Larry Elder Has Previously Criticized "Crony Capitalism" But His Campaign Just Held Its Aug. 29 LB Fundraiser At Home of Development Firm Founder Whose Co. (Under Grandson) Received Dec. 2016 City Hall Approval To Buy City Owned Atlantic Ave, Property For Roughly Half Of Broker Estimated Fair Market Value And Less Than Highest Bid Received. Does Candidate Elder Think Taxpayers Got Good Or Bad Deal?
|(Sept. 2, 2021, 11:15 p.m.) -- The Elder for Governor campaign held its Aug. 29 Long Beach fundraiser (from which the campaign banned press coverage) at the home of the founder of a LB development firm whose grandson (now company president) received Dec. 2016 City Hall approval to buy a city taxpayer owned property parcel along 6101-6141 Atlantic Ave. at less than the highest offered bid and roughly half of broker opinion of its fair market value.
Mr. Elder has in other contexts criticized what he's called "crony capitalism."
So does he consider what Long Beach City Hall did for the developer in 2016 a good or a bad deal for taxpayers? Would he support or oppose such deals as Governor?
The City owned a 60,984-square-foot vacant lot ("subject property") formerly owned by the City's defunct Redevelopment Agency adjacent to a 49,223-square foot lot owned by an entity controlled by the buyer (that had on it what city staff called an "aged retail center.") Together, the City-owned "subject property" and adjacent buyer-owned lot encompassed an entire City block bounded on the north by Harding Street, on the south by 61st Street, on the west by Linden Avenue and on the east by Atlantic Avenue.
On March 8, 2016, the City Council approved (7-0, Price and Austin absent) entering into a city staff recommended "exclusive negotiating agreement" with an entity controlled by Westland Real Estate Group.
The "exclusive negotiating agreement" ultimately begat a Dec. 6, 2016 City Council agenda item in which a city staff agendizing memo said the buyer "expressed an interest in proceeding with the purchase of the Subject Property from the City." City staff's agendizing memo said the fair market value of the property was $1.2 million as determined by a broker opinion of its value. Howevere city staff recommended accepting a purchase price from the buyer of $655,578. This amount was also lower than the highest offered bid received.
City staff recommended the transaction in a city staff memo here.
City staff agendized a Dec. 6, 2016 item asking the City Council to declare as "surplus" and authorize selling city owned property along 6101-6141 Atlantic Avenue (the "subject property") to "Amusement Industry, Inc." (dba filed operating as Westland Real Estate Group) for a little less than half a broker opinion of the property's fair market value. CD9 Coucilman Rex Richardson made the motion to authorize the transaction and CD 5 Councilwoman Stacy Mungo seconded it.
Retired LB Deputy City Attorney Jim McCabe came to the public speakers podium and noted that although city staff's memo acknowledged that staff's recommended sale price wasn't the highest offered bid, it didn't disclose what the highest offered did was. Mr. McCabe asked -- pleaded -- for any City Councilmember to ask what the highest offered bid was. None did.
Instead Councilman Rex Richardson invited staff to state its reasons for supporting the transaction. Richardson then cited reasons he said justified the transaction. He ended by, in effect, urging his Council colleagues not to pursue Mr. McCabe's request for the highest bid saying the Council should "ask better questions."
The former Chair of the North Long Beach [RDA] Project Area Committee, Laurie Angel, submitted written testimony in opposition. No Council incumbent made reference to it.
The Council approval vote was 9-0. Those voting "yes" were Lena Gonzalez, Jeannine Pearce, Suzie Price, Daryl Supernaw, Stacy Mungo, Dee Andrews, Roberto Uranga, Al Austin and Rex Richardson
Political irony: Vice Mayor Richardson led Council action to put the City on record opposing the recall election (not mentioning Mr. Elder, currently the leading candidate to become Governor if voters recall incumbent Newsom) LBREPORT.com coverage of the Council action opposing the recall election here and here.
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In its Dec. 6, 2016 agendizing memo Long Beach city staff wrote in pertinent part:
...The fair market value of the property is $1.2 million, as determined by broker opinion of value. The owner's development plan includes redevelopment of the entire block (owner owned and City-owned properties). The development concept will include expansion and renovation of an existing shopping center including office, retail and restaurant uses. .
So what did LB taxpayers get from this? It might be 21% of about $550,000 or about $115,000 BUT it might be less (and we don't immediately know how much less) if it was required to repay RDA bonds sold to purchase the "subject property."
How much did LB's RDA spend to acquire the "subject property" that the City ultimately sold to Westland for a little over $650,000? We don't know that either.
The now unified full city block (that combined the "subject property" with the buyer's adjacent property) is now emerging as Westland's "The Uptown" restaurant and retail development. Westland's website indicates it's now leasing spaces in the development. The developer/owner will pay property taxes and the City will receive sales tax revenue from the development's tenants. Westland's description of its project can be viewed on its website here.
At 12:25 p.m. Sept. 2, LBREPORT.com reached out to Ying Ma, who we believe (despite a recent Elder campaign shakeup) remains the Elder campaign's communications director on what took place. (The Elder campaign website doesn't list media contact information.) We provided a link to the City of Long Beach's agendizing memo detailing the transaction. We inquired: Is this the type of transaction Gubernatorial candidate Elder has previously criticized as "crony capitalism"? Or is it the type of transaction he favors to spur economic development? We indicated we planned to publish a story on these matters and invited Mr. Elder's response.
LBREPORT.com is awaiting a response to our inquiry.
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