Pier Board to Turn Lease Management Over to City

By Jorge Casuso and Lookout Staff

In a decision that disheartened some members of the Pier Restoration Corporation, the city has notified the quasi-public agency that it will take over the administration of leases on the historic wooden landmark.

The formal announcement was made to the board at a meeting at the Ken Edwards Center last Wednesday, but the decision had already been reflected in the new budget approved by the City Council on June 22. The budget eliminated the pier board's request of $126,000 for lease management.

"I don't know if we jumped or we were pushed," board chairman Bill Spurgin told the board. "The role of the PRC in leasing becomes one of we approve the leases instead of supervise the negotiations…. It's a whole new world out there."

The board had called an emergency meeting to discuss the city's decision before the council voted on the budget, but because City Hall was closed that Friday, there was not sufficient public notice to hold the meeting, Spurgin said.

Some board members were disappointed they had no say in the decision, which must still be ratified by the board, though it has little choice but to go along.

"We didn't have full opportunity to discuss this on the board," said vice chair Michael Klein. "The council people said, 'It didn't seem that you wanted it.' We were getting mixed messages."

"We can go back and revisit this, although the budget is set," Spurgin told the board. "It puts us in an awkward position."

City officials said the city was unable to fully fund the PRC's request for $798,000 in its 1999-2000 $345 million budget. Instead the council budgeted $629,000 and asked that the board focus its resources on management and promotion of the pier, whose revenues have fallen far short of the mark.

"The city was unable to fund that (promotion and marketing) and the leasing program to the full level of sophistication," said Jeff Mathieu, the city's director of Resource Management, who as Harbor Master is in charge of the pier. "The whole discussion was driven by budget issues."

"We basically were given a number that we had to hit so I did some slashing," PRC executive director Jan Palchikoff told the board.

Unlike the PRC, which had to hire lawyers to help negotiate the leases, the city will rely on the city attorneys office, a move that is expected to cut costs, city officials said.

The 90-year-old pier, which is city-owned property, was expected to financially break even years ago, in large part through income from leases and tenant fees. Instead, it has been losing upwards of half million dollars a year.

The city's decision to take over leasing comes after leaders of the pier board privately pushed city officials for autonomy -- especially the right to take handle leases and streamline the leasing process, which was said to be in shambles.

They argued, for example, that the city could have protected itself against the Ash Grove's bankruptcy -- which cost more than $100,000 in lost rent and fees, not to mention legal expenses -- if the PRC had been handling the leases on its own. At the time, city staff and the PRC were sharing the responsibility - a confusing and inefficient process.

Since then, however, the tenant who took over the Ash Grove space -- a Santa Monica-based record label -- still has not opened its new club, The Arcadia, on a permanent basis, though a few functions have been held.

Many expected a splashy opening at the Arcadia in time for Labor Day; now the summer season -- the pier's busiest time of the year -- is half over, and the Arcadia is not expected to fully open its doors to the public until next month.

"The Arcadia started paying rent this month," Palchikoff told the board. "They're still finishing some of the remodeling. They're booking their talent now."

The Ash Grove site is not the only one falling short of expectation. The future of the Boathouse restaurant, operating on a month-to-month lease, still is uncertain. Some PRC members blame the hold-up on a hang-up with California officials over the rights to re-build a portion of the building that sits on state property. Others, however, speculate that the PRC is at loggerheads over the kind of tenant that should fill the space.

Several on the board have been pushing -- more privately than publicly - to oust the Boathouse and replace it with a better-known chain restaurant. Others want to keep the Boathouse intact and preserve its roots-in-the-city appeal.

At the same time, local developer Russ Barnard, who owns the pier's Rusty's Surf Ranch, still is waiting to develop a new 699-seat night club and eaterie called Club Route 66. Sources say the project, which was granted a permit five years ago, has been held up by a dispute with the city over who pays for the costs of shoring up the pier's infrastructure.

Meanwhile, the owners of Pacific Park, are disgruntled over the Santa Monica City Council's denial of the longer hours they had requested. They are said to be re-negotiating the terms of their lease and demanding a lower rent because the "fun zone's" spot on the pier is no longer as profitable as it once was.

And UCLA seems no closer to discussing openly and publicly the possibility of expanding its Ocean Discovery site -- even if the city finally gets around to moving parking off the pier and makes room for a bigger aquarium.

It is said that PRC Chairman Spurgin has kept negotiations with UCLA under close wraps and few on the board ever have been entirely clear about the aquarium's future.

The pier's glimmer of hope comes in the form of its premier summer special event - the Twilight Dance Series -- which earlier this month drew its biggest ever opening-night crowd and brought Jackson Browne to the stage.

Turning the pier itself into a similarly successful venture could fall to the city's new economic development manager, Mark Richter, who is expected to handle the leases.

Sources say that managing the leases may be the easiest part of his job. Managing the politics and the personalities may be a lot tougher.

Other Pier News

The board last week unanimously backed the Playland Arcade's efforts to keep their 2 a.m. closing time, which fails to conform to the to 10 p.m. curfew for arcade operators under the Municipal Code. The PRC and the city found the discrepancy during recent lease negotiations.

The Gordons, who have operated the arcade for half a century, requested a text amendment to the municipal code that would allow arcades to operate until 2 a.m. any day of the week.

Planning staff, however, recommended that the amendment be denied, noting that the increased activity during the late hours disrupted surrounding neighborhoods. They recommended that the arcade be allowed to operate until 10 p.m. Sunday through Thursday and until midnight Friday and Saturday.

The owners say the proposed hours would devastate their business, as well as decimate late-night foot traffic on the pier.

"It would have a quite staggering impact on revenues not just for the Arcade, but to the city," said a representative for George Gordon Enterprises, Inc.

The owners estimate that the arcade, which draws its biggest crowds in the late night hours, could lose a quarter of its business. And the city, which gets a percentage of its tenants' revenues, could stand to lose $1 million a year.

Pier officials say the Playland Arcade is a unique part of the pier's history and should be preserved.

"The entire character of the pier would change," said PRC board member Linda Sullivan. "Roll up the sidewalks at 10 o'clock at night, That's what this would amount to."

In a separate measure, the board decided not to back a request by The Boathouse to allow dancing on the patio. They are expected to advise the tenant to withdraw the application to the Planning Commission for a conditional use permit until the issue is addressed in the lease, which is currently month to month.

The planning commission is scheduled to take up both the Playland and the Boathouse's requests at its meeting July 21.