(Feb. 8, 2010) -- LBReport.com has learned further regarding a city management Feb. 9 agendized item, seeking Council approval to amend a 2008 lease with investor/developer Tom Dean regarding WLB property alongside the Terminal Island freeway (reported first by LBReport.com on Sunday Feb. 7).
LBReport.com photo at West Willow St. shows portion of property which extends southward beyond photo
LBReport.com has learned that the lease, approved by Sept. 2008 voted Council action, included a rent credit provision that wasn't mentioned in city management's accompanying agendizing memo by Public Works Director Mike Conway.
LBReport.com has learned that an amendment to the lease, approved in Feb. 2009 by the Council (9-0), wasn't executed by the parties. It was accompanied by a city staff memo by Public Works Director Conway that also didn't mention the rent credit provision.
Image source: City of LB staff report accompanying Feb. 09 agenda item
As previously reported by LBReport.com, city management's upcoming Feb. 9, 2010 agendized item is accompanied by a memo from Community Development Director Dennis Thys which does indicate the rent-credit provision. As described in Mr. Thys' agendizing memo:
"Improvements: Tenant shall be responsible for constructing all improvements on the Premises. All improvements and development costs shall be subject to the approval by Landlord in its sole and absolute discretion. In consideration of permanent improvements made to City-owned property, the Tenant shall be
entitled to receive rent credits for the costs of said improvements."
The Feb. 9, 2010 Council item in effect replaces the Feb. 2009 non-executed amendment, along with a resurvey of the property that the parties agree shows a slightly smaller square footage.
LBReport.com has learned that on Sunday Feb. 7, 2010, Mr. Dean, accompanied by advocate Mike Murchison, met with a number of WLB community members regarding the upcoming Feb. 9 agendized item. Among those present in the meeting were representatives of the WLB Association, including 7th dist. Council candidate Jack Smith, as well as 7th district Councilwoman Tonia Reyes Uranga.
Asked by email for further on the meeting and the related agendized item, Mr. Murchison emailed LBReport.com:
Tom Dean and I met with a few community leaders from Councilwoman Tonia Uranga’s district at her request on Sunday [Feb. 7]. She asked a while back if we would meet with them to discuss our current use of the North Willow property; improvements made to the site including serious drainage issues and what our future plans were.
We met for about 45 minutes and Mr. Dean answered all of their questions. Those questions included the South Willow property that is being discussed tomorrow night. We basically indicated that we are more than happy to do the same thing with the south Willow property in terms of improvements that we did on North Willow.
The rent credit provision is not new. Mr Dean receives rent credits for physical improvements to the site including the wall, grading, fencing, etc. However, it should be noted that Mr. Dean put in quite a bit of money to improve this site; which was deemed surplus property by the City with severe drainage problems. The City receives the benefit of an improved piece of property that they would never develop and after give or take 12 years they will receive monthly rent for the property after the rent credit expires.
In addition to the overall deal, Mr. Dean was required to move his crane sales parts business to Long Beach from the City of Santa Fe, thus adding additional sales tax to LB’s general fund.
Overall, we believe that this is a win/win for all involved. Finally, we have offered to bring in additional palm trees to the sites if the community indicates such, and we are pleased that the residents of the west side of LB took their valuable time on Sunday to meet with Mr. Dean to discuss their concerns and answer questions. Thanks goes to Councilwoman Uranga for pulling this together.
Also present at the meeting was 7th dist. Council candidate Jack C. Smith. Asked for his comments by LBReport.com, he emailed the following:
I was pleased to attend a meeting on Sunday afternoon with Tom Dean and Mike Murchison at the property south of Willow along the Terminal Island freeway that one of Dean's companies is leasing from the City.
The meeting was arranged by the West Long Beach Association. Attending the meeting were John Taeleifi, president of the WLBA, some members of the WLBA -- including myself, our Councilwoman, Tonia Reyes-Uranga, and an individual from Bob Hill Crane. (Bob Hill Crane storage and sales are currently located on the property.)
Mr. Dean pointed out the improvements he's made to the property to make it useful and as attractive as possible. He also discussed the uses of the property -- his plans as well as what he can and can not put there. Among the things he mentioned he can not put there are container storage and an active truck depot.
I've known Mike Murchison for some time. This is the first time I've met -- or even seen -- Tom Dean. He's clearly a serious businessman who makes decisions based on what's good for his business. However, it was apparent that he feels his decisions and business endeavors are of benefit to the City.
When challenged with statements and questions, he answered them forthrightly. I didn't feel he was jerking us around. I found Tom to be very personable and approachable.
When, at the end of the meeting I complimented him for meeting with a community group like the West Long Beach Association, he said the WLBA was the first to ask for such a meeting. That really surprised me.
Do I agree with all the deals he's done with the City? No. However, I was pleased to be able to meet with him and discuss the Terminal Island freeway property. I'll not hesitate to contact him (& Mike Murchison) again when there's an issue involving Mr. Dean that I feel could benefit from a face-to-face discussion.
LBReport.com has also requested comment from the office of Councilwoman Tonia Reyes Uranga on the meeting (via Chief of Staff Ray Pok); we'll add it here as received.
Asked by LBReport.com for his comments on management's latest proposed lease amendment, businessman Terry Jensen -- who criticized City Hall's handling of the lease in a DistrictWeekly story by Dave Wielenga prior to entering LB's 3rd dist. Council race -- continues to view city management actions as undervaluing the city property and shortchanging LB taxpayers.
Among other things, he noted that the half century lease (30 years + two 10 year options) only adjusts to CPI. "From my experience, a lengthy ground lease typically includes a provision to periodically adjust to market value. That's because things could occur that make the property more valuable, exceeding a CPI increase. For management only to include adjustments based on CPI for 50 years is in my opinion ridiculous."
Mr. Jensen also stated that in his view, the methodology for appraisals used by management understates the value of the property. He added: "I don't blame Tom Dean. I believe it's the duty of city management and the City Council to exercise their fiduciary responsibility to protect taxpayer assets and money and maximize revenue from this taxpayer-owned piece of property."
Further to follow on LBReport.com...where you don't miss a thing.
