March 2001


INTERVIEW: Seeing Green
Mayor Michael Feinstein says his liberal agenda has helped busines thrive, bettered the lives of residents and made Santa Monica the envy of other cities

By Danny King. Staff Reporter, Los Angeles Business Journal
March 25th - April 1st, 2002

With tourism hit hard by the effects of Sept. 11, the dot-com collapse, unaffordable housing and highly contentious retail wage and development issues, Santa Monica finds itself a microcosm of the broader Southern California economy.

Where it diverges, however, is in its elected officials. Mayor Michael Feinstein is the most visible of the 138 Green Party members holding office in the nation, and he relishes his role in the town he describes as "a laboratory of democracy." Since his election in 1996, Feinstein has stuck to his support of diversity, environmental causes and proactive government, all the while promoting Santa Monica as a business-friendly environment.

Two issues facing the city are the skyrocketing rents that have forced restaurants off Third Street Promenade – prompting the City Council to approve a one-year moratorium on replacing restaurants with shops – and a living wage ordinance for the city’s coastline hotels and larger restaurants that will be on the November ballot.

Feinstein has led the crusade for both the moratorium and the living wage, putting him at odds with some in the business community. Still, he defends the process of government involvement in local wage and real estate issues.

Though being mayor in Santa Monica is supposed to be a part-time job, Feinstein says he works seven days a week, attending city council and community group meetings and answering resident e-mails late into the evening (he’s a notorious night owl).

Question: How badly was Santa Monica hurt by the Sept. 11 attacks and what is the city government doing to help out local business?

Answer: We’re looking at a $7.9 million shortfall in the budget for this fiscal year (ending June 30). That’s a combination of tourism losses and sales taxes losses. (Regional visitors) are also spending less after Sept. 11 because of the Bush recession, or Clinton hangover, or whatever you want to call it.

The difficulty for us is that the international visitor spends much more per day than does the regional visitor, so out of the $780 million last year in tourism and visitor related business, about $520 million was spent by the international visitor, and clearly we took a real hit there.

We spent $100,000 out of the city general fund to do a Shop Santa Monica campaign starting last fall that included print, television and bus advertising. We worked together not only with the chamber, but with the business improvement districts, the convention and visitors bureau – all the local economic entities worked together on this campaign to encourage to shop here.

Q: Some Third Street Promenade property owners are complaining that the city’s attempts to control the restaurant-retail mix restricts their ability to get the highest return on their investment.

A: The government always creates the context for a market. We have to look at whether the private individual’s self-interest is at odds with a collective interest in the area being healthy. We stepped in when restaurants over-proliferated 10 years ago in order to ensure there would be some retail. It worked very well – almost too well. We have really gone gently on this, more gently than I think our residents would like. We have hemorrhaged so many more restaurants in the last two years, and some property owners suggested that they weren’t interested in self-disciplining for the greater economic good for the area.

Q: But when restaurants and retailers move off 3rd Street and onto 2nd and 4th streets, isn’t that good for the overall area?

A: The argument that the migration to 2nd and 4th streets in and of itself is OK misses the point that the Promenade is the social engine for the economic success of downtown. If the Promenade is a single-mode destination, it will hurt the district. It’s entirely in the self-interest of national retailers to overpay and distort the local market because of the foot traffic that we’ve created with the public space.

Q: So what’s the city’s next step?

A: I think everyone is interested in finding incentives to go with the least amount of regulation possible, so that’s the philosophy going in. Some of the property owners are talking about trying to group themselves into an association as well, so they might self-regulate a bit. I’m encouraged by the interest and willingness to do that.

Q: The living wage proposal has also garnered criticism from Santa Monica business leaders. What’s its status?

A: There was a campaign primarily led by the beach hotels and some folks on the chamber to get the referendum on the ballot in an incredibly deceptive campaign. They managed to qualify the ordinance as a ballot measure, which will be voted on in November, and I’m confident that voters will vote to affirm the living wage ordinance.

Q: A recent study by the Public Policy Institute of Southern California found that the enactment of a living wage, while raising the average income of the lowest income workers, can also decrease employment in that same group. Is this a concern?

A: Not in this region. We’re talking about maybe 2,000 low-wage workers within the area that would be subject to the ordinance, and if one loses a low-paying job in Santa Monica, there are tens of thousands of similar jobs in this region. If we were an island, maybe one can make that argument, but it is entirely invalid in this region.

It makes sense for people to earn enough money to have a chance to live closer to where they work. Now, they’re not going to all live in Santa Monica, but there’s a difference between living in Downey and living in Mid-Wilshire.

Q: What is Santa Monica doing to alleviate the shortage of low-to-middle income housing and the scarcity of buildable land?

A: Certainly, we’ve lost affordability with changes in rent control. (A 1998 change allowed market rate rentals with limited annual increases.) If you go by the standard formula of housing being 30 percent of your overall costs, since 1999 it’s gone from a tenant needing an income of about $30,000 to about $80,000 just to live in the same unit. Every zoning district in the city, except for one, allows for housing. Right now we’re updating the last remaining district – the light manufacturing and studio district – for residential zoning.

Q: How does Santa Monica balance being an ecologically friendly city while allowing competitive opportunities for development?

A: We passed a green building guidelines ordinance (last year) – we require a higher rate of energy efficiency for new buildings than the state requirements, but what we did is a process in concert with the local development community. We didn’t prescribe an exact method to get the efficiency, but we helped with a menu of ways to get there. We didn’t impose it in a way that was going to be unreasonable for businesses, but we’re stretching the envelope in a way that’s good for everybody to help meet our city goals.

Also, when Edison backed out of its commitment to help small businesses with energy efficient lighting this year, the city back funded the Edison program ourselves.

Q: The Green Party is not considered part of the political mainstream. Do you find that to be a hindrance to building a thriving business community?

A: The environment and economics have to go hand in hand to be successful. The economic base of our country is based on the environmental resources, and if we undermine them, we undermine our economic sustainability.

When you look at this city, we have a very strong overall economy. We manage our money very well – we’re one of seven cities in the country with a AAA-bond rating from two rating agencies, so I think we’ve proven that environment and economy can go hand in hand. In addition, we’ve tried to find a balance between regional and national chains and locally owned businesses, and that is also a Green Party value – to have community-serving small businesses.

Q: Is this enough to overcome the "People’s Republic of Santa Monica" stereotype?

A: It’s always fun to play with stereotypes, but when one gets beyond the stereotypes, we’re the envy of most cities in the nation for how well it is run, and businesses keep coming here because we’ve managed it well. It’s a safe, clean and economically solid community. We wouldn’t be having the business climate we have here if we were so bad to business, so the evidence is here.

INTERVIEW:Michael Feinstein

Title: Mayor
Organization: City of Santa Monica
Born: Athens, Greece, 1958
Education: Bachelor’s degree in Philosophy, Carleton College
Career Turning Point: Serving as resident representative to the 17-member Main Street advisory committee in 1989
Most Admired Person: Albert Einstein
Personal: Single

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