Community Commentary: City needs to flex power for middle-price restaurants

Re. David Hansen’s column “Digging into problem with our restaurants,” Sept. 9: This article raised an issue many locals talk about: the lack of middle-priced sit-down food options. What this article lacks is a solution.

Instead of suggesting that rents are too high, which is why entrepreneurial restaurants can’t open middle-priced dining establishments, this article should suggest that the city needs to use its power of zoning and entitlements to make this desire a reality.

Laguna Beach is a free market. If a landlord wants to charge an outrageous rent, and a tenant is not concerned with profit margin and is willing and able to pay such outrageous prices, so be it. That is what makes America great and I support this.

If locals want something and the city staff has been hired or elected to serve the people, then the city needs to take action to solve the problem.

The city wants a balance of retail options to drive tourist traffic, which is a critical component of Laguna’s identity. This makes sense and the city has done a good job with laws that ensure that we keep an ample supply of galleries, high-end and low-end T-shirt shops and non-chain unique restaurants.

The city has failed though in attracting middle-price-point restaurants by not using its power. In fact, they have contributed to the focus on higher-end options due to restrictions. Only the most expensive restaurants can justify the fixed rent costs due to lack of year-round sales volume.

There is not much land left to build parking structures other than a few city parcels. This is a tough battle to raise the funds to do so and increase density. It is common knowledge that the city makes it nearly impossible to convert non-restaurant space to restaurant space. Why? Perceived parking challenges.

Reality: A restaurant versus a floundering retail establishment will not significantly change how tourists and locals park. Everyone figures it out nine months of the year when it is slow. When it is packed, the tourists are so motivated to be here, a half-mile walk down a street is no barrier to their patronage.

Solution: Provide a landlord that desires a restaurant for existing vacant space — there is plenty up and down the coast — the opportunity to convert to a specific restaurant designation but at restricted rents. Further restrict the conversion to no fast food and no national restaurants to preserve Laguna’s local charm. Even further restrict the average entree to less than say $12. Restaurants can pay the highest retail rents so an owner who is getting $1.50 to $2 per square foot for a struggling discount retailer may be willing to have a deed restriction if he can get, for example, 50% to 75% of what a restaurant would be willing to pay at fair market value: $4.00-plus a square foot.

Outcome: The landlord gets equal or higher rents. The city gets new blood from non-chain restaurant concepts that want to be in Laguna but can’t pay the $4 to $6 per square foot in rents to execute a middle-price-point concept. The city also gets a higher tax base for higher-sales-generating tenants. Residents get more options at a middle price point.

Parking, parking, parking. Who cares. We live in a pseudo urban environment downtown. Tough parking is a reality. Create some zones where the aforementioned zoning change is needed and already has a density of retail use, like downtown and or near South Coast Highway and Talia Street. Draw a box around where this zoning change could occur and put a time frame on how long the zoning restriction can go into effect, such as 18 months. After that, if this concept has generated enough new restaurant concepts, kill the special zone.

Let’s try something other than point the finger.

I own restaurants and retail real estate. This will work and attract the unique chefs and business people who want to be in Laguna but are priced out. Landlords want tenants in this market. The general public has cut back but we all need to eat. Laguna doesn’t just need options, it needs better ones.

JUSTIN NEDELMAN is a Laguna Beach resident.