Escrow opens on Chili Cook-Off deal

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Malibu Bay is negotiating with potential tenant for former Malibu Lumber site; possibly a clothing chain store would occupy the space.

By Jonathan Friedman / Assistant Editor

Malibu’s purchase of the Chili Cook-Off site is on the horizon, although it might come a few months after most people expected it to happen. At a special meeting on Monday morning, the City Council approved the final wording of the purchase contract with Chili Cook-Off site owner Malibu Bay Co. and set in motion the selling of certificates of participation, which are similar to bonds, that will help to fund the purchase.

With the signing of the contract, the city has opened escrow on the property, but it might not close on Dec. 31, as had been the original deal with Malibu Bay. The company is still negotiating with a possible tenant to move into the vacant Malibu Lumber building, and wants to finish that before officially selling the property. As part of a new deal, Malibu Bay will alert the city when it has finished its negotiation and escrow will close 15 days later or by March 31, whichever comes first.

It is not clear why Malibu Bay still wants to negotiate with a future tenant if it will soon no longer be the owner of the property. But most of the council members said they would prefer to allow the company to continue the negotiation.

“There is an old-boy network between the Malibu Bay Co. and this company they are working with,” Mayor Pro Tem Ken Kearsley said. “If we change the culture in midstream and all of a sudden we as a city are dealing with the company [the potential lessee], we would have to establish a new network and make new connections.”

Councilmember Pamela Conley Ulich was the lone member of the panel who said the city should just close escrow on Dec. 31 as originally planned and negotiate with any potential lessees on its own.

“I’m a risk taker,” Conley Ulich said. “I actually do things that are difficult. I would rather see the city finish the lease. Maybe there is somebody else we don’t know about who would want to pay.”

At the regular council meeting on Monday night, former council candidate Jay Liebig said he was disturbed by rumors that the new tenant would be a clothing company rather than a new lumber company. The company negotiating with Malibu Bay to become a tenant is rumored to be Urban Outfitters or Anthropologie, which is owned by Urban Outfitters. This rumor has gained more standing since 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.

The council members told Liebig that they were also concerned about the loss of a lumberyard in Malibu, but they had no authority over what businesses moved onto the Chili Cook-Off site, since Malibu Bay owns it. The idea of not having Malibu Bay continue negotiations and for the city to speak with a lumber company once it became the owner was not raised.

The city will issue $18 million worth of COPs next month. That will cover the money it needs to buy the Chili Cook-Off site that will not come through other channels, other costs associated with issuing COPs and a $400,000 cushion in case it is determined later that more COP money is needed. The city’s underwriter, Stone and Youngberg, will price the COPs in early January and close the sale of them by Jan. 26. Malibu residents will have the first opportunity to purchase the COPs.

Also involved in the funding are $2.5 million in Santa Monica College Measure S bond money, a $700,000 grant from the county (it might have to be fronted from the city’s general fund until the grant becomes available), approximately $2.2 million raised through private donations and $1 million from the city’s general fund. Also, a $2.5 million grant that will eventually become available from the State Water Resources Control Board was originally proposed to be fronted by interim COPs, but the council chose on Monday to use the city’s general fund to temporarily make up the difference so it does not have to pay for the costs associated with issuing interim COPs.

At Monday night’s meeting, the Malibu Coastal Land Conservancy officially donated $500,000 to the city for the Chili Cook-Off purchase as part of its matching pledge. That marked the largest donation given to the city from the private sector. Private donations are still being collected and if enough are received, it could lower the amount of COPs the city will need to issue.