Santa Monica City Manager Oliver Chi has pointed to former President Donald Trump's policies as a factor in the city's recent economic struggles, a claim that omits other significant issues contributing to its decline.
Chi suggested that Trump's approach to immigration and international relations led to a decrease in global tourism, impacting Santa Monica's economy. However, his assessment overlooks substantial financial burdens, including hundreds of millions of dollars in legal settlements, the lingering effects of the COVID-19 pandemic, widespread retail vacancies, and a persistent homelessness crisis.
"There was a real sense, I think, a year ago that maybe Santa Monica’s best days were behind it," Chi told The Wall Street Journal, while adding that the city "can still be one of the coolest places on the planet."
The city, with a population of approximately 90,700, formally declared "fiscal distress" in September. This declaration followed a series of financial setbacks.
Financial Challenges
A significant burden on the city's finances is a roughly $230 million settlement related to decades-old sexual abuse claims involving a former city IT employee. This amount represents nearly 30% of Santa Monica's annual budget.
The COVID-19 pandemic further strained the city's finances by eliminating hotel and sales tax revenue. In response, officials laid off over 400 municipal workers, approximately one-fifth of the workforce.
In the months that followed, widespread looting during civil unrest after the murder of George Floyd severely impacted downtown businesses, leaving many merchants struggling to recover.
Tourism and Retail Decline
Chi also noted a decrease in international visitors, which he attributed to Trump's policies. Additionally, a devastating wildfire in nearby Pacific Palisades last year displaced thousands of affluent residents who were regular patrons of Santa Monica's businesses.
Despite some signs of recovery, downtown Santa Monica continues to grapple with a high rate of vacant storefronts. Retail and restaurant vacancies are around 20%, among the highest in Los Angeles County. Santa Monica Place, a shopping center, has struggled significantly, particularly after its owner defaulted on a $300 million loan in 2024. Its anchor tenant, Nordstrom, closed its long-standing location last year, leaving the once-busy mall largely empty.
Business owners have cited crime, homelessness, and public drug use as factors that deterred customers during the city's most challenging period. A.J. Sacher, operations manager at Barney's Beanery, recalled multiple overnight break-ins at the sports bar between 2020 and 2021, emphasizing that a safe and pleasant environment is crucial for a city dependent on tourism and hospitality.
Michael Mandel, co-owner of Pier Pizza & Subs, highlighted the negative impact of visible public drug use on visitor experiences.
City's Efforts and Signs of Improvement
City leaders have acknowledged internal failures to adapt to changing shopping habits and a degree of complacency regarding the city's financial resilience.
In response to these challenges, Santa Monica has implemented several changes. The city now permits major fast-food chains, with businesses like Raising Cane's Chicken Fingers opening along the Third Street Promenade. Police patrols in the downtown area have been increased, the homeless shelter has been relocated away from the retail core, outdoor dining fees have been reduced, and AI-powered software has been introduced to expedite business permits.
An "entertainment zone" has also been established, allowing visitors to consume alcoholic beverages outdoors on weekends and during special events.
Officials report that these measures are beginning to yield positive results. Property crime has decreased, police staffing is nearing full capacity for the first time in nearly two decades, and visitor numbers at the Santa Monica Pier are approaching pre-pandemic levels.
"We have far more events than we ever had before," said Jim Harris, executive director of the Santa Monica Pier Corp.
The city is also anticipating economic benefits from the FIFA World Cup and is planning for the 2028 Los Angeles Olympics, having secured agreements with delegations from France, Switzerland, and England to host hospitality events. Chi stated, "The real way to get back to prosperity is we need the local economy to thrive again. What we can do is create an environment in the city that's investable."