Outdoor dining decks may become more costly in Hermosa Beach

Jan. 26—Hermosa Beach businesses, in yet another sign of the pandemic's waning influence on policy, may soon have to pay more for outdoor dining decks — potentially doubling the city's revenue from encroachment fees.

And the future of rooftop decks at two popular Pier Plaza eateries remains in doubt.

The City Council this week directed Hermosa Beach staffers to look into raising encroachment fees for outdoor dining decks. That direction, which came as Hermosa's pandemic-era, temporary outdoor dining program nears its end, is part of ongoing city efforts to implement a permanent one.

The increase, which would go into effect under the permanent program, would be relative to the fees the City Council created for the temporary program nearly a year ago.

"The fees have definitely got to go up; I don't think there's any dispute," Mayor Raymond Jackson said at this week's council meeting. "The question is when and how much."

The council first created the temporary outdoor dining program in 2020 to help restaurants and other companies weather the pandemic, since indoor operations at nonessential businesses weren't allowed for months. As such, the city didn't initially charge any fees.

That changed early last year, with pandemic restrictions having been relaxed.

Under the temporary dining deck program, Pier Plaza businesses that stay open after midnight pay $5 per square-foot per month, while those that close before midnight pay $2 per square-foot. Businesses on Upper Pier and Hermosa avenues pay $1 per square-foot a month.

The council has extended the temporary program multiple times, with the city issuing more than 60 permits since its inception.

The program is now set to end May 1.

In November, a real-estate research firm provided the city, at the council's request, with a market rental rate appraisal that recommended significantly increasing the monthly fee. Under that recommendation, the montly fee would cost $5.67 per square-foot for Pier Plaza businesses, $4.63 for those north and south of Pier Plaza along Hermosa avenue, and $4 for those east of Hermosa Avenue that are primarily on Pier Avenue and up to Pacific Coast Highway.

Increasing the fees, which would require City Council approval, would also be a boon to Hermosa's coffers. Doing so would raise revenue from the encroachment fees from around $580,000 to more than $1.6 million, said Doug Krauss, the city's environmental program manager.

That's an increase of more than 175%.

But restaurateurs who spoke at the Tuesday, Jan. 24, council meeting expressed concern about raising the fees while some businesses continue struggling in the pandemic's wake.

Michael Zislis — who co-owns multiple restaurants in the South Bay, including The Brews Hall on Pier Plaza — said eateries make money about half the year and struggle the rest of the time.

"We're still in the middle of a pandemic and we all want to think it's over, but people are still not showing up to work," Zislis said. "Older people are afraid to go inside. People with kids are afraid to go inside. You're talking about raising the revenue, but that revenue should be raised when truly the pandemic is over."

Still, while the temporary program will soon end, the permanent one is on the horizon.

To that end, the City Council on Tuesday also directed city staff to look into other issues the permanent program will have to address.

The panel told staff to get input from stakeholders about potential size limits for permanent dining decks, and to determine whether rooftop dining at Baja Sharkeez and Palmilla should be allowed to continue.

"The city allowed these temporarily with conditions that the businesses restrict overall building occupancy load to address concerns of ingress and egress," Councilmember Justin Massey said about the rooftop decks. "These rooftop areas were not previously designed for, nor approved for, regular use by patrons. But city building department staff worked with the businesses to ensure the safety of these temporary uses."

To keep the rooftop decks open beyond May 1, the businesses would need a conditional use permit, said City Manager Suja Lowenthal. But the CUP application process can take up to six months.

"If it's clear that they would not be finished with that, prior to the May 1 date," Lowenthal said, "there could be a request to the council to extend the temporary program."

Cody Lauterbach, general manager at Baja Sharkeez, said the rooftop dining deck has become a "downtown staple for community gatherings" — and is the home base for a local sports league.

"Removing the space would drastically cut down the hours of pay and cause imminent job loss for many of our service industry workers," Lauterbach said. "Taking away income takes away from them being able to provide for themselves and families."

The issue will return to the City Council sometime before the May 1 deadline, Krauss said.

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