(July 3, 2015, 5:30 a.m.) -- State legislation (SB 562), introduced and carried for the City of Long Beach by State Senator Ricardo Lara (D., LB-Huntington Park) that would extend the allowable period for City payments to the City's favored developer/operator for a new Civic Center to up to 50 years, was approved without dissent (9-0) on July 1 in the Assembly Local Government Committee.

The Committee spent less than two and a half minutes on the item from start to finish. Senator Lara spoke in support of his measure. City Hall's Government Affairs Manager, Diana Tang, spoke briefly in support and said it is very important to the City. Sac'to lobbyist Paul Gonsalvez, representing the Port of Long Beach, spoke in support and lauded Sen. Lara. There was no written or in-person testimony in opposition. Committee members spent no time discussing the measure substantively.

Committee had received a legislative analysis of the measure -- to read it, click here -- but none of its points were substantively discussed by the Committee Assemblymembers. To hear what took place, click here.

The Assembly Local Government Committee's action will likely be the only policy committee to hear S562 before it heads to the Assembly floor. The bill is expected to bypass the Assembly Appropriations Committee as it did the Senate Appropriations Committee on grounds it's not expected to have a state budget impact.

But it will have Long Beach taxpayer impacts. The Assembly legislative analysis omitted a key statement included in the state Senate policy Committee's legislative analysis:

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The state Senate's policy committee's legislative analysis included this text:

While allowing for a longer lease term may help ensure that the annual General Fund impact of Long Beach's Civic Center project doesn't exceed budgeted amounts, longer financing periods typically result in higher overall borrowing costs, which are ultimately paid by the city's taxpayers. It is unclear whether authorizing a maximum 50-year term for Long Beach's public-private infrastructure agreement makes it more difficult to ensure that the public's interest in the Civic Center project is protected for the duration of any agreement.

In essence, lengthening the term of an agreement with a chosen developer/operator means LB taxpayers will ultimately be paying more to the private firm over a longer period than city management first told taxpayers and the Council. In December 2014, the City Council approved proceeding with the transaction (9-0) after receiving only one Power Point presentation from city management (without an accompanying backup memo) on the transaction's detailed financial points (Dec. 2014, 9-0). (Previous Council "study sessions" saw possible designs, heard management rationales supporting the transaction and included management summaries, not financial details, of the proposed transaction.)

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When SB 562 reaches the Assembly floor, it will have two Assembly "readings" (in which the bill won't really be read but simply approved with a list of other bills.) SB 562 will then be placed on the Assembly's third reading file for final Assembly passage. When SB 562 exited the Senate, it was placed on a third reading "consent calendar" and received no Senate floor discussion.

Following a final Assembly vote, the bill will return to the state Senate for a final vote on concurrence in changes made in the Assembly. One of those changes is an amendment made in mid-June at the request of the State Lands Commission. The following verbiage was added:

(e) This chapter shall not be construed to authorize the city to use tidelands trust revenues that are subject to Section 6306 of the Public Resources Code or any other applicable granting statute for general municipal purposes or any other purpose unconnected with the public trust.

The Port of LB, which operates on state Tidelands, agreed to participate financially in the transaction by agreeing to co-locate its new Port headquarters building as part of the new Civic Center.

For the full text of SB 562 click here.

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The Assembly Local Government Committee included no Long Beach area Assembly members...but when SB 562 passed the Senate's Governance and Finance Committee in May, that Committee was co-chaired by LB-area state Senator Janet Nguyen (R., SE LB/western OC) whose district includes a sizable portion of ELB and SE LB. During the Senate Committee hearing on the bill, Senator Nguyen raised no substantive taxpayer issues and stated, "I just want to thank Sen. Lara. This is a, you know, this is an excellent project, private-public partnership, stimulate the economy in the local area, bring jobs and also public benefits as well. I mean these aging buildings, are not, you know, are not safe and you're growing. Long Beach has done a phenomenal job and so I just want to thank, you know, the Mayor, the Council and the Senator for bringing this forward and so I'll be very supportive of it." Another Committee Republican, state Senator John Moorlach (R., OC) asked if the transaction was similar to that used for the LB courthouse; when told that it was, he asked no further questions.

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The City has publicly contended that the Civic Center transaction doesn't require state enabling legislation, but the Legislative Counsel's digest to SB 562 states, "Existing law permits [public private partnership] agreements to provide for the lease of, or ownership of, infrastructure facilities owned by a governmental entity, but constructed by a private entity, to that private entity for a period of up to 35 years." SB 562 would authorize "the lease of all or a portion of the project to, or ownership by, a private entity or entities, for a term of up to 50 years."

An Assembly Committee legislative analysis states in pertinent part:

Bill Summary. This bill allows the City of Long Beach to use a hybrid public-private partnership procurement method to develop a new civic center, and specifies the requirements of the P3, by adding a new section of law right after the existing P3 statutes. Many of the provisions in the bill are modeled after P3 law for local agencies, with some exceptions:

a) Competitive Negotiation Process. Current P3 law requires a "competitive negotiation process" that utilizes, "as the primary selection criteria, the demonstrated competence and qualifications for the studying, planning, design, developing, financing, construction, maintenance, rebuilding, improvement, repair, or operation, or any combination thereof, of the facility." The process does not require competitive bidding.

This bill, however, allows the City of Long Beach to evaluate the project proposals it solicits and receives and to choose the private entity or entities whose proposal is, or proposals are, judged as providing the "best value" in meeting the "best interests" of the City. The bill defines "best interests" to mean a procurement process that is determined by the City to provide the best value and an expedited delivery schedule while maintaining a high level of quality workmanship and materials, and defines "best value" to mean a value determined by objective criteria that shall include a combination of price, financing costs, features, functions, performance, life-cycle maintenance costs and abatement offsets, and development experience.

b) Term. Existing law allows the P3 agreement to provide for the lease of facilities to, or ownership by, the private entity for up to 35 years. This bill, however, allows a lease agreement to provide for the lease of all or a portion of the project to, or ownership by, the private entity or entities, for a term up to 50 years and requires the agreement to provide for complete reversion of the public portion of the project to the City at the expiration of the lease or transfer term.

During Council consideration of the Civic Center transaction, city management contended that LB's 1970's era City Hall had become "functionally obsolete" and argued that the building's seismic issues (known since 2007) gave the city an "opportunity" [management's term] to create a new Civic Center that it said would provide a better use of public space. LB's current Civic Center includes a large Main Library, which under the new transaction will be replaced by a smaller size library. The new Civic Center will include an area for private development (possibly a hotel) on what is now publicly-owned land under the now-former LB courthouse.

Under the Council-approved Civic Center transaction, LB's new City Hall isn't expected to be completed [last stated city staff estimate] until late 2019.

From 2007 to the present, the City didn't seek or obtain bids for a seismic retrofit of its current City Hall (built less than 40 years ago) but cited the building's seismic deficiencies as its basis for pursuing an entire Civic Center rebuild. At least two separate sources -- a Long Beach architect experienced in adaptive reuse retrofits and a Columbia University graduate student -- independently indicated that a retrofit should cost significantly less than the sum city management estimated. The retrofit cost would likely have to be financed using some type of debt bond requiring taxpayer approval; city management said the public-private partnership wouldn't cost more than current operating costs plus a CPI escalator, and required no taxpayer approval.)

The City organized multiple study sessions and public meetings describing the transaction's asserted benefits, but the decision making Council held only one "study session" on the transaction's financial details (with Power Point slides, no accompanying text memo.) The Council invited no formal presentations from independent witnesses or experts regarding seismic retrofits or other alternatives. During study sessions and Council sessions preceding the final vote, taxpayers were allowed 180 seconds per person at the public speaker's podium.

Developing. Further to follow.