(January 2, 2009) -- City Manager Pat West says city management -- not Mayor Bob Foster or others -- agendized an item for closed session City Council discussion on Jan. 6 to gauge the Council's interest in whether to pursue certain lease opportunities at the Aiport before expending any city resources in the matter.
The item, reported first in LB media in an LBReport.com editorial, cited the verbatim text of the agendized item:
Mayor and Council adjourn to closed session in the Council Lounge.
Pursuant to Section 54956.8 of the California Government Code regarding a conference with the City's real property negotiator:
Property: 4100 Donald Douglas Drive (Long Beach Municipal Airport) Long Beach, CA
City's Negotiator: Patrick H. West, City Manager
Negotiating Parties: City of Long Beach and Barclays Capital; Citi Group; Goldman Sachs; JP Morgan;
Merrill Lynch; Morgan Stanley; Fieldman Rolapp; Gardner Underwood; and Public Financial Management
Under Negotiation: Terms of Lease or Acquisition
[We didn't audio record our quick conversation with the City Manager but the paraphrased Q & A below from our notes accurately reflects the substance of what was discussed]
Q: So..who agendized the item? A: City management did.
Q: Was this brought forward by Mayor Foster? A: No. Staff is responding to economic conditions. We're bringing this to the Council to get their input on whether this is something we should pursue. No decisions are being made. At our staff level, we're looking to see if the Council wants us to explore this.
Q: [Noting that reporters are naturally nosey about things kept secret] So why do this in a closed session instead of an open, public session? A: We're dealing with a real estate transaction and it can be discussed in closed session.
Q: Can be but doesn't have to be? A: Yes. It doesn't have to be a closed session but it can be.
Q: So who'll be in the room? The Mayor, Councilmembers, city staff and City Attorney reps.
Q: Not investment bankers or the like? No, no. Just city people.
[Cordial close; we wish each other a good New Year.]
As previously noted by LBReport.com, on Dec. 31 LATimes.com carried a story about what it described as "a financial sleight of hand" used by some City Halls to avoid Proposition 13's requirement for a public vote on more debt/taxes.
In the piece, the LATimes.com piece, reporter William Heisel wrote:
[LATimes.com text] The city [of Oxnard] had tried, and failed, to get voters to approve a bond measure for street repair. And it had borrowed money against almost all of its public property, including a soccer stadium, three fire stations and its library -- even the Police Department's evidence-storage building.
With virtually nothing left to hock, the city came up with an ingenious way to take on more debt: It borrowed against future revenue by "selling" its streets to a city-controlled financing authority...[L]ocal governments throughout California are digging themselves deeper into debt, and many are doing so through exotic financing schemes designed to sidestep the need for voter approval...
In a typical example in the private sector, a business sells a property to raise money, then leases it back from the buyer. In the public sector, lease-backs are more a financial sleight of hand. A city council that needs to raise money might sell its city hall to a council-controlled finance authority. The council would then rent, or lease back, the building from the finance authority.
The authority, meanwhile, would issue bonds using the city hall as collateral. It would pay back the bondholders with the "rent" it collects from the city.
The sale of the building is a legal abstraction, a shuffling of paper whose purpose is to keep the debt off the city's books. That way, officials can circumvent the state Constitution's requirement of voter approval for government borrowing...
Developing.
