Council Votes To Authorize (No Councilmember Questions Or Mentions) Giving Up Half Of Hotel Room Tax Revenue For 20 Yrs To "Incentivize" New Downtown Hotel (SE Corner Ocean/Pine); New Group Surfaces -- "Citizens Against Downtown Long Beach Giveaways" -- Blasts Council's Record, Says It's Filed Suit To Stop Hotel Transaction

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(May 18, 2016, 10:10 a.m.) -- As seen LIVE on LBREPORT.com, the City Council voted 8-0 (Gonzalez absent) at its May 17 meeting to sell property at SE corner of Ocean Blvd./Pine Ave. for $7 million and authorized giving the buyer/developer up to half of hotel room tax revenue for twenty years to "incentivize" a new proposed hotel.

During the Council hearing, multiple Councilmembers and Mayor Garcia praised plans for the hotel...but no Councilmembers or the Mayor inquired about or questioned financial aspects of the transaction.

In public testimony, a new group announced itself -- "Citizens Against Downtown Long Beach Giveaways" -- stating that filed litigaton earlier in the day to block the transaction...and blasted the Council's record on downtown property dispositions on several grounds.

[Scroll down for further.]

As previously reported by LBREPORT.com, city staff recommended Council approval of a transient occupancy tax "sharing" arrangement for up to 20 years to "incentivize" the proposed hotel based in large part on figures/assumptions in a report prepared by a consultant hired by the buyer/developer. City staff's agendized materials didn't attach for public/press review -- and no Councilmember asked publicly to see -- the buyer/developer-hired consultant report or an analysis of its figures/assumptions by the City's real estate economic consultant or provide an independent appraisal of the land value. [Later that night on the same Council agenda, the Council voted to ask city staff to report back on potential funding sources (from other than the City of LB) to acquire the Oil Operator's site (currently undergoing environmental remediation) just east of L.A. River and SE of the 710/405 freeway junction) for roughly $17-20 million.]

The hotel room tax "sharing" proposal comes as Mayor Garcia, the Council and city staff say the City needs more revenue as they seek public approval of a June 2016 ballot measure ("Measure A") that would raise LB's sales tax to 10% (currently 9% in Signal Hill/Lakewood and 8% in most OC cities.)

During the Council hearing, Mike Conway, City Hall's Director Economic and Property Development, disclosed (to our knowledge for the first time publicly) that staff's recommended buyer/developer wasn't the highest bid per square foot. Mr. Conway didn't say how high and from whom the highest bid was but said city staff's choice was the best proposal on various grounds.

In public testimony, a new group announced itself -- "Citizens Against Downtown Long Beach Giveaways" -- when Warren Blesofsky came to the speaker's podium and announced that the group had filed litigation earlier in the day to block the Council vote. Mr. Blesofsky went on to criticize the Council's record on several grounds. No Councilmembers or the Mayor responded publicly.

Organized labor was split. The UniteHere! union and hotel workers testified in opposition to the transaction unless it included a labor peace agreement; the LA/OC construction trade unions and IBEW supported the transaction. Council approval specifies union representation for the hotel (but doesn't indicate in what job categories) and includes a "card check" for workers [generally promotes union representation]...but no Councilmembers moved to require inclusion of a labor peace agreement.

Vice Mayor Suja Lowenthal (exiting after a decade on the Council in mid-July) praised the hotel in effusive terms, likening it to a jewel in the crown with significance citywide across from a new Civic Center (a project she described as worthy of a major city) along with new plans being discussed for the Queen Mary area. She cited the hotel site's historic connection to the Jergins Tunnel that once brought crowds to the former Pike amusement area. (City staff's agendizing memo mentioned future "discussion" -- but no commitment by the buyer/developer or the City -- to incorporate public access to the Jergins Tunnel in the project design. The agendizing memo stated: "Activation of the Jergins Tunnel will be discussed during the due diligence and entitlement phase of the development. Restoration and redevelopment of that portion of Victory Park, which fronts Ocean Boulevard, is also an integral part of the proposal.") LBREPORT.com detailed coverage here.)

Councilman Supernaw said he recalls the tunnel and noted that its northern end is sealed off. [LBREPORT.com believes the northern entrance would surface somewhere under now-widened Ocean Blvd. unless extended] City staffer Conway said staff could look into whether there's some way to restore access from the north; Vice Mayor Lowenthal asked city staff to revisit the issue and consider it if at all possible.