A new Queen Mary inspection report says little urgent repair work has been done on the ship in the past five years, leaving the historic vessel vulnerable to flooding or possibly even capsizing if critical work isn’t addressed.
The report from a city-hired naval architecture and marine engineering firm called Elliott Bay Design Group, which inspected the ship on April 28, says the city would need an additional $23 million in urgent safety repairs to keep the ship “viable” over the next two years.
That’s on top of the $23 million in bonds and Tidelands funds that the city issued to former operator Urban Commons in 2017 to fix some of the most critical repairs listed in a marine survey. The funds ran out before many of the repairs were completed, and now, the latest report says most of the urgent structural work hasn’t even started as the ship slips into further disrepair.
Long Beach owns the Queen Mary but for decades has leased the ship to a string of operators who have met similar financial problems.
In January, the ship’s current operator Eagle Hospitality Trust filed for Chapter 11 bankruptcy with a total of more than $500 million in debt. The ship’s lease is set to go to auction this Friday, but the city last week filed a legal objection to prevent the sale, arguing that the lease can’t be sold to a new bidder until former operator Urban Commons remedies a litany of failed lease obligations.
It is unclear when the judge will issue a ruling for the city.
The report from Elliott Bay Design Group was part of a trove of bankruptcy court documents released last week that paint a dire situation for the Queen Mary’s condition, the operator’s financial struggles and the city’s obligations.
A representative of Urban Commons, a Los Angeles-based real estate and investment firm, could not be reached for comment Monday.
Among the problems outlined by the city in court documents:
- Urban Commons failed to complete at least $41 million in critical repair work on the ship, which is double the initial $20 million estimate the city released last month. The figure is now higher because a recent inspection showed more watertight problems and issues related to leaks and potential flooding.
- Urban Commons owes the city $200,000 in base rent. It also owes the city $636,447 in passenger fees for the nearby Carnival Cruise terminal, and $65,336 in checks bounced by Urban Commons from pass-through fees paid on-time by Catalina Express. Urban Commons also owes the city more than $58,000 in utilities and $9,558 in special event fees. In all, the city is owed $901,783 in rent and fees. The debtors have proposed $748,157, which the city said is insufficient to cover its losses.
- Urban Commons has not paid county property taxes on the Queen Mary as part of its lease agreement since at least 2019. The Los Angeles County Treasurer and Tax Collector has filed two claims—one for $848,112 and another for $5.2 million.
- There were gaps in insurance coverage because Urban Commons failed to indemnify Long Beach from legal liability for any accidents on the ship’s premises, such as “slip-and-fall” cases. Some injury claims were filed against the city during these gaps in insurance coverage, leaving Long Beach vulnerable to lawsuits.
- Aside from the offer of $748,157, Urban Commons has not said how it will remedy its other lease failures. Moreover, Long Beach has not received any documents showing how any new potential bidder would be qualified to take over the lease obligations and operate the ship.
- Urban Commons has not provided financial documents to the Long Beach City Auditor, who is investigating how the company spent $23 million in city funds for ship repairs.
As for the ship’s condition, court documents said some of the repair work that was done on Urban Commons’ watch was incomplete or not performed correctly and will likely have to be redone. The Queen Mary has been closed since early last year at the start of the pandemic, and the ship will now need significant safety repairs before it can reopen to the public, according to documents.
Among the structural problems identified by the city:
- The sewage holding tanks are compromised and not accessible under state health and safety guidelines. The piping system has leaks.
- The hull has structural and watertight integrity issues and there is no working bilge system. This was listed as a critical issue to prevent flooding in the next two years. The “current status of bulkheads and lack of a functioning bilge pump system and flood alarm system could lead to flooding throughout the ship, potential capsizing of the ship and life safety and environmental issues to the extent that flooding occurred,” according to documents.
- The emergency generator is not working and needs to be replaced. The boilers are not working and need to be replaced in order to provide heat and hot water throughout the hotel and for food services.
- The “Spruce Goose” dome needs work to prevent structural integrity issues. This is critical since Carnival uses the dome for passenger loading at its terminal and plans to reopen for cruises later this year.
The city in a statement Monday said the Queen Mary does not have a reopening date at this time and that the ship will not be reopened by the current or future operator until the critical safety issues identified in the Elliott Bay Design Group report have been completed.
“The city will continue to work through the bankruptcy court to ensure the current or future Lessee is required to complete these repairs,” the statement said.
The city said the current or future operator will be legally responsible for making all the repairs necessary to safely reopen the ship.
“Based on the strength of its historical documentation, inspection reports, and detailed information filed with the Courts, the City should not be required to spend its own funds to repair the Queen Mary if the Lease is accepted through the bankruptcy process,” the statement said.
Officials said the city should have more details once the action has concluded.
The news of the latest inspection report was frustrating for some who have worked on the ship and said they sounded the alarm years ago about problems with safety and lack of repairs.
Ed Figueroa, who was hired by Evolution Hospitality (which contracted with Urban Commons) to serve as the Queen Mary’s facilities director, said he quit out of frustration after what he said were numerous safety hazards that were never addressed.
Figueroa, in a recent interview, said he believes the city is equally at fault for lack of oversight.
“There are two entities that are responsible for the failure of this ship, one was the management company that was awarded the contract by the city and the next was the city fathers for not handling what happened on that vessel,” he said. “If the city wants to point fingers at Urban Commons, I think they need to point some fingers at themselves as well.”
In an interview Monday, Pribonic said he painstakingly detailed the problems and critical safety concerns on the ship in his monthly reports, but city staffers declined to release the reports publicly and pushed him to change the wording, which he refused to do. He said the city is “hypocritical” for dismissing his reports but now using those details of the ship’s deteriorating condition in its bankruptcy case.
“They denied and hid my reports but now suddenly it’s convenient for them to use all that information because they’re in an argument over money,” he said. “They had plenty of opportunity and warning, but they failed in their responsibility to do their jobs.”
The city’s Economic Development Department is responsible for overseeing the Queen Mary lease and actions by its operator. When asked if the city believes there was any lack of oversight in monitoring the $23 million repair work done under Urban Commons, the city in a statement said the department “implemented many new systems and controls to ensure that the Lessee fulfilled its obligations under the Lease.”
“When the Lessee failed to produce financial documents requested by the City including audited financial reports and backup documentation related to the payment of third-party vendors requested by the City Auditor, the Lessee was put into default. The City is confident that the strength of its oversight, documentation, and pattern of formal communication with the Lessee will result in a favorable outcome for the City in the bankruptcy proceedings.”
Long Beach is now exploring possibly shifting control of the Queen Mary and the surrounding land to the city’s Harbor Commission, which oversees the Port of Long Beach.
Editor’s note: This story has been updated to include statements from the city of Long Beach.