Whose Business Is It to Manage Malibu's Businesses?

• The First Article about Local Efforts to Address the Community's Current Marketplace Mentality

BY ANNE SOBLE

Is the gap between Malibu residents seeking municipal oversight over local business composition and center owners who regard attempts at tenant regulation as commercial censorship too wide to bridge?

On March 26, the Malibu City Council is scheduled to consider whether it is in favor of attempting to regulate the composition of commercial activity within the City of Malibu and wants the municipal planning department to begin crafting an ordinance to legislatively implement that objective. 

A loosely-knit organization with no formal officers or membership list that operates under the umbrella name of "Preserve Malibu" is going to urge the city council to support what is called diversity regulation and to initiate the ordinance process to put diversification into law. 

However, as the Malibu Surfside News went to press, it was learned that City Councilmember Pamela Conley Ulich seeks an emergency agenda addition of a retail formula ordinance at the next council meeting on Feb. 27.

Ulich said the prospect of several more chain stores opening in Malibu very soon indicates "there is a need to move quickly on this issue." If Conley Ulich cannot obtain support for an emergency ordinance, she said she "hopes there can be a time-out before Malibu is changed even more."

PRESERVE MALIBU

The Preserve Malibu group's stated goal for the March 26 meeting is to gauge the position of incumbent council member John Sibert, who is seeking reelection, toward the diversification concept and have a litmus test to apply to the six other council candidates.

PMG spokespersons acknowledge that any of the council hopefuls might say they favor diversification before the April 10 election and then vote against a specific draft ordinance or dilute its effectiveness later on, but they see action on March 26 as the first step in a process to have more citizen input into what kinds of businesses best meet local residents' needs, make the community more self-sustaining, and maintain their vision of small-town community character.

One of the group's spokespersons, Jae Flora Katz, said that is why PMG submitted last week's letter-to-the-editor to the newspaper to let the city council and candidates know that "many citizens want them to vote yes [and] for the city to start writing and working on a plan for the future."

Joseph Smith, an associate planner for the city who has served as lead staff liaison with the proponents and opponents of the diversification concept, said the debate can be summed up as, "Should government force change by legislation?"

Smith said there will be one more in a series of what have been called "stakeholder" meetings, where city staff (city manager, city attorney, city planning director), commercial center representatives, and several PMG spokespersons meet to address diversification issues.

These meetings were closed to the public and the media, according to PMG, at City Manager Jim Thorsen's insistence. Recording the meetings was also reportedly vetoed by Thorsen, who was not available to comment on the PMG statements.

Cindy Vandor said, "The large group of citizens who make up Preserve Malibu called for a public forum with all five council members. We think it's the city council's responsibility to hold public meetings, open to all citizens (including those who own large shopping centers) to hash out ideas on how Malibu best achieves a balanced mix of retail that meets emergency needs, does not impact traffic, wastewater, and water use problems, and provides for the needs of residents as well as visitors."

Vandor said, "Regulation is a part of how every industry does business and that includes retail, as evidenced by all the cities we have found that already have policies in place like what we're proposing in Malibu, and the result is a healthy retail environment in those cities. She added, "If Malibu City Council members do not [support commercial regulation], we must vote them out or recall them."

If the city council votes to commence the ordinance process on March 26, or a later date, Smith and the city planning staff will be the ones deciding what to include in a diversification ordinance if they are directed to do so. 

MALIBU LUMBER YARD

The City of Malibu has its own stake in the diversification debate. The city is also a commercial landlord in the sense that it owns the land on which the Malibu Lumber Yard was built and has a vested financial interest in the complex being as profitable as possible. Critics contend that the city's financial needs helped to drive up local rents and oriented the complex toward high-end mercantile establishments, which PMG says are neither wanted by nor affordable for most residents.

As The News went to press, it was unclear what the ramifications are of a Superior Court ruling on a writ of attachment concerning the Lumber Yard. This week, the tenants of the complex received hand-delivered copies of a writ of attachment dated Feb. 8 that was signed by Judge John Clarke. The writ states that center owner Richard Weintraub allegedly has defaulted on a $15 million loan for which MLY was used as collateral.

When contacted by the Malibu Surfside News, Carie Boyce at the MLY leasing agent Blatteis and Schnur said she did not know about the legal proceeding.

WORK IN PROGRESS

The current Preserve Malibu Draft Diversification proposal is shown in Box 1 (below). Because there is the possibility of change at this week's stakeholder meeting, John Mazza described the proposal as "a work in progress." He said the goal is to come up with an ordinance that is good for the residents, good for the commercial landowners and good for the city.

The Preserve Malibu group's proposal would cover shopping centers that are over 10,000 square feet—see center sizes and current diversity in the city's summation of center-provided data in Box 3 (below) that was made public on Tuesday—and would not affect current tenants.

Mazza said the goal is to gradually balance retail uses to ensure that local goods and services provide a future retail balance for the community, as well as meet tourist needs. The uses fall into the four basic retail categories: hard goods, soft goods, food/food services and community retail services.

If a new tenant proposes a use that, combined with existing uses, exceeds 30 percent in a particular category, that tenant would be required to obtain a Conditional Use Permit from the city planning commission. If the proposed use is in balance, a CUP automatically would be granted.

In addition, no more than 40 percent of a center could be comprised of chain stores without a CUP. Mazza said, "The intention is to gradually balance the centers to meet needs in the community as tenants change and to support and encourage independent businesses in Malibu. He added, "This could take up to 10 years or more because of existing leases."

Mazza said the city's diagram shows the potential for commercial buildout in the civic center area, not counting the Adamson property on the creek inland from Civic Center Way. If the city council increases the floor-area-ratio (FAR) to.20, more than 1,000,000 square feet of commercial use could be built.

SMITH REPORT

Smith told The News that he will provide a comprehensive report for the city council 10 days prior to the March 26 meeting. The report will address the issues involved if the council wants to codify diversification and/or consider increased FAR options to provide commercial incentives for greater diversification.

It is up to the city council to "do the initiation" of the ordinance process and tell the planning staff to start researching and writing a formal draft ordinance.

Smith's assessment of the current commercial scene is that it appears to be "well mixed." He said when one looks at a wish list for local businesses that PMG provided last July, nearly all of those kinds of business exist in Malibu. However, he indicated it is possible the current providers do not satisfy the group's criteria for small independent local businesses in the price range they want.

CENTER OWNERS

Interviews with two of Malibu's most community-oriented and active commercial representatives, Steve Soboroff and Michael Koss, immediately got to the crux of their primary concern with the Preserve Malibu group. "It does not represent Malibu."

Both center owners challenged the group's credibility and claims of thousands of supporters and say that PMG organizers want to impose their personal taste on the majority of people in Malibu who shop in local stores.

Soboroff and Koss are adamant that diversification already exists locally, with chain establishments, as defined by 10 or more outlets, being in the minority.

Soboroff pulls no punches in his assertion that PMG is a small group that was motivated by a single business situation—eviction of the nursery in the Trancas area.

In a letter to the editor this week, Soboroff said, "By using misleading populist petitions, incorrect facts, and doomsday tactics, a very small group from one small part of the western area of Malibu is trying to establish their extreme views on the entire community and its visitors from all over the world."

He said the fact that PMG was successful in campaigning for a new lease for a business they personally favor proves that there is no need for a "one-size-fits-all" ordinance.

Soboroff indicated when people in the community want special treatment for a business unable to compete in the marketplace, they should respond to it on a case-by-case basis and not try to hamstring the entire local economy. 

The developer of the Whole Foods in the Park project agreed there is a role for citizen input on the city economy, but Soboroff said it should come from a broader cross-section of the community and "not be based on petitions that have no meaning" signed by people who may not live and shop in Malibu.

Soboroff said PMG appears to be totally subjective about which businesses need special city protection. The recent closure of a small independent retail business in western Malibu, reportedly due to the faltering economy, didn't receive any attention from PMG. There were no petitions or demonstrations. 

Soboroff said enactment of a CUP process to ensure diversification will be bad for Malibu and all of its residents. His letter states, "The unintended economic consequences of these actions, without due process, in a constructive and inclusive manner, can have devastating effects on the budget of the city, and its future ability to provide even the most basic services to all of its residents."

Michael Koss, the owner of the three Malibu Country Mart wings, seconded Soboroff's points, and he  added that the draft ordinance PMG wants the city to use as a starting point for an ordinance "is extremely overreaching and creates burdensome interference."

He said that when PMG members cite examples of communities to emulate, including Carmel and Solvang, they are using tourist destinations as templates. He said when those cities and other cities enacted retail diversity laws, the constraints on commercial areas led to charges for parking, limited public amenities like playgrounds and open space, fewer locations for public art, and reduced efforts for ecological responsibility.

Koss said the center owners pledge to continue to provide the items in Box 2 (below), but will only be able do so if unencumbered by additional regulation.

Koss said major financial contributions, such as the ones he and Soboroff have made, including hundreds of thousands of dollars to Legacy Park, youth recreation facilities and other community causes, would be impossible to continue because of financial losses that would be imposed by a CUP process.

In addition, he said, "I have made it a policy for 27 years not to advertise outside the community to draw visitors to my centers. If a CUP process becomes law, out-of-area customers will be a necessity."

Koss said that people in PMG appear not to understand that diversification is every center owner's goal—duplication reduces volume. But he indicated that "what PMG wants is not diversification but commercial censorship—a committee of five that will decide which businesses they like and which they don't."

As for the contention that institutional financing will not be affected by a CUP process, Koss said "that is totally disingenuous" and noted that he has letters from major lenders indicating that the additional regulation is an impediment to financial consideration.

Koss said he sees fundamental philosophical differences between PMG's objectives and the entrepreneurial spirit. The differences, he said, are rooted in the underpinnings of American progress and uniqueness—"civil liberties and free enterprise."

Lastly, to the contention that high-end businesses don't care whether their Malibu outlets make money because they want the name Malibu on letterhead and carrying bags, Koss said, "That's somebody's fantasy, it's totally untrue and ridiculous." He said no business stays in an unprofitable situation and noted there are a few chains that have not caught on with local shoppers and they now want out of their leases.

The Malibu Chamber of Commerce and members of the local small business community are also voicing concerns about the possibility of overregulation of the community's local economy.

These concerns and other aspects of what the Malibu City Council will be asked to address at its March 26 meeting will be the subject of future articles.

Preserve Malibu Group Draft Diversification Concept/Ordinance 1. The ordinance would cover all commercially zoned retail centers that have 10,000 or more gross square feet. 2. All current tenants would be grandfathered in BUT a new Planning Clearance or CUP (when applicable) would be required whenever a tenant is changed even if the proposed use is the same. A change of use for an existing or proposed new lease would also require a new Planning Clearance or CUP. This would allow the diversification ordinance to gradually rebalance centers that are currently out of balance over a period of 5 to 20 years. 3. A Planning Clearance could be granted at a nominal cost by the Planning Director if the tenant qualified as "diversified" under the ordinance. 4. To be qualified as "diversified," the tenants must provide the Planning Department an application for a Planning Clearance that proves diversification. To be diversified, the tenant must show the proposed use falls into one of four categories: Food and Food Service, Soft Goods, Hard Goods, and Services (other than food). Each category must not exceed, when combined with existing uses in the center, 30 percent of the total gross square feet of the center as calculated below: Classification would be based on SIC Codes that the tenant uses on their tax returns (i.e., 5800s for Food, 5200s Hard goods, 5600s Retail Clothing, 6000s Financial Service, etc). 30 percent is chosen because that allows for leasing flexibility. Gross permitted square feet of a center includes all permitted outside food service areas; subtracted from that is office use that does not normally involve walk in trade (i.e., book keeping, architecture, lawyers, etc). Individual non-walk in office space is not counted as retail space. Offices that serve the public at large are considered retail services as in: real estate offices, banks, etc. This adjustment is made as to not penalize the center for office space that is typically upstairs. At the ordinance effective date, all retail centers with 10,000 or more square feet would be required to register their total square footage with the City, subject to city verification. 5. If a Planning Clearance is not granted, a CUP could be applied for through the Planning Commission with appeal to the City Council. Findings would have to be made by the Planning Commission as to parking and other impacts as well as a mandatory finding that the use applied for would "ensure a broad commercial mix is available that services the needs of the community and visitors." 6. A formula business component should be integrated into the diversification ordinance that requires that no center over 10,000 square feet may contain uses by chains (10 or more is a chain) of more than, as an example percentage, 50% of the center's square footage. When the addition of a chain would exceed the maximum percentage, a CUP could be applied for through the Planning Commission with appeal to the City Council. Findings would have to be made by the Planning Commission as to parking and other impacts as well as a mandatory finding that the use applied for would "Create a diverse commercial base with a unique personality comprised of a mix of businesses ranging from small to medium to large and from local toregional to national." 7. Incentives: The FAR bonus of .05 for public amenities should also be available for "restricted rent retail space" equal to .05 FAR. The total FAR should not exceed .20. Center Owners Pledge 1. Maintain free parking 2. Encourage local hiring when possible and establish a job posting through the Internet to help facilitate local hiring 3. Maintain a picnic area at no less than their present allocation 4. Encourage our tenants to use ecofriendly practices 5. Encourage the use of local vendors and contractors 6. Emphasize local advertising to attract local residents rather than out-of-area visitors 7. Work with the city or city-appointed manager to encourage the support of a local-serving business campaign