Southern California Commerical Real Estate Lawyer & Attorney : Aronson Light Law Firm : Los Angeles, San Fernando Valley, California

With so many new studies and information emerging regarding the health and financial effects of smoking and second-hand smoke, many states and localities have strengthened their anti-smoking laws. As a result, both Landlords and Tenant must educate themselves on their state, city and county current anti-smoking laws.

In California, smoking is banned in all workplaces and within 20 feet of any door or window of a government building (including any building not owned but leased by a government entity and any public building leased to a private entity). Many cities have enacted even more strict laws. In 2006, for example, Calabasas, California enacted possibly the most severe smoking restriction in the country. Under this ordinance, smoking is forbidden in all indoor and outdoor public places, common areas of multi-unit residential buildings, and even open areas of hotels, bars, and restaurants. 

On May 1, 2007, a new Arizona law went into effect which banned smoking in all workplaces, including restaurants and bars. The statute also prohibits smoking in enclosed areas, public places and areas within 20 feet of any retail or commercial building.

Owners and property managers must try to stay on top of any new laws which affect how they manage and control their center. The smoking laws of many states require that very specific types of signs be posted, ashtrays be removed and that any offender be notified of his or her illegal behavior and requested to stop immediately. 

Besides being an additional compliance burden for the Landlord, it can also be a tenant headache. If the tenant controls any patio or other outdoor area, or if the tenant operates in a state where smoking is prohibited within 20 feet of any business entrance, then policing smokers becomes a tenant responsibility as well. Many municipalities' laws provide for a fine or citation for each violation, and if the party in control of the area does not comply with the statute, it can be fined and cited - not just the smoker. Also important to note is that a tenant could easily be in default under its lease for noncompliance with applicable law. Tenants should be especially wary if their leases contain any provision which takes away any of their rights (e.g., options to extend, etc.) should they, at any point during the lease, be in default under the lease, even if such default is timely cured.

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All across Southern California, the battle over the size, location and scale of development continues.

Santa Monica

In 2004, Santa Monica residents blocked Macerich's plans for redeveloping the three-story, 570,000 square-foot Santa Monica Place Shopping Center and replacing it with three 21-story condominiums, retail, restaurants and offices. Macerich has recently scaled back plans for the center, providing for the same footprint as the original building, but with an open air center, a third floor dining deck overlooking the ocean and a more open, village-like feel to connect to the Third Street Promenade. In March, Macerich submitted this plan to the City of Santa Monica and has received relatively positive initial reaction from the community. The approval process is expected to continue through this summer. 

Sherman Oaks

In the Sherman Oaks area of Los Angeles, Westfield has recently proposed expanding the 867,000 square foot Westfield Fashion Square by 280,000 square feet, adding 80 new stores, expanding and remodeling the food court, adding a 5-story parking garage and updating the exterior. Although many area residents dissatisfied with the out –of-date center are thrilled with idea, a significant opposition has formed, concerned with increases in traffic to the center, particularly on the weekends and holidays. The next step is an Environment Impact Report assessing the expansion and a public hearing where the local community may voice their concerns and/or support for the expansion.

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In a modern reinterpretation of the Sherman Act, the Supreme Court has abolished  the 96-year old absolute prohibition on agreements between manufacturers and retailers establishing minimum sales prices for products.  In Leegin Creative Leather Products, Inc. v. PSKS, Inc., the owner of Brighton stores and distributor of Brighton products appealed a $4 million judgment in favor of a retailer whose right to sell Brighton products was terminated as a result of the retailer's discounting such products in violation of its agreement with Brighton.  The Court held that such agreements must be considered on a case-by-case basis in the same manner as other alleged violations of the Sherman Act, using a "rule of reason" to determine whether an agreement is detrimental to consumers.

Should shopping center owners worry about the effect of Leegin on Wal-Mart, Target and similar discounters?  The general consensus is that these stores are such important customers that no distributor would ever consider imposing price floors upon them.  If, for example, Sony were to refuse to allow Target to sell Sony products at a discout, then you can be certain that every other electronics manufacturer would be lined up to replace Sony.  This illustrates one of the reasons that the case-by-case review of price floor agreements is preferable to the per se prohibition; such agreements do not always restrain competition.

Accenture has issued an informative analysis of this issue, available here.
 

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The Century City area of Los Angeles (just west of Beverly Hills) is in the midst of dramatic change. Westfield recently completed a major expansion of its Century City Shopping Center, building a new AMC theater complex and adding a second level to accommodate Borders, The Container Store, and a new dining terrace, and providing a more upscale appearance for the 43 year-old shopping center. The old food court and theaters have been replaced with fine-dining restaurants and upscale retailers. Westfield has also acquired two aging office buildings that abut the shopping center, 1801 Avenue of the Stars (slated to be demolished to make way for a mixed use project with retail and offices located beneath a condominium tower), and 1930 Century Park West (retail and additional parking). Nearby on the site formerly occupied by the Shubert Theater, the striking 720,000 square foot, 12-story 2000 Avenue of the Stars office building was recently completed. This new building, occupied primarily by entertainment industry businesses and located on the same block as the 44-story Century Plaza Towers, will be accompanied by several quick service and sit-down restaurants, a cultural center featuring art exhibitions and a central, grassy park. Next on the agenda are condominium projects. Approximately 1,000 condominiums are in various stages of development, including one 40-story building to be located on the former St. Regis Hotel site, two 48-story towers to be located on Constellation Avenue on the former Century Club location, and the mixed-use project proposed by Westfield at 1801 Avenue of the Stars. Although many local residents fought these projects over traffic, environmental and other concerns, eventually the developments were given the green light. Supporters argue that traffic in the area may actually be alleviated, as many of the new condo residents will likely work in the Century City area.

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