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Money Troubles and Conflicts at El Pueblo
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| Crowds at Olvera Street have found that several popular attractions have had their hours drastically cut. Although the historic center of Los Angeles gets 2 million visitors a year, 17 part-time employees were recently let go. |
Layoffs Begin and Museum Hours Slashed as Some Question Below-Market-Rate Leases; Budget Error Almost Leads to 'Doomsday'
by Richard Guzmán
After taking a day off work to see some sights in Downtown Los Angeles, Redlands resident José Alvarez was not happy with what he encountered on Olvera Street.
In front of the Avila Adobe Museum last Tuesday, one of El Pueblo de Los Angeles Historical Monument's most popular attractions, was a sign that read "Museum Closed Today." Where the normal operating hours of 9 a.m.-4 p.m. seven days a week were usually posted, two handwritten signs stated the museum's new opening hours: 10 a.m.-3 p.m., Wednesday to Saturday.
"We wanted to come on a weekday when it's not so crowded, and it's not even open," Alvarez lamented.
As a result of Mayor Antonio Villaraigosa's directive to trim budgets across all city departments due to a fiscal year shortfall that has been estimated at up to $155 million citywide, El Pueblo has cut 17 part-time museum guide positions and slashed operating hours for several popular attractions. The department is also considering an increase in parking fees to make up more revenue.
But things could have been much worse: El Pueblo officials faced a $350,000 deficit in the department's budget that a key city official blamed on an accounting error. If not for a bail-out by the city, the situation, known internally as "Doomsday," could have shut down most of the department's operations and caused the layoff of much of its staff.
"Essentially, we had to cut back two days and our museum hours had to be reduced by more than half," said Robert Andrade, general manager of El Pueblo. "It's a result of the overall budget crisis."
Additionally, another thorny issue seems ready to erupt: Andrade will soon begin working to raise the rents for the 79 El Pueblo merchants - some of whom have not seen an increase for more than 20 years. At the same time, some retail experts said a lease for a new Olvera Street cafe is below what the market could bear.
It's the latest flare-up for El Pueblo, an attraction with a history of budgetary and bureaucratic mischief and mishaps. In 2004, a blistering audit by City Controller Laura Chick declared that the department was "on the brink of financial disaster." In May of that year, a group of former employees broke into the department's office and shredded files.
Unkindest Cuts
As a result of the current financial crisis, days and hours have been cut at the Avila Adobe Museum, the Firehouse Museum, the Chinese American Museum and the Sepulveda House Visitor's Center.
John Kopczynski, public relations specialist for El Pueblo, said it has not yet been determined how much money will be saved by cutting back museum hours and laying off part-time staff, but the reductions ensure that the museums will at least remain open, he said.
Although a necessary cut, city and El Pueblo officials lament the decreased hours.
"Unfortunately, El Pueblo, like every other city department, is facing severe budget cuts due to the budget crisis," 14th District Councilman José Huizar, whose district covers El Pueblo, said in a statement to Los Angeles Downtown News.
David Louie, a member of the El Pueblo Board of Commissioners, said, "El Pueblo and the museum and the educational facilities are there for a purpose: to provide service to the people of Los Angeles. And when you cut back part-time employees who basically staff and operate the museum, you cut back at the very core to the existence of El Pueblo.
"Given the budget constraints we have currently and the projected shortfalls we are looking at, it is going to be a real challenge to find funding for staffing and yet it is absolutely necessary for the successful operation of El Pueblo."
El Pueblo operates on an annual budget of $4.1 million. The department raises about $2 million from parking fees and $800,000 from rent paid by merchants. Another approximately $300,000 comes from filming.
Although Olvera Street, which opened in 1930, attracts an estimated 2 million visitors per year, it still requires about $1 million from the city's general fund to balance its budget.
The proposed parking rate increase would hike prices at El Pueblo's five parking lots by about 30% as soon as May. The increase requires the approval of the El Pueblo Board of Commissioners, which may decide the matter this month.
If implemented by May 1, the increase could bring in an additional $97,000 for the current fiscal year (which ends June 30). Parking revenue for the next fiscal year is estimated to bring in an additional $580,000 with the increased rates.
"That's in anticipation of things getting more difficult next year," Andrade said.
Parking Plan
Some of those who frequent Olvera Street are not happy with the proposed increases.
"We come here to shop and spend money, and these were some of the cheapest lots around, and now we have to pay more? What's going to happen is that people will shop here less," said Angela Estrada, a San Fernando Valley resident and frequent Olvera Street visitor.
Like many visitors, Estrada uses Lot 2 on Main Street. Rates at the 220-space lot (El Pueblo's largest) are proposed to increase from $1.50 every 20 minutes and a $10 maximum to $2 every 20 minutes with a $13.20 maximum.
"It going to affect a lot of people who can't afford to pay more," Estrada said.
Huizar said the changes are necessary for El Pueblo to help balance the city budget.
"Everyone needs to play their part in balancing the budget. That includes making reductions and generating new revenue, as appropriate," Huizar said in his statement.
Another significant contributor to the budget could be boosting the merchants' rent to current market levels. Andrade noted that the majority of the leases have not been updated since the 1980s.
"Even if they were market rate back then, they aren't now," he said. "We're going to move to get them as close to market rate as we can, that's my task."
Although Andrade would not reveal the average rent for El Pueblo tenants, during a meeting with the City Council's Budget and Finance Committee last week, he testified that going to market-rate rents could mean a 30% increase in what tenants pay now.
Andrade later told Downtown News that the figure is an estimate, and determining what rents for El Pueblo merchants should pay would require a study to compare other retail rents in the area.
"We don't know what market rate is right now, it fluctuates with retail.... I'd say 30% but I don't know, I don't know if that's high or low. We have to look at what market-rate retail is right now, and in order to do that we have to do a comparison, but it's so difficult to compare Olvera Street with, I mean, what do you compare it to?" Andrade said.
Coffeehouse Questions
Another issue that relates to market-rate rents is a proposed new addition with a questionable rent. Camacho's Incorporated, which has restaurants in Staples Center and numerous other locales, has inked a deal to open a coffeehouse and store in the old Bank of America building.
According to the lease, the 3,460-square-foot space at 103 Paseo de la Plaza will cost Camacho's $1.60 per square foot a month for the first year, and rise to $2 per square foot in the third year. It would stay at that level for the remainder of the five-year term.
"That does seem low," said Derrick Moore, director of urban retail for CB Richard Ellis and one of Downtown's leading retail leasing agents. "The rents would be anywhere between $3.75 and $4.25 a foot."
Steven Williams, a senior associate with Beitler Commercial, who has experience with retail properties Downtown, agreed, although he said it was just slightly below market.
"It's definitely a good deal at $1.60," he said. "Retail, restaurant use generally is about $2 on the low end and as high as $5 on the high end."
Determining what market rate means for a place like Olvera Street, where some tenants have had stores for generations and open spaces are rare, can be difficult.
Councilman Bill Rosendahl, a member of the Budget and Finance Committee, said it is important for El Pueblo to get up to date with its leases. During the committee's meeting last week, he asked Andrade for a report on what is being done to bring the leases to market rates and also requested details on the existing rates. Rosendahl said that report should be presented within a month.
Huizar also supports bringing lease rates up.
"I am working with El Pueblo to develop revenue-generating proposals, including adjusting parking rates and signing new market-rate leases with the Olvera Street merchants. I am optimistic that these proposals will be approved soon and will provide El Pueblo with a long-term, sustainable source of funding," Huizar said in a statement.
Avoiding 'Doomsday'
While El Pueblo is taking steps to cut back on expenses and bring in more money, the situation could have been much worse. The department is facing a $350,000 deficit in the current fiscal year, prompting a city rescue.
City Administrative Officer Karen Sisson last week said that when El Pueblo was preparing its 2007-08 budget, a mistake made by the department included $350,000 in revenue from the previous fiscal year. That led to an overestimate of the money coming in, which Sisson's office also missed when they went over El Pueblo's budget, she said. As a result, El Pueblo was asked by the Budget and Finance Committee to find ways to recoup some of the budgeted money.
Andrade told the Committee last week that offsetting the deficit would mean reducing El Pueblo's remaining budget for the current fiscal year by 46%. Those cuts would have meant the elimination or vast reduction of maintenance for El Pueblo Monument, including Olvera Street and historical buildings; the termination of all part-time employees, necessitating the closure of all museums, galleries and the visitors center; and laying off 15-full time employees.
The El Pueblo staff came to refer to the plan as "Doomsday."
Andrade would not comment on the CAO's statement and whether an accounting mistake was made. He said the report on the cutbacks was in response to the request from the council committee.
"They said, 'If you had to cut back $350,000 this year, what would be the impact?'" Andrade said.
During last week's meeting the Committee elected not to take action on the "Doomsday" report, meaning they will not ask the department to cut $350,000 from the budget since it would decimate services at El Pueblo.
Contact Richard Guzmán at richard@downtownnews.com.
page 1, 4/14/2008
© Los Angeles Downtown News. Reprinting items retrieved from the archives are for personal use only. They may not be reproduced or retransmitted without permission of the Los Angeles Downtown News. If you would like to re-distribute anything from the Los Angeles Downtown News Archives, please call our permissions department at (213) 481-1448.
In front of the Avila Adobe Museum last Tuesday, one of El Pueblo de Los Angeles Historical Monument's most popular attractions, was a sign that read "Museum Closed Today." Where the normal operating hours of 9 a.m.-4 p.m. seven days a week were usually posted, two handwritten signs stated the museum's new opening hours: 10 a.m.-3 p.m., Wednesday to Saturday.
"We wanted to come on a weekday when it's not so crowded, and it's not even open," Alvarez lamented.
As a result of Mayor Antonio Villaraigosa's directive to trim budgets across all city departments due to a fiscal year shortfall that has been estimated at up to $155 million citywide, El Pueblo has cut 17 part-time museum guide positions and slashed operating hours for several popular attractions. The department is also considering an increase in parking fees to make up more revenue.
But things could have been much worse: El Pueblo officials faced a $350,000 deficit in the department's budget that a key city official blamed on an accounting error. If not for a bail-out by the city, the situation, known internally as "Doomsday," could have shut down most of the department's operations and caused the layoff of much of its staff.
"Essentially, we had to cut back two days and our museum hours had to be reduced by more than half," said Robert Andrade, general manager of El Pueblo. "It's a result of the overall budget crisis."
Additionally, another thorny issue seems ready to erupt: Andrade will soon begin working to raise the rents for the 79 El Pueblo merchants - some of whom have not seen an increase for more than 20 years. At the same time, some retail experts said a lease for a new Olvera Street cafe is below what the market could bear.
It's the latest flare-up for El Pueblo, an attraction with a history of budgetary and bureaucratic mischief and mishaps. In 2004, a blistering audit by City Controller Laura Chick declared that the department was "on the brink of financial disaster." In May of that year, a group of former employees broke into the department's office and shredded files.
As a result of the current financial crisis, days and hours have been cut at the Avila Adobe Museum, the Firehouse Museum, the Chinese American Museum and the Sepulveda House Visitor's Center.
John Kopczynski, public relations specialist for El Pueblo, said it has not yet been determined how much money will be saved by cutting back museum hours and laying off part-time staff, but the reductions ensure that the museums will at least remain open, he said.
Although a necessary cut, city and El Pueblo officials lament the decreased hours.
"Unfortunately, El Pueblo, like every other city department, is facing severe budget cuts due to the budget crisis," 14th District Councilman José Huizar, whose district covers El Pueblo, said in a statement to Los Angeles Downtown News.
David Louie, a member of the El Pueblo Board of Commissioners, said, "El Pueblo and the museum and the educational facilities are there for a purpose: to provide service to the people of Los Angeles. And when you cut back part-time employees who basically staff and operate the museum, you cut back at the very core to the existence of El Pueblo.
"Given the budget constraints we have currently and the projected shortfalls we are looking at, it is going to be a real challenge to find funding for staffing and yet it is absolutely necessary for the successful operation of El Pueblo."
El Pueblo operates on an annual budget of $4.1 million. The department raises about $2 million from parking fees and $800,000 from rent paid by merchants. Another approximately $300,000 comes from filming.
Although Olvera Street, which opened in 1930, attracts an estimated 2 million visitors per year, it still requires about $1 million from the city's general fund to balance its budget.
The proposed parking rate increase would hike prices at El Pueblo's five parking lots by about 30% as soon as May. The increase requires the approval of the El Pueblo Board of Commissioners, which may decide the matter this month.
If implemented by May 1, the increase could bring in an additional $97,000 for the current fiscal year (which ends June 30). Parking revenue for the next fiscal year is estimated to bring in an additional $580,000 with the increased rates.
"That's in anticipation of things getting more difficult next year," Andrade said.
Some of those who frequent Olvera Street are not happy with the proposed increases.
"We come here to shop and spend money, and these were some of the cheapest lots around, and now we have to pay more? What's going to happen is that people will shop here less," said Angela Estrada, a San Fernando Valley resident and frequent Olvera Street visitor.
Like many visitors, Estrada uses Lot 2 on Main Street. Rates at the 220-space lot (El Pueblo's largest) are proposed to increase from $1.50 every 20 minutes and a $10 maximum to $2 every 20 minutes with a $13.20 maximum.
"It going to affect a lot of people who can't afford to pay more," Estrada said.
Huizar said the changes are necessary for El Pueblo to help balance the city budget.
"Everyone needs to play their part in balancing the budget. That includes making reductions and generating new revenue, as appropriate," Huizar said in his statement.
Another significant contributor to the budget could be boosting the merchants' rent to current market levels. Andrade noted that the majority of the leases have not been updated since the 1980s.
"Even if they were market rate back then, they aren't now," he said. "We're going to move to get them as close to market rate as we can, that's my task."
Although Andrade would not reveal the average rent for El Pueblo tenants, during a meeting with the City Council's Budget and Finance Committee last week, he testified that going to market-rate rents could mean a 30% increase in what tenants pay now.
Andrade later told Downtown News that the figure is an estimate, and determining what rents for El Pueblo merchants should pay would require a study to compare other retail rents in the area.
"We don't know what market rate is right now, it fluctuates with retail.... I'd say 30% but I don't know, I don't know if that's high or low. We have to look at what market-rate retail is right now, and in order to do that we have to do a comparison, but it's so difficult to compare Olvera Street with, I mean, what do you compare it to?" Andrade said.
Another issue that relates to market-rate rents is a proposed new addition with a questionable rent. Camacho's Incorporated, which has restaurants in Staples Center and numerous other locales, has inked a deal to open a coffeehouse and store in the old Bank of America building.
According to the lease, the 3,460-square-foot space at 103 Paseo de la Plaza will cost Camacho's $1.60 per square foot a month for the first year, and rise to $2 per square foot in the third year. It would stay at that level for the remainder of the five-year term.
"That does seem low," said Derrick Moore, director of urban retail for CB Richard Ellis and one of Downtown's leading retail leasing agents. "The rents would be anywhere between $3.75 and $4.25 a foot."
Steven Williams, a senior associate with Beitler Commercial, who has experience with retail properties Downtown, agreed, although he said it was just slightly below market.
"It's definitely a good deal at $1.60," he said. "Retail, restaurant use generally is about $2 on the low end and as high as $5 on the high end."
Determining what market rate means for a place like Olvera Street, where some tenants have had stores for generations and open spaces are rare, can be difficult.
Councilman Bill Rosendahl, a member of the Budget and Finance Committee, said it is important for El Pueblo to get up to date with its leases. During the committee's meeting last week, he asked Andrade for a report on what is being done to bring the leases to market rates and also requested details on the existing rates. Rosendahl said that report should be presented within a month.
Huizar also supports bringing lease rates up.
"I am working with El Pueblo to develop revenue-generating proposals, including adjusting parking rates and signing new market-rate leases with the Olvera Street merchants. I am optimistic that these proposals will be approved soon and will provide El Pueblo with a long-term, sustainable source of funding," Huizar said in a statement.
While El Pueblo is taking steps to cut back on expenses and bring in more money, the situation could have been much worse. The department is facing a $350,000 deficit in the current fiscal year, prompting a city rescue.
City Administrative Officer Karen Sisson last week said that when El Pueblo was preparing its 2007-08 budget, a mistake made by the department included $350,000 in revenue from the previous fiscal year. That led to an overestimate of the money coming in, which Sisson's office also missed when they went over El Pueblo's budget, she said. As a result, El Pueblo was asked by the Budget and Finance Committee to find ways to recoup some of the budgeted money.
Andrade told the Committee last week that offsetting the deficit would mean reducing El Pueblo's remaining budget for the current fiscal year by 46%. Those cuts would have meant the elimination or vast reduction of maintenance for El Pueblo Monument, including Olvera Street and historical buildings; the termination of all part-time employees, necessitating the closure of all museums, galleries and the visitors center; and laying off 15-full time employees.
The El Pueblo staff came to refer to the plan as "Doomsday."
Andrade would not comment on the CAO's statement and whether an accounting mistake was made. He said the report on the cutbacks was in response to the request from the council committee.
"They said, 'If you had to cut back $350,000 this year, what would be the impact?'" Andrade said.
During last week's meeting the Committee elected not to take action on the "Doomsday" report, meaning they will not ask the department to cut $350,000 from the budget since it would decimate services at El Pueblo.
Contact Richard Guzmán at richard@downtownnews.com.
page 1, 4/14/2008
© Los Angeles Downtown News. Reprinting items retrieved from the archives are for personal use only. They may not be reproduced or retransmitted without permission of the Los Angeles Downtown News. If you would like to re-distribute anything from the Los Angeles Downtown News Archives, please call our permissions department at (213) 481-1448.
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