Santa Monica, lengthy a beacon of financial energy in Southern California, has endured its share of struggles lately.
Its once-bustling downtown purchasing district has taken a post-pandemic hit, with the Third Road Promenade in want of reinvention and the upscale Santa Monica Place mall about to lose its anchor Nordstrom. Different elements embrace post-pandemic shifts within the leisure trade and new tariffs.
However Santa Monica finds itself getting ready to a monetary disaster for an additional, much less anticipated motive as effectively: A whole bunch of tens of millions of {dollars} in intercourse abuse settlements.
Town nonetheless faces 180 claims of sexual abuse by a former Santa Monica police dispatcher, a scandal that has already value town $229 million in settlement payouts. On Tuesday, town declared itself in fiscal misery, a transfer that raised issues amongst metropolis employees that cuts, and maybe layoffs, had been coming.
“The monetary scenario town is coping with is definitely severe,” mentioned Oliver Chi, metropolis supervisor for town, throughout Tuesday’s Metropolis Council assembly.
The concerns amongst metropolis employees reached such a peak that earlier than Tuesday’s assembly Chi despatched out an electronic mail to all metropolis workers, attempting to reassure them no layoffs had been being deliberate.
“Let me be clear,” the e-mail, reviewed by The Occasions, learn. “This motion just isn’t about layoffs or workers reductions.”
Santa Monica’s just lately accepted price range for 2025-2026 expects $473.5 million in income, however $484.3 million in prices, and metropolis officers fear that the sexual abuse scandal might proceed to place a drain on metropolis coffers which are already reeling from an financial downturn.
Pedestrians stroll previous vacant retail storefronts for lease alongside the Third Road Promenade in Santa Monica on March 20, 2023.
(Patrick T. Fallon / AFP through Getty Photos)
Many cities are reeling from declining tax revenues and struggling companies.
However officers level to the alleged sexual abuse by Eric Uller, a former metropolis dispatcher, because the issue pushing Santa Monica into full-blown monetary disaster.
Uller preyed on kids largely in predominantly Latino neighborhoods of town, usually touring in an unmarked police car, or his private SUV, which was outfitted with police tools, in line with courtroom data.
For many years, Uller volunteered on the Police Actions League after-school program, but it surely wasn’t till 2018 that he could be arrested and charged. He died by suicide in November 2018, however the results of the abuse would proceed to reverberate within the metropolis for years.
A yr later in 2019, AB 218 was handed and prolonged the statute of limitations for childhood sexual abuse. The brand new legislation meant that victims of sexual abuse had till they had been 40 years previous, or as much as 5 years after discovering they had been victims of abuse, to file a declare.
The brand new legislation unleashed waves of litigation in opposition to faculty districts, counties and cities. In April, Los Angeles County agreed to a $4-billion tentative settlement involving 6,800 abuse claims, a few of them going again to the Nineteen Eighties, involving probation camps, juvenile halls and the MacLaren Kids’s Heart.
For Santa Monica, the brand new legislation meant that taxpayers might face a substantial tab in lawsuits associated to Uller’s abuse.
Guests stroll previous a retailer providing 50% off on all objects on the Third Road Promenade in Santa Monica on July 16, 2024. As soon as Santa’s Monica’s signature vacation spot for purchasing and eating, the Third Road Promenade is exhibiting its age. Foot visitors on the pedestrian mall that teemed with locals and vacationers throughout its heyday within the Nineteen Nineties has been thinning for years, dropping by greater than a 3rd since 2019.
(Genaro Molina / Los Angeles Occasions)
Greater than 200 kids had been believed to have been molested by the previous metropolis worker. Uller had been employed and continued to work with kids regardless of a 1991 background verify that exposed he had been arrested as a teen for molesting a toddler he baby-sat, in line with a report reviewed by The Occasions.
Santa Monica has gone by way of 4 rounds of settlement talks with those that have filed claims, Chi mentioned, and is ready to start on a fifth set of negotiations with 180 further claimants.
However present and former officers mentioned the present monetary woes of town couldn’t be positioned solely on the authorized claims, and that its dire monetary scenario may very well be seen taking form years in the past.
“Town of Santa Monica has did not reign in pointless spending for plenty of years, and we’ve identified this monetary disaster has been looming for some time,” mentioned former Santa Monica Mayor Phil Brock, who misplaced his seat within the November election.
Town has confronted a steep downturn in tourism and retail revenues, Brock mentioned, in addition to a number of companies which have left downtown and the promenade.
Undated reserving mug of Eric Uller.
(Los Angeles County Sheriff’s Division)
“I feel you may need to proper facet providers, and have a look at areas the place [the city] is perhaps overstaffed,” he mentioned. “I like to recommend we return to fundamentals.”
Town has struggled to deal with the homeless inhabitants within the metropolis, he mentioned, in addition to the notion of security in a metropolis that’s meant to attract in worldwide vacationers and guests from the bigger Los Angeles areas in search of an escape, he mentioned. Town has had some success, he mentioned, however the declining income and pending lawsuits have created a “good storm” for town.
For the report:
11:20 a.m. Sept. 14, 2025Correction: An earlier model of this story misspelled the title of Jon Farzam.
Jon Farzam, who owns three resorts within the metropolis, mentioned the bitter financial outlook within the metropolis has been evident for a while.
“Santa Monica enterprise has been down,” Farzam mentioned.
A former board member of Downtown Santa Monica Inc., Farzam is one in all two former members who just lately filed a lawsuit in opposition to the Metropolis Council, alleging six administrators had been wrongly eliminated. The nonprofit was established to advertise, oversee upkeep and host particular occasions within the downtown space. They declare they had been eliminated for pushing town to supply providers within the downtown space.
Town has not responded to the swimsuit in courtroom.
Brock mentioned town’s largest hurdle is the pending claims from the Uller scandal, which he mentioned has drawn “some unscrupulous attorneys.”
Though town is insured, a number of of the person claims have resulted in settlements from $700,000 to lower than $1 million and, with town’s $1-million deductible with some insurance coverage firms, a lot of the brunt has been confronted by town’s price range. Town has sued a few of its insurers to get well among the funds.
Tuesday’s declaration of “fiscal misery,” accepted unanimously by the seven-member Metropolis Council, has drawn worries and hypothesis by town’s roughly 2,000 workers. In 2020, town laid off roughly 400 workers, in line with a presentation from town supervisor, and town’s present projection is that income for town is declining.
Judith Serling, a consultant with Teamsters, mentioned throughout the assembly she’d been receiving calls and questions from metropolis workers asking about doable layoffs.
“Individuals are afraid of shedding their jobs,” Serling mentioned Tuesday. “Folks had been scared of getting their wages minimize.”
Santa Monica officers had initially been set to think about a “fiscal emergency,” a transfer that may have triggered authorities by town to deal with it, similar to cuts and dipping into reserves. However the declaration voted on Tuesday as a substitute referred to as for a declaration of “fiscal misery,” which Chi mentioned was meant extra for town to speak its monetary scenario with different businesses, assist in looking for grants and different funding, and as a instrument to work on a “realignment of metropolis operations.”
“There isn’t a doubt that the monetary circumstances dealing with town are severe, and the decision developed for Metropolis Council consideration is a instrument recognized by workers meant to assist institute a broader technique,” town mentioned in an announcement.
However what precisely that technique is stays unclear. Metropolis officers mentioned a plan is anticipated to be introduced to the Metropolis Council in late October.
Santa Monica Mayor Lana Negrete mentioned the declaration might assist town with making use of for grants, to work with the California Coastal Fee to expedite the method of adjusting parking charges within the metropolis, and to assist push California legislators in supporting payments that might present reduction to Santa Monica and different jurisdictions which were dealing with important legal responsibility because of AB 218 and previous sexual abuse claims.
Chi pointed on the market are payments being thought of that may restrict claims from AB 218, and will show useful for town.
“We’re carrying the burden of greater than $229 million in sexual abuse allegations,” mentioned Mayor Professional Tem Caroline Torosis. “We owe it to survivors to correctly deal with this, however we owe it to Santa Monicans to guard our metropolis’s monetary stability.”
What steps precisely town is ready to take stay unclear. One metropolis official, who requested to not be named as a result of they weren’t cleared to talk on the report, mentioned workers remained skeptical of what steps town would take, and whether or not it might imply cuts to their pay or advantages. Earlier this yr, town reached an settlement with about 10 worker unions.
Throughout Tuesday’s conferences, some residents urged metropolis leaders to not minimize providers, however the future appears unclear.
“I’ve heard lots of people saying we want extra workers, we want extra cops and all of that’s true,” Chi mentioned. “However the actuality is irrespective of what number of assets we’ve, irrespective of what number of cops we’ve, irrespective of how a lot we’ve right here within the metropolis, there’s all the time going to be a necessity for extra. What we have to do is attempt to determine how will we make the most of the assets that we do have in the easiest way doable.”
