10:00am | The Long Beach City Council last night approved a motion to grant a $3,000 monthly reduction in rent to BANCAP, Inc., to help the Seal Beach Yacht Club from potentially defaulting on its property due to a 40% loss in membership and subsequent revenue since 2007.
The motion carried 7-1, with Tonia Reyes Uranga dissenting and Robert Garcia absent.
The move will cost Long Beach $47,000 over the next two years.
A study completed by Cushman & Wakefield estimated that if the Council did not approve the motion, and the Yacht Club did default and vacate the premises, the City would sustain a loss of over $110,000 in a best case scenario. The study also estimated that the vacant premises would be difficult to fill, because Tidelands rules dictate that the property must be marine-related or a visitor-serving use.
City Management recommended the approval, “In order to avoid potentially greater losses that might otherwise be incurred,” said Property Management Services director Victor Grgas, who presented the report to the Council.
When the motion was introduced, Reyes Uranga and Patrick O’Donnell spoke.
“I just want to be clear, the reason were helping them is the 40% loss in membership dues in a social club?” said Reyes Uranga. “I hate to simplify it but that’s what the letter seems to say.”
“I had some questions as well,” said O’Donnell. “A lot of questions.”
“Why is it four months retroactive? said Reyes Uranga, referring to the City report that recommends the rent reduction begin January 2010. “Why isn’t this just a negotiation between BANCAP and the Yacht Club as opposed to… if this is a sublease to BANCAP and not with the City.”
Grgas then presented his report, which included a projection analysis that was completed by City Management and BANCAP. O’Donnell did not ask any further questions, but Reyes Uranga did.
“We’re setting a kind of precedent in terms of doing this,” Reyes Uranga said. “Will this open the doors to other people requesting the same consideration? I mean we’re certainly not doing this for neighborhood businesses.”
Grgas responded, “At the present time there appears to be no other marina-related uses under City lease that are asking or will ask for this kind of relief that we can foresee in the near future. I believe this represents a special circumstance in which the City is trying to avoid sustaining larger losses that might otherwise be incurred for providing this relief in the interim.”
No public speakers came forward and the Council asked no further questions.
The motion was originally introduced months ago but was taken off of the February agenda and postponed until last night, a move that former Deputy City Attorney James McCabe wrote in a letter to the City Council was a ploy to hold the issue over until after last week’s local elections.
“It is worthy of note,” wrote McCabe, “That Bancap’s principals are John Hancock and Steve Conley. Both of these gentlemen are maxed out donors to Councilman DeLong, in whose district this lease is located. John Hancock was, for years, President of the Harbor Commission. The men who want the taxpayers to take on this burden are the ultimate political insiders.”
The question ultimately becomes, is it worth a $47,000 loss now to assist the Yacht Club and potentially avoid a $110,000 loss in the future?
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