Smith property settlement approved by Malibu council
Michele Willer-Allred, Staff Reporter12:47 pm PDT May 27, 2020
The Malibu City Council narrowly approved giving an investment company sewer rights for a Civic Center property with what is considered the last wetlands in the city.
At its meeting held via videoconference on Tuesday, the council voted 3-2 to settle a lawsuit brought by Third Point Land Company LLC to connect the Smith property at 23855 Civic Center Way to the city’s wastewater treatment facility and to participate in an assessment district.
City Attorney Christi Hogin emphasized that nothing in the settlement gives Third Point development rights for the property.
Mayor Pro Tem Mikke Pierson and council member Jefferson Wagner cast the no votes.
In 2009-10, the Regional Water Quality Control Board and the State Water Board adopted bans on onsite septic systems within the Malibu Civic Center area. In response to the bans, the city committed to undertake a three-phase wastewater treatment plan in the Civic Center area, with all properties within Phase Two of the prohibition area to be connected to the city’s wastewater treatment facility by Nov. 5, 2024.
In May 2019, the city accepted applications from property owners seeking inclusion in Phase Two. However, the city denied all applications, including that from Third Point, because the applications far exceeded the facility’s anticipated available capacity.
Hogin said the Smith property was different from other properties for the fact that even though it’s within the prohibition area, it was not assigned any phased participation in the wastewater facility.
Hogin explained that all the other properties that applied were either in Phase Three or they were not in the prohibition area, so they are able to get onsite wastewater systems.
“And that meant that all the properties had a clear legal sight on how they could treat their wastewater and the Smith property doesn’t,” she said.
In December 2019, Third Point sued the city, alleging the city abused discretion in denying the application for inclusion in Phase Two and rendered the property undevelopable. Third Point further alleged that the city actually condemned the property and violated the owner’s civil rights.
“Obviously, the city disagrees with Third Point and is prepared to mount a defense. But to what end?” Hogin asked. The lawsuit is not over development rights; whether and what development is allowed on any parcel in the city is governed by the city’s (Local Coastal Program) and local land-use laws.”
“The issue here is exclusively the ability to participate with the other Phase Two property owners in forming and being part of an assessment district. The likelihood of prevailing in the lawsuit must be tempered with the practical reality that even complete victory is expensive and does not reap any significant benefit to the city,” she said.
Hogin said the city would still be in the same position of having to address a parcel that’s in an area where an on-site system is currently prohibited by state water boards and also that it’s not associated with any phase.
“So, the option that’s in front of the council is basically to save all that money litigating the case and categorize that property in Phase Two,” she said.
The settlement agreement gives the property an allocation of 7,194 gallons per day capacity for the wastewater facility, which was based on wastewater flows for all properties in the prohibition area.
Hogin also added the city isn’t receiving much money in the settlement, so this wasn’t a “sale of any special privilege” and does not give Third Point development rights.
However, she said that preventing the property owner from generating any wastewater and trying to keep the property open space would be considered “regulatory taking” of the property, which isn’t permitted and would be hard to defend legally.
“There isn’t a way to just deny access to basic services that every other property has in the hopes that it stays open space,” she said.
“If and when the issue of development comes before (the City Council), it’s going to be accompanied by a full environmental assessment, it’s going to have an accurate survey … it’s going to come with a decision from the Planning Commission.”
Lisa Weinberg, an attorney for Third Point, described the company as a small group of individual investors managed by the Calvin Company of Irvine, with a primary focus on managing, renovating and developing small commercial and single-family residential properties all in Southern California.
Weinberg said litigation with the city wasn’t its preference, but there was a short statute of limitations running from the city’s vote, so the owner had to file litigation to preserve its rights.
“The settlement merely gives Third Point the opportunity to pay into and support a city wastewater treatment facility. Any future acts to develop the property will be subject to the usual and necessary environmental and land-use studies and will require city approvals,” Weinberg said.
Many residents spoke against the settlement, saying that litigation would pave the way to further commercial development of the Civic Center area. They also said that the City Council has in the past failed to use its broad powers to lawfully restrain commercial development that is inconsistent with the city’s vision and mission. They said the Smith property is protected by environmental laws, and is one of the last such areas in that section of Malibu.
“Why in the world would Third Point be so interested in signing this settlement agreement if it was in the best interest of the citizens of Malibu? And, since we’re not skittish and we don’t avoid sticking to our principles, why aren’t we going to defend a lawsuit that we think we can win? It doesn’t make sense,” said Malibu resident Lance Simmens, who urged the council to support protecting the environmental assets in the city.
Malibu resident Pat Healy said that Malibu Bay Company, the previous owner of the property, excluded it from Phase One because they wanted the property to be retained as one of the few remaining parcels of natural land in Malibu.
“Why would Third Point pursue litigation so vigorously if they didn’t have an expectation of developing quite a bit of the land? This makes no sense to me,” Healy said.
Wagner said that 103 people emailed him not to vote in favor of the settlement and wanted the council to have their backs on protecting Malibu.
“To those 103 people I think I will have your back … I vote absolutely no,” Wagner said about the agreement.
Pierson also voted no, saying he wished he was on the council when the property was being negotiated in the past.
“Not that it’s helping now. I would vote for Phase Three, so I’m a no,” Pierson said.
Council member Skylar Peak said he was voting in favor of the agreement because it was clear that it was not an entitlement for the property and that avoiding litigation is a wise move. He emphasized that it didn’t mean he was in favor of development of the property, but that the council should also be advocates for property rights.