Hear It: In 62 Seconds With No Discussion, Council Votes
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|(May 22, 2020, 12:45 p.m.) --- As streamed live and flashed on LBREPORT.com's front page on May 19, the City Council voted -- in roughly 62 seconds from start to finish with no discussion by any Councilmembers prior to a roll call vote -- to approve an amendment to the City's contract with its privatized Civic Center operator that will effectively let the operator delay for up to an additional year repaying the City roughly $7.3 million that the City advanced in the 2016 Civic Center transaction.
The item was among ten that Mayor Garcia collectively introduced by saying they "should go rather quickly." [The Mayor doesn't decide "how quickly" items go; Councilmembers do.] Councilman Jeannine Pearce moved, Councilwoman Mary Zendejas seconded, and the Council voted 9-0 to approve.
The action came just minutes after city management delivered a report on the City's fiscal outlook indicating revenue shortfalls so large that they would require Council cuts to all city departments and affect taxpayer services.
The Council action, recommended by city management, will let Plenary Properties Long Beach, LLC delay payment to the City of $7.3 million that it's contractually required to pay to receive City conveyance of the "mid block" parcel (roughly where the old City Hall stands) for the LLC's private development,. The conveyance was originally supposed to occur in November 2020 but for issues city management says relate to delays in demolishing the old main library, was extended to September 2021. The May 19 agenda item indicates the LLC now seeks an additional delay in conveyance of the "mid block parcel" to reflect COVID-19 economic conditions that have the made the LLC's developing the mid block parcel less desirable at present than originally anticipated.
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City manageement's agendizing memo visible at this link, acknowledged that if the Council agrees to the conveyance delay sought by the LLC, it could result in a further delay of up to a year in payment of the $7.3 million to the City.
Management's agendizing memo notes that if the Council declined to amend the contract and if the LLC didn't otherwise come up with the $7.3 million, the City wouldn't be required to convey the mid block parcel to the LLC. In that event, the City could presumably continue to retain it...and use it for public purposes or could sell it and collect more than the $7.3 million the LLC would pay the City..
City management's agendizing memo also acknowledged 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.
However during this period, LB taxpayers will continue to remain responsible for paying the LLC its annual escalating "service fee" for operating the Civic Center LBREPORT.com estimates the annual "service fee" has now reached at least $17 million annually...and the agenda item doesn't mention any reduction in the "service fee" to reflect City budget issues related to COVID-19. To the contrary, management's agendizing memo said the amendment requested by the LLC "will have no impact to the previously approved Service Fee for operations. "
[LBREPORT.com also believes the delay would also effectively give the LLC a de facto extended no-interest loan for $7.3 million for the additional months. During this period, city management's memo indicated that LB taxpayers will remain responsible for paying maintenance costs on the parcel.]
City management agendized the item with the uneventful title of an "amendment to the contract with Plenary Properties Long Beach, LLC, of Los Angeles, CA, modifying the conditions of final occupancy. (District 2)."
The agendizing memo by LB Public Works Director Craig Beck (signed as approved by City Manager Tom Modica) recommended Council approval of the LLC-sought delay offering the following narrative and reasoning:
...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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