New Santa Monica Parklet Fees Hit Restaurants With Steep and Confusing Charges

Things are moving fast on Santa Monica’s Main Street, and it’s not only the recent restaurant renaissance that has shaken up the neighborhood: as the city transitions from temporary to permanent parklets, new five-figure fees — and widespread confusion over the payment schedule — have Main Street restaurateurs debating whether to pay up or shut down their outdoor spaces.

On Tuesday, September 13, Brian Bornemann, owner of Crudo e Nudo, and Chuck Craig, manager of Lula Cocina Mexicana, stared in disbelief at the city’s fee structure table, did some fast multiplication, and realized that they each owed more than $40,000 in city fees if they wanted to make their parklet seating permanent. The focus of their frustration was a one-time “wastewater capital facility fee” charge of $1,358.49 per new seat.

The first half-payment was due along with their applications at 5 p.m. on September 15, or so they thought, based on misconceptions about the fee that the city scrambled to clarify, including its payment schedule, as the deadline neared. Another misunderstanding: the definition of “new seats” was a bit more forgiving than it initially seemed: The city will only charge for a net increase — not for the total number of parklet seats — so a restaurant that reduced indoor seating by 40 and built a 40-seat parklet would face no new wastewater charges at all.

But that formula won’t save everyone, and it took two days and a pop-up information booth on Friday to spread the news. As word got out, dozens of restaurants rushed to file in time; anyone who held back is in for a new kind of trouble. The last-minute applications caused a “backlog” that the city can’t possibly process by October 1, when temporary permits expire, said senior transportation planner Jacqui Swartz.

There’s going to be an unpermitted gap for late filers — Swartz said it could be two weeks or more — when they are prohibited from doing business outdoors.

Here’s how it happened: Santa Monica’s Public Works division issued a permanent parklet manual on August 24, requesting applications and itemizing new fees, a second payment reminder on September 8, and outreach emails since then — but those reminders were predicated on chefs and owners reading their emails in a timely fashion. The payment schedule referred to half payments due on September 15 and October 1, when in fact only three relatively small payments, for plan check and licensing fees, are due at that time. Restaurants have until February 1 to pay the larger balance.

Ashley Randall

Swartz defends the largest fee as business as usual: “Wastewater fees have been in place for a long time now. It’s a one-time fee that a restaurant pays to have a seat at a table,” she said. “Parklets add seats.” She hoped owners would be less upset once they re-did the math and came up with a lower net-seat number.

But many restaurants have looked at parklet seating as an opportunity to expand, which means they have a simple choice: apply and pay the bill, or lose the added space. Any restaurateur who doesn’t file by September 30 will get an email — and if they continue to operate, a formal letter from the city attorney — informing them that their permits have expired and they must remove all items from the street.

In a moment of frustration, Bornemann considered not filing, and even when he did, he swore he and co-owner Leena Culhane would move Crudo e Nudo off the block if the city doesn’t roll back the wastewater fee. “It’s a deal breaker for us,” he said. “There’s no correlation between the amount being charged and services provided, whether paid now or paid over a longer time.” Crudo effectively has no indoor seats, only a short window counter, so it can’t survive in its current location without a parklet.

Ann Hsing, COO and managing partner of the Michelin-starred Pasjoli, filed an application because “we’d heard fees were coming but had the sense it wouldn’t be too bad,” she said. Now that the restaurant faces about $36,000 in wastewater fees alone, she isn’t sure the parklet’s worth it.

“They could approve the application,” she said, “and I could decide not to proceed.”

Craig and Lula owner Geri Gilliland went back and forth in the span of a few days, as things became clearer. At first, the prospect of about $40,000 in wastewater fees made Craig think they could get along without the parklet. But when Swartz explained the new-seat formula, 40 fewer indoor seats canceled out the 40 parklet seats, and Lula’s wastewater fees evaporated. Craig considered rushing to complete an application but wanted more time to consider the costs and refine a permanent design. It was too much too fast, so Lula will lose its outdoor space on October 1, and will file for a permit sometime after the first of the year.

It pained Craig to be at odds with a city government that handled the initial crisis of the pandemic so well. “I have never been more proud of the city and the merchants’ association, with how fast they responded,” he said. “The parklets were up and running July 1, 2020. We want to be a good partner, but this was just a bridge too far.”

The owners of La Vecchia Cucina, a block north, still have to find out if they can keep their existing parklets, which span three parking spaces. The new regulations limit parklets to two parking spaces. La Vecchia’s chef, Mark Mollica, and his brother, Anthony, had permission to use two adjacent parking spaces from the Victorian, next door, for the restaurant’s temporary 60-seat parklet. The Victorian agreed to make that arrangement permanent, but they need the city to accept it.

If the city agrees, La Vecchia faces a wastewater fee of more than $50,000 on a net increase of 40 seats. But the brothers intend to argue that outdoor seating “doesn’t meet the definition of developed buildings,” said Anthony, and shouldn’t incur any wastewater fees. They filed their application; now, along with everyone else, they wait.

The general mood on Main Street? Hsing worries about damage to the street’s nascent revival — to her, the parklets represent much more than potential revenue. “The street seems much more alive,” she said. “But a lot of us are going to have to think about whether it’s worth it to continue outdoor dining. We’re dealing with rising food costs, rising health care costs, and rising wages, so as an owner I have to ask, ‘Is it worth it to have extra staff along with other rising costs?’”

“It’s a big enough number for me to think twice,” she said, of the wastewater fee. “For a place like Crudo, I can’t see it being worth it for them.”

“We’re holding our breath,” said Bornemann. In the meantime, he says he hopes that there’s enough pushback to get the city to reconsider the fees.