By Jorge Casuso

February 26, 2026 -- The City Council Tuesday night took steps to make it feasible to convert vacant retail spaces Downtown into restaurants by lowering costly fees and helping with tenant improvements.

Spearheaded by Councilmember Lana Negrete, the discussion item directs staff to explore creating a pilot program that "would waive, reduce, or defer fees for qualifying conversion projects."

The fees -- which include one-time wastewater and sewer-related fees of $1,399 per seat and $431 per bar stool -- "create a huge roadblock" for prospective tenants who want to open restaurants in vacant retail spaces, Negrete said.

The item, which was unanimously approved, also calls for providing "other financial incentives and support for tenant improvements" that include installing "grease interceptors, ventilation, ADA upgrades, fire/life safety, and utility modifications."

"We are not eliminating standards or compromising safety," Negrete said. "We are exploring how to strategically lower barriers so small operators can activate vacant storefronts.

"Restaurants drive foot traffic, foot traffic drives retail and retail drives our economic recovery," Negrete said.

Councilmember Jesse Zwick, who co-sponsored the item, echoed Negrete's comments. "I think we want to do everything we can as a city not just to make it legal, but to make it feasible to have these kinds of establishments," Zwick said.

Luke Cain, a real estate agent Downtown, told the Council that the high wastewater fees -- which total $70,000 for a restaurant with 50 seats -- threaten to dampen a new-found sense of optimism.

"For the first time in a long time, it feels like things are coming back," Cain said. "It's the first time I've ever seen a tenant who is willing to take a retail space and convert it to a restaurant space.

"I feel with all the work you're doing, it's all for nought if you don't waive these fees," Cain said.

Negrete, whose previous efforts to reduce wastewater fees for existing restaurants were unsuccessful, said she knows entrepreneurs who want to open restaurants Downtown but find the cost prohibitive.

"We’ve spent years talking about economic revitalization," Negrete said. "If we are serious, we need to make it easier, not harder, for entrepreneurs to say yes to Santa Monica."