News - Local - North Coast

Tuesday, Jul. 29, 2008

Morro Bay Fishing Industry Special Report: Morro Bay knows it’ll take more than kites and cars to revitalize city

Festivals are helping to bring in visitors, but what city really seeks is healthy expansion of the business community

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Dozens of longtime business owners along the Embarcadero have seen Morro Bay transition from a once-booming fishing port to a city packed with annual festivals designed to attract visitors’ dollars.

But relying on an influx of tourists isn’t the only answer to solving the city’s economic woes, local leaders say.

Morro Bay must strengthen its overall business community too, said Peter Candela, president of the Morro Bay Chamber of Commerce.

“You have to be able to rely on other means. When you make that blend is when you are successful.”

In the past year, the city has hosted 29 off-season events to boost tourism. One of them, the Kite Festival, drew about 5,000 visitors.

Candela said the chamber’s surveys of randomly polled local businesses after each festival showed some improvement for the city’s economy.

“If you follow the trend, you can see a spike in occupancy,” he said, referring to feedback received from local hotel owners.

However, it’s too early to tell whether the surge in events will buoy sales and bed tax revenues in the long run.

So city leaders are trying other tactics — encouraging businesses to move to Morro Bay or open shops there, as well as helping existing local businesses to grow.

They’re also considering establishing a redevelopment agency to improve parts of downtown and the waterfront —a top recommendation of a consulting firm the city hired earlier this year.

Target redevelopment

The agency was one of 34 suggestions by Management Partners Inc. of San Jose — most of which centered on improving municipal operations — to control expenses and boost revenue.

If Morro Bay created such an agency, it would have to obtain the state’s approval. But it would enable city leaders to declare parts of the town blighted and then capture a portion of the property tax revenue generated in those areas to finance redevelopment efforts.

It also would give the city the power to sell bonds without voter approval to pay for infrastructure improvements or developments designed to revamp the areas being redeveloped. Those bonds would be paid back over 20 to 30 years with the expected increases in property tax revenue.

A redevelopment agency would enable Morro Bay city leaders to use eminent domain powers to remove eyesores, obtain property for infrastructure or create public spaces and remake neighborhoods.

The consulting firm stated that a redevelopment agency could help improve infrastructure and attract more tourism to Morro Bay while generating sales tax and other revenue to help replenish the city’s general fund.

The city would likely start earning revenue from a redevelopment agency beginning in 2010.

Morro Bay first considered activating its redevelopment agency status in the 1990s. But city leaders tabled the idea because of budget concerns.

This year, city officials are revisiting redevelopment.

The city would have to spend $83,000 for a study to determine whether parts of the city are eligible for economic or physical redevelopment, according to Public Services Director Bruce Ambo. City officials are planning to apply for $70,000 in grant funding to complete the study. The rest of the money would come from grants the city already has.

The study would primarily examine Main Street, Morro Bay Boulevard, parts of the waterfront where fishing operations exist and the power plant.

Ambo said the city would have to spend about $170,000 to $200,000 in upfront costs to jump-start a redevelopment agency. About $44,500 from the initial study would be applied toward the formal formation process. Additional costs could be offset by future grants the city would seek, he added.

Other turnaround efforts

The consultants also suggested planning to redevelop city-owned properties along the harbor and near the power plant and the former Chevron property in north Morro Bay.

Morro Bay is among several cities and unincorporated areas of the county that joined a business improvement district to promote tourism. The district imposes a levy of 2 percent on hotels’ gross receipts, with that revenue paying for promotional campaigns.

For his part, the chamber’s Candela is contacting out-of-town business owners to gauge their interest in opening retail and commercial enterprises on vacant commercial lots in town.

The chamber hasn’t succeeded in this endeavor yet and is focusing on businesses that would provide services for local residents. But Candela is optimistic.

In March, Mayor Janice Peters sent letters to executives at Carrows, Coco’s and Denny’s restaurant chains inviting them to occupy retail space on Quintana Road that was once a Denny’s Restaurant.

A Bob’s Big Boy is now expected to open there later this year, Candela and city officials confirmed, though that company was not a target of Peters’ efforts.

In addition, Candela and the chamber are cultivating relationships between Morro Bay shop owners and the Cuesta College Small Business Development Center to help local enterprises improve their operations.

Under that partnership, a local business owner interested in revitalizing his or her enterprise gets a chance to meet with a representative from the development center for free to discuss strategies such as developing solid marketing techniques or managing expenses.

“This is what I think the survival of Morro Bay is all about,” Candela said. “We have to operate efficiently on tourism and the local economy.”

Helping local businesses reach their potential fits well with the city’s goal of encouraging Morro Bay residents to shop locally, he said.

Candela also noted that chamber and city officials have been pushing to develop a conference center on a bluff atop Market Street to attract weekday visitors.

Councilman Bill Peirce said such a center could make up for sometimes-poor weekday occupancy rates in local motels.