City Staff Seeks Council Approval <nobr>Nov. 17</nobr> For New Lessee/Operator For Queen Mary And Adjacent Land...For ANOTHER 66 Year Term And These Details

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City Staff Seeks Council Approval Nov. 17 For New Lessee/Operator For Queen Mary And Adjacent Land...For ANOTHER 66 Year Term And These Details

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(Nov. 10, 2015, 9:20 a.m.) -- On November 17, Long Beach city management has agendized an item seeking City Council approval for a new lease/operating agreement that would transfer operation and management of the city-owned Queen Mary and adjacent property to a Los Angeles firm, Urban Commons (which indicates it also has a Hong Kong office.) Press releases on the firm's website indicate the firm purchased the Sheraton in Pasadena, Ramada Hialeah Miami Airport Hotel, Comfort Inn & 110-room Holiday Inn in San Mateo; Embassy Suites Palm Desert; Radisson Plaza San Jose; and Land for Hotel Development in Grover Beach, CA. In a release on its website, the firm describes itself as follows:

Urban Commons, a Los Angeles-based real estate investment firm, specializes in hospitality and residential income generating assets. Urban Commons targets value-add property acquisitions in highly populated, predictable markets. With decades of cumulative real estate investment, development, and management experience, the company has a proven ability to thrive in the US real estate market throughout all market cycles. Urban Commons owns, manages and invests in a variety of assets including land, apartment buildings, condominium projects, hotels, retail and commercial properties...

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A city staff agendizing memo indicates that city staff and Urban Commons have negotiated terms for a new 66 year lease and operating agreement to replace a current 66 year lease (on which about 17 years have elapsed) that the city made with QSDI in 1998. (In 2005, after a dispute over rent credits under the lease, QSDI sought bankruptcy protection; the lease was acquired in a BK sale by another entity which eventually lost the lease in a foreclosure by Garrison, an investment firm that now wants out...and Garrison suggested the successor lessee, Urban Commons, city staff's memo says.)

The lease covers 64.22 acres (43.38 acres land area/20.84 acres water area) and city staff's memo indicates it foresees a restructuring of the Carnival Dome Lease. "At a time of mutual agreement between Successor Lessee and Carnival Corporation (Carnival), Successor Lessee shall sub-lease the entire Carnival Dome to Carnival for expanded terminal operations." (No other details provided.)

The new lease includes several types of rent payments (details in agendizing memo below) and [city staff agendizing memo text] "will provide flexibility for the Successor Lessee [Urban Commons] to terminate the Amended Lease as to individual development parcels, subject to receipt of applicable entitlements, and for Successor Lessee (or its assignee) to enter into new, financeable ground leases for development purposes, not to exceed the term of the underlying 66-year lease."

In terms of Fiscal Impact, city staff says $300,000 in annual rent revenue will be redirected from General Tidelands Fund use to a "Queen Mary Fund" restricted for capital expenses and investments for the Queen Mary. These funds and the Carnival Passenger Fees will be available to fund the Historic Preservation and Capital Investment Plan for the Queen Mary."

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On June 23, 2015, Mayor Robert Garcia and Vice Mayor Suja Lowenthal agendized an item that told the public that lessee Garrison was ready to formulate a "comprehensive plan for development of the surrounding properties." (The item proposed, and the Council approved, creation of a 12 member "task force" with members chosen by the Mayor to develop [June 23 memo text] "the optimal approach to reimagining the land around the Queen Mary and its place in our city's economic and cultural life" and "help develop appropriate recommendations for moving forward with this important development process." The task force meetings (if there have been any) haven't been transparent and if the group has made any recommendations to the Mayor, Council or city staff they haven't been publicly disclosed thus far.

On Oct. 6, 2015, the Council conducted an agendized closed session (from which the public and press were barred) regarding a conference with City Manager Pat West on lease negotiations "to grant authority to its negotiator regarding the price and terms of payment" for a proposed purchase, sale, exchange, or lease of identified real property" adjacent to the Queen Mary.

LBREPORT.com hasn't had an opportunity at this point to analyze city staff's proposal from the standpoint of taxpayers and the city; we report the development here as breaking. City staff's full agendizing memo is below:

Queen Mary lease / Long Beach city staff proposal (Nov. 17, 2015)

City staff didn't attach the text of the proposed lease itself; Long Beach city management routinely declines to disclose the text of proposed leases and contracts for which it seeks Council approval until after the Council approves them. A number of other cities attach the text of proposed agreements (especially involving large sums or significant transactions) for Council and public review prior to Council approval votes.