1:00pm | Controversy is brewing today around a proposed City Council decision that could significantly decrease the monthly rent that prominent business owners in scenic Alamitos Bay by $3,000 per month for two years.
City Management is recommending that the City Council approve the motion, which would lower the monthly rent of BANCAP Marina Center, Inc., from $37,803 per month to $34,803 per month. BANCAP Marina Center includes Stan Miller Yachts, Stoll Engine marine engine sales, Alan Andrews Yacht Design, West Marine Products, Scuba Duba boat maintenance, Schooner or Later restaurant and the Seal Beach Yacht Club.
The information provided to the City Council expresses a fear that if BANCAP is not allowed the reduction, the City would lose significant money if the inaction leads to “a sublease default and temporary vacancy of the space,” particularly if the Seal Beach Yacht Club is forced to leave.
In theory, the report says, that situation could cost the City $110,387 in future expenses.
Instead, City Management is advising the City Council to voluntarily place an annual $47,376 hit on taxpayers by reducing the rent.
“The result of this analysis determined the City would lose significantly more revenue by not entering into the proposed temporary rental reduction,” reads the report, which was created by City Management and BANCAP itself.
The issue was brought to light yesterday when former Deputy City Attorney James McCabe e-mailed every member of the City Council, denouncing the proposed deal and calling it, “just plain cronyism.”
McCabe also pointed out that the item was originally slated for action in February, and speculates that it was pushed back to late April because local elections were on the horizon and the issue may cause controversy.
“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 report issued by City Management says that a recent loss in membership at the Seal Beach Yacht Club has made the current rent payments “unsustainable.”
BANCAP would make monthly reimbursement payments to the City of either $900 or 30% of their percentage rent income – whichever is lower.
“In the good years, Bancap got the benefit of rising subtenant rents,” wrote McCabe in his e-mail to the Council. “It obviously did not offer to share these increased rents with the taxpayers. Now times are tough. It wants the taxpayers to pay for the decreased rents it is getting from one of its sub-tenants. Bancap was willing to take the risk of fluctuating sub-lease rents when times were good. Now it wants the taxpayers to foot the bill when we have been in a recession.”
The report was submitted and signed by director of the Department of Community Development Dennis Thys and the director of Department of Parks, Recreation and Marine Phil Hester. It was originally submitted for the February 16 meeting and was re-submitted for tonight’s meeting.