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City Att'y Directs Council To Rescind Its 66 Yr Queen Mary Lease Vote And Re-Vote Item On Jan. 5; Action Comes After Retired Deputy City Att'y McCabe Testified On Brown (Open Meetings) Act Agendizing Issue, Then Hired Law Firm To Press Issue; As A Result, Public Will Now Get Fresh Opportunity To Raise Lease Issues Council Initially Shrugged 9-0


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(Dec. 29, 2015) -- The Long Beach City Attorney's office has directed the City Council to rescind its Nov. 17 voted action authorizing a 66 year lease to a private firm to operate/maintain the Queen Mary and develop adjoining land and consider the item anew on January 5, 2016 with a revised agenda description that specifically references the "Queen Mary," not merely the Assessor's Parcel Number (as the Nov. 17 agenda did.)

The action comes after retired Deputy City Attorney Jim McCabe publicly testified at the November 17 Council meeting that in his view the agenda item was "pretty glaringly in violation of the Brown [open meetings] Act in not even mentioning the Queen Mary." Mr. McCabe said, "This is a clear violation of the Brown Act and should be of concern to all of you, because if it's found to not be sufficient, what you do tonight will be null and void."

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When Mayor Garcia posed that Brown Act issue to City Attorney Charles Parkin, Mr. Parkin cited CA Government Code section 54954.2 (requires "a brief general description of each item of business to be transacted or discussed at the meeting...[and] generally need not exceed 20 words) and said the city's agenda notice was legally sufficient in referencing the lease and providing the exact lease number. [The agenda notice text was: "Recommendation to authorize City Manager, or designee, to execute any and all documents necessary for an Amended and Restated Lease and Operations Agreement No. 22697 and concurrent assignment to Urban Commons, LLC, as Successor Lessee to Garrison Investment Group, LLC. (District 2)"]

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After the Mayor proceeded with the item and the Council voted to approve it 9-0, Mr. McCabe retained private counsel -- The Channel Law Group -- to pursue the matter. The law firm sent the City a letter (attached to the Jan. 6 agendized item, link below) seeking correction of the Council voted action, a remedy provided in the Brown Act.

The City Attorney's office transmittal letter to Council for its Jan.5, 2016 action states in pertinent part:

RECOMMENDATION:

Rescind and Reconsider an Amended and Restated Lease and Operations Agreement No. 22697 and concurrent assignment to Urban Commons, LLC, as Successor Lessee to Garrison Investment Group, LLC, previously approved by the City Council on November 17, 2015; and

Authorize the City Manager, or designee, to execute any and all documents necessary for an Amended and Restated Lease and Operations Agreement No. 22697 for the Queen Mary and adjacent properties, and concurrent assignment to Urban Commons, LLC, as Successor Lessee to Garrison Investment Group, LLC. (District 2)

DISCUSSION

On November 17, 2015, the City Council approved an Amended and Restated Lease and Operations Agreement No. 22697 and concurrent assignment to Urban Commons, LLC, as Successor Lessee to Garrison Investment Group, LLC.

On December 16, 2015, the City received a letter (Attachment "A") alleging that such action was a violation of the Ralph M. Brown Act ("Brown Act") as follows:

On or about November 17, 2015 the City Council considered a recommendation to adopt an amended and restated lease and operations agreement and concurrent assignment with regard to the Queen Mary, a City-owned asset. The agenda item was identified on the November 17,2015 as Item No. 14. The specific description given to this item is as follows: "Recommendation to authorize City Manager, or designee, to execute any and all documents necessary for an amended and restated lease and operations agreement No. 22697 and concurrent assignment to Urban Commons, LLC, as successor lessee to Garrison Investment Group, LLC (District 2). "Significantly. no reference was made in the agenda description to the Queen Mary. [Emphasis in original]

While the City Attorney does not believe the City Council's action violates the Brown Act as discussed below, to conserve public resources and avoid unnecessary litigation, the City Attorney recommends reconsidering the item by first rescinding the November 17, 2015 action approving an Amended and Restated Lease and Operations Agreement No. 22697 and concurrent assignment to Urban Commons, LLC, as Successor Lessee to Garrison Investment Group, LLC, and then considering the request for a new approval pursuant to this revised agenda description that specifically references the "Queen Mary".

It is the City Attorney's opinion that this item was sufficiently identified on the November 17, 2015 meeting agenda. Government Code section 54954.2 states: (a)(1) At least 72 hours before a regular meeting, the legislative body of the local agency, or its designee, shall post an agenda containing a brief general description of each item of business to be transacted or discussed at the meeting, including items to be discussed in closed session. A brief general description of an item generally need not exceed 20 words. We believe the description of the item in this case meets the statutory mandate of the Brown Act to include a "brief general description" of the matter, such that a member of the public could attend if he or she desired to observe or comment upon the matter before action was taken.

The Brown Act allows, after receipt of a written demand to cure, the City Council to reconsider the challenged item and cure the alleged defect. Importantly, doing so is specifically not an admission of wrongdoing by the public agency. (Government Code section 54960.1 (f) states: "The fact that a legislative body takes a subsequent action to cure or correct an action taken pursuant to this section shall not be construed or admissible as evidence of a violation of this chapter"). Thus, to avoid the possibility of unnecessary litigation, the City Council may first rescind the prior action taken on November 17, 2015 and then consider the item anew, with the revised agenda description specifically referencing the "Queen Mary".

Rather than restating the prior staff discussion, if the City Council rescinds the prior action, the November 17,2015 Staff Report is attached (Attachment "B") for reference in considering the newly revised request.

...Very truly yours

CHARLES PARKIN
City Attorney
Attachments

To view the Jan. 6, 2016 agendizing documents in full (including the law firm demand letter) is at this link.

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As result of Mr. McCabe pressing the issue, the public will now have a fresh opportunity to raise issues regarding the lease and the proposed transaction...on which he and others also raised separate issues and asked questions (below) that went unanswered.

The Queen Mary lease re-do is listed among "consent calendar" items on the Jan. 5, 2016 City Council agenda...meaning there will only be public or Council discussion of the item if a member/members of the public choose to speak to it (which the public is entitled to do) or if a Councilmember(s) pulls the item for separate discussion.

As previously reported by LBREPORT.com, the Channel Law Group (which sent the City the Brown Act demand-correction letter) is the same firm now representing a group of Long Beach residents ("Citizens for Responsible Planning" or CARP) which filed a legal action after the City Council voted (like the Queen Mary lease, without dissent) to approve a zoning change enabling a dense residential (townhouse) development on what had been privately owned Will J. Reid Scout Park (4747 Daisy Ave.) (That separate legal action alleges violations by the City and the development parties of the CA Environmental Quality Act (CEQA) in changing current zoning to allow 131 two and three story residences (2,100 to 2,900 sq. ft. townhouses) on 10.5 acres of land.)

As previously reported by LBREPORT.com, the same law firm was retained by Alamitos Beach residents concerned over already scarce neighborhood parking in connection with a proposed Alamitos/Ocean Blvd. high rise enabled by previous Council approval of a sweeping, mainly developer-friendly "Downtown Plan." After the firm sent a legal brief style letter to the City Attorney's office, on December 3, 2015 the Alamitos Beach group announced on its website that it had it had resolved the dispute with the developer after meetings with developer, the city and the neighborhood group's attorneys, saying the project applicant had volunteered additional parking, mitigating its concerns.

As previously reported by LBREPORT.com, the Council voted without dissent on Nov. 17 to approve the long-term Queen Mary lease without seeing the proposed lease's full text (city management provided an agendizing memo that it says contained the proposed lease's major points) and without questioning the new long-term lessee itself about what it plans to do with the City's property. (Councilwoman Price made a generalized inquiry and received a vague generalized response from city management, transcript below.)

The Council also declined to pursue Tidelands/taxpayer revenue issues about the lease raised in Council testimony by retired Deputy McCabe (who oversaw the Queen Mary leases when he worked for the city.) Councilmembers also didn't respond to or pursue an inquiry by open-space advocate Ann Cantrell about what the lease may or may not say about the future of adjacent Harry Bridges Event Park next to the ship. Further on these issues below.

The proposed lessee's website describes Urban Commons, LLC as follows:

Urban Commons, a Los Angeles-based real estate investment firm, specializes in hospitality and residential income generating assets. Urban Commons targets value-add property acquisitions in highly populated, predictable markets. With decades of cumulative real estate investment, development, and management experience, the company has a proven ability to thrive in the US real estate market throughout all market cycles. Urban Commons owns, manages and invests in a variety of assets including land, apartment buildings, condominium projects, hotels, retail and commercial properties...

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The company website indicates that in addition to a Los Angeles office, lessee Urban Commons also has a Hong Kong office. Press releases on the firm's website indicate it purchased the Sheraton in Pasadena, Ramada Hialeah Miami Airport Hotel, Comfort Inn & 110-room Holiday Inn in San Mateo; Embassy Suites Palm Desert; Radisson Plaza San Jose; and Land for Hotel Development in Grover Beach, CA.

In public testimony, retired Deputy City Attorney McCabe raised Tidelands revenue issues based on what city staff's agendizing memo indicated:

[Mr. McCabe]...[T]he City, the Tidelands, beaches, recreation will receive nothing from this lease. There is $300,000 in purported rent that goes right back into the ship that we're giving away for 66 years, a new 66 year period. We'll never get the 10% of gross revenue rent because obviously this is a net profits situation in which you'll never get any rent until Urban [lessee] gets a whopping 9% of its return every year for the next 66 years...This is a very sweet deal for Urban, entered into with almost no public notice...

Mr. McCabe offered to answer any questions if any Councilmembers had some; Mayor Garcia responded: "Thank you. Next speaker please."

In keeping with current Long Beach practice, city management didn't provide the Council or the public with the proposed lease text on which the Council would be voting. On November 12, LBREPORT.com requested a copy of the proposed lease; within 90 minutes, our request was declined by LB's Director of Dept. of Economic and Property Development, Mike Conway, who replied by email that "[t]he major terms and conditions of the Restated Lease are included in the City Council letter [agendizing memo.] The Restated Lease remains in draft form. When completed, it will conform with the major terms and conditions included in the City Council letter and will then become a public document." [Without waiving our objections to the City's response, LBREPORT.com requested a copy of the lease; our request remains pending.]

The terms of what the actual lease text says or doesn't say became a matter of public inquiry during the Council item. Open-space advocate Ann Cantrell noted that Harry Bridges Events Park (adjacent to the Queen Mary) was created as open space mitigation for construction of the Aquarium complex, and the mitigation made part of the city's Local Coastal Plan approved by the Coastal Commission. Accordingly, Ms. Cantrell asked if the new lease would let the new lessee put some type of development on what is now open space. Mayor Garcia declined to seek a response to Ms. Cantrell's this question and no Councilmembers pursued the issue on their own.

During the agenda item, it was disclosed that an advisory "task force," chosen by Mayor Garcia and approved by the Council in June 2015 to offer suggestions on developing the surrounding land hasn't met to date...and isn't scheduled to meet until early January 2016...presumably after the lease is signed. Mayor Garcia indicated the "task force" would seek public participation and input.

On Nov. 17, Councilwoman Suzie Price acknowledged the creation of the Task Force but sought further information. She asked Development Manager Conway: "In terms of development plans, development desire, given your knowledge of the project and the partners we're going to be working with?" Mr. Conway replied: "There has been some considerable discussion as to potential uses on the site, and as demand analyses indicated it will likely be entertainment oriented...We expect that given the constraints of the site and the Tidelands restrictions, that entertainment uses are likely going to be predominant on that land but the actual elements we would like to get more feedback from the community and the task force on that." No representative of the lessee spoke.

Vice Mayor Suja Lowenthal said she has had deep interest in the Queen Mary, which has been part of her Council district during her now-nearly-ten year incumbency. She said she was looking forward to an exciting future for the ship and praised exiting lessee Garrison (a lender which acquired the lease in a foreclosure) for making investments in the ship. Prior to Garrison, the lease was held by Save the Queen which acquired the lease in a bankruptcy proceeding (triggered by City Hall's position on rent credits) involving Queens Seaport Development Inc,/QSDI) which sought and received a 66 year lease from the City in the mid-1990s under Mayor O'Neill's administration.

Wrapping up the Council discussion before the ultimately unanimous vote, Mayor Garcia voiced enthusiasm for the new lessee and the future of the ship and surrounding property. "This is an opportunity to build something spectacular adjacent to the Queen Mary...that respects the fact the Queen Mary is and will be the centerpiece of this development" and said "we're going to engage in a very open and transparent process for the community can come in and be able to comment..."

Developing. Further to follow.




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