(Aug. 20, 2015) -- Long Beach city management has revealed that the controversial Long Beach Civic Center rebuild transaction -- which the City Council voted 8-0 to pursue (Dec. 9, 2014, 4th dist. vacant) without seeking bids for a less costly City Hall seismic retrofit -- could cost LB taxpayers a management-estimated $14.5 million to demolish the former LB courthouse, considerably more than the roughly $2-$3 million that management had assumed [proposed FY16 budgeted at $3.055 million] to tear down the former LB courthouse and hoped state Redevelopment funds would cover (which Sacramento refused to approve.)

In an agendized memo accompanying an item scheduled for the Aug. 18 Budget Oversight Committee meeting and cc'd to the Mayor and all members of the City Council, City Hall's Financial Management Director, John Gross, recommended that if legislation now pending in Sacramento doesn't pass, the City (ultimately meaning the City Council) should cover the cost with $3 million taken from taxpayers' General Fund FY15 surplus (in proposed budget) and incur a debt-bond (without voter approval) that would impose a roughly $1.3 million annual General Fund cost on taxpayers for the remainder over next ten years (starting a little over one year from now in FY17.)

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The city management memo indicated that the City is seeking Sacramento legislation that would require state payment for the demolition/remediation costs, but if the legislation doesn't pass, management says the City will have to come up with the multi-million dollar sum from some source(s) by October if the project's current timelines are to be met.

City management's memo (which can viewed at this link) attributes the added cost to a Sacramento refusal to let Redevelopment's "Successor Agency" (governed by the City Council) to fund the demolition and "in the last few months it was found that the old County Courthouse contains substantial asbestos and remediation is necessary."

Management memo also says that "there may also be a need" to borrow $1.5 million (in addition to the courthouse demolition amount) to fund relocation of the 3rd/Pacific storm drain (which is a financing component of the Civic Center project.)

Financial Management Director John Gross gave an oral presentation to the Budget Oversight Committee, chaired by Vice Mayor Lowenthal and attended by Vice Chair/Councilwoman Stacy Mungo, with Committee member Suzie Price absent for a previously announced vacation. Mr. Gross' oral presentation summarized his agendized memo.

Councilwoman Mungo asked no questions. Vice Mayor Lowenthal asked no questions.

Retired Councilwoman Rae Gabelich (who exited the Council in mid-2012) urged the Council to be very cautious in proceeding. Downtown resident Gary Shelton raised questions about the proposed Pacific Ave. storm drain issue.

The item was agendized with a recommendation to "receive and file" (take no action.) Chair Lowenthal announced there had been a motion and a second [although one wasn't audibly made] and the Committee voted 2-0, presumably to receive and file the item, presumably as indicated on the agendized recommendation.

The Budget Oversight Committee failed to make any recommendation(s) or vote to refer the item to the full (prime time) City Council for discussion. However all Councilmembers and the Mayor received Mr. Gross' memo (which was cc'd to them.) The net result of the Budget Oversight Committee vote means that the multi-million-dollar item may not receive any full Council debate, or prime time public comment or discussion (including alternative options) unless a Councilmember(s) were to individually agendize the item, or Mayor agendizes it, before city management brings its proposed action to the full Council for approval.

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City officials didn't mention the additional taxpayer costs publicly while they sought and obtained state legislation (SB 562) letting the City extend taxpayer payments (meaning increased total LB taxpayer costs) to Council-chosen private developer-operator for as long as 50 years. (Management initially indicated the payment period would be roughly 30 years, then 35 years, then 40 years.)

City management didn't initially make clear, but has subsequently acknowledged, that the Civic Center transaction will cost LB taxpayers roughly $1 to $3 million in addition to annual City taxpayer base payments (escalating annually by CPI) because some city agencies now officed outside of Civic Center, won't be relocating to the new Civic Hall because, as now designed, it won't be large enough to accommodate them.

In December 2013, the former Council (Schipske dissenting) agreed to authorize spending up to several million dollars for consultants and outside legal counsel to pursue the complex transaction. On December 9, 2014, the current Council voted 8-0 (4th dist. vacant) to authorize management to enter into an Exclusive Negotiating Agreement (ENA) with the Council-chosen preferred proposer/developer.

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The ENA includes a provision allowing the City to terminate the ENA on terms it specifies including payment to the preferred proposer/developer of a stipend sum (from the originating Request for Proposals) plus a termination payment equal to the preferred proposer/developer's actual out of pocket costs incurred but not to exceed sums on a sliding scale as the transaction progresses: $250,000 after execution of a term sheet; $400,000 after project site plan review submittal; $1 million after schematic design submittal; $2 million after receipt of fixed price proposal and detailed design (+/- 50% design development); or $3.5 million after the preferred proposer/developer executes project agreements [Source: ENA, section 16.3.1]

In response to a question from LBREPORT.com for preparation of this article, city management indicates the termination sum has now reached the $400,000 stage.

Developing. Further to follow on LBREPORT.com.

This article's text has been edited since its initial webposting for clarity.