First On LBReport.com / Perspective
No Competing Bidders On Foreclosed Queen Mary Lease/Development Rights, Lender Garrison Becomes Owner Of "Save the Queen" & City Hall's Business Bedmate
(January 29, 2009) -- In a transaction that effectively began when previous City Councils privatized operation and future development of a public asset and gave City Hall's then-Queen Mary operator decades of lease and development rights, City Hall (and taxpayers) now find themselves with a new business bedmate (wearing the former bedmate's clothing) for the lease that includes development rights for QM adjacent property.
LBReport.com is told that there were no competing bidders yesterday (Jan. 28) on those lease/development rights which were purchased in the bankruptcy of the now-former QM operator (QSDI) by "Save the Queen, LLC," which borrowed money via Garrison Investment Group, which asserted a default in repaying the loan by Save the Queen...and Garrison has now foreclosed on its loan.
LBReport.com's requests for comment from Garrison's LB rep received no response. (Mike Murchison, who spoke for STQ's former ownership, doesn't speak for STQ's new ownership).
The net result appears to be that a lender (Garrison) has acquired 100% of Save the Queen, LLC. STQ remains City Hall's lease holder for future development and operation of the Queen Mary; STQ continues operating the QM hotel through its contractual arrangement with Hostmark and the public that visits the ship likely won't see an immediate change.
However, LB City Hall and LB taxpayers are now effectively in bed with a different business bedmate (albeit wearing the former companion's clothes).
The foreclosure eliminated some previous debt load so the financial outcome is arguably an improvement. However, whether the new marriage -- an arranged affair basically out of control of City Hall and taxpayers who are now legally expected to perform their part of the bargain. City Hall does control certain development rights in the relationship, but whether the outcome results in marital bliss remains to be seen.
On November 7, 2007, Save the Queen's previous ownership and city officials hailed STQ's purchase of the lease and development rights. LBReport.com was present at the event aboard the historic ship; we provide flashback coverage below:
[Nov. 7, 2007]...Developer Klein, Mayor Foster and Councilwoman [Suja] Lowenthal indicated that the property surrounding the ship would be developed into a world class, marquee magnitude, regional drawing development for the city...to which Councilwoman Suja Lowenthal added that it would be developed in ways different from LB projects of the past.
Mayor Foster: There's two parts to this. First of all, it's great for the City to be able to restore and upgrade this ship...But the acreage around this ship has the potential to be the marquee project in the City of Long Beach...and I know that Councilwoman [Suja] Lowenthal and Vice Mayor [Bonnie] Lowenthal are very engaged in the visioning process, that will add, to help to be able to design what we're going to put here and describe what we're going to put here...This is on everyone's agenda. This is an extraordinarily important piece of the city. It will be a destination. It will be a marquee project...I'm confident that with the people involved and the tools that the City has to make sure this is a great project, it'll happen."
Councilwoman Suja Lowenthal: I believe it's going to be the legacy for this city...I look for great things here...Something that I know Jeff and his team are cognizant of, this is going to require a process unlike no other that this City has experienced when it comes to a development project. We will not do this development project like other development projects have been done in the very, very past. And so he understands this. He knows that he'll be calling experts from around the region, around the country if necessary and around the world if necessary...And to pull that off through a community outreach process is something that I personally, and I know the Mayor also is looking forward to. And so we do expect that and I think this is a team that's going to deliver that because they understand that Long Beach will no longer be 'anywhere America.' This will be a destination, and that is truly our potential. It's our destiny and I think it's going to happen here at the Queen..."
Reporters pressed for development plans; the parties cited outreach, not plans.
...Reporters pressed further...and the possibility of an NFL team [a stadium] as a development possibility surfaced, initially incrementally. After developer Klein, Mayor Foster and Councilwoman Lowenthal indicated public outreach and thoughtful consideration would precede development decisions...Councilwoman Lowenthal added:
Councilwoman Suja Lowenthal: I'm certainly of the belief that there doesn't have to be brand new ideas. There have been ideas that have been considered in the past for the City of Long Beach, for this area. We have representatives here from the business community that have been downtown pioneers for a very long time...There have been a lot of ideas that have been discussed in the past that I think can be revisited today and would be relevant and absolutely prudent to do so.
Q: [audibility difficult] What would some of those past ideas be?
Councilwoman Lowenthal: Perhaps an NFL team...[followed by some laughter and applause]
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