In addition, disclosed in a single paragraph in an attached report to the agendizing memo is an acknowledgment that "The cost of the agreement to the City is approximately $7,790,000 in land acquisition costs through negotiated settlement and the use of eminent domain. Relocation and clearance costs are unknown" (details below.)

On August 2, 2016, the City Council approved sale of the property at 601-685 E. Artesia/6600-6620 Atlantic Ave. to Newport Beach-based Frontier Real Estate Investments, LLC. for $2.1 million. The properties were assembled into a single sale parcel by LB's now-dissolved Redevelopment Agency.

CA law forbids gifts of public money, but in 2016 (at basically the same time as the LB City Council approved the property sale), the state legislature enacted AB 806 (without voted opposition in the Assembly and state Senate.) It's now codified as CA Government Code section 52201 and Long Beach city staff proposes that City Council use it to cut the buyer/developer's cost nearly in half, citing changes to the project's plans it says city staff required that implement "community benefiting design features."

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A city staff agendizing memo by Economic Development Dir. John Keisler (visible here says city staff "requested significant changes and expansion of the project area" including inclusion of a roughly 4,800 sq. ft "parklet" that "will be open to the public and patrons of the retail center" and "available for programming and community engagement to meet the needs for community gathering spaces that currently do not exist in the area" with the buyer/developer providing security "during regular operating hours." City staff also says "extensive architectural, landscape, and site modifications have been required increasing the quality of the project" including "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." And the City's Public Works Department "has increased public dedication requirements of the project, thus reducing the anticipated area for development" and the site plan was modified "to consist of four free standing buildings."

Initially planned

Now planned

And city staff's agendizing memo concludes: "The City-requested changes in the scope of the project have significantly increased the project costs, originally estimated at approximately $8,000,000. The success of the proposed project, with all the modifications in design and project features, is vital for the revitalization of the area. Under the current terms of the Purchase and Sale Agreement, the total purchase price for the Subject Property is $2,100,000. To assist the Buyer/Developer in implementing the City requested community benefiting design features, staff recommends a reduction of the purchase price from $2,100,000 to $1,100,000."

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CA Government Code section 52201 requires the City to prepare and make publicly available a report disclosing certain information about the transaction. That report is visible as Attachment E at this link.

It states in pertinent part:

I. Proposed Sale of City Owned Property [§52201(a)(2)(A)) The City assembled the Subject Property through the acquisition of various parcels (approximately 93,230 square feet) and entered into a Purchase and Sale Agreement with the Buyer. The Fifth Amendment amends the purchase price based on certain requirements imposed on the Buyer, by the City, for community-serving purposes, and certain development standards above those otherwise required by applicable zoning. A copy of the Purchase and Sale Agreement and Proposed Fifth Amendment are attached...

...II. Cost of the Agreement to the City [§S2201(a)(2)(8)(i)]: The cost of the agreement to the City is approximately $7,790,000 in land acquisition costs through negotiated settlement and the use of eminent domain. Relocation and clearance costs are unknown.

III. Estimated Value of the Interests to be Conveyed Determined as the Highest and Best Uses Permitted Under the General Plan or Zoning [§S2201(a)(2)(8)(ii)): The estimated value of the interests to be conveyed is $2,100,000. The City conducted a Request for Proposal process requesting proposals consistent with the vision and intent of the North Long Beach Redevelopment Project Area and its guiding documents. Of the proposals received, the Buyer's proposal was selected at a purchase price of $2,100,000 offering the best value to the City with a development concept design that offered a well balanced land use transition while complementing the surrounding residential neighborhood.

IV. Estimated Value of the Interests to be Conveyed at Highest Use and With Conditions, Covenants and Development Costs [§52201(a)(2)(B)(iii)): The estimated value of the interests to be conveyed at Highest Use and with Conditions, Covenants and Development Costs is approximately $1,100,000.

V. Explanation of Why the Acquisition, Sale, or Lease of the Property Will Assist in the Creations of Economic Opportunity [§52201(a)(2)(B)(iv)): An economic opportunity is created through the sales agreement which will increase property tax revenues to all property tax collecting entities, by at least 15 percent of total property tax resulting from the project at full implementation when compared to the year prior to the property being acquired by the City.

The City completed assembly of the Subject Property in 2010, at which time the annual property taxes for the Subject Property was $25,115. 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.

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In terms of Fiscal Impact of the staff-requested Council action, its agendizing memo says the reduced purchase price ($1.1 million instead of $2.1 million) will be paid (less escrow fees, closing costs, etc.) to the L.A. County Auditor-Controller for distribution to various taxing entities based on their share of the 1 percent tax rate. "The City's share is approximately 21 percent of the net sales proceeds. Consistent with City Council direction, 75 percent of the City's share shall be retained for projects within North Long Beach Redevelopment Plan Area and 25 percent shall be used for Citywide economic development priorities. Approval of this recommendation will provide continued support for the local economy and further the intent of the North Long Beach Redevelopment Plan Area."

By LBREPORT.com unofficial reckoning, the net result will leave LB taxpayers with about $200,000 less while saving the developer/buyer $1,000,000.

The bottom line: through various actions enabled by LB city government and the state legislature dating back to 2010, the collective redevelopment of the properties will cost LB taxpayers roughly $8 million, and in the December 4 proposed transaction would save the buyer/developer $1 million for amenities city staff required but the developer/owner will now have as part of its property.

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