Business Levy Proving to Be a Tough Sell : Commerce: Proposal would create special districts to help promote two retail areas. Cost of the program is stirring heated debate between merchants and city officials.

By KEN ELLINGWOOD

Oct. 31, 1993 12 AM PT

TIMES STAFF WRITER

WEST HOLLYWOOD — Call it a Halloween omen--even the witches have joined the bitter brouhaha over a proposed business levy that would pay to advertise two West Hollywood retail areas.

“For my store, it’s outrageous,” said Babetta, a self-described witch who has run the Sorcerer’s Shop on Santa Monica Boulevard for 23 years. Babetta, who does not use a last name, said the shop where she sells oils, herbs, books and other witchcraft supplies would owe about $300 more each year to fund one of the two proposed business-improvement districts.

“It’s basically another tax. Business owners cannot afford another tax,” she said, summing up the chief complaint of dozens of businesses objecting to the creation of special districts along Santa Monica Boulevard and in a commercial area around the Pacific Design Center.

The controversial proposal, the center of an increasingly nasty debate following a City Council session last week, returns Monday for a final public hearing and possible council action. Mayor Sal Guarriello and Councilman Paul Koretz said they will oppose the current version, but three other council members said they are awaiting public reaction to the proposal before making up their minds.

Under the proposal, businesses in the two districts would tax themselves and a merchants committee would spend the money to promote the zones collectively through logos, street markers, special events or other marketing strategies.

One district would include about 445 businesses along the western half of Santa Monica Boulevard, a busy stretch of shops and bars from Doheny Drive to Crescent Heights Boulevard that generates about $200 million in annual sales.

Also, a so-called Avenues of Design district would sweep in 500 businesses--chiefly interior-design showrooms and upscale restaurants with annual sales of about $120 million--along Melrose Avenue and Beverly, Robertson and San Vicente boulevards on the city’s west end.

The Pacific Design Center, whose 225 design showrooms already pay a fee to promote the complex, is excluded from the district.

Boosters say business-improvement districts will give recession-strained retailers in West Hollywood a more cost-effective way to draw customers than simply advertising on their own.

The approach has had mixed results elsewhere. Cities such as Santa Monica and Pasadena have energized shopping districts through such collective promotions, but a Ventura business-improvement district is so unpopular with many merchants that they have refused to contribute and are seeking to disband it through court action.

The idea came to West Hollywood two years ago as desperate merchants began searching for a way out of a worsening recession. Their answer was borrowed from shopping malls and retail Meccas like Santa Monica’s Third Street Promenade: If you build your own identity--and sell it--they will come.

“You’re really making an investment in your business,” said Debbie Potter, the city’s housing and economic development manager. “If everyone’s participating, you’re able to leverage your dollars and everyone’s able to do more.”

Supporter Don Zuidema, who owns three clothing stores in the proposed Santa Monica Boulevard district, said the pooled money might also be used for anti-panhandling campaigns or to spruce up the strip. Zuidema said his projected $2,400 yearly assessment roughly matches the annual cost of the quarter-page ads he regularly places in one local magazine.

“I don’t think any of us can survive as our own little island,” Zuidema said.

But critics accused city staffers and Chamber of Commerce officials who planned the districts of failing to inform affected merchants first. Many learned of the proposal for the first time when they received sample assessments that are based on a flat rate plus yearly receipts. Some complained the flat rate is unfair to small stores.

Opponents at the council hearing worried that the districts are drawn too big to accommodate a unified image, while others said the whole city should pay to lure new customers. The city already pays the West Hollywood Marketing Corp. $160,000 annually to promote it as a tourist spot and site for new commercial business.

In a kind of miniature filibuster, opponents led by members of the West Hollywood Community Alliance paraded one at a time to the rostrum Monday and read aloud the names of 284 businesses they claimed had signed letters protesting the districts.

“To me it sounds like another tax, and as a small-business owner we cannot afford another tax,” said Vicki Chalfin, co-owner of Marvin’s Pharmacy, which she said would face a yearly $1,200 bill.

The most any Santa Monica Boulevard business would have to pay is $2,400. The design district has a $1,200 limit.

The projected total assessment for the Santa Monica Boulevard zone is about $170,000; the Avenues of Design district is expected to raise about $160,000.

State law forbids the establishment of a special district if it is formally protested by owners representing at least half of the total assessment.

Council members indicated that they probably would base a decision on the number of businesses opposed, rather than the share of the assessment represented by opponents.

Even by West Hollywood’s raucous standards, the debate took on an ugly hue as the week wore on, with both sides accusing the other of dirty tactics. City officials and others charged that district opponents were falsely claiming the backing of businesses that actually favor the districts. Meanwhile, members of the community alliance cried foul over chamber literature accusing alliance president Michael Radcliffe of frequent “misrepresentations.”

There was even disagreement over the protests. By an unofficial count Thursday, the city had received 352 letters from businesses opposing the districts. But Potter said many letters gathered by the alliance would not count because they have been signed by employees or others--not the owners, as the law requires.

Among the council’s options are shrinking the districts, lowering the proposed levy and dropping the base-rate portion so all businesses would pay the same percentage. Koretz said the current draft is too ambitious and unfair to small stores. Councilwoman Babette Lang said she would seek changes at Monday’s hearing.

Councilman John Heilman, who said he was troubled that businesses knew so little about the proposal, suggested considering a voluntary program.