The Council's Dec. 4 action, which was agendized as a formal hearing scheduled as second item on the 5:00 p.m. Council agenda, didn't come up until 10:41 p.m. as a result of Mayor Robert Garcia (without Council objection) choosing to take two other items first: $250,000 for an immigration/deportation defense fund and an ordinance governing short term rentals (both of which drew large numbers of public speakers.)

By the time the $1 million price reduction hearing came up, the Council Chamber was nearly empty and Councilmembers Stacy Mungo and Lena Gonzalez plus Mayor Robert Garcia had already left the meeting for the night.

Two NLB residents spoke in opposition, objecting to aspects of the project's design. One speaker explicitly questioned the propriety of the Council basing its action on a new site plan that hadn't yet been heard or voted on by the Planning Commission. (A Planning Commission agenda item on aspects of the new design was agendized for two days hence for Dec. 6 [since moved to Dec. 20])

However no members of the public spoke (pro or con) on the specific Council action agendized: a proposed $1 million reduction in the selling price of the city acquired properties.

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As previously reported by LBREPORT.com, the properties cost LB's now-dissolved Redevelopment Agency $7.7+ mil to acquire and in August 2016, the Council (having gained approval from Sacramento to sell the properties) voted 9-0 to sell them for $2.1 million to "Atlantic and Artesia LLC," an affiliate of Frontier Real Estate Investments, LLC. The developer/purchaser signed a purchase/sale agreement for $2.1 million and the parties thereafter agreed to make certain changes detailed in a Dec. 4 Council agendizing memo and reiterated in a city staff presentation at the Dec. 4 hearing. City staff acknowledged that the requested Council action would reduce the sale price paid to the City to $1.1 million of which the City would receive about 21%.

After the purchase/sale agreement was signed in Dec. 2016, city staff says it sought a number of public dedication requirements and inclusion of a 4,800 sq. ft. "parklet" which collectively reduced the anticipated area for commercial development. LBREPORT.com has previously noted that the amount of the reduction was roughly 17.3% of the developer's Aug.2016 proposed commercial square footage compared to the 47.56% reduction in the developer's purchase price sought in the proposed Council action.

Sponsor

Sponsor

Ninth district Councilman Rex Richardson urged approval of the agendized action, acknowledging that reducing the sale price would cost the city roughly $200,000 (21% of the $1 million cut in sales price) but reasoned that the project would result in $90,000 in property taxes annually, supposedly making up the sum the city wouldn't receive by cutting the developer's cost by $1 million ($90,000 x 2 years.)

"The $200k that the City won't receive as a part of making this investment, we [will] receive $90,000 in property taxes and $9,000 in sales taxes in the first year, it makes itself up in one year what we invest. So this is a smart economic opportunity created by making these improvements to the site and I think we should continue to think about how we make a small investment today and recoup it in a fairly short amount of time and that will have a long term effect on our communities."

A city written report, part of the agenda hearing item required by state statute, stated in part: "Given project costs of approximately $9,000,000, anticipated annual property taxes at full implementation is $90,000, a 258% increase in annual property taxes to affected taxing entities." The basis for assuming that the developer's project costs would equate to 1% of the Assessor's future valuation wasn't explained in the city report.

The city report also acknowledged "approximately $7,790,000 in land acquisition costs through negotiated settlement and the use of eminent domain. Relocation and clearance costs are unknown."

Sponsor

When the City Council voted in Aug. 2016 to sell the properties for $2,100,000 (which staff acknowledged at the time wasn't the highest offer, it was "slightly lower"), it was for [city Dec. 2018 report text] "a development concept design that offered a well balanced land use transition while complementing the surrounding residential neighborhood."

At the August 2, 2016 Council meeting that approved the original $2.1 million sale price, Councilman (then-Vice Mayor) Richardson offered effusive praise for the development as it was initially proposed, saying it included amenities and features sought by the public. To hear quick launch audio of Richardson's words (and other Council/Mayor/public comments on August 2, 2016), click here.

California's Constitution forbids making gifts of public money, but in 2016 (at basically the same time as the LB City Council approved the $2.1 million sale price), the state legislature enacted AB 806, now codified as CA Government Code section 52201 to promote what it called "economic opportunities"...and the Dec. 4, 2018 Council hearing item cited the statute in cutting the buyer/developer's cost nearly in half.

Sponsor

Sponsor

In its Dec. 4 agendizing memo, city staff offered the following rationale for its proposed reduced sale price:

Over the past two years, the Buyer/Developer has been working with City staff on the entitlement of the proposed project as required under the terms of the agreement. Through the entitlement process, City staff has further evaluated the conceptual design and requested significant changes and expansion of the project area. First, an approximate 4,800-square foot "parklet" will be introduced to the southwest corner of the project site and will be open to the public and patrons of the retail center. The space will be available for programming and community engagement to meet the needs for community gathering spaces that currently do not exist in the area. The Buyer/Developer will provide security during regular operating hours. Second, extensive architectural, landscape, and site modifications have been required increasing the quality of the project. The City has requested that the Buyer/Developer provide articulated building facades with brick veneer and smooth stucco finishes, large landscaped setbacks with tier landscaping, off-site landscaping, hardscape (multiple hardscape surfaces including stone pavers, concrete, and granite), and lighting improvements. Third, the Public Works Department has increased public dedication requirements of the project, thus reducing the anticipated area for development. Finally, the site plan has been modified to consist of four free standing buildings. The revised project design and new site plan are attached as Attachment C and D. The City-requested changes in the scope of the project have significantly increased the project costs, originally estimated at approximately $8,000,000.

Following Councilman Richardson's supportive remarks, Vice Mayor Dee Andrews and Councilman Al Austin also spoke in support of the proposed Council action.

No Councilmembers suggested reducing the amount of the sale price reduction; none asked what would happen if a Council majority declined to approve the reduced sale price.

With Councilmembers Lena Gonzalez and Stacy Mungo and Mayor Garcia having already left for the evening, the seven remaining Councilmembers who voted to approve the $1 million sale price reduction were Jeannine Pearce, Suzie Price, Daryl Supernaw, Dee Andrews, Roberto Uranga, Al Austin and Rex Richardson.

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