Strange Family Vineyards exits MLY, alleges monopoly and ordinance violations
By Barbara Burke
Special to The Malibu Times
When one enters Malibu Lumber Yard (MLY), you will see a lot of James Perse’s presence. There’s an apparel shop named James Perse, featuring the highly successful businessman’s aesthetic clothing. Then, there’s James Perse Malibu Home, an upscale home furnishings and accessory space. For a while, James Perse had an antique store on the first level and also had its Y/osemite brand of high performance gear and accessories occupy a space. Now, much of the lower level space is vacant, with Cafe Habana and the two James Perse locations as the only current first floor occupants.
In the past, some local retail businesses were also on the ground floor. No longer. Strange Family Vineyards’ Malibu Wine Tasting Room, the last local business standing on the first level of MLY, was given notice to vacate its first-floor location as of Aug. 31.
However, the Strange family is not going quietly.
After spending 10 months of time, energy and expense waiting to be placed on the agenda for the Malibu Planning Commission to allow Strange Family Vineyards Malibu Wine Tasting Room to split the MLY’s liquor license in half so it could relocate its tasting room from the ground floor to MLY’s second floor — and, after finally getting the City Council to approve that split of license and venue relocation, and after negotiating a lease with WPG Malibu, LLC, an affiliate of Washington Prime Group (NYSE:WPG) and signing the lease, the Strange Family Vineyards waited, and waited and waited for several months while WPG represented that it was going to renovate the upstairs space to accommodate the tasting room.
Finally, in March 2023, WPG abruptly informed Strange Family Vineyards it had to vacate MLY. Their deal was off. Strange was able to arrange staying through the summer.
Strange Family is the last in a litany of locally based businesses that were either specifically notified they had to leave in the last few years, or that chose to leave because, Strange Family Vineyards and other prior tenants maintain, James Perse is monopolizing the retail center and, in their view, thereby violating Malibu’s Retail Formula Ordinance discussed below.
Strange Family Vineyard’s last day of business at MLY was Aug. 31. However, the company is not going quietly. Not without airing its grievances, as many residents have in the past years. The Strange family opines that the city-owned MLY should, as Malibu Councilmember Steve Uhring said, “be a poster child for what the Retail Formula Ordinance is all about — supporting local businesses to adhere to the intent of the City of Malibu’s mission, which respects the uniqueness and quasi-rural nature of Malibu,” attributes that are not served by having too many similar high-end fashion chain stores all selling similar T-shirts for hundreds of dollars or other high-end products.
Malibu Lumber Yard’s history provides important context to the dispute
To assess what is going on in the Malibu Lumber Yard, and to be fair to all concerned, one must view the contentious situation in the context of MLY’s unique history. First, the City of Malibu owns the land at MLY. Second, WPG Malibu, LLC leases the buildings and then subleases spaces within the center to James Perse companies and other businesses. Third, and perhaps most importantly, when the city contracted with Richard Weintraub and Richard Sperber in 2007 to design the MLY, it specifically intended for some of the space to serve locals.
The Malibu Times chatted with former City Councilmember Pamela Conley Ulrich, whose proposed formula retail ordinance in 2004 did not pass. In 2014, voters approved an initiative imposing a number of restrictions on formula retailers, aka chain stores. Then, in 2017, an appellate court overturned the voter-approved initiative, and the California Supreme Court declined to grant review, rendering the appellate court ruling dipositive.
In October 2017, the Malibu Planning Commission proposed a more watered-down version of the chain store restrictions so as to pass judicial scrutiny. Ultimately, the City Council approved a formula retail ordinance in 2018.
“With regard to the Malibu Lumber Yard, when the city originally decided to work with Richard Weintraub and Richard Sperber to develop buildings on the city-owned MLY land, the original intent was that local businesses would benefit from the space, that 10 percent of the space would be allocated to having a City of Malibu welcome center and that the city would get a percentage of gross sales,” Ulrich said. “All those provisions were intended to benefit locals and the local economy.”
At first, WPG seemed to support the concept of the MLY being community-oriented.
“Originally, Washington Prime wanted to build MLY as a place for the community to gather,” said Diane Dreyer, who served as the MLY local events coordinator for Washington Prime from 2017-21. “After Lou Conforti became its CEO, Washington Prime gave more attention to the MLY as Lou viewed the space as a hidden gem with a great location. I was charged with hosting fantastic events to support local businesses and nonprofits.”
Dryer noted that after the Woolsey Fire, MLY hosted a fundraiser for Malibu Foundation and a donation center for fire victims. During COVID, residents could do yoga classes outdoors in the MLY courtyard so as to be appropriately spaced apart for safety.
“MLY also hosted events supporting AMPS, Malibu High School and Junior High, Webster and Malibu Elementary, Boys & Girls Club of Malibu, The Malibu Foundation and Children’s Hospital Los Angeles,” Drain said. “Strange Family Vineyard was an integral part of MLY’s philanthropic efforts and Strange also supported its own efforts for nonprofits, including the Emily Shane Foundation, Kitten Rescue LA, Eastwood Ranch Foundation, and St. Jude’s Children’s Hospital.”
However, over time, Washington Prime filed for bankruptcy reorganization, emerged from that process, and subsequently entered into a joint venture with O’Connor Capital Partners, an institutional, management, and development firm in New York City.
Over time, the community’s perception is that MLY’s commitment to local businesses and nonprofits has been supplanted by a focus on profitability and a high-fashion aesthetic.
Evidence of this shift lies in changes to the leasing agreement between the city and WPG Malibu, LLC. Upon a request for public records by The Malibu Times, the city disclosed amendments to the lease. One key change occurred on Jan. 27, 2020, when former City Manager Reva Feldman signed an amendment that explicitly removed provisions aimed at supporting local businesses. Specifically, the amendment deleted all requirements related to “Locally Based Subtenants,” “Local Preference Space,” and “Reduced Local Rents” from the original lease.
The provision grandfathered in the subleases between Dance Star Entertainment, LLC, dba Dance Start, formally d/b/a Malibu Dance Studio, and James Perse Enterprises, Inc.
Despite those changed contractual provisions in leases, WPG is still bound by the formula retail ordinance. The city provided The Malibu Times with this statement on Sept. 1: “Malibu Lumberyard is subject to the Formula Retail chapter in Malibu Municipal Code section 17.61. The MLY used to have many formula retail businesses that were grandfathered at the time as they were in place prior to the MMC Formula Retail ordinance, however there are now many vacancies, and the City of Malibu Code Enforcement and Planning Staff members conducted an inventory this week of the existing uses still in place and confirmed that the MLY is currently in compliance with MMC 17.61. Shopping centers are allowed to have non-exempt formula retail occupy 30 percent of the shopping center’s gross floor area and MLY is within that percentage. The Strange family may opt to explore whether the computations utilized in arriving at that conclusion are correct. Or, they may seek an equitable remedy based upon their detrimental reliance on WPG’s assurances that a lease for the space on the second floor was forthcoming.”
For its part, Washington Prime Group said that the city confirmed it was in compliance with Malibu’s retail formula ordinance, and that for all of its properties, its goal is to “offer a tenant mix of shopping, dining and entertainment options that are preferred by the residents of and visitors to the surrounding community,” according to Kimberly Flaherty, WPG’s vice president of communications and public relations, who added, “We are proud that Malibu Lumber Yard successfully attracts a steady volume of guests and offers shops and restaurants that residents continue to enjoy visiting.”
For its part, David Schulte, president of James Perse, Inc. stated, “We have and will always support small businesses and local brands. We have the utmost respect, appreciation, and understanding of the importance that small and unique businesses bring to a community. We have been a part of the Malibu Community for over 20 years and have built the company with the values of a small-town brand. We are disheartened that anyone would imply otherwise.”
Shamra Tankersly Strange said, “Numerous times, after other local vendors left, customers have come into my Tasting Room asking, ‘What’s happening? Why is James Perse the only brand here? Where are the other shops?'” She stressed the difference between chain stores capitalizing on Malibu’s zip code and local vendors deeply invested in the community. “There should be room for both, particularly on city-owned property,” she concluded.
As Strange Family Vineyards cleared out its last items on Tuesday, Shamra told The Malibu Times, “James is relocating wine barrels into multiple front spaces at the Malibu Lumber Yard, marking a full takeover by James Perse.”
Interestingly, a close examination of the lease amendments reveals that WPG has the option to transfer its entire leasehold interest to another entity.
Some locals question whether that may be what’s going on: Is James Perse perhaps not only figuratively taking over MLY, but also considering or planning to literally do so?
Matt Myerhoff, the City of Malibu’s media information officer, stated in an email to The Malibu Times, “I have heard, that [Washington Prime Group] may want to transfer the lease.”
Locals are left to wait and wonder what happened to the focus on local businesses and local residents’ needs.
As for what happened to the Strange family and its being led on for so long, ultimately, what WPG did by deciding not to ink the final deal, may be legal. However, in many locals’ perspectives, that’s not dispositive of the question regarding whether it is fair.
The Malibu Times will continue to follow this story as it develops and provide new information as it becomes available.
