Terry Jensen
Common Sense / Opinion

Good Or Bad Deal For Taxpayers? Info & Answers Needed Before Council Leases Parking Spaces To 6th/Pine Owner


(April 30, 2012) -- An item on the May 1 City Council agenda has sparked my interest. Agenda item 17 asks the the City Council to authorize the City Manager to execute a 12 year agreement with "6th & Pine Development, LLC" (latest owner of the former Press Telegram building) to use up to 500 parking spaces for employees in lots or structures located somewhere else in the City of Long Beach.

A cursory review the agenda item might lead one to believe that the transaction seems reasonable and beneficial to the City. Staff indicates an unnamed "health care tenant" could have a "significant positive impact to the downtown area and improve the economic health of the City." The City would provide parking to the 6th/Pine property owner so a 900 employee health care tenant can locate downtown. So far so good.

Then I read the three page city staff report (to view it in full, click here). In my opinion, it lacks the necessary detail one would expect from a City Hall that's supposedly struggling to claw its way out of a fiscal black hole and scrambling for every nickel.

I want to be clear on this: in my view, based on the information provided by the city staff agendized report, I'm not sure if this is a great deal for downtown or just the latest taxpayer-costly transaction proposed by the current City Hall administration.

In my opinion, more information is needed. Rather than criticize the deal after the Council votes on it, I'm offering a list of constructive observations and taxpayer-friendly questions that the Council can apply to evaluate the proposal's costs and benefits and make what I hope will be an informed decision on whether it's a good deal or not.

Starting at the top, I believe Councilmembers should ask the following questions publicly and get meaningful answers from city staff:

  • Given that parking requirements often seem to drive developments due to the number of spaces required, land area involved and cost of potentially having to build a parking structure on the property, isn't it fair to say that City Hall offering to supply up to 500 off site spaces may amount to an enormous financial windfall for owner/developer of the functionally obsolete Press Telegram building? Is it fair to say that requiring the property owner to build a parking structure to house 500 cars might cost the owner/developer somewhere in the neighborhood of about $15 million?

  • LB Muni Code section 21.41.222 indicates all required parking shall be located within 600 feet of the use it serves...but several parking locations listed by staff are considerably more than 600 feet away...and the Kilroy parking lots are roughly four miles from the site. With the RDA dissolved, a provision exempting project areas from the 600 ft. requirement would seem to be voided. Therefore, how do the parking locations listed comply with this 600 foot requirement?

  • Code section 21.41.222 requires that off site parking be guaranteed to remain as parking by a deed restriction to which the city is a party. Is city management proposing to bind the City in this way and grant this to the owner/developer as part of the proposed agreement?

  • Staff indicates locations are "tentatively identified" with a desire to "minimize neighborhood impacts" and allow "prudent development of vacant land." This invites three questions.

    • What neighborhood impacts is city staff trying to minimize and why?
    • Why are the locations only tentative?
    • What vacant land is being developed and what development is planned?

  • If the Pike lot is currently used by Pike employees, how can it be provided for the next 12-24 years for 6th/Pine employees?

  • Who are the principals of "6th & Pine Development LLC"?

  • Who is the unnamed "health care provider" tenant?

  • Does the "health care provider" tenant have any connections with any of the principals or officers of "6th and Pine Development LLC" or any related firms?

  • Where are the proposed tenants health care offices currently located? If the tenant is already in Long Beach, City Hall inducements to put them downtown arguably may not be warranted.

  • What are the current and expected future uses of each of the parking lots listed by city staff in the agendized item?

  • Given the distance and time required for employees to travel from the Kilroy parking lots to the employee site, what makes city staff believe employees won't simply park in the downtown neighborhoods?

  • City staff says annual parking revenues from all locations are estimated to be "up to" $300,000 but what will the City's annual costs be (that is, taxpayers' costs) to maintain the parking lots/spaces it will lease out? That cost analysis should include ALL maintenance, supervision, repair, reserves for replacement and amortized land cost.

  • LB's Municipal Code requires parking for between two and four cars per thousand square feet of gross floor area. As the site has approximately 92,000 square feet of gross floor area, this would appear to require between 184 and 220 parking spaces. Why does city staff contend the developers need 500 spaces when the existing gross floor area seems to require less?

  • If the owner/developer were to construct buildings on the site, why shouldn't it be required to construct an onsite parking structure or the like to provide needed parking?

Regarding the license agreement:

  • As the City is offering to provide the parking spaces to facilitate a lease with a tenant that can bring 900 employees, is the agreement with 6th and Pine Development, LLC conditioned on the execution of the lease by both parties? If not, why not?

  • Why isn't the contract itself -- not some city staff summary of it -- available for Councilmembers and the public to see? Why does the Council continue to keep itself in the dark on major transactions like this? What doesn't the Council want to see, or have taxpayers see, before major deals are done?

  • If the tenant leaves the site or shrinks in size, does the agreement to provide the 500 spaces contain a termination clause? If not, why not?

  • If "reasonable efforts" to ensure employees actually park in the remote lots don't work, what will the remedy be?

  • Does the option to extend the term for two additional five year terms contain a provision to adjust the lease rate for each space to the then current market? If not, why not?

  • Does the right of the licensor (the City) to change the location of the parking premises require the approval of the Council? If not, why not?

  • Will the Council approve this transaction without knowing the actual parking sites that will be provided? If so, why?

  • Does staff have a downtown parking rental rate survey that indicates $600 per parking space is a market rate? If not, why not? When I informally checked, I found current rates for reserved parking downtown ranging between $105 and $150 per month. In my view, a formal survey should be required.

Those are my constructive observations and questions. They reflect many years of experience by me with similar business leases.

I hope that on Tuesday May 1, LB's Councilmembers take the time to show taxpayers that they are serious about protecting the public's interests...and not simply pleasing another private business interest.

I did my job; now itís the Council's turn.

Previously on Common Sense by Terry Jensen (continuing series):

  • No. 16: New Taxes? Get Serious First

  • No. 15: Important Questions Not Asked, Answers Needed Re Uncollected Parking Ticket Revenue

  • No. 14: Using Bad Technology To Excuse Bad Management

  • No. 13: Ruling By Obfuscation, Enabled By Mayor & Council

  • No. 12: Mystery Holiday Moves Mayor To Propose Canceling Jan. 3 Council Meeting

  • No. 11: Public Officials Shrugging Public Costs Of Project Labor Agreements

  • No. 10: Outsourcing City Hall

  • No. 9: Lack of City Hall Credibility, Not Residents' Complaints, Deters Quality LB Developments; Restoring Trust Requires Accurate Information & Respectful Partnership b/w Residents & Officials

  • No. 8: Council Grants Permit With Conditions Requiring What City Hall Already Basically Requires & Residents Deserve

  • No. 7: Facing A De Facto Precedent Proposed at 2nd/PCH

  • No. 6: Put Redevelopment In Council's Hands, Make LB Elected Officials Accountable (For A Change)

  • No. 5: Suppose Our City Officials Had Applied These Efforts To Assure World Class Kroc Center Instead Of For This, This & This

  • No. 4: Council Majority Either Didn't Know, Or Knew But Didn't Disclose, Amount Of Taxpayer Dollars Potentially Up In Smoke On Med MJ Vote

  • No. 3: City Hall & Its Boosters Created Budget Mess (Quit Blaming Recession); Proposed Proportional Cuts Don't Prioritize; Council Needs To Define Core Items & Cut Others

  • No. 2: Costs vs. Benefits: Council's Costlier-Than-Necessary Seawall Fix = Decaying Belmont Pier & Other Shoreline Assets

  • No. 1: Santa, Call LB City Hall: Taxpayer Leased Vacant Bldg. (New Home To Daisy Lane Xmas Displays) Invites Annual Public Review of All City Owned/Leased Properties And Zero-Based Budget

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