Last Chance For Dutton’s?

1/3/07

Ryan Vaillancourt

After three years in its Beverly Hills location, and six months of continuous missed rent payments, the city has pulled the plug on Dutton’s Books.

As the only major book store in the city, its sudden departure is considered by many to be a major loss to the community. But owner Doug Dutton isn’t packing up yet.

The store officially closed for business on Tuesday, but a conversation between Dutton and Mayor Steve Webb last Thursday left at least some hope for the store. Webb called a special closed session council meeting last night to discuss the issue and to determine “what the city can and is willing to do.”

One solution could be to shrink the store. Currently, it has 7,300 square feet of floor space.

“I think the space is too big for Dutton’s to be able to potentially support,” Webb said. “One of the things that we are at least looking at is whether or not [Dutton] can operate a book store in half the space. That would allow him to cut his rent in half and maybe make this thing financially successful for him.”

Could a smaller store work for Dutton?

“Sure, but only if there could also be a renegotiated rent,” he said. “I’m still in a growth mode and I’ll still have a landlord insisting on rent at a certain rate. I have no idea if I’d be able to make it or not.”

Instead, Dutton would prefer to negotiate a rent based on a percentage of gross income, at least until the store grows enough to survive at the current rent price. But that could take three more years, Dutton said, and in the age of “Amazon” no estimate can be certain.

The city may be unlikely to bend for Dutton’s, as any sort of renegotiated rent would lighten a lease price that is already beneath market value. The city had to reduce the rent because, in response to widespread community support, it was committed to bringing in a book store back in 2003. The 7,300 square foot site was likely too small for the likes of Barnes and Noble, yet at that size and at in that prime Beverly Hills commercial location, it would have also come with market value price tag too high for smaller book stores.

At $2.20 per square foot, Dutton’s rate is at least a dollar less than what is paid by the city’s other tenants in the same building, according to Webb, and less than half the going rate for retail space in that area of the city.

“These days on North Canon drive, for retail space you’re looking at a minimum rate of $6 per square foot,” said Houman Mahboubi, a commercial real-estate consultant in Beverly Hills.

But still, rent plus the utilities and property taxes have proved too much for the slowly growing book store. “[Those in] the community who have shopped here have been very supportive,” Dutton said. “Do we need more customers? Yes. But I believe that given sufficient time, that would come.”

Dutton said that he penned a letter to the City in June, the last month he allegedly paid rent, indicating that his business was not growing enough to continue. It was not his intention to close the store though, Dutton said, he only hoped to negotiate a new agreement with his landlord that would work toward the mutual goal of keeping a branch of the Brentwood-born store in Beverly Hills.

“I was willing to talk about anything but the city really turned us down flat,” Dutton said. “I withheld rent to see if I could get the city to at least talk about it because if they weren’t going to talk about it, the business couldn’t succeed.”

Webb said that he had not received call from Dutton before last week and that he would have been “happy” to talk with him prior to that. “For him to withhold the rent was inappropriate,” Webb said. Asked whether or not the city would consider negotiating a new lease agreement based on a percentage of gross income, as Dutton is hoping for, Webb was not sure.

“I don’t think anybody is opposed in concept to a percentage rent, but the ‘devil’s in the details’,” Webb said. “I still think that the city is going to be hard put to give him a percentage rent that would result in his only paying half the rent he’s paying today.”

Some critics of the city’s decision, however, wonder why the city as a landlord would be hard put to do whatever it takes to save the city’s only book store.

“They’re the landlord, they can do whatever they want,” said Fran Berger, owner of the Farm restaurant, which is on North Beverly Drive. “The City of Beverly Hills should not be in the real-estate business.”

The City released a statement regarding Dutton’s saying that it could not legally subsidize a for-profit business. To do so, according to City Attorney Larry Wiener, would be an illegal gift of public funds.

And while there may be no legal bind that would prohibit the city from offering a lower rent price, the six months of rent payments owed by Dutton – he has paid property taxes and utilities – “cannot be forgiven,” Webb said.

Dutton still owes about $100,000 and he said that his security deposit will go toward paying his debt. The rest will be paid over time, but the specific arrangements with the city were not disclosed. He remains hopeful though that yesterday’s closed session meeting and the ongoing discussions that will arise from it will result in a viable way for the store to stay.

In the meantime, the city has directed its commercial real-estate brokers to find another book tenant for the space. That is perhaps the only bright spot for those who are dismayed by Dutton’s departure.

“How could Beverly Hills not have a book store?” Berger said. “It’s really ridiculous.”

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