Rags and Riches

As one of the wealthiest areas in the nation, the Palos Verdes Peninsula might seem like the last place in need of economic revitalization.

But with both anchor department stores in the only mall on the hill having shut their doors in recent weeks--not to mention that the old Marineland site has remained vacant for a decade--officials from two of the peninsula’s four cities have teamed up to establish an Economic Development Commission to give the picturesque area a fiscal shot in the arm.

The agency, formed by Rolling Hills Estates and Rancho Palos Verdes, is aimed at encouraging residents to spend their money in their own communities and at working to bring in businesses to fill budget gaps caused by shrinking tax revenues.

“We’re hoping to create the right mix so that the local economy can become self-sustaining,” said Rolling Hills Estates City Manager Doug Prichard, whose community will lose $250,000 in sales taxes annually because of the department store closures. “It has to be balanced very carefully so that we retain the rural atmosphere.”

This week, the Shops at Palos Verdes mall in Rolling Hills Estates lost its biggest department store when Robinsons-May closed after years of lackluster sales. The shutdown came on the heels of Macy’s departure last month.

Sales tax revenues, most of which are generated at the mall, account for nearly one-third of Rolling Hills Estates’ $4.5-million annual budget.

Rolling Hills Estates residents are among the most affluent in the country. A 1996 Worth magazine survey ranked the city, along with three other communities on the peninsula, among the wealthiest cities in the nation.

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But in the last two decades, the ability to levy taxes has become so limited that many seemingly prosperous cities have had to rely on businesses, including malls, to boost their budgets. Rancho Palos Verdes, the site of the former Marineland property, lost much of its primary source of revenue in the years after voters approved Proposition 13 in 1978, freezing property taxes.

Like many others in Southern California, peninsula residents have suffered job losses in recent years because of defense industry layoffs. In Rolling Hills Estates, as residents’ cash flow decreased, so did city sales tax revenues, which have dropped more than 20% since 1989.

Most businesses on the tony hill are centered around Hawthorne Boulevard, where Rolling Hills Estates and Rancho Palos Verdes intersect. The 50-store mall is populated by specialty retailers, an ice skating rink and a nine-screen movie theater complex. Other area businesses include supermarkets, drugstores and dry cleaners.

Part of the difficulty in attracting business, according to city officials, is that many residents do not pass through the commercial district. And many peninsula residents have become accustomed to driving down the hill to Torrance, where they have a choice of more than 20 shopping centers, some large enough to offer the convenience of one-stop shopping.

Over the years, there have been several proposals to bring large-scale commercial ventures to the peninsula. A plan to turn the Marineland site into a nine-hole golf course and resort hotel has been approved by the California Coastal Commission. But the project has been held up because the developer has proposed an 18-hole golf course.

On the eastern side of the peninsula, developers of the Ocean Trails housing and golf course project got the go-ahead after a three-year legal battle that ended last year when environmental groups and the developer reached an agreement to move the golf course back from the coastal bluffs.

Rancho Palos Verdes City Manager Paul Bussey said construction may begin soon, but added that it will be many years before the project is completed.

Most peninsula officials agree that the golf courses and a hotel are major elements of a healthy economy.

“We’re sort of at the end of the road, so it’s hard to attract the kind of big-ticket operations that would produce revenue,” Bussey said. “To be successful it has to be the kind of enterprise that would draw people. . . . That’s what’s unique about the hotel and golf course project.”

Over the years, the Shops at Palos Verdes has shown that upscale boutiques can survive. The mall is home to the only Williams-Sonoma and Talbots stores in the South Bay and many other specialty shops.

The Ann Taylor store was ranked No. 1 in the chain’s western region in sales last year, and Williams-Sonoma officials report that their peninsula shop also boasts a large sales volume.

Mall operator Ron Florance contends that the shopping center was designed primarily for small stores and that one reason Macy’s and Robinsons-May failed was because they were operating in spaces less than half the size of the average department store.

Macy’s spokeswoman Merl Goldstone said the 60,000-square-foot store proved too small for the retail chain to present its entire collection and that customers preferred traveling to Macy’s two other, larger South Bay stores.

Indeed, Mary Jo Mock, a Rancho Palos Verdes homemaker, said that when she tried to find a sport coat for her son at the local Macy’s, she discovered that it didn’t carry them. She ended up driving to the South Bay Galleria in Redondo Beach and said she only goes to the peninsula mall when she needs a gift item, such as something from stores like the Nature Company.

“We need a nice, well-stocked department store to make the mall really go,” Mock said. “We need something local, because the Galleria is really a far trip, especially when you have kids.”

Rancho Palos Verdes Councilwoman Marilyn Lyon said that even though the anchor stores were poorly stocked, they at least carried basic necessities.

“They were the only place where you could buy underwear and makeup,” Lyon said.

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Though it is uncertain what will become of the space occupied by the two department stores, Florance is confident that specialty shop owners will be “standing in line” to get into the mall.

Small businesses in the mall seem to agree. John Fisher, owner of Ruby’s restaurant, which overlooks the ice skating rink and attracts mostly families on the weekend, said new shops will give the shopping center new blood to attract curious customers.

Denise Huddleston, general manager of Eddie Bauer, concurs.

“People didn’t come to this mall to go to those two stores,” said Huddleston, whose sales increased 10% in 1996 over the last year. “They came here for the specialty shops.”