City Staff to Draft Retail Diversification Ordinance

City staff will examine what limits and locations can be put on chain stores.

The Malibu City Council on Monday directed the city staff to draft a preliminary retail diversification ordinance.

Staff will examine, among other things, what percentage of retail outlets can be chain stores, as well as the areas of the city where the ordinance should be applied.

The Preserve Malibu group has asked that no more than 20 percent of stores in Malibu be chain stores, a number that council members were split on. 

"We do all shop and eat at chain stores," said Mayor Laura Rosenthal, who felt that 20 percent was too low. "They can afford to pay the big rents and we need to look at this closely."

Councilmember Pamela Conley Ulich, who recently proposed an urgency ban on chain stores in Malibu, supported a number near 20 percent.

Eighty people addressed the council on the diversification proposal for close to three hours.

If approved, the ordinance would require a broader offering of services within the city by requiring a balance between local-serving shops and larger chain stores.

“I believe the citizens have made it quite clear that this is the way we need to proceed,” said Missy Zeitsoff, who is currently running for a seat on City Council. “We’re not saying there can be no chain stores. We’re saying there needs to be a balance that can serve our residents and tourists.”

Preserve Malibu members attended the meeting, equipped with signs that read “Together, We Can Preserve Malibu,” among other things.

“I really don’t think it’s that big of a deal,” said council candidate Hamish Patterson. “We’re just asking for a little fairness in how the businesses are laid out. It’s our town. Malibu should have some say on what should be put in these shopping centers.”

As Zeitsoff mentioned, the ordinance would not seek to ban chain stores. However, local property owners, such as Point Dume Village owner Zan Marquis, commented that implementing a diversification ordinance would merely worsen an already difficult permit process.

“It would make a difficult permit process even more complicated for any new business,” Marquis said. “It would dramatically increase the building vacancies in Malibu. What happens when a merchant vacates a space? Does it just sit vacant until a user that matches what the city wants occupies that vacancy?”

Matt Khoury, majority owner of the Malibu Village shopping center, said that by implementing a diversification ordinance, local business owners in Malibu would actually be adversely affected.

Khoury explained that local shops and restaurants in Malibu Village are allowed to rent their spaces at a lower monthly cost because larger chain stores can afford to pay higher rents.

That extra money, according to Khoury, allows him to offer discounted rates to local businesses.

“We’re trying to support local residents,” Khoury said. “It’s in my best interest to do that. I like those guys.”

“Please don’t implement some diversification ordinance,” he added. “It’s really going to hurt the people you’re trying to save.”

Saltwater March 27, 2012 at 01:45 PM
...Khoury explained that local shops and restaurants in Malibu Village are allowed to rent their spaces at a lower monthly cost because larger chain stores can afford to pay higher rents. That extra money, according to Khoury, allows him to offer discounted rates to local businesses. Yeah, right. S
Cindy Vandor March 27, 2012 at 03:23 PM
City Council listened to Malibu citizens & shoppers who overwhelmingly support what city planners were directed to do with a diversification ordinance: *maintain the unique character of our community and the appeal of buying local *protect our community’s public safety, environment, infrastructure, and economic vitality by ensuring a diversity of services and businesses with sufficient opportunities for independent entrepreneurs *foster businesses that serve the basic needs of the surrounding neighborhood CONTINUED...
Cindy Vandor March 27, 2012 at 03:25 PM
These ideas firmly support the city’s core values as clearly stated in Malibu’s General Plan and Mission Statement. A grassroots group of citizens from Malibu's East End to West End asked City Council to tell the planning department to write a diversification ordinance with the details you are about to read. The details to include in the diversification ordinance were drawn up with the help of City Council members and City staff, ideas came from owners of businesses in Malibu and from thousands of residents and shoppers, countless hours and over a year spent researching and conducting interviews in other cities with similar problems learning from planners, residents, and commercial interests what solutions work and what fails, collecting data and expert analysis, and in discussions at two meetings at Malibu City Hall facilitated by City Manager Jim Thorsen with owners and representatives of some of Malibu’s largest shopping centers currently and to be built:  Don Schmitz, Matt Khoury, Zan Marquis, Dan Blatteis, Steve Soboroff, David Reznick, and Michael Koss.  This proposal is meant to consider the objections of Malibu’s commercial interests. CONTINUED...
Cindy Vandor March 27, 2012 at 03:29 PM
DETAILS FOR CITY OF MALIBU DIVERSIFICATION ORDINANCE >Covers all commercially zoned retail centers of 10,000 or more gross square feet.  Does not affect individual buildings. >Does not affect current tenants.   >When there’s a change -- in the use or the lease -- check with the city.  If the use is “diversified,” city staff should not have to spend more than one hour to evaluate an application at nominal cost and automatically grant it over the counter.  >How does a business know where it fits in the mix?  Business owners decide their use for themselves saying I sell hard goods, I sell soft goods, I sell food/food service, or I sell community retail.  This eliminates city staff having to determine use and keeps an even playing field among landlords. CONTINUED...
Cindy Vandor March 27, 2012 at 03:31 PM
>To gradually balance the mix of retail to meet the needs of the community as tenants change, and to support and encourage independent businesses in Malibu, the diversification ordinance caps any one use in Malibu's largest shopping centers at 30%.  To exceed 30% requires a conditional use permit from the city planning commission, which considers parking and other impacts, as well as a mandatory finding that the use applied for would "ensure a broad commercial mix is available that services the needs of the community and visitors."  There is right of appeal to City Council.   Why 30% hard goods, 30% soft goods, 30% food/food services, and 30% community retail?  This allows for leasing flexibility & long-term viability of the ordinance.   But wait, you say!  30% times four categories equals 120%.  Right you are...that’s why landlords have flexibility.  One category can be as high as 30% while another category as low as 10%.  That way a landlord has flexibility to -- for example -- lease to more food services and fewer hard goods stores.  To exceed these reasonable guidelines requires a conditional use permit from the planning commission. There's right of appeal to city council.   The diversification ordinance is meant to provide balance, not determine which uses or which individual tenants a landlord has to choose.  The landlord is free to choose tenants and free to choose uses as long as the shopping center as a whole remains balanced.  CONTINUED...
Cindy Vandor March 27, 2012 at 03:32 PM
>Chain stores (a chain is defined as ten or more stores) stop at 20% in Malibu’s largest shopping centers.  An additional 20% allows for banks, grocery stores, and gas station chains.  For a shopping center to add even more chain stores requires a conditional use permit from the planning commission.  Findings would have to be made about parking and other impacts, as well as a mandatory finding to "Create a diverse commercial base with a unique personality comprised of a mix of businesses ranging from small to medium to large and from local to regional to national."  There is the right of appeal to the city council.  >The diversification ordinance does not apply to office space located in shopping centers.  >Shopping centers of 10,000 or more square feet would be required to register their total square footage with the city, with the city verifying.
Chuck Simms March 27, 2012 at 03:50 PM
"Khoury explained that local shops and restaurants in Malibu Village are allowed to rent their spaces at a lower monthly cost because larger chain stores can afford to pay higher rents." DO NOT BELIEVE THIS! Local Small Business Owner!
Chuck Simms March 27, 2012 at 04:37 PM
Do you think Small Local Business Owners may be afraid to speak their minds based on the possibility of retaliation? I think many Local Small Business owners may be intimidate by sometimes Billionaire Landlords in Malibu.
Saltwater March 27, 2012 at 04:42 PM
^Are the "Billionaire Landlords in Malibu" so financially bulletproof that they can afford to alienate a paying commercial tenant in this economic environment?
Susan Tellem March 27, 2012 at 05:35 PM
Me thinks that they would rather have someone in those spaces at Malibu Village (Guido's, shoe repair, theaters) than have empty spots. Plus they have learned the wrath of Malibu residents when they tried to take away our nursery. We should have stood our ground with the Lumber Yard but we now have strength. Don't mess with us anymore!
J. Flo March 27, 2012 at 10:55 PM
You are 1000% right - we've been told this by most of them. Their entire livelihoods are dependent on not angering landlords. Serfdom . . . ?
J. Flo March 27, 2012 at 10:59 PM
Thank you Walmart heirs for waking the sleeping Malibu giant! No putting that genie back in the bottle. :) Great speech last night Susan!
J. Flo March 27, 2012 at 11:02 PM
Many of these developers are also doing an excellent job of alienating their local Malibu customer base. They're succeeding. And the fight against the needs of Malibu isn't over from them . . . just watch! One would hope they'd work with - not constantly against the needs of so many Malibu residents.
Susan Tellem March 28, 2012 at 10:02 PM
Thanks J. Weren't the developers poor mouthing it last night? Didn't we give this guy a break on his rent at the lumberyard???????!!!!!!!!!!!!!!!!! I'm so confused. http://www.huffingtonpost.com/2012/03/28/la-villa-contenta-malibu_n_1385090.html#s162636
Alex Quilici March 29, 2012 at 03:40 AM
There are actually a number of reasons why it can be better to keep space vacant vs. leasing it. At least four quick ones are: (1) the financing for the property has debt covenants around minimum rent, and the proposed tenants and rent are below the minimums, (2) a lower rent would result in a lowered appraisal of the overall property (based on the most recent per square footage rental), making it harder to refinance and put the proceeds into a newer property with higher returns, (3) a reasonable belief that some future tenant will sign a lease at a materially higher rent for a longer period of time, (4) a conflict with the proposed tenant and terms of leases granted to other tenants (e.g., only one business selling XYZ, or a most favored nation rental agreement where a tenant is guaranteed a match of the lowest rent of any other tenant). And it's not like we haven't seen some places stay empty for an extended period of time, like the old Granita space.
paula marchetti June 15, 2012 at 05:18 AM
Trust me ...Those chains got Deals to be there
paula marchetti June 15, 2012 at 05:20 AM
yeah right. Trust me .. Those chains got deals to be there................


More »
Got a question? Something on your mind? Talk to your community, directly.
Note Article
Just a short thought to get the word out quickly about anything in your neighborhood.
Share something with your neighbors.What's on your mind?What's on your mind?Make an announcement, speak your mind, or sell somethingPost something