Privatized Civic Center Operator Seeks Delay In Repaying $7.3 Mil City Advanced In 2016; If Council Says "Yes," City Would Face Add'l Delay In Receiving Sum City Could Use For COVID-19 Budget Deficits; If Council Says "No," City Could Retain Midblock Parcel (Where Old City Hall Stands) For Public Use OR Sell It For More Than LLC Would Repay
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|(May 13, 2020, 11:40 p.m., updated May 14, 3:24 p.m.) --- What would be best for LB taxpayers, and how would you like your Councilmember to vote on the following multi-million dollar taxpayer impacting item coming to the City Council on May 19?
City management has agendized an item that would let the LLC (under a 2015 Council voted action) now operates the Civic Center delay repayment to the City of $7.3 million that the City advanced to the LLC at the commencement of the 2016 Civic Center transaction.
The $7.3 repayment by the LLC is supposed to coincide with City conveyance of the "mid block parcel" (roughly where the old City Hall stands) to the LLC. It was originally supposed to occur in November 2020 but (for issues city management says relate to demolition of the old library) was extended to September 2021. The LLC now seeks to slow conveyance of the "mid block parcel" which would delay the LLC's required $7.3 repayment to the City, citing COVID-19 economic impacts that have made development conditions for the mid block parcel less desirable than originally anticipated.
If the City Council agrees to the delay requested by Plenary Properties Long Beach, LLC, it could result in a further delay of repayment to the City of the $7.3 million sum. This would now occur at a time when, city management has acknowledged, the City faces COVID-19 City budget shortfalls estimated in the millions. The delay would also effectively give the LLC a de facto no-interest loan for $7.3 million for as long as another year. During this period, LB taxpayer would remain responsible for paying maintenance costs on the parcel. City management acknowledges that Council approval of the delay would decrease Civic Center Fund funds available (money available to be appropriated and spent) from a positive $2.4 million to a negative $5.0 million.
City management has agendized this taxpayer-impactful item with the seemingly uneventful title to authorize an amendment the contract with Plenary Properties Long Beach, LLC, of Los Angeles, CA, modifying the conditions of final occupancy. (District 2)." It's visible in full at this link
[Update] LB taxpayers will continue to remain responsible for pating the LLC the full amount of its annual escalating "service fee" to operate the Civic Center (The Fiscal Impact statement in management's memo states that the requested amendment "will have no impact to the previously approved Service Fee for operations. " (LBREPORT.com estimates the annual "service fee" has now reached at least $17 million annually.] [end update] The agenda item doesn't mention any reduction in the "service fee" to reflect City budget issues related to COVID-19.
If the Council declines to amend the contract and if the LLC doesn't otherwise come up with the $7.3 million, LB taxpayers wouldn't be erquierd to give up the mid block parcel. The City could continue to retain it...and the City could use it for public purposes OR could sell it and collect more than the $7.3 million the LLC would pay the City..
An agendizing memo at this link by LB Public Works Director Craig Beck (signed as approved by City Manager Tom Modica) recommends Council approval of the LLC-sought delay. It offers the following narrative and reasoning:
[Scroll down for further.]
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...As specified in the Agreement, the old City Hall site (Mid-block site) is to be transferred to Plenary (or its approved assignee) for development of a private mixed-use project. Entitlements for the Mid-block site were approved by the Planning Commission at its meeting on March 19, 2020. The project includes 580 residential units, of which 58 units are affordable, and 35,000 square feet of retail space. The Mid-block site development also includes construction of Cedar Avenue between Ocean Boulevard and Broadway to further improve access throughout the downtown area.
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