As economic rough patches renew fears over downtown Santa Ana’s fading Latino footprint, its merchants are mobilizing at a scale not seen in years to rethink the area’s needs on its commercial and cultural ends. 

And their presence at a Nov. 15 City Council meeting prompted an initial council vote to dissolve a special tax on their shops that in large part goes to Downtown Inc., the downtown economic interest group with ties to the area’s expanding high-end restaurant and bar profile.

Under its agreement with the city to run what’s called the Business Improvement District (BID), Downtown Inc. collects money from the 600-plus businesses within its borders. In exchange, it runs promotional events and publicity with a sister group it operates called the Santa Ana Business Council.

But there have been questions about who truly wins in this arrangement, as smaller Latino merchants – and now a majority of City Council members last month – described an uneven community reflection in the downtown groups’ promotional practices and leadership.

“Who’s Alfredo Amezcua?” asked Councilmember David Penaloza at one point during the meeting, as he read off the Santa Ana Business Council’s list of board directors who advise on issues of concern for the area’s business community.

“He is an attorney in the city and he is elected,” responded a city staff member at the podium.

“Does he have a business inside this business district?”

“No.”

“So why is he on the board?” 

“The Santa Ana Business Council board can be made up of pretty much any membership, it doesn’t have to — I’d have to look at the operating agreement …” the city staffer started. 

Penaloza stopped him as groans let out in the audience. 

“See, that does not make sense to me,” he said.

Left, Ana Laura Padilla, hands over a list of demands during a day of protest to Councilman Jonathan Ryan Hernandez, who represents the area in which the OCTA Streetcar construction is located. Santa Ana Mayor Sarmiento and (not pictured) Supervisor Katrina Foley were present at the impromptu meeting. Credit: JULIE LEOPO, Voice of OC

Under the special tax system, critics say the downtown business groups take struggling shops’ money in exchange for marketing that barely helps them, funded by whatever doesn’t go to the downtown groups’ own administrative costs. In some cases, merchants on Nov. 15 said they were hardly informed about the system at all.

Some speakers said they only learned about the downtown groups after merchants got politically organized in protest of the OC Streetcar construction’s choking of customer traffic along Fourth Street and lack of assistance from local government officials.

At the time, the downtown groups’ representatives sided with merchants in pressing for local government bailout money. 

But the streetcar’s economic blow to the area – add the pandemic on top of that – put merchants through struggle after struggle, driving them on some early mornings to occupy the streetcar’s dirt construction trenches with chairs and poster board signs. 

And as they pinched pennies, they grew curious about the downtown groups’ use of their tax money. 

“What improvements did you bring to the coin laundry shop on the corner of French and Civic Center?” asked Shawn Makani, the more than 30-year owner of Telas Fabrics, in public comments at the Nov. 15 meeting. 

“What about all the businesses on Main and 5th street?”

The idea to dissolve the tax district, which got initial City Council support in a 6-1 vote, with Councilmember Phil Bacerra opposed, would mean much more than downtown merchants finding new ways to pool their own money for promotional funds.

The dissolution would chip Downtown Inc. ‘s hold of an area it long envisioned for “enhancement” – to make it a shopping, food and entertainment destination with commercial and creative appeal.

“We continue to believe the BID is incredibly valuable to our merchants and the City and we cannot imagine how Downtown would look without our weekly newsletter, social media, events, advocacy, partnerships and customer service,” wrote Downtown Inc. President Ryan Chase in a letter to the council prior to the meeting.

Chase added, “It would frankly be devastating and turn back the clock further, which after COVID and [OC Streetcar] construction, can’t afford to happen.”

But nothing’s been finalized yet. There are more steps to the dissolution process, with one on Dec. 20, where the council will vote on “a resolution of intent” to dissolve the Business Improvement District.

After that, the council is expected to set a public hearing and final vote on the special tax district’s dissolution for Jan. 17 of next year.

The council’s November vote followed an earlier October recommendation from the city’s Community Development Commission to dissolve the special tax, which happened at a meeting that Councilmember Jessie Lopez later publicly described as “heated” and “scandalous.”

‘A Small Fraction’

A quinceanera dress is displayed on Fourth Street in downtown Santa Ana Wednesday morning to protest against the Orange County Streetcar construction. Valentin Martinez, the 25-year business owner of Nino’s Bridal Couture, said the brand-new dress that cost him $1200 will go to waste from being exposed to the sun for more than 5 hours as well as from the surrounding dirt that made it onto the dress. (Omar Sanchez / Voice of OC)

“Are you solely focused on restaurants and bars?” asked Community Development Commissioner Richard Santana to Madeleine Spencer, a Santa Ana Business Council representative, during a line of questioning about the merchants’ complaints at the October commission meeting. 

“No, we are not,” Spencer said.

The crowd voiced their objection.

“Let her speak, please,” Santana said.

Responding to claims about lack of outreach and awareness, Spencer said information about the Santa Ana Business Council and Downtown Inc., like their financials and leadership structure, has always been available to the public online. 

“The public might not know how to access those documents, which might be some training that needs to be there, but at the same time, it’s always been there,” Spencer said.

The downtown groups run events like Savor Santa Ana, which reported to have included more than 40 participating restaurants and 2,000 attendees. The organizations also contributed $20,000 to a dozen event producers to bring events to the downtown and $10,000 in micro-grants for pop-up businesses and small events throughout the year, according to city staff in a report attached to the November meeting agenda. Staff wrote both groups “continue to increase their social media presences and have over 50,000
followers.”

Of the businesses that Councilmember Johnathan Ryan Hernandez said he heard from, “many (said) that the BID has worked for them.”

“But an overwhelming majority,” Hernandez added, “shared that many of them never made contact with either of the groups that represent them.”

“Those who came out today are just a small fraction of how people really feel in downtown Santa Ana – groups of business owners who have been disenfranchised, marginalized and pushed to the side,” Hernandez added.

Yet the downtown groups had several supporters at the Nov. 15 City Council meeting.

Among them: Raul Yanez of Mi Moda men’s clothing store on Fourth Street.

‘Better in What Aspect?’

Business owners and community members halt construction in the early morning hours of Feb. 9, 2022. Their efforts are part of an ongoing demand for the city of Santa Ana and OCTA to help business owners affected by the construction of the OCTA streetcar. Credit: JULIE LEOPO, Voice of OC

Speaking at the podium, Yanez addressed what critics deemed the redundancy in having two organizations – Downtown Inc. and the Santa Ana Business Council – run the district. 

But, Yanez said, “we’re in the process of merging into one association and including new BID members with new ideas that have better communication and better representation.”

Yanez paused to clear his throat as people behind him jeered. 

Dissolving the special tax, he continued, would be “devastating.”

“Having no promotion or events downtown — it’s going to be worse than the construction and COVID,” Yanez added. 

Bacerra, the lone council objection to the tax district’s dissolution, said the tax serves its purpose. 

“I think there is an overall benefit from the marketing, but that’s not to say the current marketing is the right way to go. For me to move forward, I would support doing it for one more year,” Bacerra said. 

Other business owners who spoke in support of the downtown groups promised room for improvement and reconciliation. Some peers were unfazed.

“Other comments, which I respect – the only thing they can say is that the BID is going to do better. Better in what aspect? The BID does not pay for security. Getting rid of the BID is not going to bring us more vandalism or (issues) we already have in downtown,” said Ana Padilla, owner of two downtown businesses.

She called herself “the perfect example that this tax is not working.” 

“On one hand I have Perla’s Mexican Cuisine, which is a restaurant that I get a lot of ads for on the Downtown Santa Ana page,” Padilla said. “On the other hand, I’m an accountant with a professional business (in another part of the area) that’s never been advertised, not once.”

The “whole idea” of transforming downtown – It’s “not always a good thing because then there’s displacement,” said Mayor Vicente Sarmiento before the vote. 

“There are businesses that have been there for generations, legacy businesses, that are now being displaced by others. That’s a challenge, it changes the identity and culture of any downtown.”

And things have changed in Santa Ana, even beyond the pace at which the downtown groups can apparently keep up.

“There are … businesses that said they’ve never known about us – that’s most likely true,” Spencer told Community Development Commissioners in October. “Anyone who’s come in pre-COVID, in the last two years or something, they may not have any idea who we are.”

Following the publication of this story, Spencer texted Voice of OC to clarify those remarks, saying she meant businesses that came into downtown since the COVID-19 pandemic.

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