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 City of Hermosa Beach --- 07-22-97City
of
Hermosa Beach
SUBJECT: Status Report - Downtown Reinvestment
Recommendation: That the City Council receive and file this report.
Background: In 1994 the City changed downtown parking requirements and negotiated a development cap with the Coastal Commission for 96,250 square feet of development utilizing existing surplus parking. Concurrent with these parking standards, the City changed Conditional Use Permit requirements and instituted other business friendly measures facilitating downtown development. Also concurrently, the City implemented a seismic retro-fit program requiring rehabilitation of 41 buildings in the downtown, prepared and implemented the Downtown Improvement Plan and commissioned traffic and circulation studies to assess parking and circulation demand for proposed development projects and prepared predevelopment studies to redevelop Lot "C" as a multi-level parking structure.
Over the last three years the City has substantially implemented these programs with a new resort hotel under construction, a 400 car parking structure in design and over a dozen new businesses opening or expanding. All but 11 of the original 41 unreinforced masonry downtown buildings have been rehabilitated. Owners compelled to renovated buildings under the new seismic retro-fit ordinance, sought new tenants to share costs of making retro-fit improvements, and businesses looking for South Bay locations, located in downtown Hermosa where parking was not a major cost of development. The new parking and development standards, new requirements for seismic upgrading and new Lower Pier Avenue streetscape has changed the climate for reinvestment.
Private Reinvestment Over the last 3 years the City has encouraged new private reinvestment resulting in the following:
Total Reinvestment 33.80 million dollars Public Reinvestment Over the last 3 years the City has committed the following funding for public improvements:
Total Funds Committed 8.3 million dollars
Annual Financial Return to the City The hotel and parking structure are expected to generate the following revenues annually:
Total $631,358
Total Annual Revenues $681,358 *Does not include ground lease revenue from parking structure retail frontage Summary: The financial impacts of the revitalization program are impressive. The ratio of private to public to reinvestment is approximately 4 to 114. Revenues generated by this level investment will total approximately $600,000 annually. There is a high level of confidence in investing in the City and little ground level vacancy in the downtown. The City is now receiving inquiries for office development which can help satisfy the need for more downtown daytime users and generate additional sales revenues. By the end of this year the first phase of the hotel will be complete and the City will have completed Phase One Pier renovations and the Pier Plaza. By the end of next year the 400 car parking structure will be in operation and the second Phase of the hotel will be complete. A new market for office and retail development is emerging downtown with substantial projects proposed to renovate and expand the Bijou Theater with new retail development. In addition to the above, according to hotel/convention industry standards, hotels generate approximately $51.00 per day on shopping and non-food items. This average suggests that a 96 room hotel will generate approximately $1.1 million dollars in annual shopping/non-food business activity and restaurant uses can expect up to $800,000 in additional annual restaurant sales based upon hotel related commercial activity. Comparing sales tax over the three year period, annual sales tax has increased by approximately 20% in the downtown since 1993. Therefore the scope and rate of redevelopment over this three year period is remarkable and is the best indicator of the changed climate for downtown reinvestment.
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