$10 per sq. ft. too rich for outdoor dining decks, Hermosa restaurant owners say [UPDATE]
by Kevin Cody
The Hermosa Beach City Council expressed unanimous support for a permanent extension of the downtown Hermosa Beach dining decks, and patios during a lengthy discussion about outdoor dining permits at its Tuesday March 28 city council meeting. The outdoor dining permits, issued during the pandemic, when indoor seating was banned, are set to expire in May. In January, the council set the permit fee at $1.50 per square foot. The city has issued approximately 60 permits for dining on outdoor city property.
During Tuesday night’s meeting, in response to staff’s request for input, councilmembers discussed increasing the outdoor dining permit fees to approximately $10 per square foot on Pier Plaza, and approximately $4 per square foot for Pier and Hermosa avenues street decks and sidewalk dining.
“If I’m not mistaken, Plaza rents are roughly $10 a square foot. That’s the neighborhood we should be in for outdoor dining,” Councilmember Justin Massey said.
“If it’s $10, so be it,” Councilman Rob Saemann concurred.
In January, city staff presented a report to the council that showed other cities charge as much as 300 percent more than Hermosa is charging. Redondo Beach charges its restaurants $2 per square foot for outdoor dining decks. Manhattan charges $3 per square foot, according to the staff report.
Hermosa’s parking deck revenue would double from $582,00 annually to $1.6 million annually were the city to apply market rates to both the pre pandemic and the temporary pandemic dining patios on public property, the January staff report stated.
Also at Tuesday’s meeting, in response to staff’s request for input, the council discussed requiring restaurants with patio permits to stop patio service at 11 p.m. and for the patios to be closed at 11 p.m. or midnight. Some patios are now open until 2 a.m.
The proposed increases prompted Hermosa restaurant owners to question the sincerity of the councils’ expression of support for outdoor dining downtown.
“To set the rate at $10 a foot is basically saying you don’t want outdoor dining. It’s so high no one will accept it,” Baja Sharkeez CEO Greg Newman said Wednesday following the council meeting. Newman’s restaurant group includes Sharkeez, Palmilla and Tower 12, all on Pier Plaza.
“Add to the rent increase, they want to reduce our service by three hours. For what reason? We’ve served on our patio until 2 a.m. since 1996,” Newman said.
Paul Hennessey, owner of Hennessey’s Tavern on Pier Plaza, said when told about the $10/square foot proposal he thought it was an April Fools joke.
“This will kill outdoor dining. But I don’t really care. I’m selling to Hooters,” Hennessey said. (He was joking).
“Basing the patio rent on indoor rent makes no sense,” he added. “Patios don’t have bathrooms, and kitchens. You can serve indoors seven days a week. You can’t serve on a patio when it’s cold, or windy, or the sand is blowing,” Hennessey said.
He noted that the Pier Plaza patios offer 450 additional seats for diners, creating 50 jobs.
Uncorked owner Kathy Knoll told the council at Tuesday’s meeting, “First quarter business has been horrible because of the cold. We need your support. Keep the increase minimal, maybe $2, or we’ll stop serving outdoors.”
Uncorked’s sidewalk permit would be $4/sq.ft. under Tuesday’s council recommendation.
Chamber of Commerce President Jessica Accamando shared with the council the results of a chamber survey of 22 downtown restaurants.
The survey showed most respondents cannot afford more than $2/sq.ft for an outdoor dining permit, and that their average rent is $4.80/sq.foot.
The council delayed discussion on whether to restore Hermosa and Pier avenues to four lanes until the city completes a traffic analysis in April. When the street dining decks were permitted, Hermosa and Pier avenues were reduced to two lanes to create a buffer between cars and the dining decks. The buffer lanes are presently designated as bike lanes.
Editor’s note: The following response to the preceding article about Hermosa’s dining decks was submitted on Friday, March 31, following publication of the article:
The City has asked The Easy Reader to clarify that the City Council did not “instruct” staff to charge $10 per square foot for outdoor dining, as was reported in an earlier version of the story and in the print edition. The City appreciates the change in language and wants to note that Mayor Pro Tem Justin Massey commented that six late night establishments with full liquor licenses on Pier Plaza should pay “in the neighborhood of” market rent for their outdoor dining space because those establishments impose extraordinary public safety costs on the City. Mr. Massey then noted that he understood market rent for those establishments to be approximately $10 per square foot and, if so, that would be “the neighborhood” for outdoor dining fees for these establishments. No discussion on the point was had, and no instruction was provided. The City is seeking information on market rent for Pier Plaza, and early information indicates it is between $5 and $10 per square foot. The City Council will address the fees for outdoor dining at a future meeting. ER