City Posts Record Sales

By Jorge Casuso

April 27 – Sales tax revenues topped the $24 million mark last year, likely making 2003 the highest sales tax grossing year in Santa Monica history, according to figures compiled by the City.

Not only did the $24,114,833 in revenues top the 2002 figures by nearly $2 million (a 7.8 percent hike), they exceeded the $23, 558,192 reaped by the City in 2000, before the 9/11 attacks dealt a blow to the Santa Monica economy.

“It looks that this would be the highest calendar year I would say probably ever in terms of gross dollars,” said City Treasurer Dave Carr. “I think the economy is bouncing back a little stronger than it had been anticipated.

“It is doing very well, but we’re only now exceeding levels of three to four years ago, so it has taken time to come back,” said Carr, who noted that some reporting “anomalies” that have not been taken into account would not substantially change the figures.

A strong showing by auto dealers once again fueled the local economy, with vehicle sales tax revenues posting a 21 percent hike, compared to the fourth quarter in 2002. The sales increase followed a 27.5 percent jump in the third quarter, compared to the same period in 2002.

Auto sales -- which account for about one fifth of the City’s total tax sales revenues -- have spiked as dealers offer auto maker incentives.

“The auto dealers are a big chunk” of the total increase, Carr said.
Restaurants also continue to do well. Thanks to new venues opening up, eateries saw a 6.7 percent increase in the last quarter of 2003, Carr said.

The Downtown continued to lead the resurgence in sales, with the Third Street Promenade posting a 14 percent increase for both the year and the fourth quarter. Bayside businesses outside the Promenade did even better, with a sales hike of 22 percent for both the year and the final quarter.

The increase, said Bayside District Chair John Warfel, can be attributed to “a combination of an improving economy, but more to new businesses opening in the district.

“They are replacing vacant space or space generating very little in sales,” said Warfel, who runs Metropolitan Pacific, a commercial real estate brokerage and investment firm. “Downtown is increasing its ability to cater to Santa Monicans and to visitors.”

Sales of office equipment also accounted for the Downtown boom, Carr said. “I think the Apple store (on the Promenade) has a lot to do with it,” he said.

The sale of expensive equipment should mushroom with the opening of the new Circuit City store, which has moved into a vacant bank building on the corner Arizona and Fourth Street, further fueling the revival of streets flanking the Promenade.

“The evolution of Downtown is happening,” Wafel said. “Businesses are locating off the Promenade. It’s starting to take hold, and we have some major players like Circuit City.”

Sales at Santa Monica place continued their downward spiral, posting a 5 percent drop last year, compared to 2002, and a 4.2 percent decrease in the final quarter. The struggling indoor mall had posted a 2.7 percent decrease in the third quarter last year.

The sales drop could reflect a national trend, Carr said.

“The department stores are having problems,” he said. “I think there’s just a lot of different alternatives, and we have places like Walmart and Target that I think take away from department stores.”

In addition, Carr noted, Santa Monica Place is competing with the Promenade, which has become a model for outdoor malls.

The city’s three other business districts, besides the Bayside, posted mixed results. A 10.3 percent in crease in the final quarter of 2003, compared to the final quarter in the previous year, helped Main Street post an 8.5 percent sales increase in 2003.

Montana Avenue posted a 2.6 percent increase last year, despite an 8.4 percent decrease in the final quarter, compared to the fourth quarter in the previous year.

Pico Boulevard showed the only decline, dropping 3.8 percent for the year, despite a 7 percent hike in the final quarter.

Reporting anomalies -- likely resulting from businesses paying taxes for previous periods -- may have accounted for increases on Colorado Avenue (17.1 percent for the year) and the airport area (14.8 percent), Carr said.

Accounting anomalies may also have been partially responsible for a 17.4 percent hike in sales tax revenues on hotel row, which encompasses Ocean Avenue and the pier.

Although sales tax revenues are a critical part of the city’s economy, they don’t tell the entire picture, Carr cautioned.