(June 11, 2008) -- Multiple City Councilmembers voiced support at their June 10 meeting for a request by Cal Worthington Ford, supported by city management, for a taxpayer funded loan to upgrade its 405 freeway electronic message sign (at Lakewood Blvd.) from old light bulbs to a double-face, full color electronic display using light emitting diodes...with a 15 year lease extension to 2026.

Mr. Worthington, an octogenarian media icon, attended the Council meeting and testified personally in support of the loan (audio below).

Screen capture: LBTV 8

Without objection from Mr. Worthington, the Council put off voted approval of the loan for a week allowing city staff to address possible light mitigation for nearby nursing/convalescent facilities, site clean up...and perhaps consider changes to the deal suggested by Councilman Gary DeLong (not made part of the motion).

Councilwoman Gerrie Schipske (in whose 5th dist. the sign is located) said that representatives of some nursing/convalescent facilities on Grand Ave. (north of The Grand/AJCC) had voiced concern about possible light/glare from the nearby sign...and said the site was also overgrown with grass, untrimmed trees and the like. (A firm handling the sign site for Worthington Ford indicated that city staff had already directed clean up of the site...to which Mr. Worthington had agreed).

Supporting the loan -- but with reservations about the way the deal is structured -- was 3rd district Councilman Gary DeLong...who noted that the Economic Development Department proposal is being subsidized by the General Fund (by offering the property for $1 annual rent). Councilman DeLong suggested (but didn't require in a motion) using the one week delay possibly to increase the loan amount for Worthington Ford -- using Economic Development money -- but ensuring that City Hall's General Fund receives a fair market value for the use of the land (instead of $1 a year)

Councilman DeLong: I'm completive supportive of finding some kind of economic assistance to Worthington Ford and the billboard, I think it makes perfect sense to do so...As the City Manager knows, one of the concerns that I have with the deal is how it's structured. We're subsidizing Economic Development with General Fund revenue and that bothers me. We're looking at doing a $200,000 loan which I think is completely appropriate, I do support, but then on the other hand we're discounting the value of the land to a $1 a year so it's essentially costing the General Fund money doing it. I would rather see, while we have this week, to see if there's a way to work with Worthington Ford to maybe increase the amount of the loan to a larger amount but yet get something close to the fair market value of the land, something that could break even, so Worthington Ford is happy with the new deal as presented but the city truly does their Economic Development from Economic Development money not General Fund money.

Councilman DeLong declined to make this suggestion as a substitute motion, supporting Schipske's one week delay...and when Mr. Worthington came to the podium, he indicated he wasn't troubled by the one week delay.

To hear Mr. Worthington's testimony, click here.

During Council discussion, it became known -- disclosed by Councilman Patrick O'Donnell and then admitted by city management -- that the new sign was already built and in operation with City Hall approval.

That revelation prompted Councilwoman Rae Gabelich to wonder aloud what would happen if the Council voted "no" on the loan. Economic Development Manager Robert Swayze replied that Worthington Ford had separately obtained a permit to upgrade the sign and did so...and the Council was now being asked to approve the loan and the 15 year lease extension.

Councilwoman Gabelich said she viewed this process as "backward"...while emphasizing (with several of her colleagues) that she supports the loan to Worthington Ford. (City management said that Worthington Ford is among Long Beach's top 10 sales tax generators.) Councilwoman Gabelich indicated that she didn't want to repeat LB's costly past policy that led some car dealers (high sales tax generators) to leave LB for other communities that offered taxpayer-backed financial sweeteners.

LBReport.com went to the location about ninety minutes after the Council item and found the new sign operating. We shot video first of the northbound sign view from Lakewood Blvd. north of Willow St. (parking lot to Holiday Inn) (still shots below)

...and then from the southbound sign view taken from roughly 2626 Grand Ave. just north of The Grand/AJCC near some convalescent/nursing home facilities. (To get a clear view of the sign, we had to move a bit south of the convalescent/nursing homes; the sign became harder to see as we moved north, blocked from some angles by trees/landscaping and the freeway offramp itself.)

To view the video, click below.

During the Council hearing, a representative of a firm familiar with the old and new sign technology said that unlike its previous light bulbs (100,000 watts total...which could only be on high or low beam), the brightness of the new sign's light emitting diodes could be adjusted over a wide range.

Management's agendizing memo stated that the $200,000 City Hall proposed loan to Worthington Ford would be for a 12 year term with interest only payments for the first seven years, and the entire loan amortized over the remaining five years at a fixed interest rate of four percent per annum. "Worthington Ford will use the loan proceeds plus an equity injection of approximately $224,000 to upgrade the sign," city management says adding:

"It is recommended the proposal be accepted, as it has been determined that the sign upgrades will retain an existing auto dealership, preserve existing jobs, create six additional jobs at Worthington Ford, retain and increase sales tax revenues, and provide a promotional opportunity for the City," city management said in an agendizing memo.

The loan would be made through City Hall's "Commercial and Industrial Revolving Loan Fund Program (Program)" run by the Economic Development Bureau, funded by the U .S . Department of Commerce, Economic Development Administration (EDA), Community Development Block Grant (CDBG), and Redevelopment Agency (RDA) tax increment, city management says.

In the agendizing memo by Community Development Director Dennis Thys, city management stated in pertinent part:

Worthington Ford, Inc. (Worthington Ford), has been located at 2850 Bellflower Boulevard since 1974 and consistently has been a major sales tax generator for the City of Long Beach.

Current economic conditions have presented a major challenge to the auto industry and have impacted car dealer revenues . To counter the downward pressure on sales, Worthington Ford is willing to make an investment in upgrading a freeway sign that not only is expected to augment sales, but will significantly reduce energy consumption . Worthington Ford is requesting an extension of Lease No . 24823 and financial assistance in the form of a loan from the City .

These proposed actions will assure the viability and retention of a major car dealership in Long Beach . The City will have use of at least 20 percent of the display time to promote its activities .

On June 25, 1996, the City Council approved Lease No . 24823 between the City of Long Beach (Lessor) and Worthington Ford, Inc. (Lessee), for the construction of an electronic automotive message sign on City-owned property at 2601 Lakewood Boulevard. The Lease site is situated within the Lakewood Boulevard off-ramp loop of the southbound San Diego Freeway (1-405) . Due to the isolated location of the property, limited access and other site restrictions, the electronic advertisement sign is a highly desirable use of the site.

The above-mentioned sign was constructed in 1996 in accordance with the Conditions of Approval that were established by the City's Planning Commission and is used by Worthington Ford to advertise its products and services. As compensation for use of City-owned property, the City has a prominent identification marker on the sign and is provided use of at least 20 percent of the available display time for civic and community promotional purposes .

Worthington Ford has proposed to refurbish and modernize the electronic display sign . The improvements will include removing the existing light bulb display and installing one double-face full color Light Emitting Diode (LED) electronic display, repainting the sign, providing an automatic dimming circuit and other items . The sign improvements will comply with the Modified Conditions of Approval that were approved by the Planning Commission on February 1, 2008 . The estimated cost for the sign improvement project is $424,000 and will be paid for by Worthington Ford .

As consideration for refurbishing and modernizing the electronic advertisement sign, Worthington Ford has requested Lease No . 24823 be extended for fifteen years beyond the Lease termination date of September 23, 2011. The proposed First Amendment to Lease No . 24823 with Worthington Ford contains the following major provisions :

• Premises : The leased premises shall be composed of approximately 3 .24 acres (approximately 141,309 square feet) of vacant land at 2601 Lakewood Boulevard, within the Lakewood Boulevard off-ramp loop adjacent to the 1-405 Freeway.

• Use : The Premises shall be used for an electronic advertising sign and access to the sign, as well as for a business office trailer and necessary parking for office use . The advertising shall only promote Worthington Ford's business, goods and services in the City of Long Beach . Vehicles shall not be stored on site .

• Length of Term : The term shall be extended for 15 years and shall terminate on September 23, 2026 .

• Rent: The annual rent shall be $1, and as other consideration for use of the Premises, the City shall be provided with at least 20 percent of the available display time for promotional activities .

• Options to Extend : None.

• Site Maintenance: Worthington Ford shall be responsible for maintaining the Premises .

• All other terms and provisions of Lease No . 24823 shall remain in full force and effect.

Approval is recommended to provide a $200,000 loan with a 12-year term to Worthington Ford, with interest only payments for the first seven years, and the entire loan amortized over the remaining five years at a fixed interest rate of four percent per annum . Worthington Ford will use the loan proceeds plus an equity injection of approximately $224,000 to upgrade the existing 1-405 Freeway visible electronic sign located at 2601 Lakewood Boulevard . The loan will be secured by a first lien position on the freeway sign .

The existing freeway sign has contributed to the competitiveness and increased sales at the dealership . However, the existing sign utilizes outdated technology, which limits its effectiveness . The new sign is expected to increase sales by approximately 8 percent . It is recommended the proposal be accepted, as it has been determined that the sign upgrades will retain an existing auto dealership, preserve existing jobs, create six additional jobs at Worthington Ford, retain and increase sales tax revenues, and provide a promotional opportunity for the City .

This loan will be made through the Commercial and Industrial Revolving Loan Fund Program (Program), which is administered by the Economic Development Bureau . In 1987, the City Council authorized the establishment of the Program, which is funded by the U .S . Department of Commerce, Economic Development Administration (EDA), Community Development Block Grant (CDBG), and Redevelopment Agency (RDA) tax increment . The purpose of the Program is to provide access to capital to retain, attract, expand, and create businesses in Long Beach. Financing under the Program supplements, but does not replace, private lending . Since its inception, more than 300 loans have been funded, totaling more than $22 million . Loans in the Program exceeding $100,000 require authorization by the City Council . This loan will be made with EDA funds .

On August 15, 2007, the proposed loan was approved by the Business Assistance Committee of the Economic Development Commission, which serves as the approval body for the Program...

SUSTAINABILITY

Worthington Ford's new color LED sign will operate at approximately 30 percent of the current power level and provide substantial savings in power usage . The existing 30- watt incandescent electronic message display utilizes approximately 184,320 watts at full capacity with all lamps turned on ; the new 25mm LED digital display will use approximately 53,914 total watts at full capacity with all lamps turned on . As such, the power consumption in the message display will be reduced by approximately 71 percent.

Additionally, LED signs do not generate heat and are not subject to burnout, as are the current incandescent lamps that are subject to the life of the filament...

FISCAL IMPACT

There is no fiscal impact associated with the recommended extension of the Lease. An appropriation increase of $200,000 is requested in the Revolving Loan Fund Program in the Business Assistance Fund (SR 149) in the Department of Community Development. The receipt of interest and principal payments over the entire term of the loan will offset the increase in appropriation. There is no impact to the General Fund.