In a letter submitted to the City of Malibu this week, an attorney representing a group of Civic Center property owners castigated the city’s draft of controversial chain store ordinance, calling it unconstitutional. The attorney strongly hinted at legal action if the ordinance were to pass.
In a previous opinion, Malibu City Attorney Christi Hogin said potential litigants suing the city would have to show that the ordinance’s burden on interstate commerce is “clearly excessive.”
City planning officials maintain that the ordinance intends to preserve Malibu’s unique character and limit the number of chains/ formula retail stores that open in the central part of town. As currently drafted, the ordinance would amend the city’s zoning code to require formula/chain businesses to obtain a conditional use permit (CUP) from the city’s Planning Commission if they wish to open a business in the Civic Center.
The draft defines a chain as having six or more establishments operating in Southern California (outside of Malibu), but it excludes banks, grocery stores, gas stations and “existing formula retail uses that change ownership, exclusively.”
“To advance the City’s goals, the proposed ordinance is intended to encourage retail elements that promote variety while contributing to and maintaining the City’s rural charm and small-town feel,” the draft states.
Attorney David Waite wrote the letter to the city on behalf of clients including Malibu Village owner Matt Khoury, Malibu Country Mart owner Michael Koss, Malibu Bay Company President David Reznick and prominent developer Steve Soboroff.
It alleges that an ordinance regulating the type of chain stores/ formula businesses allowed in the Civic Center would violate the Federal Commerce Clause, which prohibits “economic protectionism— that is, regulatory measures designed to benefit in-state economic interests by burdening outof- state competitors.”
Supporters of the retail ordinance believe Malibu’s character and uniqueness will lose its luster if chain businesses continue renting up vacant spaces in shopping centers. They also fear shopping center landlords hiking rent prices and making it hard for small business owners to afford leases in Malibu.
But Waite argues the ordinance instead “picks winners (local retailers) and losers (formula retailers, the overwhelming percentage of which are out-of-state companies).”In an interview with The Malibu Times on Monday, Waite said a CUP process would give the Planning Commission “entirely subjective” discretion over which chain stores are accepted or rejected for the Civic Center.
“We believe that the true intent is protectionist,” Waite said. “If ultimately the planning commissioners are naturally disposed to protect local merchants against formula retail, then formula retailers are shut out.”
The stakeholders are urging the city to “rethink its approach and…achieve its goals in a legally sustainable manner,” Waite wrote. Otherwise, such an ordinance could result in “balkanizing and fever-pitched litigation for many years to come.”
Senior Planner Joseph Smith said Waite’s argument was “one way of looking at [the draft]” but the staff intended it as a means of maintaining Malibu’s overall uniqueness.
“It’s a matter of perception,” Smith said. “It’s an ordinance to protect the unique character of Malibu and of the Civic Center. To us, in this department, it’s about the overall sort of look and feel of the Civic Center, as well as ensuring that goods are here that give balance to both visitor and resident needs.”
Smith deferred questions of constitutional legality to City Attorney Christi Hogin.
When asked whether the ordinance draft, as currently presented, violates the U.S. Constitution, Hogin said she didn’t want to offer up specific legal input before the ordinance is presented to the City Council.
“I’m going to let this policy discussion form,” Hogin said Monday. “Once we get a consensus on what we’re trying to accomplish, that’s where I’ll offer up what we can and can’t do under the law.”
But in a report written to the council in October before the body voted 3-2 in favor of drafting the ordinance, Hogin said should a formula retail ordinance be drafted and passed by Malibu, parties challenging the law in court would have to “show unlawful discrimination or that the burden on interstate commerce is clearly excessive.”
Councilwoman Laura Rosenthal, who in November proposed that the ordinance apply only to the Civic Center, said she also would not comment on the draft until it makes its way back to the council table.
“I don’t have an opinion on any of it. I know that a lot of it will be modified and changed through the planning process,” Rosenthal said. “I will wait until the planning process reaches the City Council.”
On the council dais in November, however, Rosenthal staunchly defended the idea.
“Asking for a CUP for formula retail is not outrageous,” Rosenthal said. “It’s not saying that [formula retailers] are not going to be able to come in…but we want to be able to preserve what our Civic Center looks like now.”
The public has until April 11 to review and comment on the draft of the ordinance, available at malibucity.org. Once the public review period ends, planning staff will schedule the draft item for Planning Commission public hearing and then the same at a City Council meeting.
To read Waite’s letter to the city in its entirety, see the attached PDF at left.