(July 13, 2015, 6:45 a.m.) -- A bill that would extend the allowable period for City [i.e. taxpayer] payments to a City Hall chosen developer/operator to build/operate/maintain a new Civic Center from 35 years to up to 50 years, is on today's (Mon. July 13) Assembly "third reading" file. SB 562 could come up for a vote today or later this week or in the next few weeks.

Under the transaction that the bill would facilitate, annual payments by the City [i.e. LB taxpayers] escalate each year by a CPI inflator...and by 35+ years out, they will reach a sum no current politician dares to itemize publicly. (Today's incumbents will either be happily pocketing taxpayer pensions or serving as food for the worms by then.)

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LBREPORT.com will be watching to see how LB Assemblyman Patrick O'Donnell (D, LB) acts on this awful bill that City Hall management desperately wants to facilitate the transaction. As a Councilman, O'Donnell was leary of a Civic Center rebuild when then-Mayor Foster and his allies first broached the idea, but went along with Council majorities under Foster to advance, but not commit to, the transaction in subsequent Council votes.

O'Donnell managed to avoid a recorded vote on the infamous December 2014 City Council action (8-0) that authorized signing a contract to negotiate with a City-favored developer/operator to reach a final deal. Getting a divorce from that deal isn't impossible, but like most divorces it becomes costlier (in sums the City agreed to pay its developer/operator) the longer the City tries to make the unsatisfying marriage work.

By December 2014, O'Donnell was no longer a Councilman; he was an Assemblyman...but if he marries himself to SB 562 he will wind up infecting himself with everything bad that the costly transaction carries. In our view, the worst part is the City's failure, through 2007, 2008, 2009, 2010, 2011, 2012, 2013 and 2014, to put out to bid a modest, sensible seismic retrofit of LB's 1970's era City Hall. Yes, that would have required a vote of the people to fund...and what exactly is wrong with that? Some Democrats [and some Republicans] apparently fear democracy. The "public private parternship" concocted by City Hall to finance the deal neatly avoids a pesky vote of the people...while dragooning taxpayers into decades of annual escalating costs.

[LBREPORT.com has carried multiple op-eds by retired commercial property consultant and former LB Redevelopment Agency Boardmember Terry Jensen deconstructing the fatuous figures offered by city management in advancing this deal.]

As LBREPORT.com has previously reported, SB 562 was approved without dissent (9-0) on July 1 in the Assembly Local Government Committee. The Committee spent less than two and a half minutes on the item from start to finish. Senator Ricardo Lara (D, LB-Huntington Park) spoke in support of his measure that he's carrying at City Hall's behest. Government Affairs Manager, Diana Tang, spoke briefly in support and said it is very important to the City. Sac'to lobbyist Paul Gonsalvez, representing the Port of Long Beach, spoke in support and lauded Sen. Lara. There was no written or in-person testimony in opposition. Committee members spent no time discussing the measure substantively.

The Assembly floor "legislative analysis" of the bill is in our opinion a tendentious joke. In describing the "public private partnership" being used for the transaction, it fails even to mention that the non-partisan Legislative Analyst Office found in November 2012 that the new L.A. County courthouse built in Long Beach, cited by various Long Beach political figures and state judicial officials as an example of the benefits of a "public-private" development arrangement, may cost as much as $160 million more than under a traditional procurement approach. As LBREPORT.com reported at the time:

The report by the LAO (an office that anlayzes legislation and makes recommendations to the legislature) states that in applying state legislation, the Administrative Office of the Courts [as well as Caltrans on a separate project] "did not use clear P3 [public-private partnership] processes and appear to have selected projects not well suited for a P3 procurement. In addition, we find that the analyses done to compare project costs under different procurement options were based on several assumptions that are subject to significant uncertainty and interpretation, and tended to favor the selection of a P3 approach."

It concludes, "Our analysis indicates that utilizing a different set of assumptions than those discussed [details below] (such as excluding the assumed federal tax adjustment and leasing costs) would result in the cost of the Long Beach courthouse project being less -- by as much as $160 million in net present value terms -- in the long run under a traditional procurement approach than the chosen P3 approach."

(The transaction continues to have its defenders who dispute the LAO report's conclusions.)

The Assembly "legislative analysis" also doesn't even acknowledge the issue raise in the state Senate's policy committee's legislative analysis of SB 562:

While allowing for a longer lease term may help ensure that the annual General Fund impact of Long Beach's Civic Center project doesn't exceed budgeted amounts, longer financing periods typically result in higher overall borrowing costs, which are ultimately paid by the city's taxpayers. It is unclear whether authorizing a maximum 50-year term for Long Beach's public-private infrastructure agreement makes it more difficult to ensure that the public's interest in the Civic Center project is protected for the duration of any agreement.

In essence, lengthening the term of an agreement with a chosen developer/operator means LB taxpayers will ultimately be paying more to the private firm over a longer period than city management first told taxpayers and the Council.

So...does Assemblyman O'Donnell really want to get married -- permanently -- to this?

And where is the check and balance in Sacramento? Sac'to Republicans -- who posture as taxpayer advocates -- have been out to sea on this. In May, SB 562 sailed through the Senate's Governance and Finance Committee, co-chaired by LB-area state Senator Janet Nguyen (R., SE LB/western OC) whose district includes a sizable portion of ELB and SE LB. During the Senate Committee hearing on the bill, Senator Nguyen raised no substantive taxpayer issues and stated, "I just want to thank Sen. Lara. This is a, you know, this is an excellent project, private-public partnership, stimulate the economy in the local area, bring jobs and also public benefits as well. I mean these aging buildings, are not, you know, are not safe and you're growing. Long Beach has done a phenomenal job and so I just want to thank, you know, the Mayor, the Council and the Senator for bringing this forward and so I'll be very supportive of it." Another Committee Republican, state Senator John Moorlach (R., OC) asked if the transaction was similar to that used for the LB courthouse; when told that it was, he asked no further questions.

Good grief. We'll report on any signs of life from Assembly Repubs and let readers know what Assemblyman O'Donnell does on the measure on the Assembly floor. If SB 562 passes the Assembly, it must return to the state Senate (where state Senator Lara is its author) for a final vote.

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