(Oct. 9, 2019, 6:50 p.m.) -- LBREPORT.com has learned that on Sept. 10, Queen Mary Mary ship/adjoining development property lessee Urban Commons requested, and on Oct. 1 LB city management agreed (per Economic Development Dir. John Keisler) on behalf of the City as the QM landlord/lessor (not in a regulatory approval capacity) to a "major change" in the City's lease sought by Urban Commons. The major lease change described in the city's letter agreeing to the major lease change references demolishing the existing "Village and Marketplace" in the QM parking lot and constructing additional parking areas...and requires Urban Commons to submit in writing that the building demolition/parking lot construction are required "because it [Urban Commons] does not intend to finalize the entitlements for the Queen Mary Island project within the next 24 months..."
The letter also notes that the City "retains full discretion to impose mitigation measures, make modifications and/or disapprove of the Major Change as a regulatory authority." In the Oct. 1 "major change" approval letter addressed to Taylor Woods in Urban Commons' L.A. office, Mr. Keisler wrote: The purpose of this letter is to provide approval of the Major Change requested on September 10, 2019, pursuant to Article 6.7 of Agreement No. 34432: Amended and Restated Lease and Operations Agreement of Queen Mary, Adjacent Lands and Improvements, Dome and Queen's Marketplace (Lease No. 22697) ("Lease"). The Major Change, requested by Adam Grandorff, vice president of construction for Urban Commons, LLC, includes the demolition of the existing Village and Marketplace within the Queen Mary parking lot, and the construction of additional parking areas. [Scroll down for further.] |
City management's letter agreeing to Urban Commons' request for the "major change" in the lease is dated the same day -- Oct 1 -- as city management's "fix it-detault-cure" letter (also per Mr. Keisler) asking Urban Commons to present a plan by the end of October to address a number of repair items (two of which are estimated to cost at least $7 million) among repairs that the public was told would be covered by a City-funded "Historic Preservation Capital Improvement Plan" (HPCIP) that included a $17 million City-floated debt bond plus $5 million taken from reserve funds. The HPCIP's funds were depleted before completion of all planned repairs when fire-safety (priority) items consumed roughly $5 million more than initially anticipated. The City also sought two financial documents from Urban Commons by the end of October. The two letters occur in the context of a Sept. 23, 2019 city management memo (previously reported by LBREPORT.com) that informed the Mayor/Council that although "critical ship repairs" are the responsibility of the lessee Urban Commons, city "staff is working with the Lessee to improve operational income and to develop new revenue streams associated with the Queen Mary and surrounding activities and city staff "hope to receive from Urban Commons an update on this plan "by the end of the year." This implicitly raises the possibility that at some point city management might seek Council approval to seek City Council approval to have the City (in ways that might potentially expose LB taxpayers) pay for the uncompleted QM repairs. One day later on Sept. 24, 2019, Mayor Robert Garcia stated in conspicuously brief terms during a staged event titled "Building A Better Long Beach" that he wasn't pleased that plans for developing "Queen Mary Island" (the land surrounding the Queen Mary) hadn't progressed as quickly as he'd hoped. He made no mention of the Sept. 23 city management memo (on which he was an indicated recipient) or the two year delay requested Sept. 10 from city management by lessee Urban Commons. In November 2016, the City Council on a 6-1 vote (Price dissenting), agreed to enter into a 66 year lease with Urban Commons to operate the ship and (more importantly) granted Urban Commons development rights to the ship's adjoining land.
The City's fix-it/default/cure Oct. 1 letter to Urban Commons cited five remaining repair items it said should be "immediately addressed to be considered in compliance with the Lease" plus two financial documents it said "are currently outstanding under the lease. " The Oct. 1 letter said if Urban Commons failed "to respond" within 30 days, the City could find the firm "in default" under a portion of the lease "with a right to cure" pursuant to another portion of the lease.
The Oct. 1 letter also listed two financial items "currently outstanding" under the lease: The Oct. 1 letter stated that Urban Commons staff had been responsive in taking steps to obtain the financials, but indicated the two items "are due no later than October 30, 2019." It concluded: "Please respond to this letter within 30 days and provide a plan to address the deficiencies described above. If you fail to respond within 30 days, Urban Commons may be found in default per Section 14.1.b of the Lease, with the right to cure pursuant to Section 14.2."
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