Last Minute Addition To Dec. 15 Council Agenda: Item Would Take $3 Mil Now And Drain $1.7 Mil Each Year For Next Ten Years After Sac'to Declines To Pay And City Failed To Include Old Courthouse Demolition / Asbestos Abatement In Civic Ctr. Deal
City Mgm't described its plan in August to Budget Oversight Committee which quietly buried it, although LBREPORT.com spotted and reported it at the time
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(Dec. 12, 2015) -- Using a last minute agendizing procedure (originally intended for unexpected urgent matters), Long Beach city management has quietly inserted an item on the Dec. 15 City Council agenda (that management described in August to the Council's Budget Oversight Committee) that seeks Council approval to consume $3 million immediately, and incur a debt bond that will cost the City $1.7 million more each year for the next ten years to demolish the old L.A. County courthouse and abate its asbestos as part of the Civic Center project, relocate a storm drain next to the Civic Center project, "assist the development project of 222 residential units and 8,500 square feet of commercial lease space, located at 245 West Broadway" [across from the Civic Center project] and provide "approximately" $8 million "to assist with a portion of the one-time and construction costs related to the Civic Center project."
Total additional downtown Civic Center related cost for LB taxpayers citywide: roughly $13.8 million.
It's not immediately clear from the agendizing materials if city management sought to have its preferred Civic Center developer/operator bear any portion of the cost. The City apparently assumed state taxpayers should pay the courthouse demolition cost, asking Sacramento to approve using sums from former Redevelopment Agency assets. When Sac'to refused, the city sought state legislation; when state lawmakers balked, city management devised the plan that will now effectively make LB taxpayers citywide pay (including abating asbestos in the 1950's structure that management called an unanticipated additional cost.)
[Scroll down for further.]
City management described its plan in August to the Council's Budget Oversight Committee and added that the debt bond could also be used to pay to relocate a storm drain next to the Civic Center project; the Committee (Lowenthal and Mungo, Price absent) asked no questions and voted to "receive and file" management's report. quietly burying the item...although LBREPORT.com spotted it and reported it at the time.
It remained buried until management quietly inserted it on Friday afternoon (Dec. 11) on the Dec. 15 Council agenda, scheduling it immediately following seventeen hearing items comprising the complex and costly Civic Center transaction and immediately before a "study session" on citywide "infrastructure needs." [City Hall sources, speaking on condition of anonymity, have told LBREPORT.com that the "study session" on "infastructure needs" is actually the first step in a plan to seek a tax increase from Long Beach voters in 2016. Further on this to follow.]
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Below is salient text of the city management memo accompanying the agendized item:
The City proposes to issue 2016 Lease Revenue Bonds Series A (Series 2016A), to
finance a portion of the costs for the hazardous materials abatement and demolition of the
former County of Los Angeles Courthouse (Courthouse Demo), located at Ocean
Boulevard and Magnolia Avenue; the storm drain relocation project, located at 3rd Street
and Pacific Avenue (Storm Drain Project); and to assist with both one-time costs and
construction costs related to the Civic Center project as follows:
Not to exceed $4,150,000 of bond proceeds, along with $3,055,000 of cash funding
from the City, to finance the Courthouse Demo, which will consist of the removal of
hazardous materials, demolition of an approximately 330,000 square-foot, steel and
concrete, six-story (plus basement) structure, and all related work;
Not to exceed $1,700,000 of bond proceeds to finance the storm drain relocation
project, which will assist the development project of 222 residential units and 8,500
square feet of commercial lease space, located at 245 West Broadway; and
Approximately $8,000,000 of bond proceeds to assist with a portion of the one-time
and construction costs related to the Civic Center project.
All projects will be financed through the issuance of Series 2016A by the FALB, as
authorized under Article 4 of the California Government Code, in an amount not to exceed
$14,500,000...
TIMING CONSIDERATIONS
City Council action is requested on December 15, 2015, to ensure the timely completion of
the remediation and demolition of the former County of Los Angeles Courthouse and
reimbursement of City costs.
FISCAL IMPACT
Beginning FY 17, the average annual debt service payment for the proposed Series
2016A is approximately $1,700,000, of which $965,000 is for the Civic Center project and
the balance for other projects which will be funded from the RDA residual property taxes
received in the General Fund (GF). The term of the proposed lease revenue bonds is not
to exceed ten years. Since the debt is being issued in mid-fiscal year, the debt service
payment will only be $400,000 for FY 16. The annual debt service payment for the Series
2016A will be included in the FY 17 budget as a technical adjustment to the budget.
Pursuant to GASB guidelines, all General Fund (GF) debt must be paid out of the Debt
Service Fund (OS 600). Therefore, an appropriation increase is requested in the General
Fund (GF) in the Citywide Activities Department (XC), in the amount of $400,000, offset by
residual property taxes to transfer into the Debt Service Fund (OS 600).
An appropriation increase is requested in the Debt Service Fund (OS 600) in the Citywide
Activities Department (XC), in the amount of $400,000, offset by revenue from the General
Fund to pay the debt service. There is no local job impact associated with this
recommendation.
