City wrestles over development, rent issues

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The city’s lack of planning may have resulted in the current state of Malibu’s business affairs, but its future, city leaders say, will depend on new definitions of the existing triad among government, businesses and residents. Part II in a look at development and retail in Malibu.

By Nora Fleming / Special to The Malibu Times

In the mid-90s, the City of Malibu formed a committee and hired a consultant to develop a guide for future development in the Civic Center area. Called the Civic Center Specific Plan, it was completed, but never approved or even voted on by the City Council.

Some say the city’s failure to finalize any type of plan for the area has contributed to a loss of local businesses in Malibu.

“We do not have a formula to build responsibly,” said Planning Commission Chair Regan Schaar. “Development is coming. We need a planning department that guides the developers to be responsible developers.”

Critics say a lack of planning will lead to piecemeal development, with shopping plazas and office buildings being built with no connection to one another.

“In general it has to do with planning and regulation,” said John Mazza, a 35-year Malibu resident and commercial property owner in Laguna Beach. “[The City Council] doesn’t want to regulate. Outside economic forces work against the city.”

Mazza said the council should put regulations in place to prevent an excess of certain kinds of stores, such as high-end boutiques, which many have complained are running local businesses out of town by being able to pay high rents smaller businesses cannot afford.

“I think we have a moral obligation to do everything we can [to save local businesses], but legally we can’t tell businesses who they can rent to,” said City Councilmember Sharon Barovsky.

Commercial real estate broker Tony Dorn said an attitude of no interference is potentially beneficial, since the city stands to profit from some of the high-end retailers who have signed contracts to move into the upcoming Lumber Yard mall, located on the 20-acre Legacy Park property the city bought in 2007 and leased to Richard Weintraub.

According to a deal signed between Weintraub and the City of Malibu, the city, acting as a landlord, will be able to collect a percentage of the mall’s sublease money after it reaches a certain threshold. Having more tenants who can pay higher rents will make it more likely to reach that amount, Dorn said.

Blaming landlords for recruiting high-end retailers may not be the only place to point fingers. Malibu’s city code allows developers to build on only 15 percent of a property without obtaining a variance. Called a Floor Area Ratio, Malibu’s FAR restriction is the lowest in the state.

As a result, a limited amount of expensive commercial property forces developers to find tenants who can afford ever escalating rent costs needed to pay for the property. Or, as Malibu has seen over the last few years, an influx of pricey boutique shops that desire a Malibu address.

Dorn estimates rents in areas such as at Cross Creek Road and Pacific Coast Highway have doubled per square foot in a year and a half.

Members of City Council say this supply and demand problem is due to a lack of community support behind commercial development in Malibu.

“Economically, it will come to a point were only high-end businesses can rent here,” Barovsky said. “Residents have to decide what their priorities are. I’m willing to listen to the community, but you can’t have it both ways.”

Some believe the City of Malibu should make allowances for existing property and business owners, instead of expanding commercial retail space for the newer businesses that may move out of Malibu quickly when they don’t see projected profits.

“Some kind of plan that would allow incentives to build certain things would be ideal,” Schaar said. “You can build ‘X’ amount more, if you put these kind of community-serving shops in.”

Rebekah Evans, CEO of the Malibu Chamber of Commerce, said the chamber is trying to create a dialogue among the city, business owners and residents.

The chamber hopes to start having workshops on how to build a business in Malibu and how to re-think how one does business in the changing economic landscape, in addition to establishing an economic development group that would work to bring in businesses that would support the community.

“We’re in desperate need of basic things,” Evans said. “We want to find the right kind of businesses to come into town to support the community at large.”

City leaders say a close relationship between the business community and the city government would be a step in a new direction for Malibu.

“I don’t think there’s ever been a strong business voice that influences the community,” said Mayor Jeff Jennings at the chamber’s State of the City event on March 12. “Maybe it’s because a lot of the people who have businesses here don’t live here and so usually don’t vote hereā€¦ Individual business owners need to take a step up and be heard.”