes negotiations for a development agreement with Macerich, the real issues will be financial. Key to the deal is that the Redevelopment Agency must tear down its existing parking structures and dig a hugely expensive underground facility that, depending upon how many spaces it contains, may cost well over $100 million.

Doubtless the increased assessed values at Santa Monica Place will provide enough taxes for the Redevelopment Agency to pay for whatever it builds. But is that right? The Agency siphons these taxes from state school funds and the County; County funds are used mostly for healthcare and the justice system.

To give you an idea, the "Downtown Project Area" consisting of Santa Monica Place currently has an assessed value of about $173.5 million, nearly $170 million more than the base valuation of $3.7 million; that already generates net tax increment funding to the Agency of nearly $1.7 million each year. With redevelopment, this amount will soar; imagine the value of 300 condominiums, 500,000 square feet of retail (newly assessed), and 80,000 square feet of offices.

Should property taxes on a million-dollar condo pay for schools and hospitals or for the condo-owner's parking spaces? That is the issue. (You may have heard that redevelopment agencies pass 20 percent of the tax increment through to counties and schools, but this does not apply to redevelopment areas, like Santa Monica Place, that were created before 1993.)

It's not wrong to build the parking to get public benefits. But it is wrong to provide parking free or below cost to subsidize development (other than affordable housing). In effect, the City, through the Agency, will be the landowner, and if it cannot get back the cost of the parking from parking fees, then it needs to negotiate appropriate "rent" to get back the difference, or negotiate for offsetting public benefits, such as parks that are open to the public.

Again, let's not lose sight of the forest for the high-rises.

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Dogs on the beach? Even in summer? Sorry, Fido, but call me skeptical.

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Important meeting notice: On Saturday, the Planning Department will hold its first community meeting on the land use and circulation element updates to the general plan. Location: John Adams Middle School, 2425 16th Street. Time: 10 to 1. For more information: http://www.shapethefuture2025.net/