Some 2010 council candidates bash the sitting Malibu City Council for its city hall building purchase and rent deferral for Malibu Lumber Yard.
By Olivia Damavandi / Assistant Editor
The Malibu City Council at its Monday night meeting hotly refuted what Councilmember Andy Stern called “flat-out lies” being promulgated by some candidates running in the upcoming council election.
The issues Stern referred to have to do with two of the city’s most controversial business transactions-the $1.5 million rent deferral for the owners of Malibu Lumber Yard and the multimillion-dollar purchase and pending renovation of the Malibu Performing Arts Center, both of which some candidates say have put the city in $25 million to $45 million of debt.
“We have a history of a city council that doesn’t [conduct] good business practices,” candidate John Mazza said last week at a public forum, during which candidate Steve Scheinkman called the rent deferral a “$1.5 million giveaway” and candidate Michael Sidley said the city is $45 million in debt.
“I stand by everything I’ve said, and if you guys need an education please give me a phone call and I’ll be more than happy to discuss it,” Scheinkman told the council Monday night.
“When you say flat out that the city gave away $1.5 million, it’s not true and we’d like to educate you about what we did do,” Councilmember Pamela Conley Ulich responded. “It confuses the community and it’s only fair that the voters know the truth.”
The 54-year Malibu Lumber Yard lease agreement signed in 2008 calls for owners Richard Weintraub and Richard Sperber, the principals behind Malibu Lumber LLC, to pay an annual base rent of $925,000, with the rent increasing every five years by 5 percent. An added feature to the agreement is that Malibu Lumber pays additional money to the city based on the amount of income it receives from mall tenants. The council last September allowed Malibu Lumber to defer some of that excess payment. Malibu Lumber can defer up to $1.5 million in total and the money must be paid back by 2025, with no interest.
The city, which annually receives $20 million in general taxes, owns the Chili Cook-Off property that houses the Malibu Lumber Yard mall, Pacific Coast Animal Hospital and the former Coldwell Banker Building, and will use the revenue from each to fund the construction of Legacy Park. Stern said the city would also save at least another million dollars by allowing the animal hospital to hook into the Lumber Yard’s sanitation system instead of having to build its own.
“You’ve got to spin it big time for people to believe we made a bad deal,” Mayor Sharon Barovsky said. “Did they not want us to buy the Chili Cook-Off site? Maybe they would have preferred a shopping center there. We’re not running for city council. Go have your campaign, leave the city out of it.”
The city on Wednesday this week will also receive about $7 million worth of certificates of participation, or COPs, to fund the redesign of the Malibu Performing Arts Center, which will become the new city hall. The city purchased the center last year in Chapter 11 bankruptcy proceedings for $15 million.
The preliminary cost for the renovation project is an estimated $4.8 million. Council members Pamela Conley Ulich and John Sibert on Monday night were appointed to an ad hoc committee to work with the architects on determining cost-saving options for the renovation.
The COPs, which are similar to bonds, will be issued at an average interest rate of 5.38 percent. Assistant City Manager Reva Feldman said the city will likely only need to issue $6.6 million worth of bonds, but the authorization for the higher amount will allow for flexibility in case there is a “dramatic change in interest rates.” The COPs will generate $5 million for the project and additional money to cover the price of issuing the bonds and other associated costs. Beginning in 2013, the city will pay off the debt with annual payments of $470,000 from the General Fund over the course of 30 years.
If the actual project costs end up being less than $5 million, the remaining money could go to pay off the debt or be used for another capital project.
“[The MPAC building] is a bad investment because in these bad times we act like economy is different in Malibu than the rest of the world,” council candidate Michael Katz told the council. “We’re spending money and we shouldn’t be.”
“The original intention was to lease out the current city hall to create revenue once we move into the other city hall, and in this economy it looks like there’s very little chance of that,” Mazza said to the council.
Malibu resident Lloyd Ahern defended the city’s fiscal policy and accused Scheinkman, Mazza and Malibu resident Steve Uhring, among others, of trying to prevent the renovation.
“The Warren Buffet School of Intrinsic Values says you find a building or a business that’s well valued, you find the limits, you buy it cheap and finance it, and that’s exactly what [the city] did,” Ahern, who is supporting Lou La Monte and Laura Rosenthal in the council election, said at the meeting. “The John Mazza school of economics says go out and pay rent and then when your lease runs out in 2017, pay more rent.”
Actions from the March 8 regular city council meeting
– Proclaimed March 27 through April 30, 2010 as “Earth Month” in the City of Malibu
– Directed staff to bring back an item to discuss the use of Bluffs Park for high school soccer games
– Endorsed the temporary parcel tax measure (Measure A) proposed by the Santa Monica-Malibu Unified School District that will be presented to the voters on a special mail-in ballot election on May 25
– Authorized the mayor to send a letter of support for the City of Manhattan Beach’s petition to the California Supreme Court seeking review of the appellate court’s decision overturning its plastic bag ban ordinance