The cities of the East Valley might learn something about downtown revitalization from this city of 139,712 people north of Los Angeles.
Old Pasadena, a 22-block downtown shopping and dining area, is enjoying a rebirth that began when property owners and city officials teamed up to eliminate blight and crime and replace them with prosperity. The effort is now nationally known as the "Pasadena Model."
"It has a great feel to it," said Jeff Franklin, who shopped on a recent weekend with his wife, Lyn, in Old Pasadena.
"It’s clean and safe."
Old Pasadena is home to 150 retailers, including national brands such as Banana Republic, Anchor Blue, Urban Outfitters, Pottery Barn, Crate and Barrel Accessories, Saks Fifth Avenue, Barnes and Noble and Victoria’s Secret. The district’s 80 restaurants include national chains such as Hooters and Cheesecake Factory, as well as dozens of local eateries.
And, people live there. Old Pasadena contains 600 residential units, and another 2,000 are under construction.
City officials estimate that an average of 30,000 people visit Old Pasadena each weekend. Retail sales there grew from $16 million in 1988 to $211 million in 2001. Property owners have in turn spent hundreds of millions of dollars preserving the historic look of Old Pasadena, which contains buildings that date back more than a century.
"It’s been a tremendous magnet to bring people from surrounding areas to the downtown area," said George Barnes, who recently opened a consulting business in Pasadena. "To rebuild a city, you have to have a core."
"Old Pasadena’s kind of been an example of how to go through this old urban revitalization," said Robert Montano, Pasadena’s business district coordinator.
FROM SLUM TO SHOWPIECE
Old Pasadena’s heyday was the late 1800s to the 1930s, Montano said. The area started to decline in the 1950s as people moved out of downtown. By the 1970s and 1980s, "Old Pasadena was a slum," Montano said. It was a location for drugs, prostitution and the homeless.
City officials and developers initially wanted to demolish the entire area and start anew, designating city blocks for residential, retail, office, hotel and cultural development. The linchpin of the plan was to build colossal corporate offices that in some cases would span several city blocks.
That idea caused historic preservationists, property owners and merchants to mobilize. Rather than succumbing to acrimony, city officials and the various interests developed a common strategy in 1978 called "A Plan for Old Pasadena."
It called for saving historic buildings, adopting design standards to preserve the historic look, and spending tax dollars to build parking structures. Property owners also were asked to restore their buildings.
Since the 1980s, the city has spent about $25 million in Old Pasadena. But private investment has topped $500 million, according to city records.
The area’s success is a result of a combination of strategic moves over a period of years, said Maggie Campbell, president and CEO of the Old Pasadena Management District.
"It’s a real place that evolved over time," Campbell said. "It’s not fabricated."
Officials and property owners said key factors to revitalizing Old Pasadena include:
• Use of tax incremental financing. Under California law, Pasadena established a so-called "TIF" boundary in Old Pasadena. Establishing the TIF area allowed the city to freeze property tax rates of state and local taxing authorities inside the boundary. As property values increased in the TIF area, property taxes collected above the frozen rate in Old Pasadena went toward paying off bonds the city issued to finance infrastructure improvements.
City officials said the boundary created a chain reaction: Infrastructure improvements encouraged property owners to invest in the area, which in turn raised the value of property, which in turn increased the property tax revenue collected in Old Pasadena, which in turn paid off the bonds the city used to finance the infrastructure improvements.
In Arizona, TIF projects have been approved by voters to corral sales and income tax revenue. That differs substantially from California projects, which usually rely on property tax revenue. The Arizona Constitution prohibits property tax-based TIFs.
• The establishment of standards for historic conservation and redevelopment. In 1979, Pasadena adopted a conservation zone that restricted demolition of historic properties and included strict design guidelines for restoration of old buildings. The city established a redevelopment area in Old Pasadena in 1983, giving officials eminent domain authority and setting the stage for tax incremental financing.
• Construction of parking structures. The city constructed two parking structures using General Fund money and tax incremental financing. Private interests built a third parking structure. The three structures gave the area about 2,300 parking spaces, allowing people to drive into Old Pasadena and find convenient parking. That has helped create needed foot traffic for the area’s merchants.
• Creation of a business improvement district. In 1989, merchants formed a business improvement district in a six-block area, to help keep the area safe and clean. Business owners paid an assessment fee to fund street cleaning and promotional material, among other things. In 2001, the district was renamed the Old Pasadena Management District and expanded to 20 blocks. It shifted from directly assessing business owners to assessing property owners.
Today, the district operates on a $1 million annual budget. About half of the budget comes from property owner assessments; the remainder comes from the city. Much of the city’s portion comes from parking meter revenue collected in Old Pasadena. The city installed about 400 parking meters in Old Pasadena roughly a decade ago. Officials said the meters encourage shortterm parking on streets.
The city reinvests a portion of the parking meter revenue into infrastructure improvements, including streets, sidewalks, signs, lighting and alleys. The rest goes to the business improvement district, which uses its funds to clean alleys, sidewalks and streets; remove graffiti; collect litter; enforce parking; market the area; and hire "guides," people who watch the area and call police if there is trouble.
While the improving condition of Old Pasadena has raised property values, commercial space is less costly to lease than in most East Valley cities.
Commercial rents average $4 to $6 a square foot per month on Colorado Boulevard, the main street through Old Pasadena, said Norman Sauve, vice president of the Pasadena firm Sauve Riegel Commercial Real Estate.
In comparison, commercial lease rates in downtown Mesa are $7 to $11 a square foot, according to the Mesa Town Center Corp.
Sauve speculated that lease rates in Old Pasadena are comparatively low because the success of the area is relatively new. The vacancy rate for commercial property in Old Pasadena runs about 3 percent, he said. He often avoids putting "for lease" signs in the windows of vacant properties because of the high volume of calls it generates.
"Demand is incredible here," Sauve said. "It’s a real tight market."
AVOIDING BECOMING A MALL
If it suffers from anything, Old Pasadena is hurting from its success.
Officials worry that local mom-and-pop retailers are being driven off Colorado Boulevard because of competition from corporate retailers.
"The question is how do we maintain a unique character?" Campbell said.
Jack Huang, who is opening his third restaurant on Colorado Boulevard, said the popularity of the area has allowed his restaurants to thrive. By reinvesting in his restaurants, Huang said he has grown while others have cut back. He owns Sorriso, an Italian restaurant, and Wok N Roll, which specializes in Chinese and Japanese cuisine and sushi.
"I’m fortunate," Huang said. "My business has continued to grow over nine years."
Over the years, Huang said he has seen more than 100 restaurants and dozens of local and corporate retailers come and go. Old Pasadena’s popularity is prompting corporate retailers to outbid local businesses for commercial space just to have their name visible on the street, he said. Turning a profit is secondary to them, he said.
"They really don’t care if they make any money," he said of the chains. "It’s marketing. They will sign a lease at higher rents because it will help their overall image."
Lyn Franklin, who was shopping in Old Pasadena over the Fourth of July weekend, said Colorado Boulevard has become too much like a mall.
"It needs fewer chains," Franklin said.
City parking meters also have create ill-will among some customers and business owners, Huang said.
Customers have vowed never to return to Old Pasadena after receiving several parking tickets, Huang said. He has even gone as far as paying customers’ tickets to sooth their anger and ensure they return, he said.
"I think meters are evil," said Huang, who also serves on the Old Pasadena Parking Commission.
While they may debate the merits of parking meters and corporate retailers, no one debates that Old Pasadena is better now than it was a decade ago.
"I watched it turn around," Pasadena resident Detry Lucas said while shopping with his wife, Esmerelda, in Old Pasadena. Over the course of 15 years, Detry said he saw Old Pasadena transform from sex shops and seedy bars into a firstrate shopping and dining district.
The combination of influences has resulted is a uniquely pedestrian-friendly
city in a state known for using automobiles.
"It’s an area where people walk," said Lorraine Hill of the Pasadena Convention and Visitors Bureau. "For California, that’s an unusual area."
Pasadena and the cities of the East Valley have notable differences.
The fast-growing East Valley borders Phoenix, a city of roughly 1.3 million people. Los Angeles, by contrast, contains about 3.8 million people, and the city’s metro area is one of the most densely populated places on the planet. Few places in the world offer the diversity or level of attractions found in Southern California.
And, while winter temperatures in Pasadena are similar to the East Valley, the Los Angeles area enjoys milder summers, making it a year-round destination for tourists.
"We’re in a great location," Campbell said of Pasadena, which is best known for the annual Rose Bowl college football game and Tournament of Roses Parade in January.
Beyond that, the similarities between the East Valley and Pasadena seem striking.
Pasadena has an old downtown. The East Valley downtowns are old, too.
There is a heavy emphasis on arts and cultural venues in Pasadena. East Valley cities also have grabbed onto the notion of promoting arts and culture.
Downtown Pasadena includes museums, art galleries, and theaters. The Pasadena Playhouse, offering more than 300 performances a year, is designated as California’s state theater. Scottsdale, Chandler, Mesa and Tempe also have built or are building performing arts centers. Mesa is attempting to redefine its downtown as an arts and cultural district. Scottsdale is known for its private art galleries.
Arizona cities could see success stories of downtown revitalization like Old Pasadena if they could capitalize on tax increment financing, said Dave Fackler, Tempe’s development services manager.
"If we would have had that tool, Tempe would have been done with our downtown redevelopment," Fackler said.
But state Rep. John Huppenthal, R-Chandler, said a variety of tools are available in Arizona for cities to revitalize their downtowns without tax incremental financing. TIFs and similar financing methods rob the state of money needed to build prisons and provide other state services, he said.
"To me, those kinds of functions are just a bad idea," Huppenthal said, adding that California TIF projects have contributed to that state’s current $32 billion deficit.
By using the tools available in Arizona, downtown Scottsdale and Tempe are the closest to achieving the success of Old Pasadena. Both have blended local and chain retailers and restaurants into their downtowns to create magnets that attract visitors.
Chandler, by contrast, continues to look for ways to turn its downtown into an attraction. Some property owners have meticulously restored historic buildings in downtown Chandler.
Gilbert may be the fastest-growing municipality over 100,000 population in the U.S., but its downtown remains sleepy and has actually lost residents.
And, after numerous studies and millions of tax dollars spent, Main Street in downtown Mesa remains empty at night. The city hopes a $94.5 million arts center will spark interest from developers and citizens in the downtown area.
Tempe officials have noted the revival of Old Pasadena.
Rod Keeling, executive director of the Downtown Tempe Community, Tempe’s special improvement district, said Tempe is modeling its downtown parking meter program after Pasadena’s.
"Did we learn some things from Pasadena?" Keeling said. "Sure we did. We think Pasadena is our closest peer without a major university."
Montano said Old Pasadena’s success can be accomplished anywhere there is an older downtown. Indeed, age is a key ingredient.
"There’s nothing like old downtowns anymore," Montano said.