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    News

    City Mgr. & City Auditor Want Roger Staubach's Real Estate Advisory Firm To Conduct Independent Review of City Hall's Business Relationship With QSDI (which operates Queen Mary under City Hall lease)


    Dec. 23 update: The item below was enacted at the Dec. 23 Council meeting on the consent calendar without discussion 8-0 (Lowenthal absent)

    (Dec. 22, 2003) -- At the Dec. 23, 2003 City Council meeting, City Manager Jerry Miller and City Auditor Gary Burroughs have jointly agendized on the consent calendar (for items routinely approved unless some requests separate discussion) a request to have the Staubach Company conduct an independent review of the business relationship between the City of Long Beach and Queen's Seaport Development, Inc. (QSDI) which operates the Queen Mary under lease with the City of LB.

    In an agendizing memo accompanying the item, Messrs. Miller and Burroughs write in part:

    "It is estimated that at the end of 60-90 days a useful summarization of the business relationship between the City of Long Beach and QSDI will be completed. A thorough review of all relevant documentation and agreements will produce a deliverable product allowing all parties to understand the representations and covenants that were agreed to, and whether or not there was adherence to these agreements. Recommendations regarding the lease between the City of Long Beach and QSDl and suggestions concerning other currently unresolved issues would also be included in the review."

    The memo indicates that the "scope of this review would begin with a retrospective analysis of the Queen Mary lease, subsequent amendments, rent credits sought and paid, and related issues. Following this initial review, additional work could be carried-out as might be required but only upon receiving the approval of the City Council prior to commencement."

    Cost for the initial review is estimated at $20,000 and will be charged to the Tidelands Fund.

    The Staubach Company's chairman and CEO is Roger Staubach, a former Dallas Cowboys quarterback who launched his real estate career while playing football. Mr. Staubach is a U.S. Naval Academy graduate and earned his Bachelor of Science degree in Engineering before spending four years in the Navy as an officer.

    In materials on its web site, the Staubach Company describes itself as "a global, full-service real estate advisory firm that delivers cost-effective solutions for the users of office, industrial and retail space...When your company is facing an important real estate decision, you may have concerns about several issues. The costs involved. The hidden risks and obligations. The amount of time your company spends dealing with real estate problems. The integrity of the company that advises and represents you..."

    We post the Miller-Burroughs agendizing memo text verbatim below.

    The item appears one week after a closed session item on the December 16 City Council agenda titled, "Closed session pursuant to Section 54956.8 of the California Government Code for the purpose of a conference with the City's real property negotiator Jerry Miller, City Manager, and Queen Seaport Development, Inc., concerning an amendment to the lease for property at 1126 Queen's Highway, Long Beach."

    No action was publicly reported on this item during the subsequent open Council session.

    Asked about the Staubach Co. report being co-requested by the City Auditor's office at the Dec. 23 Council meeting, Assistant City Auditor J.C. Squires told LBReport.com it is separate from an audit being finalized by the City Auditor's office (completion anticipated in January) concerning QM rent, percentage rent, credits paid and taken and the like. Mr. Squires indicated the audit is of a type routinely done by the City Auditor's office on hotels and other entities paying transient occupancy tax or similar sums to City Hall.

    Neighborhood activist and taxpayer watchdog Traci Wilson-Kleekamp, who has for months pursued a public records act request to City Hall to examine its recordkeeping on the QM, told LBReport.com, "I don't understand what the Auditor is auditing because City Hall claims not to have some materials that I think taxpayers would expect it to have."

    On Dec. 19, LBReport.com emailed the QM's media office inviting comment if desired on the Dec. 23 Council agenda item. QSDI chief Joe Prevratil has previously told LBReport.com that his firm's records are in quite good order and noted that they undergo regular audits by an independent accounting firm.

    [begin Miller-Burroughs memo text]

    SUBJECT: Independent Review of the Business Relationship Between the City of Long Beach and Queen’s Seaport Development, Inc. (QSDI)

    DISCUSSION

    As you will recall, it was recently recommended by the City Manager that the City of Long Beach conduct an independent review of the business relationship between the City of Long Beach and Queen’s Seaport Development, Inc. (QSDI). The scope of this review would begin with a retrospective analysis of the Queen Mary lease, subsequent amendments, rent credits sought and paid, and related issues. Following this initial review, additional work could be carried-out as might be required but only upon receiving the approval of the City Council prior to commencement .

    Over the past several weeks the City Auditor and City Manager have interviewed firms that are qualified to conduct this review. Based upon these interviews, subsequent follow-up, and after consultation with the City Attorney, it is felt that the firm most qualified to complete this review is The Staubach Company. The Staubach Company has been in existence for 25 years, growing from a small real estate services firm specializing in complex tenant-landlord disputes to a leader in its field with over 50 offices worldwide.

    Though The Staubach Company has proposed and the City is interested in pursuing the possibility of additional work related to the future business relationship between the City of Long Beach and QSDI, at this time City Council authorization is only sought for the initial phase as described above. It is estimated that at the end of 60-90 days a useful summarization of the business relationship between the City of Long Beach and QSDI will be completed. A thorough review of all relevant documentation and agreements will produce a deliverable product allowing all parties to understand the representations and covenants that were agreed to, and whether or not there was adherence to these agreements. Recommendations regarding the lease between the City of Long Beach and QSDl and suggestions concerning other currently unresolved issues would also be included in the review.

    TIMING CONSIDERATIONS

    It is important that this review be conducted as soon as possible and that City Council authorization be provided at the meeting of December 23, 2003.

    FISCAL IMPACT

    It is estimated that Phase I of the project will cost $20,000 and will be charged to the Tidelands Fund.

    IT IS RECOMMENDED THAT CITY COUNCIL: Authorize the City Manager to enter into a contract with The Staubach Company, which will result in an independent review of the business relationship between the City of Long Beach and Queen’s Seaport Development, Inc.

    Respectfully submitted,
    Gerald R. Miller
    City Manager

    Garry Burroughs
    City Auditor


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