Voters favor status quo, reject retail dope sales

Hermosa Beach Mayor Mike Detoy and Councilmember Raymond Jackson were upbeat on election night at Hermosa Brewing after returns showed Jackson leading seven council challengers. Photo by Kevin Cody

by Kevin Cody

Hermosa Beach’s crowded Nov. 8 General Election ballot portended significant change to the landscape of Hermosa politics.

The ballot listed eight candidates for three open council seats, and also  measures to legalize cannabis stores, tax cannabis sales, increase the local sales tax by .075 percent, and rescind the city’s outdated civil service procedures.

But rather than vote for change, residents reelected Raymond Jackson, the one council incumbent seeking reelection, and voted down cannabis stores, despite a $100,000 campaign by the cannabis industry. 

Voters also rejected the council-backed tax increase, raising the familiar specter of a budget crisis. 

Voters did approve a tax of up to 10 percent on cannabis sales. But the only cannabis sales allowed in Hermosa are by delivery. In October, the council lifted the ban on cannabis deliveries in hopes of weakening voter support for cannabis stores. But to date, no cannabis delivery services have applied for business permits. Identifying unlicensed cannabis delivery services is difficult because state law prohibits identifying signage on their delivery vehicles. 

The unopposed civil service measure was also approved.

Councilmembers Stacey Armato and Mary Campbell declined to seek reelection, opening the door to a three-candidate slate backed by downtown restaurant and bar owners, who perceived the current council as unfriendly to business. 

Instead, voters selected longtime planning commissioner Rob Saemann and longtime environmentalist Dean Francois to fill Armato’s and Cambpell’s seats.

All three council victors campaigned on council comity, a challenging promise to keep in the post covid era. 

The failed sales tax increase would have generated $3 million annually, which City Treasurer Viki Copeland said will be needed to cover budget shortfalls when the federal COVID subsidies are exhausted

During a June budget meeting, Copeland told the council a balanced 2022-23 budget will require spending $1.3 million of the city’s remaining $2.3 million in American Rescue Plan Act (ARPA) funds.

Reducing spending will be difficult because of staff hirings, and capital improvement projects deferred by the pandemic.

“Studies, studies, studies. I think we have paralysis by analysis,” Councilmember Raymond Jackson said during the June budget meeting. The budget included $100,000 for a study of permit processing, $500,000 to study safety bollards on The Strand, $600,000 for a facilities assessment, $500,000 for a master parks plan, $500,000 for a city yard plan, $420,000 to review business license fees, $250,000 to remove outdated parking meters, and $60,000 to study downtown traffic lane configurations.

The improvements associated with the studies could reach $200 million over the next 20 years.

The new council will also be tested by thorny holdovers from COVID, including how much to charge restaurants for dining decks in metered parking spaces, and how to placate retailers angry over the lost parking, assuming the dining decks are allowed to remain. Both Jackson and Saemann promised during their campaigns to solve Hermosa’s parking problem.

On the positive side, Copeland’s 2022-2023 Budget Overview showed property taxes increasing 5.3 percent, to $17.7 million, as a result of home price sales increasing to an average of  $3 million. 

The hotel occupancy tax (TOT) is projected to increase 7.4 percent, to $3.9 million, surpassing sales tax for the first time as the city’s second largest source of income. Copeland said occupancy rates skyrocketed from a low of 23 percent during the pandemic to the current 73 percent. 

Sales tax revenue is projected to increase 2.6 percent, to $3.6 million, led by “dining/drinking places.” Restaurant and bar sales tax revenue jumped 46 percent in the second half of 2021, accounting for 30 percent of the city’s total sales tax, according to the budget overview.

Another potentially positive outcome from the pandemic is an increase in UUT (Utility Users Tax) revenue resulting from the boom in streaming services. UUT revenue has been flat in recent years, at about $2.3. million. 

“Our consulting firm is pursuing streaming companies, including Amazon, Disney, and Netflix. Hopefully, we’ll get an agreement under which our UUT ordinance will apply to those services, but negotiations are going slowly,” Copeland said. ER

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