The center will house the new City Hall, but the city plans to retain its cash-generating performing arts venue and recording studios.
By Melonie Magruder / Special to The Malibu Times
The City of Malibu’s purchase of the Malibu Performing Arts Center for $15 million has sparked a flurry of criticisms from people who say city officials are irresponsible for forking over so much cash during such a fiscally woeful environment. Council members, however, urge them to read the fine print. The city plans to make the site its new city hall.
The city’s offer for the MPAC property was accepted last Friday in Chapter 11 bankruptcy proceedings. Vineyard Christian Fellowship of Malibu, which owned the building, filed bankruptcy late last year.
The city council plans to move from its current location at the Miramar building on Stewart Ranch Road, where they pay an annual rent of more than $800,000, to the new city hall “as soon as possible,” after hiring an architectural space planner to refurbish the MPAC building, City Councilmember Jefferson Wagner said.
He said that the council’s decision on the purchase was unanimous. “Our lease was going up to $950,000 within three years,” Wagner said. “Instead of 15 years of paying that kind of rent, we will own our own property.”
Readers of The Malibu Times had plenty to say when the announcement was posted on the Times’ Web site. The general tone from a number of comments posted was one of outrage at the $15 million purchase price in a bleak financial picture, suspicion of lack of full disclosure in the bidding process, and dismay that the city would be losing a cultural icon and arts venue.
Mayor Andy Stern was blunt in his assessment of critics of the purchase. “They simply don’t have a clue,” he said. “If you look at a cash flow analysis, this is a no-brainer. What if our current landlord doubles our rent? What if they kick us out? The taxpayer is going to pay a lot less in a mortgage over the next 15 years than he would in rent-and we have a prized city asset.”
Of concerns that the city is not in a position to afford the property, Stern was adamant. “Even after the purchase of Legacy Park, Bluffs Park and MPAC, the city is in very, very solid financial shape,” Stern insisted. “I welcome anyone to come look at the books. It’s about intelligent management of revenues, intelligent borrowing against cash flow and intelligent, conservative policies.”
Councilmember Pamela Conley Ulich agreed. “Ask anyone if they would rather rent or own their home,” she asked. “Do the math. In 15 years, we would pay more for rent than we will for a mortgage and, now, we have a new home for our City Hall. Besides, now we have new opportunities to promote the arts in Malibu, which is something that has always been very important to me.”
Wagner said that all income-generating aspects of MPAC would be retained as much as possible, including the current state-of-the-art recording and sound systems, the 500-seat theater, studios and parking facilities.
Wagner also pointed out that by purchasing the property now, the city might be protecting its assets from being plumbed by the state legislative Budget Conference Committee, which recently proposed “borrowing” sums from cities whose coffers are flush in order to help close the state’s $24 billion deficit. “You can guess when the state would repay that,” Wagner said. “This way, we are applying cash to our own city’s advantage.”
City Manager Jim Thorsen said the annual mortgage on the purchase will probably run between $1.2 and $1.3 million, “depending on how much cash we put down as a deposit.”
“This was unquestionably the best time to purchase property,” Thorsen continued. “A little more than a year ago, we wouldn’t have even been able to buy land for $15 million. Now we have six acres and a terrific building to house City Hall. This will be a tremendous community asset.”
Jeffrey Golden, the Chapter 11 trustee with law firm Weiland, Golden, Smiley, Wang, Ekvall & Strok, LLP, who handled the bankruptcy proceeding, said that Malibu’s was the only “qualified” bid offered in the proceedings.
“This might be indicative of today’s real estate market,” Golden said. “There were other interested parties, but none who came forward under the terms we required. Value of a property is always a function more of what someone can pay at any given time, rather than any real intrinsic value. Who knows what the result would have been five years ago?”
Wagner and Thorsen said that the full purchase deposit amount has yet to be decided and might be partially financed by issuing city bonds. “Sure, we are encumbering the city with a certain amount of debt,” Wagner said. “But it’s debt we would be paying anyway for something that gives us no equity. This new property is twice as big (35,000 square feet of usable space versus the current City Hall’s 15,647 square feet), it will generate revenue for the city and we’ll have our own destiny in hand.”