A councilmember says the city is in a better position because it can apply for the grant money later for the building of a wastewater/storm water treatment program. A local activist says the loss of the grant money has put “a cloud over the City Council’s” ability to raise the necessary funds.
By Jonathan Friedman / Assistant Editor
Despite this week’s news that the city will receive at least $8 million less in grant money than it had expected, city leaders remain optimistic about Malibu’s ability to accumulate the $25 million it needs to buy the Chili Cook-Off site.
City Manager Katie Lichtig announced the situation at Monday’s City Council meeting and in response the council unanimously directed city staff to go forward with a new financing plan that includes nearly doubling the amount of bonds it will issue.
Although Lichtig declined to say outright in an interview on Tuesday that the city will not be receiving most or all of the $12.5 million in grant money it was expecting, she did say that several technicalities have delayed the grant process. She said the situation could not be resolved prior to the Dec. 31 deadline Chili Cook-Off site owner Malibu Bay Co. has set for Malibu to come up with the money.
With that shortfall, Lichtig developed a new plan, which received the blessing of the council. The city will issue $15.7 million in bonds rather than the $8.5 million, with the bonds being paid off over a 30-year period through the rent money it receives from the three structures on the Chili Cook-Off site. Santa Monica College agreed last week to increase the Measure S bond contribution from $1.5 million to $2.5 million, if the city needs it. The remaining sum would come from a $2.5 million grant from the State Water Resources Board, $1 million from the county government, $300,000 from Malibu’s reserve that is saving to buy a City Hall and $3 million raised through public donations.
However, the city might not be eligible for the State Water Resources grant for some of the same technical reasons it is not eligible for the other grants, and the county money has not been guaranteed. So as a backup plan, Lichtig proposed the city use the entire $2.3 million City Hall fund and take additional money from the city’s undesignated reserve. Lichtig said she has another plan if the situation becomes drastic, but did not mention what that was on Monday and declined to say what it was on Tuesday.
Councilmember Sharon Barovsky said she is pleased with the new situation because the city does not have to use the grant money to buy the Chili Cook-Off site and can instead reapply for the grants once the land is purchased. The city will need that grant money to build its wastewater/storm water treatment program, which will include the Chili Cook-Off site.
Malibu Coastal Land Conservancy President Steve Uhring, whose group issued a challenge Monday that it would match all donations made from Nov. 15 to Nov. 30 up to $500,000, did not share the same view about the situation. He said with the city losing the grant money for now, it is in a position in which it has to prove to the community it has its act together.
“The process of losing $8 million worth of grants begins to place a cloud over the City Council’s ability to pull this off [raising $25 million.],” Uhring said.
But Uhring said he is an optimist and believes Barovsky is doing a good job leading the public fundraising effort, and the city will still get all the money it needs.
Barovsky said she wants the city to reach the $3 million public fundraising mark by Dec. 1, since the city wants the $25 million to close escrow by Dec. 15 to make for a smooth transaction before the year concludes.
“If it’s necessary, I’m going to mortgage my house to make this happen,” said Barovsky, who declined to speculate further what she would do if the city is short come payment time because she said she remains positive it won’t happen.
The city lost its grant money, at least for now, for several reasons. The major reason is that the California Department of General Services, which needs to approve an appraisal before most of the granting agencies would finalize their grants, said Malibu did not conduct an appropriate appraisal of the Chili Cook-Off site. The city then did another appraisal, but General Services still said it was not done correctly. Lichtig said on Tuesday that she and the city’s appraiser believed the methodology it used to do the appraisal was correct and a third appraisal could not be done in time.
Lichtig said she has not gotten a clear answer yet whether State Water Resources requires a General Services-approved appraisal, so she doesn’t know if that grant is still available for this year.
Another issue was that some of the granting agencies require Malibu to give up easements to them on the Chili Cook-Off property. This conflicts with some of the language in Malibu Bay’s offer to sell the site, because it would only sell it if the city of Malibu were the sole owner.
Also, it had been previously believed by city staff that the city did not necessarily need to have all the grant money in its hands before the end of the year, but rather it just needed to receive approvals for the grants. The city had planned to issue interim bonds if necessary that would be paid off once the grant money came in. But last week, Lichtig said the city learned that was not legal. When asked why she had not found that out several months ago, Lichtig said she had never received a definitive answer from the authorities on the matter.
Although most of the granting agencies, which include the State Coastal Conservancy, Wildlife Conservation Board and Santa Monica Bay Restoration Commission, might be inclined to support Malibu in the project to build the wastewater/storm water treatment program, it is unlikely the Santa Monica Mountains Conservancy, which was supposed to give the city $2 million, would participate. The agency usually only supports grants for land acquisition.