Musings on the Coast

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The Big Hoax

By Michael Ray

There is a big hoax in Laguna: the reason why our downtown has so much awful and/or vacant retail is because landlords are too greedy. They want way too much rent.

For sake of comparison, look at the CdM retail strip. (Yes, I hate the CdM McMansions too, and almost everything else about Newport.) The landlords there are just as greedy, probably more so. All landlords are greedy; that is their livelihood. CdM’s retail strip is a blizzard of mostly old, one-story buildings that have been renovated multiple times. It is vibrant with locals shop, hardly any vacancy, and except for banks and Starbucks, there are almost no retail chains. Like Laguna, half the marketplace is in the ocean and the demographics will not support chains.

So, why is the CdM retail strip full and dynamic, and Laguna emptying and dying? Answer: it is the process retail tenants are required to follow.

These are the process steps in CdM: 1: You buy a business license from the city. 2. You submit your buildings plans, including exterior renovations, over the counter. 3. You pull your building permit and construct the improvements. 4. You open for business.

The only time you have a problem is if you increase parking, which requires a Conditional Use Permit (CUP) because parking is so precious.

The whole process takes about three months.

Then there is Laguna Beach. Below is an exact copy of the relevant part of a retail consultant’s new report just released by the city. The copy is about the process in Laguna:

 

Note: every use here requires a CUP because the city is a control freak.

 

What follows is an explanation of what the Laguna process entails:

 

  1. You meet with city staff for a pre-application conference where the “process” is explained to you, which horrifies you because it is so complex.
  2. You submit your application. This requires filling out multiple forms and includes filing a public notice so that those who dislike your use can protest. And boy, do they.
  3. You submit for an environmental review. This requires hiring city-approved relevant consultants, at your cost, and they will take three or four months. If the building is declared of historical importance, you cannot change the outside of it unless you go through a long, separate process, which takes about a year and costs a good $100,000. Because of that, you bypass it, and leave your building’s exterior as ugly, unkempt and deteriorating as it already is.
  4. Then you go through staff review for submission to the Planning Commission. City staff will tell what items you can sell, exactly. Items sold in existing stores usually are disallowed in your store. This includes what type of T-shirts you can sell.
  5. If your building is not of historic importance and you wish you to make exterior improvements, you must go through the Design Review Board. This alone will take a year and cost you at least $100,000, so you bypass that too and leave the exterior as ugly, unkempt and deteriorating as it already is. (Beginning to see a pattern yet?)
  6. You go to the Planning Commission hearing for approval of your use.
  7. If the Planning Commission denies your use, you can appeal to the City Council.
  8. You build your tenant improvements and open up.

This whole process, best case, takes about 15 months and costs at least $125,000. Worst case, it will take years and so much money you cannot afford it.

This is why retail in Laguna is failing. The process itself is fundamentally hostile, long and deliberately bureaucratic. No sane person wants to endure it.

Laguna Beach does this because some time ago, the city decided it was a great idea to “curate” its downtown retail businesses.

This idea that retail should be “curated” is born of a mindset which is unbelievably pretentious. Most who advocate it never have owned or operated a retail business and have zero idea as to what “success” looks like. Further, the advocates are incredibly cruel: they simply do not care if a potential retailer must endure more than a year of torture and cost a fortune. The advocates shrug: not their problem.

The consultant’s new report recommends nibbling around the edges because they believe that is what Laguna wants. And it is like putting lipstick on a pig. It will not accomplish a damn thing of consequence and no sane small retailer will wish to endure the new, “streamlined” process.

The whole thing, all of it, and all of Laguna’s curation pretensions, and the entire bureaucratic, cripplingly expensive, and demeaning procedures, should be discarded. This includes all of the existing process—all of it.

Or, we can just let downtown Laguna retail continue to rot.

Michael Ray grew up in Corona del Mar and lives in Laguna Beach. He is a real estate entrepreneur involved in many nonprofits.

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