Major QW Bay Development:
State Lands Comm'n Won't Support What It Calls Precedent Setting Comm'l Uses at QW Bay (Movie Theater & Like Uses) Unless City Hall Provides Add'l Public Benefits Or Improvements in Tidelands
Commissioners Urge City And Staff To Return With Creative Solutions
Impact on Project Unclear
Transcript excerpts below
(April 25, 2001, updated April 26) -- In a major development, two of the three members of CA's State Lands Commission (which oversees use of taxpayer owned tidelands property) have said they will not support what they called precedent setting commercial uses (such as a movie theater) on tidelands at QW Bay unless LB City Hall provides additional public benefits or improvements as compensation in the tidelands.
Openly expressing unease with City Hall's plans and the precedent they might create elsewhere during the Commisson's April 24 meeting in Los Angeles, Commission members (Lt. Gov.) Cruz Bustamante and (Controller) Kathleen Connell directed Commission staff to communicate with the city to see if alternatives or other mechanisms could be found that might allow the project to proceed by providing improvements or public benefits in the tidelands.
The item on the Lands Commission's April 24 agenda was to consider a staff report on the QW Bay Development Plan & LB tidelands and a response to an earlier request by Commissioner Connell for a staff audit.
As previously reported on LBReport.com, staff's report said QW Bay's proposed entertainment and commercial uses were consistent with the tidelands grants, found no evidence of City Hall mismanagent of the tidelands and advised the Commission to take no further action.
At the Commission's April 24 meeting, Commissioners voiced their uneasiness with land use aspects the plan and urged the city and Commission staff to try to develop mechanisms for providing additional public benefits to offset what Commissioners called precedent-setting uses such as a proposed movie theater.
Commissioners also directed their staff to draft policies that would govern future proposed commercial land uses along the coast and to revise staff's report accordingly, all in time for the Commission's next meeting in June.
Commissioners directed that at the June meeting, the issue be set as an "action item" although it's presently unclear exactly what that action will be. The possibilities are speculative but could theoretically range from approving a movie theater and like uses with inclusion of additional public benefits, or taking no action, or deciding the city was violating the tidelands grants.
The Commission has the authority to sue LB City Hall if it decides it's violating the tidelands trust. It could also urge the state legislature to change the terms of LB's tidelands trust. The Lands Commission itself does not have independent approval authority over QW Bay; that belongs to the CA Coastal Commission. (See related LBReport.com coverage forthcoming at Coastal Comm'n Backgrounder.)
A LB based spokesman for QW Bay developer DDR, Mr. Jeff Adler, told LBReport.com today "We're evaluating what it all means, if anything. Really, this is an issue between the city and the State Lands Commission at a legal level. As far as we're concerned, we think it's extremely premature to say that it's going to have an impact on the project. Everybody's evaluating." He added that a movie theater "remains integral to the project."
The State Lands' Commissioners expressed confidence in their staff report's conclusion that LB City Hall had not mismanaged tidelands funds.
However, a high level City Hall delegation that included Mayor Beverly O'Neill, City Manager Henry Taboada and Deputy City Attorney James McCabe was unable to sway Commissioners who repeatedly expressed their discomfort with supporting the land use aspect of the plan.
LB officials, who offered brief statements radiating confidence at the start of the hearing, were followed by local environmentalists and open-space advocates including Diana Mann, Ann Cantrell, Don May, Lester Denevan, Adrea Stoker and Doug Korthof in opposition.
By the time the opponents had finished, Commissioner Bustamante told Mayor Beverly O'Neill, "The unfortunate thing for you is that the people who spoke in opposition are right. They raise an issue that...is this an activity that is within the [tidelands] public trust?
Commissioner Connell said bluntly, "If there is no way to soften the suggested use, I can not move forward, Mr. Chair on an idea of movie theaters in a tidelands trust, so I've got to hope that the staff will within the next 30 days will come up with some innovative discussions of how we can deal with this matter because as it now stands, I certainly couldn't support it."
Two environmentalists who witnessed the events separately told LBReport.com that the Mayor and City Manager appeared visibly shaken by the reversal of fortune.
At one point, Mayor O'Neill returned to the microphone and told the Commission that "the city is not financially solvent. We have been dependent on so many other things that we cannot depend on (inaudible). Some of the problems that we're facing in that area are caused by the fact that the [QW Bay] area is not developed."
City Manager Taboada said, "We have timing considerations that make this a critical project for us at this point in time based on market conditions, based on lease conditions, based on a whole set of factors that make it almost, not acting today almost undermines the project in its totality."
The City Manager then made an offer on the spot to use $600,000 worth of credit in City Hall's tidelands account (that City Hall couldn't use because the city is built out and, he said, there is no property attainable in the tidelands that the city doesn't already own) "to buy 70,000 square feet or as much as that $600,000 will buy anywhere in the state of California..."
Mr. Taboada suggested that the credit (which resulted from the city previously giving land to the tidelands in a swap), plus the fact that "the theaters don't occupy ground floor space," provided a way to "fashion a solution that would allow us to go forward with our project and still not create the kind of precedent that is being suggested."
Commissioner Bustamante called the proposal interesting, questioned the relevance of the theater being on the second floor, said there was nothing the Commission could use the credit for in the City of LB, but did suggest the rough outline of a counter-offer.
"Would there be an enhancement of existing public trust land that currently doesn't have the kinds of amenities that a specific trust account could establish, that would be administered perhaps by a local board? Would that be a way?..."
Mr. Taboada replied, "If you want to keep it within the boundaries of the City of Long Beach, we could enhance curently owned state lands property which is not developed or is not improved."
Later in the afternoon, City Hall issued a written release portraying the day's events as a "delay" and quoting Mayor O'Neill as saying, "We are disappointed that the Commission did not take action on the recommendation of the staff" but said "[w]e have always cooperated with the Commission and are willing to answer any questions that they might have about Queensway Bay or any other project. Our focus will continue to be to bring visitors to the tidelands, consistent with tidelands law."
LBReport.com posts below excerpts of portions of the proceedings. Not all speakers and statements are transcribed. The transcript below is not an offical record; it was prepared by us, not the State Lands Commission, using a recording that relied on ambient sound; some poritons were marginally audible; portions of the proceedings may be added in the coming days.
[begin transcript excerpt text]
Ann Cantrell: Good afternoon, Ann Cantrell, conservation chair of the local Audubon society. I was also born in Long Beach, as I like to say when it was a long beach. There was eleven miles of Long Beach and now there are less than six...
One of our arguments is that there has not been mitigation for the land that was taken. They dredged the lagoon, they took the tidelands out, and they have created a new tidelands at the mouth of the L.A. river as mitigation. So when you're told that this is to bring people to the tidelands, what they're going to see is not ocean. They're going to ses boat harbors, they're going to see restaurants, they're going to see a movie theater...
IMAX is no longer in the picture. When the [State Lands Comnn'n] staff had the hearing [in LB] in July, they were told that IMAX was a part of this development. They are not a part of that development, and I could see where it might have a little bit of connection with the ocean if you had movies there, educational movies. But what we have now are just plain old movies.
It's a tourist trap. Maybe restaurants and hotels are incidental uses for the tidelands, but this is 18 acres of commecial use...and that is why we are asking you to do a real audit. This staff report, although very complete, all their answers came from the city. They didn't do any research of their own that I can determine. They didn't look into things that have been brought up today...
I think that this project is doomed for failure and we would like you to help us save the last bit of our shoreline. Thank you.
Commissioners Connell & Bustamante
Commissioner Connell: Mr. Chair, may I ask a question again of staff and the Attorney General? Where else in the state have we approved (inaudible) tidelands where there are commercial movie theaters built on the tidelands property?
[Speaker uncertain]: There are no others. As we indicated to you earlier, this would be a first time. [audibility difficult for ensuing colloquy]..
Commissioner Connell: ...I can see where if it was necessary to accommodate visitors to a public trust land a movie would fall under that category if [like an IMAX] it enhanced the person's understanding of what they were seeing along the shoreline. But I want to understand how we get to the point of accommodating visitors to public trust lands with a movie theater.
Now if it's only an economic issue, I have a problem with it. If it means that it's only got to protect the other uses there, I have a problem, not because of Long Beach 'cause I respect what has been done in Long Beach at Queens [sic] Bay, but because I'm concerned about the precedent nature that it reflects up and down the coast.
And I can assure you that the next motion or the next movement in that direction will be the city of Los Angeles...because they have (inaudible) Ports of Call that they're going to have to resuscitate...
I do not want to be on record as to having voted for something where we used the term necessarily incremental and then find out that we've opened Pandora's Box and that we have up and down the coast applications based on a precedent making decision that we had on a one-line statement [in the staff report] that isn't further defined here with no public policy.
I am very concerned about what we do in that relationship. I am not prepared to take action today on a one-line statement that says "is necessarily incremental" without further definiton of what that means...
Commissioner Bustamante: ...Since we're in a situation here where we're looking for economic viability for the project, it really begs the question, how did we get ourselves in this situation in the first place.
And if we're adding a piece of commercial venture to a project for the purposes of allowing it to become economically viable, then we shouldn't have gotten ourselves into that situation in the first place. And so what we're doing is that we're compounding the problem here, rather than trying to figure out how to mitigate the problem in a way that gives us that "win win win win win" situation...
...We've kind of stumbled ourselves into this thing. The City of Long Beach is doing all it possibly can to make this thing become viable. You know frankly, if I was in the position, I would be doing the same exact thing...[W]e have to make a decision on policy and on something that is a greater (inaudible) as was stated by ealier by several of the people who spoke, by saying that we had a duty, a responsibility, to protect the public's trust.
And I think that we've (inaudible) thrown off a bit here, and we've gotten to a point where now what we're doing is providing economic stability to a (inaudible) that we shouldn't be involved in perhaps in the first place...
...[W]e're adding clearly things that are clearly commercially viable that are not in line with the public trust, and we're stretching and bending and we're trying to wrap something around in a way that allows us to be (inaudible) with what is a problem for the City of Long Beach.
And as much as I would like to be able to assist them on that, I think I have to side with (inaudible) that there is a problem here that we need to deal with and I think in much greater fashion. You know I don't know that it's frankly at this point up to the staff to resolve. And I don't know that it's up to the City of Long Beach to resolve. I think frankly it's a public policy question that we're going to have address as a board and we're going to need to figure out exactly how we're going to do our job...
Commissioner Connell: ...I am very concerned that we not do anything that limits the ability of this board to keep in mind the important environmental principle here for which we sit as Commissioners, and that is the protection of the limited amount of land. It is a finite amount of resource and once it is gone, it is gone...
Don May: Don May, California Earth Corps...The land swaps [in past projects] all involved tidelands. There is no gain to the public. There is no gain of public resource of sovereign land, there was in fact a taking...
...We thank the staff for [their] report, but...the comments, and in fact the narrative [in the report] are not the staff's.
I'll introduce this, this is the answers to the questions that your staff asked of the party at interest. The answers are from an interested party, the director of the project. They are not staff's. If you look at this, and I'll give it to you, those that show both the narratives...and each of the questions as pointed out there, are directly written by the interested party...
The responses that you got are the same ones we've been getting. In fact, they're the motivation for our asking for a workshop and an audit.
And let me point out that, because this is direct financial error here, where this [staff report] says the response was that no tidelands funds were used, in fact...the option that they have looked at from the City Council is to use tidelands funds to make up the Aquarium shortfall.
Second, the answer is at variance to direct official data. In response to a simple question on page 38, "Is the Convention Center Subsidized by the City?" The answer is "no," quote, "Fiscal year 2000, the profits placed $882,241 in the tidelands fund." That's in direct opposition to the City Auditor's report which said it lost $2.5 million taken from the tidelands fund...
Mayor Beverly O'Neill
...We as a city have tried very hard to cooperate with everything you have asked us to do. We went, I think we started last summer, for really with some hearings on this issue, in working with the staff and also the Commission.
The problem that I find (inaudible) is that the city is not financially solvent. We have been dependent on so many other things that we cannot depend on (inaudible). Some of the problems that we're facing in that area are caused by the fact that the area is not developed.
We have gone through many trials with the developers in their own internal organization and I just need to know where we are with you. I don't know whether this is entirely precedent setting we're talking about.
...But the problem that I have is I don't know what you're really asking about. Are we talking about months and months of time for questions? I think that, and I have great respect for the people that spoke to you today because they have very great passion in what they believe in...
So I need to know as a city, we are struggling, we have tried very hard to comply with everything that we need to. We are a land locked city, and we are growing. And we're facing the same problems as California (inaudible) we have no land to expand on, so we either go up or out.
And I need direction from this body for where we go from here with this because it's been probably over a year and now we have a new element, which I respect, I don't see it in the same way you do, but I do respect what (inaudible).
Commissioner Bustamante: ...I don't think that anybody here is questioning, at least I'm not questioning, I think we have a different issue I think before me that it's not about management...This is something that makes your project more economically feasible. And I think if, as I said earlier, if I was Mayor I mean I would be pushing this as strong as you are.
The unfortunate thing for you is that the people who spoke in opposition are right. They raise an issue that...is this an activity that is within the public trust? And the Controller [Commissioner Connell] raises an even bigger issue as to are we going to allow this in every jurisdiction that we're going to have review over?...
I don't know where we're at...
Mayor O'Neill (interrupting): And I think...
Commissioner Bustamante (continuing): ...I know that we've allowed the city, we've been a co-conspirator in getting us to this point, allowing all this activity to take place. Now, it's kind of like we're going to pull the rug out from underneath you...
Mayor O'Neill: Is it because of the theater?
Commissioner Bustamante: [searching for proper word] I think that the theater is, is, uh, is, is, it is the theater, it is the...
Mayor O'Neill: If it weren't for the theater it would be alright?
Commissioner Bustamante: Well it's not just the theater. It could be other like commercial ventures. I don't know that I would have the same opinion if it was something else, I mean, it's kind of like if I saw it.
Mayor O'Neill: I think up and down the coast there may not be theaters, but there are book stores, there are restaurants, there are all of things that draw people...
Commissioner Bustamante: And I think that the issue the theater brings a whole new element to this whole equation and I think it's something we're going to deal with as a policy body, whether we're going to allow this.
When you say something is not precedent setting and you do it anyway, it still is precedent setting. And the question is how do something, how do we assist you in allowing you to get through this phase which I would like to figure out how to do but still not set a whole new range of commercial activities that we would allow into this mix.
Mayor O'Neill: But then that means that with each proposal, wherever you were. you would have to see what everything was that was going in there, is that what you're saying, or just not theaters?
Then it would be more than just theaters. It would be all kinds of things that have not been previously allowed that someone could equate to the same kind of activity as a movie theater. It may not be a movie theater the next time. It may be something akin.
Mayor O'Neill: But if it's been allowed before is allowed now?
Commissioner Bustamante: Well, kind of, sort of. And sometimes it's not and sometimes it is...
Commissioner Connell: ...I am unprepared today, Beverly, that has a movie theater in it, largely because I think it becomes a question for me of whether or not a shopping center in a tidelands area is any more appropriate than it is anywhere else...
Mayor O'Neill: I think that's a misnomer, but...
Commissioner Connell: I think a commercial development is the least of my concerns. I think it's the movie theater...I think this is a whole new ground that we're breaking and I am very leary of what it suggests. I can envision ten years from now if we go this route, that we're going to have movie theaters up and down the coast, and I see no way to prevent that,because if we allow it to occur in Long Beach, I think that same kind of salient argument can be made as we look at tidelands property throughout California.
...I have no disagreement with staff that there is not a management issue here. I am very comfortable as the chief auditor of the state to say there is not a management issue here and I want the citizens to understand that. There is not a financial issue here but there is a land use issue here which goes into an arena that we have not explored yet as a Commission.
And that is what has deeply concerned me and in reading the report and looking at the location of these theaters, I am very, very concerned of what it suggests...
Mayor O'Neill: May I just ask where we are then? I need some direction? Are we talking about taking it back to staff? Are we talking about looking at our plans again and bringing them back? What are you suggesting?
[Audibility very difficult. Staff sounds like it suggests arranging something before June to see if something else could be done so the project might be able to move forward but perhaps the public benefits could be increased, or a swap, or some other mechanism.]
Commissioner Bustamante: It would also sway me...had there been an effective argument that in the development of either this project or in other projects that the City of Long Beach has enhanced other areas of the public trust and that in fact they were doing it strictly for the mitigation of this particular use.
If we were able somehow to establish that (inaudible), that would go a long way to making me feel better about this process.
But just the taking without any mitigation of any kind, I think it's abrogating our responsibility...
I want to make sure that the Mayor knows that we're not attempting to put something on the table here at the last minute to try and squeeze you for something else...We really do believe that there is responsibility for us to find some mitigation for what we're giving up.
And then they [members of the public] are right several things, one which is that it's finite in terms of the land and for us to give up something there needs to be something given back...
Let's find something that people value. Let's find something that we can in fact have a win-win situation here.
Mayor O'Neill: Our City Manager has equal value.
Commissioner Bustamante: Ha ha, OK, can we go through this very quickly because I think we're at the end of this.
City Manager Henry Taboada
City Manager Taboada: ...We have timing considerations that make this a critical project for us at this point in time based on market conditions, based on lease conditions, based on a whole set of factors that make it almost, not acting today almost undermines the project in its totality.
We've already gone through a situation where a theater has backed out of the project caused all of the other leases to have to be renegotiated based on having acquired another theater operator, so we already understand the mechanics of the project when we don't have a theater.
...[T]he representative of the developer will state to you that the theaters comprise 70,000 square feet of second floor space, below which are uses which we believe are consistent with tidelands uses.
We have available to us in our tidelands account $600,000 worth of credit if we are unable to secure additional tidelands property with that money. We've been unable to do that in the City of Long Beach because we have nowhere to go, as the Mayor pointed out, we're totally built out. We have nowhere to go to spend the $600,000 for eight additional tidelands properties.
I'm willing to offer up that $600,000 to buy 70,000 square feet or as much as that $600,000 will buy anywhere in the state of California, anywhere where it can be used, because it sits unused in our treasury. unable to use it because we have no property we can attain that is within the tidelands area that we don't already own.
So we can't spend it. It's a credit that's due us because we gave land to the tidelands in that amount and it was a swap that we did. And I think that if we could do that, and also give us credit for the fact that the theaters don't occupy ground floor space, then I think we can fashion a solution that would allow us to go forward with our project and still not create the kind of precedent that is being suggested here.
Commissioner Bustamante: It's an interesting proposal, but the fact it's not on the ground floor, I don't know that that has any relevance, but I think it's an interesting proposal. Unfortunately, you're stating as your offer nothing that we can use it for.
City Manager Taboada: In the City of Long Beach?
Commissioner Bustamante: In the City of Long Beach...Would there be an enhancement of existing public trust land that currently doesn't have the kinds of amenities that a specific trust account could establish, that would be administered perhaps by a local board? Would that be a way?...
City Manager Taboada: If you want to keep it within the boundaries of the City of Long Beach, we could enhance curently owned state lands property which is not developed or is not improved.
[Staff colloquy, inaudible]
...That's the kind of creative thinking that I would want to have...How do we enhance the public lands? And we are giving up something and I need something in return, even if it's in a bank some place waiting for the opportunity, I think that's an important piece of trying to mitigate for a use that is, to me, it's outside (inaudible).
Commissioners Connell & Bustamante
Commissioner Connell: ...I don't know what we can do to resolve this matter within the next thirty days. I mean, I've listened to some very definite positions that appear to be far apart and I am concerned that we do give an up or down signal to the City of Long Beach certainly within a limited period of time.
If there is no way to soften the suggested use, I can not move forward, Mr. Chair on an idea of movie theaters in a tidelands trust, so I've got to hope that the staff will within the next 30 days will come up with some innovative discussions of how we can deal with this matter because as it now stands, I certainly couldn't support it.
Commissioner Cruz Bustamante: There really is a tremendous need for the Commission itself to reflect just a little bit and to have staff (inaudible) them up with at least a draft of some policy with regard to this type of commercial use. There were a lot of charges that were leveled today, a full range of them, and I think that you can't do it all.
I think that we're facing an issue that's a very large public policy issue that we have to face and so I would suggest that as you are involved with your discussions with the city developers that you make an effort to figure out how we in fact in some kind of a different commercial use that we establish not only a precedent but the right kind of precedent. That if we're going to establish a precedent here, it's got to be one that in fact is either extremely so rare that it never takes place again or that it is such a situation where mitigation is appropriate to the kind of use that we're talking about.
In this particular case I think that it's clear it's on the very edge of public lands, but it's still on public lands. And so in order for us to be able to deal with this issue in I think the responsible fashion, we need to figure out how to do that and entire public policy at this point so that when we're faced again, because we will be, that we have some precedent that in fact makes sense as a precedent...
So, I would hope that the sooner that you could do that with the city the better so it doesn't prolong any activities. I feel very, very badly about the situation that I believe we have been a part of (inaudible) in this situation, without ever indicating that this kind of activity would have this kind of reaction by the Commission and for that I apologize.
However, we are also faced with a much harder public policy issue here and I think we have to resolve that before we move forward.
Commissioner Connell: Well, I'd like to suggest that, Mr. Chair, that we put this on the June agenda...and give us as a status report. If you have not resolved it, if you're finding that there is no tenable compromise here, we need to know that. We need to give some indicator as a Commission to the City of Long Beach, so I would like to have this slated as an action item so that if necessary we can take action. If you reached a conclusion, whether it's positive or negative as it relates to the City of Long Beach, I think we need to position it as quickly as we can.
Commissioner Bustamante: I'll echo that and I would basically tell both sides that I think we've clearly gotten a sense of the issues that are involved here, so this is not an opportunity to gin-up 40 or 50 members because by the next meeting I'm going have this changed (laughter) so that we can go into any new dabate as necessary without covering all the old ground.
I think that the opposition made the case very clear and I think was very eloquent. I think that the city also has made their case. We have a responsibility to effectively deal with this in a public policy format and I think that that's what we're (audibility difficult) hedging on...So let's try to resolve this as an action item.
[Staff asks for clarification on what it is being directed to do]
Commissioner Bustamante: One is hopefully a "win win win win win" and the second is a policy in the establishment of having "ancillary" include anything remotely like a movie theater or any other like kind of situations as to how we would deal with that in the future.
I'm glad I don't have to write the first draft of that...
Commissioner Connell: ...I would just urge, again, I think it's a matter of staff staying close to boardmembers over the course of the next several weeks. If you present us with a report that is, you know, like diverted from what we talked about today, it's not likely that we're going to get to a Commission decision. You can obviously brief individual boardmembers throughout the course of the interim period betwen now and our June date without violating any state law and I urge that you do so, and if you come up with some creative solutions you try it on various boardmembers and then you get a sense of (inaudible) so you're not surprised by actions that may occur at the June meeting...
Commissioner Bustamante: ...Let's shoot for a target of 10 days. I think anything less than that is not going to be well received...
Staff: ...in terms of eventually wanting to work out public policy (inaudible), we might want to look at that in a slightly larger...
Commissioner Connell (interrupting): Well you're going to have to look at a longer timetable, I can certainly appreciate that, I mean I can think of a half dozen circumstances up and down the coast where this issue is going to become precedent setting in the next year.
...Ann Cantrell: I'm sorry. Ann Cantrell. I just heard Mr. Thayer [Commission staff Executive Director] say that he'd be talking with
the developers and the city. I was wondering if the public is going to have any (interrupted by applause)
Commissioner Connell: Mr. Thayer always speaks to members of the public
and that has always been the history of this Commission so of course they will be speaking to you. They have been speaking to you on an ongoing basis as you know, so they will certainly be encouraged to do that again.
Ms. Cantrell: Thank you.
Commissioner Bustamante: We may not be able to (inaudible) 50 people but I'm sure that all the folks who are here will have an opportunity to have input.
Diana Mann: Could the meeting in a local area? My name is Diana Mann and I'd like to request that the June meeting be held in a local area so that Long Beach public can...
Commissioner Connell: Let me just speak to that issue, that came up during the break before you arrived, Mr. Chair. We try to schedule meetings related to the geography, the concerns of residents. We had htis meeting specifically scheduled here at my request so that we could have all the southern California items before the Board. Unfortunately, some of them have now been deferred to June...but we also have the need to address northern California concerns.
The Lake Tahoe people have a concern to hear their matters before a board in northern California, so we'll try to develop that, but just as a Commissioner I can tell you that we kind of (inaudible) items with a sensitivity to having local residents (inaudible)...that will be a decision of staff.
...[Staff asks if there's any further action] Commissioner Connell: No, I don't think that there's an action. I think that you've done the audit, and now the throwing-out of this audit. Well, fortunately we did ask for the audit and I'm glad I pursued that. We have now had this more serious matter. I am comfortable with the information on the audit. I think it has approached a number issues that we're discussing today.
Commissioner Bustamante: Maybe we can have an amended version of the staff report at the June meeting as well, so that we can include the audit activities...