As previously reported by LBReport.com, LB taxpayers will be required to pay that $3 million sum on Sept. 1, 2009 that taxpayers weren't supposed to pay...unless the City Council takes measures to protect taxpayers from that payout.

LBReport.com has further learned that such annual contract amendments with the Foundation have apparently been the continuing case year after year, despite the Foundation's continuing failure to pay the $3 million sum. The sum stems from a 1999 City Council action (archival audio and documents below) that obligated city taxpayers to pay a $3 million debt bond, whose proceeds were used to expand the museum's facility, with the Foundation's representation that its fundraising would pay the $3 million so taxpayers wouldn't have to pay it.

On September 9, 2008, the City Council voted to adopt the current FY09 City Hall budget that included a $3 million sum put aside to pay the debt bond principle that city taxpayers weren't supposed to pay. That potentially costly outcome was the subject of a exchange a week earlier (Sept. 2, 2008) in which Councilman Patrick O'Donnell asked City Manager Pat West about the $3 million sum. To hear City Manager West's reply and the colloquy that followed, click here.

The most recent contract amendment states the following took place on September 9, 2008:

This Sixth Amendment to Agreement No. 26174 is made and entered, in duplicate, as of September 10, 2008 for reference purposes only, pursuant to a minute order adopted by the City Council of the City of Long Beach at its meeting on September 9, 2008, by and between the Long beach Museum of Art Foundation ("Foundation") and the City of Long Beach ("City")...

LBReport.com has learned that there is no formal "Minute Order." City Clerk Larry Herrera says the "Minute Order" refers to the City Council's vote to adopt the City Budget on September 9, 2008...and the Foundation Agreement (including amendments) adopted in annual budget processes since the Second Amendment (September 14, 2004, pursuant to Council authority on December 17, 2002).

In pertinent part, the most recent (Sept. 2008) contract amendment recites that the parties desire to amend the Agreement to reflect compensation paid to the Foundation for previous fiscal years and goes on to provide:

The City shall pay to the Foundation as compensation for Foundation's management services a fee of...$569,000 for fiscal year 2008-2009, which has been appropriated by the City Council...

If funding is reduced in future fiscal years, during the term of this agreement, below the sum of...$645,565, then the parties agree to negotiate for a period of 90 days regarding the level of services that the Foundation can provide for the actual level of funding. If the parties have not reached agreement by the end of the 90 day period, then Foundation shall have the right to terminate this Agreement and the Lease by giving 30 days notice of termination to the City.

The parties further agree to negotiate for any increase in the fee in any future year provided, however, that the fee shall be no greater than...$669,000 plus cumulative increases in the Consumer Price Index (All Consumers) of Los Angeles-Riverside-Orange County with a base year index of 2003.

The contract amendment makes no mention of the $3 million unpaid sum. It was signed by LBMA Foundation management on Sept. 29, 2008 and by city management on October 17, 2008.

For details on how the unpaid LBMA $3 million sum (with city taxpayer exposure) originated, LBReport.com has made archival audio available plus documents from that 1999 Council action. To access these, click here.

The unpaid $3 million sum was the subject of City Auditor reports in 2006 (under former Auditor Burroughs) and 2008 (under incumbent Auditor Doud) and was discussed by the Council's Budget Oversight Committee in early 2008.

On June 5, 2009 the Foundation sent a letter to LB Mayor Bob Foster (not publicly copied to Councilmembers who have the voting power to decide the matter) that offered to give City Hall a share of part of a physical facility that the Foundation claims it own...but leaves taxpayers exposed for the $3 million payout. To view the Museum Foundation's June 5 letter in full, click here.

At 3:30 p.m. today (June 23), the following City Council action is scheduled to occur:

SPECIAL MEETING

1. Opportunity for public comment.

2. Mayor and Council adjourn to closed session.

a. Pursuant to Section 54956.8 of the California Government Code regarding a conference with the City's real property negotiator:

1. Property: 2300 E. Ocean Boulevard Long Beach, CA

City's Negotiator: Patrick H. West, City Manager
Negotiating Parties: City of Long Beach and Long Beach
Museum of Art Foundation
Under Negotiation: Terms and Conditions of Lease