A Historic Opportunity Or A Royal Pain? City's Queen Mary Lessee Bankruptcy-Hobbled Urban Commons Hands Ship And Adjacent Developable Land Back to City
|(June 4, 2021, 11:35 p.m.- As flashed earlier today (June 4) on LBREPORT.com's front page and Facebook platform, in the wake of City Hall's Queen Mary lessee/bankruptcy-hobbled Urban Commons suddenly abandoning its leases to the ship and surrounding developable property to the City, city management hurriedly agendized an item for the June 8 City Council meeting to appropriate up to $500,000, offset by the Tidelands Operating Fund), to pay Moffatt and Nichol to provide what management calls "needed engineering design services...for critical repair work on the Queen Mary."
[In late 2019, city management retained Moffatt and Nichol to "review" reports by the City's long time Queen Mary inspector, Ed Pribonic, whose reports vexed city management by alerting the public to increasingly serious maintenance issues. City management then ended the City's contract with whstleblower Pribonic.]
On the upcoming June 8 Council item, city management also seeks Council approval to pay Evolution Hospitality, the current on-ship operator, for what management calls a "short term caretaking agreement" of up to $2 million for up to six months.
Management's agendizing memo states in pertinent part:
[T]he City has a unique opportunity to address critical repairs to safety systems identified in recent inspection reports that were not completed by the former operator. More specifically, there are approximately $5 million in short-term repairs that City contract engineer Moffatt & Nichols recommends to immediately improve safety and stability of the Queen Mary when it is reopened to visitors, including the installation of temporary bilge pumps and warning systems, repairs to bulkheads, removal of lifeboats, and the installation of an emergency generator. Completing these repairs while the Queen Mary is closed to visitors will al low better and more efficient access to hard-to-reach areas of the Queen Mary and likely shorten the time that it takes to complete the work. The total estimated cost for this engineering and construction design work is less than $500,000.
In response to an inquiry from LBREPORT.com, Deputy City Attorney Rich Anthony says: "The surrender does not affect the City’s claims for sums owed. The City did not agree to give up any of its rights or remedies against the debtor in exchange for the surrender."
City estimated costs for needed repairs have varied wildly. Recent city management estimates put the sum now needed for "urgently needed repairs" at roughly $23 million although previous city estimates had reached $280+ million. Those costs are top of roughly $23 million in debt bonds and Tideland revenue that the Council agreed (6-1, Price dissenting) to fund in entering a November 2016 lease with Urban Commons. That sum was depleted before completion of all the "urgently needed repairs" because fire protection items cost millions more than estimated, city management said at the time.
City Auditor Laura Doud (whose salary is set annually by the City Council), hasn't performed an audit on Queen Mary operations from 2011 until City Hall alleged sums were due from Urban Commons in 2019.
Through Mayors O'Neill, Foster and now Garcia, City Hall officialdom painted a publicly rosy picture of the Queen Mary even as two lessee-operators prior to Urban Commons (QSDI and Save the Queen) failed.
Mayor Garcia publicly toasted the 2016 Urban Commons lease as the start of a new "golden era" for the ship. In January 2020, Garcia made the Queen Mary the climatic portion of his State of the City message, calling the Queen Mary a historic City icon that would be preserved and praised Urban Commons for development plans for "Queen Mary Island" that he said would be forthcoming. (Artist conceptions materialized but nothing further.)
One year later in Jan. 2021, Garcia didn't mention the Queen Mary in his State of the City message.
When details of the ship's maintenance decrepitude surfaced a few months later in bankruptcy proceedings (initiated by other creditors), the City Council sought a report from city management that would let LB's elected Councilmembers rid themselves of decisionmaking on the ship's future by turning the vessel and Pier H over to LB's non-elected Harbor Commissioners. (The Council request for that feasibility report remains pending.)
Garcia has since doubled-down on preserving the ship. As previously reported by LBREPORT.com, Mayor Garcia said in May 2021 that the Queen Mary should be preserved, and said the City had tried "for the past 40 years" to get the QM right but encountered a lack of the right partner and right development plan.
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