Santa Monica is a city that would seem to have everything. A glorious, wide sandy beach. A fabled pier framed by palm trees and views of the southern California mountains. An aura of Hollywood magic, with a native honor roll that runs from Shirley Temple to Sean Penn. Streets that smell like the Mediterranean, filled with restaurants, cafes and interesting one-off shops.
And yet, for the past several years, almost nothing has gone right for a beach resort known and envied in the Los Angeles area for its beauty, excellent public schools, and a progressive political culture that has sought to keep the city accessible and affordable to people of all income levels.
These days, Santa Monica is struggling with an uptick in petty crime and unprecedented numbers of empty storefronts and offices. Community services, including a well-regarded library system, have dwindled; housing prices have soared beyond the reach of most middle-class families; tourist numbers are half of what they used to be, and the budget is in such a hole that the city council recently declared a state of financial distress.
Even Santa Monica’s top public employee, city manager Oliver Chi, agrees that the trajectory is unsustainable. The city’s landmark pedestrian street, the Third Street Promenade, no longer attracts throngs of shoppers and movie-goers, or the buskers and variety acts who used to entertain them.
An adjacent outdoor mall, Santa Monica Place, has lost two big department stores and a multi-screen cinema. A string of beloved restaurants have shuttered their doors, and there is little sign of other businesses wanting to fill the spaces left behind.
“The city … has lost much of the focus, capacity, and confidence that once defined it,” Chi wrote in a frank appraisal last month that doubled as a call to arms for a drastically different approach. The perception, he added, is that “Santa Monica’s best days may be behind it.”
It’s a staggering turn for a city that has often considered itself a cut above its grittier giant neighbor, the city of Los Angeles. A municipality that used to pride itself on competent leadership now attracts bitter complaints – from ordinary voters and from business leaders – about everything from its rigid planning and permitting rules to its failure to plan better for big structural shifts in the economy.
Two generations ago, when mall shopping was all the rage across southern California and a night out was often built around some combination of shopping, dinner and a movie, Santa Monica’s leaders built a downtown that catered to these needs and, at the same time, offered rent control and a generous menu of social services for struggling young people.
The so-called “People’s Republic” of the late 1970s and 80s took what had been a sleepy beach town, deemed fit only for “the newly wed and the nearly dead”, and turned it into one of the LA area’s most desirable and culturally diverse neighborhoods.
Now, mall culture has given way to online shopping, movie-going has to compete with streaming entertainment at home, and in the wake of the Covid-19 pandemic, traditional office culture has largely collapsed. If that wasn’t enough, the city has struggled with a tech boom that has put the housing market out of reach for all but the super-wealthy. The LA region has one of the most severe homelessness crises in the country. And a sharp rise in the cost of living has caused broader difficulties across many income brackets.
Santa Monica is far from alone among US cities in struggling with these problems. Unlike many of them, though, it can look back at a time before the pandemic when its pedestrian-friendly shopping areas were booming, its offices so full that the city population doubled during the day, and its municipal coffers so flush that even beat cops were taking home hundreds of thousands of dollars in salary and overtime each year.
With the pandemic, though, came an economic upheaval so pronounced that the city manager of the time quit on the spot rather than deal with a sudden $300m shortfall in projected revenues. “There comes a time to recognize one’s limits,” he wrote in a startling resignation letter.
Signs of official dysfunction multiplied from there. In the spring of 2020, the Santa Monica police focused so many of their resources on a large but overwhelmingly peaceful Black Lives Matter protest near the pier that they left the rest of the city unprotected, and a wave of looters rode cars and trains into town and picked hundreds of businesses clean.
Voters frustrated by it all booted out much of the city council, but the replacement candidates – many of them opponents of new housing development at a time when demand was soaring – proved no more popular, and most were quickly voted back out Any hopes of renewed growth were further dashed by the 2023 Hollywood writers’ and actors’ strike and last January’s wildfires that devastated thousands of homes in Pacific Palisades and Malibu, just north of Santa Monica.
Meanwhile, the city is feeling the impact of a broader Los Angeles county problem – a pervasive homelessness crisis, and with it an increase in people on the streets who are struggling with drug addiction and mental instability issues.
Homelessness is far from a new issue for Santa Monica, but officials say an explosion in methamphetamine and fentanyl use has made many of those living on the streets unusually volatile and unpredictable – and has caused other residents to call law enforcement with increasing regularity. City crime statistics show a 16% increase in public order offenses in 2024, and a spike in arrests of unhoused people, particularly in downtown areas.
Josh Loeb, whose Rustic Canyon group has closed three of its eight popular and critically acclaimed Santa Monica restaurants in the past year, said his staff has had to deal with regular break-ins and episodes of unwell people spitting at customers, including children, and pulling knives. Two other restaurateurs who did not want to be identified for fear of attracting more trouble described finding faeces smeared on their windows, money stolen from tip jars, and people coming into their stores naked.
“There seems to be very little enforcement,” Loeb said.
Such public safety concerns have only compounded a perception, shared by many business owners, that Santa Monica is not an easy place to operate. A big reason why one in six storefronts are empty, business and city leaders say, is that big commercial property owners do not want to lower rents for fear of bringing down the overall value of their holdings and calculate that they lose less money by leaving their spaces unrented.
In a city where a three-bedroom house can sell for as much as $4m, Santa Monica residents are certainly wealthy enough to support a full roster of local businesses. But no retailer in the digital age wants to take on huge, expensive spaces on the Third Street Promenade, and many other would-be entrepreneurs are deterred by the cost of renting even on a smaller scale. The office vacancy rate in Santa Monica is 35%.
On top of that, the city attracts frequent complaints because it issues building permits more slowly than the city of Los Angeles and can impose a lot of restrictions on bread-and-butter issues such as sidewalk seating or access to parking. Gleam Davis, a former city mayor who sympathized with a lot of the complaints, urged city hall to learn to “be a partner, not just an entity imposing burdens”.
Taking on these challenges has only been made harder because of the city’s governance structure. In common with other cities of its size (but not necessarily its $750m annual budget), Santa Monica has no elected mayor, and its city council is made up of part-time volunteers. Many key decisions – on transport and on facilities to serve unhoused people, for example – are made over their heads by Los Angeles’s county.
Former city council members and community leaders lamented several squandered opportunities that they said had resulted from too much red tape and a lack of clear leadership: an enclave of art galleries known as Bergamot Station that was reimagined as a major cultural hub including a museum, a boutique hotel and cutting-edge restaurants but has moved forward with none of them; a plan to redevelop the civic auditorium that has similarly hit a brick wall; or a large city-owned space, one block from the promenade, that has languished undeveloped for more than a decade.
“These ideas start out pretty good when we come up with them, but they get whittled down by … the process,” said Terry O’Day, a former city council member and environmental business entrepreneur. “The more the city involves itself, the harder these projects become.”
Chi, the city manager, came into office this summer with a mandate for change and has just issued what he calls a realignment plan – a multi-faceted revival that he hopes will balance the city budget and breathe new life into Santa Monica business and culture over the next two and a half years. He wants more police patrolling downtown, more prosecutions even of petty offences, more trees and sidewalk art to attract visitors and businesses, libraries that are open again after years of closures, faster permitting and fewer rules and fees around outdoor dining.
It’s not yet clear if the numbers will add up, or if Santa Monica residents will take to Chi’s revenue-generating ideas, which include giant digital advertising billboards and allowing people to walk certain streets with alcoholic drinks, New Orleans-style.
So far, local leaders have been near-unanimous in praising Chi’s plan. “It’s an attempt to be bold,” Davis, the former mayor, said, “and I think bold thinking is what the moment requires.”
The business community, though, has struck a more cautious note. Loeb said he and his Rustic Canyon partners love the city and want to believe in it, but they are yet to be persuaded to open more businesses there. A doubling of the minimum wage over the past seven years had been particularly punishing for his restaurants, Loeb said, and while he had no philosophical objection to paying people better he wished the city had been more responsive to his concerns that labor costs were making it almost impossible to turn a profit, even with full tables.
“It’s really frustrating to have to close places because the numbers don’t work any more,” Loeb said. “The inability of the city to understand and support businesses is a major disservice.”
Chi’s office said it was committed to providing more support for local businesses. “We are saddened to see any business close,” a spokesperson said. “Our focus is on bringing back a vibrant, resilient economic environment for everyone.”
While Loeb and his team consider Chi’s plan a good first step, Loeb said he questioned how much could change without a fundamental shift in the way Santa Monica is run. “We need a real structure,” he said.
