It’s been a year since the Long Beach City Council voted unanimously to approve the plans for a public-private partnership that would finance the construction of a new civic center in downtown. At next Tuesday’s council meeting, a vote is expected to approve the contracts with Plenary/Edgemoor Civic Partnership (PECP), one that will cost the city about $14.48 million annually over the 40-year term of the lease.
The structure of the finance plan is not unprecedented, as the George Deukmejian Courthouse—also an Edgemoor project— was completed under the same model. Tuesday's vote comes after a year of outreach efforts, community meetings and presentations on the proposed design plan.
The original estimate of the service fee paid to PECP was set at $12.6 million but the city’s director of economic and property development, Mike Conway, said that that number had been bumped up due to community-requested enhancements to the original design presented by PECP—because it was “too boxy”—and the addition of outdoor lighting on some of the buildings. The discovery of asbestos lining the top of the Lincoln Park parking garage will also force the city to fully remove it before reconfiguring the park’s layout and moving the main library on top of the structure.
“That was a significant number that was not anticipated at the time,” Conway said of the asbestos removal cost.
While the overall cost of annual payments has risen since the plan was unveiled, Conway stressed that it's comparable to the cost of merely maintaining the current civic center. The $12.6 million figure is already accounted for in the upkeep for the civic center as it stands now, but Conway said to bring it up to “like new” condition the city would have to allocate another $6.7 million annually, making the actual cost just over $19 million. However, the structures would still be seismically unsafe, which was the issue that initially prodded the city to seek out a replacement strategy.
The quest to replace the old civic center was spurred by an federally-directed investigation in the wake Hurricane Katrina which found the current structure to be seismically deficient in the event of a significant earthquake. A follow-up study in 2013 showed that in addition to the previous findings, the stairwells in city hall would likely break free and collapse, as would the main library, and city hall itself would likely “wobble and collapse” due to the significant tension on its steel supports.
“That created a whole different level of urgency for a new City Hall,” Conway said.
The new structure will be designed to the “gold standard” of the Resilience-based Earthquake Design Initiative (REDI) which provides for a 50 percent confidence level that in a design-level earthquake there will be a very low probability of injuries and no deaths with the building being available for preoccupancy within weeks and being fully functional within a month.
A design-level earthquake is defined as being between 7.2 and 7.5 on the Richter Scale, a seismic event that is projected to have a 10 percent probability of happening in the next 50 years. Under that standard the new structure is only expected to experience a five percent financial loss compared to the replacement value of the building.
The construction, if council approves the city manager to act on the contracts, will begin in July 2016 and will include 54 months of on-and-off construction that will stretch into 2023. While the new City Hall and Port of Long Beach headquarters are expected to be completed and ready for occupancy by the end of June 2019, the old structure must remain in place to house city staff until they’re ready for move in. The proposed private portion—a structure that will include some 8,000 square feet of restaurant space, 32,000 square feet of retail, up to 580 residential units and potentially a 200 room boutique hotel—cannot begin construction until the old city hall is demolished. The anticipated date for the demo is nine months after the move to the new building, or Spring 2020.
In total, the project will include the construction of six new buildings including the new port and city hall buildings, new main library and the private mixed use tower. The tower is projected to be the tallest at 432 feet and city hall will trump the port complex by two feet, with the new buildings being project to be 165 and 163 feet respectively.
The private portion of the civic center design will play a monetary role in the city’s payment of its service fee to PECP, but to what extent is still only a projection. Conway said that the structure could generate upward of $940,000 per year, but that total could fluctuate with the occupancy rates of both the retail and residential spaces. Additionally, while the tower will be permitted to operate a hotel, there is no guarantee of what the market for a hotel in that location will be in 54 months. Conway said the projected revenues were based on a 100 room hotel—it’s permitted to operate a 200 room hotel—and full occupancy of the retail space.
“We’ve taken essentially not the lowest and not the highest but we tried to be somewhat moderate in our expectations of those additional revenues,” Conway said. “The cost of the civic center would be offset by those additional revenues.”
Another cost saving measure instituted in the plan is the outsourcing of maintenance of the facility to Johnson Controls Inc. (JCI) rather than hiring city employees. The move is expected to save the city an additional $625,000 annually in maintenance costs by hand off the 24-hour services to JCI. There are also provisions for the city to withhold fees to JCI, which average about $7,000 per day, if issues go unfixed past the timeframes agreed to in the contract.
“They’re going to be very motivated,” Conway said. “If three elevators are down for one day, that’s fifteen thousand bucks. They’ve just lost two full days of their payment, so they’re pretty motivated to make sure that the facility is functioning as well.”
At the end of the 40-year period where the city will assume full ownership of the civic center it is projected to do so with the facilities in no less than "B" condition. The contract calls for a Facility Condition Index (FCI) of no less than a .20 depreciation from what’s considered brand new. The original plan called for a .15 guarantee but Conway said by allowing JCI to lower that mark to .20 the city will save an additional $100,000 per year. Still, Conway said the commitment of resources will still aim for the original FCI mark.
The new civic center stands to transform the downtown skyline as well as the traffic and interaction in the sector with the addition of its walking loops and residential and retail aspirations. After green-lighting the project last December, Mayor Robert Garcia praised the decision of selecting PECP as the design firm and the prospects it posed for the city.
"Partnering with this team to build a new Civic Center is the right decision, and provides an opportunity to add residential development and other uses to the site, and to create a modern, sustainable project that will last for generations, without additional cost to our residents," Garcia said.