Council Temporarily Halts Restaurant Conversions on Promenade

By Teresa Rochester

Nov. 28 -- Hoping to stem the exodus of restaurants from the Third Street Promenade due to escalating rents, the City Council Tuesday night narrowly passed an emergency ordinance that freezes the conversion of properties from restaurant to retail use.

The council voted 4 to 3 in favor of the ordinance -- which halts for 45 days the issuance of certain permits necessary to convert property uses -- and was ready to move on to the next item when the City Attorney noted that emergency ordinances require a 5 to 2 vote.

Council member Robert Holbrook, who opposed the moratorium because he didn't feel it would be effective, then changed his vote without stating a reason, allowing the ordinance to pass.

Mayor Michael Feinstein and Council member Kevin McKeown remained firm in their belief that the measure did not go far enough in protecting the balance and mix of restaurants and retail shops on the popular outdoor shopping street.

McKeown said that the only way he would support the ordinance was if it also prohibited the consolidation of smaller spaces into larger ones.

"I'm not so sure the loss of restaurants are the only problem the Promenade has," McKeown said before the vote. "Small businesses have also been disappearing... I'm concerned about limiting the change from restaurants to retail."

Initially, the ordinance suggested by staff called for a moratorium on the development, physical expansion, consolidation or change in use of commercial properties on the Promenade.

Councilmen Herb Katz and Ken Genser pushed to narrow the focus to the conversion of restaurant use to retail, a trend City officials worry is turning the strip into just another shopping mall lined with large retail chains.

"We're treating the major symptom, the bleeding of restaurants," Genser said. "It's like doctor do no harm. If this were private industry, the landlord would be doing the exact same thing."

Promenade landlords, however, urged the council not to regulate property conversions, arguing that meddling with the free market would kill the street, which already is suffering in the economic aftermath of September 11 terrorist attacks.

"I believe this ordinance is poorly worded and unnecessary," said Joe Romano, who is currently looking for a tenant for his building at 1338 Third Street Promenade. "The free market should be allowed to operate freely."

"We're coming on a very precarious time," said Charlie Christenson. "If a moratorium is the answer, 45 days is a very long time in the retail world. We need to put out the welcome mat for the retailers, not put up the warning signs."

Many speakers, including officials of the Bayside District Corporation, which oversees the management of downtown, urged the council to form a task force to study possible solutions for maintaining the retail and restaurant mix on the street.

The council agreed directing staff to return December 11 with suggestions on the composition and purview for a task force and a schedule. Staff also will present information on a number of recommendations made by the Bayside District to remedy the problem that might be administratively implemented.