[Update] City Attorney Charles Parkin tells LBREPORT.com (Mar. 23) that no publicly reportable action was taken in the closed session. [end update]

The closed session comes after the City Council voted 9-0 on December 15, 2015 to approve seventeen co-agendized items, one of which more than doubled $3 million added by the Council in December 2014 by adding over $3 million more in December 2015 payable to a consulting firm to oversee the complex Civic Center transaction. The total payable to the consulting firm now tops $8 million...and is in addition to other costs that the Council has approved.

[Scroll down for further below.]

The item as agendized is:

Pursuant to Section 54956.8 of the California Government Code regarding a conference with the City's real property negotiator: 1. Property: A portion of the property bounded to the west by Magnolia Avenue, to the north by Broadway Avenue, to the east by Pacific Avenue, and to the south by Ocean Boulevard; and 230 W. 3rd Street. Assessor parcel numbers 7280-025-900 & -902, and 7280-022-914. Long Beach, CA 90802. City's Negotiator: Patrick H. West, City Manager. Negotiating Parties: City of Long Beach and Plenary Properties Long Beach LLC. Under Negotiation: Real Estate Transaction Terms

On Dec. 15, 2015, the Council voted 9-0 for number of collective actions that authorized management to sign a final binding contract ("Project Agreement") for the transaction. Structured as 40+ year "public private partnership" that avoids a vote of the people, the Council approved transaction will tear down LB's less than 40 year old City Hall (without having sought bids for a less costly seismic retrofit), replace LB's Main Library with a smaller facility, and permanently give up a portion of the Civic Center for private development without a publicly released independent appraisal of its market value.

When signed, the final Project Agreement will bind LB taxpayers to pay annual increasing sums for 40+ years to a private firm, for its profit, to build, operate and maintain a new Civic Center with annual taxpayer costs contractually escalated by CPI. A less costly seismic retrofit of City Hall/Main Library would likely have required a financing bond at fixed annual costs with a vote of the people.

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LB taxpayer costs for the consultant firm overseeing the complex transaction grew from roughly $1 million approved by the Council in December 2013 (7-1, Schipske dissenting, Lowenthal absent) to begin the process to just over $8 million approved by the Council in December 2015 to extend through roughly December 2020. Here's the salient chronology:

December 2013: The Council voted 7-1 (Schipske dissenting, Lowenthal absent) to enter into a contract with Arup North America, a prominent consulting firm to start the process.

December 2014: the Council voted 8-0 (4th dist. vacant) to authorize paying the consulting firm for an "additional period of five years and increase authority by $2,900,000, plus a ten percent contingency of $290,000." Management's Dec. 2014 agendizing memo stated: "Estimates of costs associated with this "Phase III" for Arup North America Ltd (Arup) is $2.9 million. The contract is proposed to be extended for an additional five years, to bring the City to the point of occupancy of a new City Hall and Main Library. [emphasis added] The budget is proposed to be increased by $2.9 million, plus a ten percent contingency of $290,000, in addition to the existing authority of $848,438, for a total contract authority of $4,070,438."

December 15, 2015: the Council voted 9-0 to approve paying an additional $3.3 million sum to the consulting firm [Dec. 15 agendizing memo text] to "ensure adequate oversight and management through the period to Financial Close, to provide Project and contract management services, and to achieve the expected cost limitations, quality outcomes and performance objectives, to establish clear protocols, regularly monitor progress and performance and proactively manage design changes and change orders during the construction period, and to provide overall Project and contract management, change management and commissioning and relocation assistance...over the upcoming five year period." [emphasis added.]

The Dec. 2015 Council votes (scheduled ten days before Christmas) were taken in near-robotic fashion; no Councilmembers publicly questioned why they were voting to roughly double the $3 million sum to roughly 2020 that nearly all of them had voted barely a year earlier to approve to the scheduled end of 2019. [The Council's Dec. 2014 vote added $3+ million "to bring the City to the point of occupancy" which is late 2019 under management's current scheduled] and the December 2015 Council action authorized $3+ million more for what appears to be one additional year "over the upcoming five year period" presumably to December 2020.]

On March 8, 2016, city management agendized an item that sought and obtained Council approval to pay the consultant firm $450,000 from the sums already approved (for a few months of work) and disclosed that the total amount authorized for payment to Arup has now topped $8 million.

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Management's March 8 memo also quietly disclosed that the final Project Agreement, authorized by the Council's Dec. 2015 vote, hadn't been signed yet...but was anticipated to be signed no later than April 29, 2016. Management's memo offered no explanation for the delay but LBREPORT.com speculates it's to address an issue resulting from city management's failure to "meet and confer" with a city employee union whose represented workers would be impacted by the Civic Center transaction (who'd no longer be working for the City but for a private operator.)

Taxpayers can only speculate on whether today's (Mar. 22) closed session -- agendized as "real estate negotiations" -- might result in additional taxpayer costs or some other surprises.

The downtown Civic Center also includes funds for legal consulting of approximately $1.8 million and financial consultation of $450,000 (plus a 10% contingency for each sum not to exceed $225,000.); management said these contracts, approved in a Dec. 2014 Council vote, "are anticipated to bring the City...to the point of occupancy."

In late 2015, the Council also voted to take $3 million from LB's current taxpayer surplus, and incur a decade long debt bond that will consume roughly $1.7 million from LB taxpayer funds each year for ten years, to abate asbestos in demolishing the former LB courthouse (and relocate a nearby downtown pipeline.) Management initially indicated that Sacramento would pay for these items but when Sac'to didn't, the Council handed LB taxpayers the bill.

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All of these sums -- which stem from Council approved actions in which all incumbents have now joined -- won't be available to provide police, fire, street/sidewalk repairs or neighborhood infrastructure. They are also sums that current and future Councils could take from their June 2016 ballot general sales tax hike to 10% which, if approved by voters, would make LB one of the highest sales tax cities in the state.

Unspoken publicly by any Councilmembers: since the final Project Agreement isn't yet signed, the Council appears to have an opportunity to extricate itself from the Civic Center deal. The Council has the contractual ability, under paragraph 16.3.1 (c)(iv) of the Exclusive Negotiation Agreement (now in effect), to terminate the agreement for a payment of $2 million if the final agreement isn't yet signed (and management acknowledges this hasn't happened yet.) That cost would jump to $3.5 million after the private developer/operator and the City sign the final Project Agreement, and Paragraph 16.3.1 (b) also requires paying a Stipend (agreed to in RFP) now that we believe is in the range of $1 million.

So with a contractual extrication cost by our unofficial math of roughly $3 million, LBREPORT.com was puzzled when city management told the Council in its December 15, 2015 agendizing memo that it would cost the City $4 million to get out of the deal. We asked about this, and LB's Director of Economic and Property Development, Mike Conway, who is managing the Civic Center project, replied via email:

The ENA [Exclusive Negotiation Agreement, currently in force] indicates that the City will provide a termination payment of $3.5M after the Preferred Proposer executes the Project Agreement. While the City has not yet executed the Project Agreement, it is in generally executable form, which the Preferred Proposer can execute at any time, thereby achieving the termination payment. The Preferred Proposer has worked in good faith to bring the Project Agreement to executable form and has earned the full termination payment.

A second item on today's Closed Session agenda involves labor negotiations with the Long Beach Lifeguards' Association; Long Beach Association of Engineering Employees; Long Beach Management Association; Long Beach Association of Confidential Employees; Long Beach Police Officers' Association; Long Beach Fire Fighters' Association; International Association of Machinists and Aerospace Workers, Local Lodge 1930 District Lodge 947; Long Beach City Prosecutors' Association and Long Beach City Attorneys' Association.

Any raises for those labor groups could also be paid from the sales tax increase.

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