What many call the Crown Jewel of Malibu is now in the hands of the city. Escrow closed Wednesday on the Chili Cook-Off site and it was recorded in the county record today.
At Monday’s City Council meeting when City Attorney Christi Hogin announced the escrow closure was going to happen, several council members expressed excitement about the Chili Cook-Off site nearing a municipal ownership. Mayor Pro Tem Ken Kearsley compared the situation to the creation of Central Park in New York City, which is 102 years old. He said people come to that park and wonder how it was made.
“Maybe 102 years from now when everything is fully grown and people are enjoying the shade of those trees that you guys [the public] bought, people will ask ‘How did you guys do that?'” Kearsley said. “And we can say that it was done through a lot of blood and sweat, and even a few tears.”
However, there is still some work to do as the structure on the site formerly occupied by Malibu Lumber remains vacant.
The city was originally supposed to purchase the Chili Cook-Off site from the Malibu Bay Co. for $25 million on Dec. 31. But that deadline was extended because of a request from Malibu Bay to allow it to continue negotiating with an unnamed party about renting the vacant structure previously occupied by Malibu Lumber.
However, no deal was reached between Malibu Bay and the unnamed party. Hogin said the city would most likely have to hire an agent to continue negotiating with possible tenants.
Having that building occupied is important for the city because it will be depending on rent money from the future tenant of the vacant property and the current tenants of the other Chili Cook-Off site structures (Malibu Animal Hospital and Coldwell Banker) to pay off its debt from the property purchase. The city issued more than $17.4 million worth of certificates of participation, which are similar to bonds but do not require voter approval, to accumulate most of the money for the purchase of the Chili Cook-Off land, and will have to cover this debt in payments over the next 30 years.
Council candidate John Mazza, who had supported rejecting Malibu Bay’s request and instead closing escrow in December, said on Tuesday this was a further example of the city’s mishandling of the situation.
“Any commercial lease that takes six months of negotiation should have been looked at by the city,” said Mazza, who was concerned about the city now having to find a tenant.
It is not known if Mazza’s estimate of how long Malibu Bay had been negotiating with the potential tenant was factual.
Mayor Andy Stern said in response to Mazza’s comments that he believed it was a “prudent decision at the time” to agree to Malibu Bay’s request for an extension because it assured grants coming from the city and the State Water Resources Control Board could reach the city prior to escrow closure, preventing the city from needing to make up the money. However, the SWRCB money has not come through and the city will have to front the money until it does.
Stern added that he was not concerned about the city finding a new tenant because Malibu Bay had limited itself to negotiating with one partner, while the city will be able to take bids and negotiate with several.
Mazza said he was frustrated because, with the Federal Reserve having raised its key interest rate by .5 percent since December, Malibu will be paying more in interest on the certificates of participation.
Stern said he had not heard that the Federal Reserve’s rate hikes would affect the amount of interest Malibu would have to pay in interest.
“It’s just one of Mr. Mazza’s unfounded allegations.”
Malibu Bay officials did not return calls for comment. The usually secretive company, which is owned by the reclusive part-time Malibu resident Jerry Perenchio, never revealed who the potential tenant for the Malibu Lumber building was. But it was rumored to be Urban Outfitters or Anthropologie, which is owned by Urban Outfitters. It is stated in the Chili Cook-Off contract that the real estate company, The McDevitt Co., was involved in the negotiation. McDevitt represents Urban Outfitter’s on rental issues. It is not known why Malibu Bay was interested in who would be occupying the vacant structure if it were no longer going to be the owner.
Of the more than $17.4 million worth of certificates of participation the city issued, approximately $15.7 million of the money generated will be used to fund the purchase. The rest of the money will be spent on other costs associated with the issuing of the certificates. To pay for the property, the city has other money coming from the public fundraising campaign ($2.4 million), Santa Monica College Measure S bond money ($2.5 million), Los Angeles County ($700,000), a grant from the State Water Resources Control Board ($2.5 million) and the city’s General Fund ($1.2 million).
Reva Feldman, the city’s financial services director, said the money for the SWRCB grant has not arrived yet, so the city has had to front the money from its General Fund. But she said she expects it to be available from the state agency next week.
City officials said they have received assurances from the same state agencies that originally offered them grants for the Chili Cook-Off site purchase, that they should reapply for grants to transform the property into a park.