Proposed Queen Mary Lease Offers Illusory Rent, For Taxpayers Basically A Sham

LBReport.com

Opinion

by Jim McCabe *

* Mr. McCabe is a retired Long Beach Deputy City Attorney

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(Nov. 16, 2015) -- I am the retired Deputy City Attorney who handled the Queen Mary legal affairs for Long Beach during the 90s and early 2000s. Without undue modesty, I am the individual outside City government who is most knowledgeable on this subject.

City management has chosen not to show the Council or the public the actual text of a proposed new lease for the Queen Mary and adjoining property it wants the City Council to approve on Tuesday Nov. 17, but in my view what it has said publicly should alarm taxpayers because in key respects it appears to be basically a sham.

Management's memo describes "minimum rent" of $300,000 a year. But that money goes back into the upkeep of the Queen so taxpayers won't see that money in hand.

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Then there's the sham of a purported "percentage rent" of 10% of operating revenue. But taxpayers won't see this either until the new owner of the property makes a whopping 9% return on its money. I doubt this will happen, which city management should realize, since it's similar to making a bad deal with a movie studio for a share of a film's net revenue and receiving little or nothing after studio accounting claims it hasn't made money.

In addition, city management hasn't seen fit to tell the council or the public what price the new owner is paying so it's basically impossible to know what the 9% return is based on.

I describe the new lessee above as the new owner because as a practical matter, I believe that's what it amounts to. It gets the Queen Mary and surrounding 40 seaside acres for 66 years starting from now, a super extended period that's basically indistinguishable from outright ownership. Tidelands law forbids an alienation.of title, and in my view, a lease spanning six and a half decades combined with illusory rent mocks that.principle.

It's disturbing to me that city management proposes to effectively give away the Queen Mary in the manner it has described, and will be made worse if the Council approves it unanimously. It may please some when City Hall sends a message that its machine marches on and resistance is futile, but over time, history and taxpayers will judge harshly those whose names are tied to a bad deal.

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