(June 22, 2015) -- The City Council plans to conduct a session -- closed to the public and the press -- to discuss what it says are negotiations related to the Civic Center transaction. The item is scheduled to begin with open public comment at 4:30 p.m. on June 23, after which the Council will go behind closed doors. The closed session is scheduled to precede the main Council meeting (scheduled start time 5:00 p.m.).

Meanwhile, LBREPORT.com has learned that a Sacramento bill (SB 562), introduced and carried for the City by State Senator Ricardo Lara (D., LB-Huntington Park) that would extend the period for City [and Port] payments to the chosen developer operator to up to 50 years, is now scheduled for an Assembly Committee hearing on July 1, (The measure has already passed the state Senate.)

CA Gov't Code 545956.8 lets a City Council conduct a closed session "prior to the purchase, sale, exchange, or lease of real property by or for the local agency to grant authority to its negotiator regarding the price and terms of payment for the purchase, sale, exchange, or lease."

The item as agendized states that the closed session will be conducted "[p]ursuant to Section 54956.8 of the California Government Code regarding a conference with the City's real property negotiator" City Manager Pat West for [agenda text] "Under Negotiation: Real Estate Transaction Terms."

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In December 2014, without seeking marketplace bids to establish the marketplace cost of retrofitting LB's less than 40 year old Civic Center, the Council voted (without dissent) to authorize city management to enter into an "Exclusive Negotiating Agreement" with a Council chosen Preferred Proposer [Plenary Edgemoor Civic Partners, LLC] to finance, build, operate and maintain an entirely new Civic Center. Under the transaction, the City would pay the private developer/operator an annual escalating sum, increased each year by the CPI, for a period initially represented to taxpayers as 30 years, then 30+ years, then 40 years, and now possibly further. The transaction would also give the Preferred Proposer (in a final agreement) the prime located land under the former LB courthouse (Magnolia/Ocean) for the developer/operator's private development.

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The "Exclusive Negotiating Agreement," signed by the parties in December 2014, indicates that the City and the Preferred Proposer agreed to proceed in good faith to negotiate "to prepare a (i) term sheet outlining, among other things, the Project's financial structure, development timeframes, risk allocations and costs ("Term Sheet"); (ii) an agreement setting forth the rights and obligations of the parties with respect to the conveyance of a leasehold and fee interest for the Civic Center and Private Development Sites, respectively, and the development of the Project, the timing and conditions to closing of the transaction, and the terms (and in some cases the final forms) of all documents necessary to close the transaction ("Global Executory Agreement"), and (iii) other agreements as deemed necessary by the parties to implement the Project as contemplated by the Preferred Proposal..." (Source: Exclusive Negotiating Agreement, section 2.2.1.)

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Meanwhile, LBREPORT.com has learned that a Sacramento bill (SB 562), introduced and carried for the City by State Senator Ricardo Lara (D., LB-Huntington Park) that could extend the period for City [and Port] payments to the chosen developer operator to up to 50 years, is now is now set for a hearing in the Assembly Local Government Committee on July 1.

Although the City has publicly contended that the transaction doesn't require state enabling legislation, 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."

SB 562 would also [Legislative Counsel text] "make a statement that a special law is necessary and that a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique and special circumstances surrounding the existing Long Beach Civic Center, and the need to immediately, quickly, and efficiently develop the project, and to resolve property issues potentially delaying the project."

The bill, which cleared the state Senate without opposition,

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In the Senate, the measure was placed on the state Senate's "consent calendar" (where it received no Senate floor discussion.) It previously received 7-0 approval in the state Senate's Governance and Finance Committee -- with its only two Republicans (Senators Janet Nguyen (R., SE LB/western OC) and John Moorlach (R., Central OC) joining in. In the Senate Committee, vice-chair Senator Nguyen (elected in Nov. 2014 to represent a district that includes part of SE Long Beach) 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."

The Committee vote advanced it to the Senate floor where it passed without discussion.

The precise reasons for seeking state legislation to extend the previously indicated time period for city payments weren't explored in detail in the Committee hearing or discussed in any respect on the full Senate floor. However the legislative analysis accompanying the bill in the full Senate stated in pertinent part:

SB 562's 50-year limit on a lease agreement for the Civic Center project is shorter than the limits that generally apply to leases on city property. However, 50 years far exceeds the 20 to 30 year terms of bonds or other debt instruments that local governments usually use to finance public infrastructure projects and extends the 35-year maximum lease term established by the 1996 Aguiar bill for local P3 agreements. 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.

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" to create an 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.

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.

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...and during study sessions and Council sessions preceding the final vote, taxpayers were allowed 180 seconds per person at the public speaker's podium.

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.)

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