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Beauty is one of Long Beach's greatest assets. The graceful arch of Queensway Bridge and imposing City Hall building complement the silver crescent of shore and glittering blue harbor. Redevelopment schemes threaten to compromise aesthetics and ecological balance.
The following transcripts of addresses made to the Long Beach City Council will provide examples of concerns and doubts residents express regarding the evident disintegration of democracy in their city.
The following agenda item, number 26, from the January 15, 2002 council meeting, combined separate measures, presumably to obfuscate the true nature of the issues.
Local newspapers all reported that construction and funding of the Carnival Cruise Terminal at Pier J would be considered at the council meeting of January 15. Most public speakers attended to address this subject rather than options for financing QSDI debts. Clearly, these topics should have each been separate agenda items. [Editor's note]
Here is the agenda item as it appeared on the program for that evening:
26. Director of Financial Management, regarding Carnival Corporation and Queens Seaport Development, Inc., conduit financing. (District 2)
Suggested Action:
1. Authorize City Manager to request assistance from the Port of Long Beach on structuring the proposed tariff.
2. Authorize City Manager to prepare bond and related documents for the proposed Carnival Corporation financing and return to the City Council for authorization to issue bonds.
3. Authorize City Manager to prepare bond and related documents for the proposed Queen's Seaport Development, Inc., financing and return to the City Council for authorization to issue bonds.
Robert Torrez, Long Beach City Director of Financial Management:Thank you. Madam Mayor and members of the City Council, Carnival Corporation and Queen Mary approached the city in early December and requested assistance in securing bond financing for the Carnival terminal and for Queen Mary capital maintenance projects. Both financings will be non-recourse to the city and would not impact city budgets or the city's credit rating in any way...
Presentation Outline:
Financing Request:
A.Carnival Corporation and QSDI have requested city assistance to secure bond financing:
1. Carnival for 25 million for terminal capital improvements.
2. QSDI 23 million for capital improvements related to the:
a. Carnival project,
b. completion of hotel renovations, and,
c. certain other maintenance operating costs.
Project Background:
A. Carnival is moving it's west coast base from Los Angeles to Long Beach.
1. The Long Beach terminal will be a year-round home port for two 855-foot cruise ships (Elation and Ecstasy).
2. Carnival has entered into a 25-year sublease with QSDI with two 10-year options to extend.
3. Carnival expects to begin construction this month (January 2002).
4. The first Carnival ship is scheduled to set sail from Long Beach in April 2003.
5. 600,000 cruisers departing and arriving are expected per year.
B. QSDI is obligated under its sublease with Carnival to construct approximately 3 million in improvements, including:
1. The majority of these improvements are required before Carnival can begin construction.
2. Work is currently in progress.
Carnival Corporation Financing:
A. 25 million of tariff-backed revenue bonds for terminal and facility improvements including:
1. A 1,000-foot cruise ship docking facility and terminal adjacent to the Queen Mary facility which will homeport two 855-foot Carnival cruise ships.
2. An embarkation/debarkation facility within a section of the Spruce Goose Dome which will include Carnival, U.S. Customs and Immigration Services operations.
3. A cruise passenger ticketing area on the Queen Mary ship.
4. Roadway improvements for cruise passenger vehicles and buses.
B. In addition to the 25 million bond-financed capital improvements,
1. Carnival is building financing on its own at 20 million, 1,300 vehicle parking garage.
2. The complete project totals 45 million, including 20 million of Carnival financing and 25 million of bond financing.
3. Tariff was requested by Carnival.
Carnival Corporation Bond Structure:
A. Tariff-backed revenue bonds.
1. Board of Harbor Commissioners would be requested to impose a tariff on Carnival passengers between 13.00 and 18.00 dollars per passenger.
2. Tariff revenue used to pay annual bond payments.
3. 7% to 8% TBO 20- to 30-year bonds.
4. Carnival Corporate guarantee in case of tariff shortfall.
5. Any surplus tariff would be used for early retirement of the bonds.
6. 60 to 90 days to structure and issue bonds.
7. Non-recourse to the city.
QSDI Financing:
A. 23 million of Industrial Development Bonds for planned Queen Mary facility improvements and maintenance operation costs, including:
1. 3 million for the relocation of the utility and energy plants and utility and electrical transmission lines required by Carnival and temporary utility plant already in operation.
2. 14.5 million for the retirement of existing QSDI debt issued for capital improvements and maintenance/operating costs.
3. 4 million for various capital improvements including hotel room renovations and entry corridor from the Carnival docking terminal and parking area to the Queen Mary ticketing facility.
4. Hardscape, landscape and drainage.
5. 1.5 million for additional maintenance capital and/or interim operating costs during construction.
QSDI Bond Structure:
A. Industrial development bonds.
1. Taxable bonds sold by the city and proceeds loaned to QSDI.
2. QSDI loan payment would be equal to the annual bond payment.
3. Bonds secured by QSDI revenue not an obligation of the city.
4. QSDI would adopt covenants and remedies relative to their operations and cash flows.
5. 60 - 90 days to structure and issue bonds.
B. Carnival has agreed to advance QSDI the 3 million for the capital improvements with the city's commitment to complete the QSDI financing.
1. The advance would be reimbursed to Carnival upon receipt of the proposed bond proceeds.
Considerations:
1. Both Carnival and QSDI bonds are wholly and explicitly non-recourse to the city without any financial or credit-backing of the city.
2. Due to the potential for a significant positive financial impact, it is recommended that the city, within its legal ability, assist Carnival and QSDI with the furtherance of this project.
3. The city has a vested interest in the success of the Queen Mary and will continue to work closely with QSDI to maintain this community treasure.
4. QSDI must complete its required 3 million in capital improvements.
5. Carnival has already incurred 4 million in costs for design and construction plans, EIR and permits.
Recommended Actions:
A. Authorize City Manager to request assistance from the Port of Long Beach on structuring the proposed tariff.
1. The City Manager and staff will work with Port Commission and staff.
2. Concerns, if any, will be addressed to the satisfaction of the port.
3. Interests of the Port and City will be protected.
B. City Manager to prepare bond and related documents for proposed Carnival Corporation financing and return to city council for authorization to issue bonds.
C. City Manager to prepare bond and related documents for proposed QSDI financing and return to the city council for authorization to issue bonds.
Mayor Beverly O'Neill: Thank you. Councilmember Grabinski.
Councilman Ray Grabinski: Thank you, Madam Mayor. Just a couple of questions of Mr. Torrez. I think I'm hearing this the way I thought it was structured. Essentially, what's happening is, our asset, the Queen Mary and property around it, is being improved by the investment of the new project that's going in at Carnival. In other words, part of the structure and all the attending facilities that go along with it, are not only improving our asset in terms of dollar improvements, but this refinancing, this bond—this bonding is going to also allow us to get done the kind of maintenance that need to be done to eliminate any possibility of the ship having any big problems with very old antiquated systems. Most of that's been repaired, am I correct?
Robert Torrez: That's correct. That's exactly correct.
Councilman Ray Grabinski: So, essentially, what happens is—I'm hearing from you—and that's what I read in the report—that the city's interests are secure. And that you're going to work—the manager and the staff are going to work to secure the interests of the port so that the risk here, if any, is not on the city.
Robert Torrez: We'll structure this so there'll be no risk to the city. And I think everyone benefits through this new bond for Carnival and restructuring of debt for the Queen Mary.
Councilman Ray Grabinski: And the outcome of this could be that the asset that we took a little bit of a flyer on some years back for 600 jobs and all the other good reasons, now puts us in a position for this asset—in four or five years of relatively good economy—not soaring economy, but relatively good economy—is going to put us in a position where the hotel will be doing much better business, the ship will be doing much better business, the ship will be upgraded, and the facilities will be upgraded, with the parking structure.
Robert Torrez: With this project, I believe that this will improve the value of the asset and secure the future performance of the Queen Mary.
Councilman Ray Grabinski: Thank you.
Mayor Beverly O'Neill: Thank you very much. I would like to point out too, Councilmember Grabinski, and maker of the motion and seconder, Councilmember Richardson-Batts, that would just be part of the three that we have. Okay, we'll hold on any action until we've had some members of the community speak, Mr. Murphy.
Thomas Murphy: [Reiterated the outline presented by Robert Torrez.] ...All of this is on the agenda that the councilmembers received yet there are only three suggested actions on the agenda that the tax-paying public (who must pay the bills) received. And, if the cruise line can't meet it's financial obligations to pay the bonds, is it the city's obligation to pay it? Just like the city did when the "can't-miss aquarium" failed to meet its first bond payment—then the city council voted unanimously to assume the payment obligation of the bonds when due. All this wording on the agenda is a [inaudible] procedure to fully understand. I would appreciate it if some city official more knowledgeable than I, would spell out any additional details that I missed, or, for me to be corrected. Thank you very much.
Mayor Beverly O'Neill: Thank you. Mr. Murphy. I might mention for any of the speakers this evening, the issue is not whether or not we have Carnival cruises here. We had discussions on that and the decision has been made by the council The issue this evening is on the conduit bonds.
[Transcripts were omitted in this segment for brevity.]
Adrea Stoker: Good evening, my name is Adrea Stoker, I am a spokesperson for the Sierra Club Harbor Vision Task Force. The Sierra Club has 100,000 members in southern California who are potential visitors to beach towns with clean water; visitors who add to the city's revenues. While the Sierra Club works to keep our bays and beaches clean and healthy, as an important part of our commitment to planet Earth, you are considering subsidizing more pollution of one of Long Beach's major tourists attractions—its beach—by supporting a cruise ship terminal and a parking lot that will add polluting air, water, sediments, runoff and ballast water containing unwanted exotic sealife to the city's environment.
The State of California is implementing AB-993 The Marine Life Protection Act. In contrast, your city councilmembers are considering a proposal that could be named "The Marine Life Extinction Act". An act that will result in more beach closures unpopular tourism that is not ecology-based, and extinction of sea life from the bottom of the food chain web to the top. We believe that the site of the cruise ship terminal is wrong, we believe that our members who, remember, are also voters and their children who will be voters, should not be taxed in order to underwrite a polluting business. In the Sierra Club's view, this is neither a political nor a business decision. We support the opinion of E.O. Wilson, chair of the National Science Foundation of the U.S. Federal Government, who insists that decisions such as this, are moral and ethical decisions. Please vote "NO" on the proposal before you—your vote will then be a moral and ethical one. Thank you.
Mayor Beverly O'Neill: Thank you very much. I'd like to remind the remaining speakers that the issue is not whether we have Carnival cruise lines—we have had discussions, there have been lawsuits on this, it is continuing, it is on the conduit bonds. Yes, Mr. Bannister, oh, sorry, Gary.
Gary Shelton: ...I appreciate what the folks might have to say about whether or not the cruise lines should be there—that was an issue before you before and you made your decisions and that, for me, is fine. What I'd like to speak about to you tonight, on this—as you consider your votes on this, are the ethics of the situation that we're faced with.
Partly in light of the fact that we have ethics on our minds in a big way, and will have, for the next several months (while it's being discussed in committee and commission). ...I hate to use that phrase, "Methinks the Queen doth protest too much"—we heard...25, 35, 45 times that there's absolutely no risk to the city--that these are non-recourse bonds. A lot of people...don't know exactly what non-recourse means. So, in the course of your deliberation, if we could find out—really—what "non-recourse" means...I know that was explained one more time...by Mr. Torrez.
We've heard it so much before and we're hearing it so much tonight. What ethics means is, we tell it like it is, up front. And we haven't heard any "wiggle-words" at all from the city, but somehow in the editorial section of today's Press-Telegram, there were "wiggle-words" all over the place—it should be paid back by the revenue from the Queen, it might be paid back, it can be paid back...
So, what I'd like you to do on your deliberations, is read the materials carefully, listen really closely to what's said, get some definitions for the words, what really is a non-recourse bond, come to grips with reality. Find out if there's a city liability or a public liability...that way you'll be armed to make an ethical decision tonight. Thank you.
Mayor Beverly O'Neill: Thank you, Gary. Please, Mr. Bannister.
Reggie Bannister: Good evening—Reggie Bannister—eighth district. I believe you have a copy of the statement that I'm going to read so you can kind of 'follow the bouncing Bannister' here. An article in the Press-Telegram last Saturday quoted Carnival vice-president, Giora Israel, as saying, "we at Carnival, are not asking the city to put up any money. We're not asking the city to put up any collateral". Mr. Israel's statement defies the definitions of reason and logic. If Carnival doesn't want any money or collateral from us then what are we doing here tonight addressing this issue? The fact is, Carnival needs us to get 25 million dollars so they can fully finance their proposed passenger terminal. They say that they will stand good for the bonds through the imposition of a tariff against the cruise ship passengers and pay the debt over the next 20 to 30 years. Well, that sounds great but begs the question. Who's responsible for paying back the money, should, in the next 20 or 30 years, Carnival decides to move again?
The cruise ship industry is a risky business and subject to the winds of change. Tourism numbers have evaporated dramatically since 9-11, and I don't think I have to go into any kind of scenario that would put the cruise ship industry into the same disasterous financial position the airlines found themselves in dealing with the tragedy of that horrific day. I doubt seriously if the Federal Government would find it as fiscally prudent to bail out the pleasure cruise business as they did the airline industry. In short, what guarantee do we have that Carnival cruise line will even exist 10 years from now let alone 20 to 30 years? How will these bonds be paid back in the event that Carnival is unable to meet its obligation, who is ultimately liable in this bond issue? The answer is we, the taxpayers of the City of Long Beach—that certification of these bonds must necessarily stand the light of scrutiny as regards the council's fiduciary obligation and responsibility of upholding the public trust.
Carnival is supposedly very strong right now, financially. It's common knowledge that they have enough cash to be involved in hostile take-overs of other substantially-financed cruise ship operations. So, why do they need 25 million from us? This brings me to the companion issue of 23 million in bonds for Queens Seaport Development, Inc. Certainly we have to protect our investment and refinancing the current mortgage is in order. After all, just like the aquarium, we own the Queen Mary, lock, stock and fish tanks. However, 3 million dollars of the money in this bond will be kicked back to Carnival cruise lines in the form of work required by Carnival as part of their development agreement with Queens Seaport Development, Inc.This is a spooky deal worth 70 million-plus dollars when the smoke clears.
I believe the questions raised here tonight are legitimate and deserve to be answered. No one is trying to be a wet blanket but the taxpayers of this city have the right to know exactly what it is you leaders, our leaders, are getting us into. Thank you.
Mayor Beverly O'Neill: Thank you. Mr. May.
Don May: My name is Don May, I wear a different hat here tonight—I'm a retired medical device manufacturer. Some eight years ago, I looked to move my company into Long Beach as a first choice and ran into substantial opposition—not only that, but...I should point out, that first of all, small businesses like mine are the ones that generate new jobs. They're the ones that invigorate the economy here in Long Beach. Perhaps a medical device business requires a lot more, in terms of leasehold improvements; in terms of cleanrooms and that sort of thing. In fact, the property we found down by the airport we were thinking about—a quarter of a million—half of which we would have put up—the rest—we needed a small business association—a small business administration loan for.
Most cities intervene on behalf of businesses seeking to site into their city—Long Beach does not—did not, at least back in '94. I have at least a dozen friends who have had similar problems with what they perceive, and certainly I perceive, as unfriendly to businesses seeking to come in.
My point is, if you took as much interest in those small businesses that generate the jobs as opposed to one who flies a foreign flag and hires people from outside the United States, and pays no sales tax, property tax, income tax—that sort of—any other kinds of taxes compared to folks like Axiom Medical, that would have generated a little over a quarter million dollars in the time that we would have been here. I think you'd be a lot better off. Going out and extending yourself for small business in this town—the ones that generate the jobs—doesn't put you at risk. And you are indeed at risk. This is not 25 plus 23. With interest, this is 75 million dollars. That put into small businesses, would have generated way over 50,000 jobs and a substantial increase for the city. So, when you're handing out money, and indeed this is a subsidy, you all know that, you know who's at risk. Look at what it is you could be doing to provide some real economic benefit for the city. Thank you.
Mayor Beverly O'Neill: Thank you, Mr. May. Next speaker.
Diane Rush: I reside [in] Anaheim, former president of the Queen Mary Foundation—Prevratil's corrected all that—I'm no longer "unfairly competing" with him—apparently someone else is now—if he's still three and a half million dollars in debt.
I just want to urge you to look more closely at some of the things that you're talking about—expecting the taxpayers to buy [accept], just because they're being told there is no risk. Obviously, if you're going to ask for 23 million dollars in bonds, somebody is going to have to pay for that; it's either the city, or the tax payers, or both and that means someone is at risk.
We are right back where we were in 1992 with the Eckstut and Ehrenkrantz plan. The people of Long Beach did not want a freighter or a cruise terminal in their port [Pier J] then, and they don't want it now. It's just interesting how—it's not so much that the citizens get their way, it's just—the council gets their way very slowly and that's still not democracy.
If I have a little bit of time I'd like to read something that Colette McLaughlin had sent to me last night. She was saying that "this latest bail-out will not require any support from Long Beach taxpayers—so we're told. That was the same assurance Long Beach residents were given preceding the failed promises of the economically-challenged "Pike" at Rainbow Harbor (formerly Queensway Bay) and the aquarium. Instead of waiting a few years to question how taxpayers ended up stuck paying off Prevratil's ever-increasing debt, it's time to investigate why this heavily-subsidized, lawsuit-ridden tenant of a multi-generational lease on our ship is now 23 million dollars in debt". Colette wrote that but I whole-heartedly endorse it. Thank you so much.
Mayor Beverly O'Neill: Thank you, next speaker, please.
Robert Palmer: ...I'm the chairman for the Long Beach chapter of Surfrider Foundation. We're absolutely opposed to issuing bonds to fund the construction of the dock. This project seems like it keeps changing or it keeps developing—anyway, we're back here again. If I'm not mistaken, about a year and a half ago, there was some talk about issuing bonds, but at that time, I thought the bonds were for construction of the parking structure and not building the docks. I don't know what happened between then and now—but now Carnival is talking about funding the building of the parking structure and now they're asking the city to issue bonds to help pay for the construction [of docks]...
There are a couple of other points as well, this issue—the original EIR [Environmental Impact Report] was based—in fact, tonight a number of people talked about Carnival relocating to Long Beach, when in fact, they just upped their lease at the Port of Los Angeles. It seems to me that this isn't relocating, this is expanding. And this is something totally different than the EIR addressed. Expansion means more pollution, more traffic—these issues are being totally overlooked. The other issue is—we're talking about two cruise ships per week, when—I believe in the course of this—after the approval, et cetera, et cetera, we find that Carnival is now planning to bring into the port one of their other sister cruise ship lines from time to time. Again, this is more pollution—adding to congestion, more problems and now they're coming back to the city and they're asking us to fund this by issuing bonds. The Surfrider Foundation needs to go on record saying, "we are absolutely opposed to this". Carnival cruise lines are a wealthy corporation, they can afford to build their own dock. Thank you.
[This concludes the excerpt from the council meeting of January, 15, 2002.]
Director of Financial Management, Robert Torrez: Madam Mayor and members of the city council, on January 15, 2002, you authorized the city manager to proceed with preparing bond documents for a bond issue for the Queen Mary. Tonight, staff is requesting approval of bond documents and the issuance of bonds for the Queen Mary operator. Queen's Seaport Development Incorporated (QSDI), the master lessee of the city's Queen Mary ship and adjacent property, has requested the city to issue non-recourse, conduit bonds on its behalf.
Non-recourse means the bonds will not be obligations to the city and the city's credit or taxes will not be used to back the bonds. The bonds will be used to finance certain capital improvements and allow for loan refinancing related to prior capital improvements. Though other financing may potentially be attainable, QSDI has requested the city to assist with issuing more cost-effective and expeditious financing.
The payment of debt service of the bonds will, again, be the sole responsibility of QSDI. The proposed 28.2 million dollar bond financing will provide funding for approximately 5.1 million dollars in hotel room renovations, elevator and escalator improvements, a l million dollar construction contingency reserve, and 16.5 million dollars to refinance existing QSDI debt. The balance of the bond proceeds (approximately 5.6 million dollars), will be used to pre fund a portion of the debt service during the construction period and provide for debt service reserve and cover the issuance cost of refinancing.
Initially, we had contemplated including 3 million dollars in these bonds for Carnival-related improvements that QSDI is responsible for. However, those improvements will be financed through Carnival and that debt will be amortized over 25 years.
As part of the proposed conduit financing, the city will be the bond issuer and will loan the net bond proceeds to QSDI. The bonds will be taxable, will have a term of about 30 years (with an expected interest rate between 9 and 11 percent). The loan, payment and debt service will be the sole responsibility of QSDI with no direct or indirect recourse to the city. As a result, the city bears no financial risk in this financing. It is not pledging any city revenues to support the transaction.
The financing and planned improvements coincide with the Carnival Corporation's cruiseship relocation from Los Angeles to Long Beach. A separate Carnival Terminal bond financing will be brought to the city council for approval in a few weeks. Therefore, tonight's request only deals with the Queen Mary financing. QSDI's renovation strategies to complete the improvements of room renovations concurrent with the grand opening of Carnival's new Long Beach berth in the first part of 2003. It is anticipated that by refinancing QSDI's existing debt at lower interest rates and terms, the new 3 million dollar bond payment will result in annual cash flow savings of approximately 1.25 million dollars below the existing QSDI debt.
Staff is requesting an authorization to issue bonds in an amount not to exceed 35 million dollars. The additional authorization above the 28.2 million dollars actually contemplated is to provide for potential changes in bond issuance amounts due to changes in market conditions.
Madam Mayor, members of the city council, that concludes my report.
Mayor Beverly O'Neill: Thank you very much. I'd like to remind the council and also members of the audience that this resolution, before it was a resolution, it was discussed at council meeting and we had a long and lengthy presentation and also a long and lengthy comments on this item and this was asked for; it has already been approved to do this action but this is the resolution that authorizes this action.
So, um, if you are going to address the council, please remember that the—what we're talking about is continuing with the action in the issuance of bonds and loans for this—for item 21. Councilmembers? Vice Mayor Baker—
Vice Mayor, Dan Baker: Madam Mayor, thank you. You summarized it very well. We already did have quite a lengthy policy discussion on this. There is no liability to the city; it seems to me it's the right thing for the Queen Mary and the right thing for Long Beach. I'd like to make the motion to adopt the resolution.
[Which was seconded with dispatch]
O'Neill: It has been moved and seconded to adopt the resolution.
[Brief discussion between Mayor O'Neill and Councilman Colonna has been omitted]
Citizen Thomas Murphy: [After reiterating material presented by Robert Torrez (above) Murphy continued] Don't you think, harried tax-payers, that with a project like this, at the present uncertain times and of this magnitude, it should have been studied and analysed in more detail by Gary Burroughs [Long Beach City Auditor] our city auditor's office staff? Since it's the tax-payers money, if the [inaudible] fails to meet the bond payments (like the aquarium, in regards to the expenditures) the city will be obligated to pick up the tab.
It should be explained in more detail by some knowledgeable employee from our city auditor's office and since Long Beach hasn't the luxury of having any more failed projects, this audit report, once forthcoming, should be sent to our local newspapers for verification.
Mayor Beverly O'Neill: Thank you, Mr. Murphy. Next speaker please:
Diane Rush (Turbine Tribune editor): You know who I am; Diane Rush...[from] Anaheim. Hopefully I will be a resident of Long Beach; I was born here. Madam Mayor, members of the council and staff: I have a question for you. Someone behind the rail might be able to answer this—I understand that the market analysis and hotel report sections of the Preliminary Official Statement were not available a couple of days ago? Have all of you had a chance to see both of those items?
[Silence behind the rail]
O'Neill: Just keep talking—
Rush: Ok, well, the silence is as eloquent as any words you might speak. As a citizen, I face a dilemma and I know a lot of other people here who are tax-paying, voting citizens; they face a dilemma in a situation like this. If we agree to the bond issue—the 28 to 35-million dollars—the good part of that is, hopefully the money goes for the repair and maintenance of the Queen Mary which is needed and deserved. However, there's no guarantee that that's going to happen. If the public opposes this bond issue, that falsely appears that the citizens do not support the Queen Mary. In reality there is a growing distrust and skepticism about the city's determination to finance a proven failure.
If you could not get funding for Queensway Bay in ten years, how can you get funding for RMS/QSDI in two months? Also, can you confirm or deny that—I heard a report that RMS (the nonprofit entity operating the ship) was dissolved? Is that correct?
O'Neill: [stuttering] Y-Y-You're just making a presentation to us. We're not here to answer questions right now. Perhaps we will when we're all finished with the speakers.
Rush: Ok, my concluding remarks include a plea to consider the alternatives. Since 1993 the entity operating the Queen Mary has accrued at least one lien, several lawsuits and has refinanced several times; I think this makes number four? If those behind the rail or any member of the public wants to know why I urge caution, please visit my website, the Turbine Tribune on the Internet. Thank you so much.
O'Neill: Next speaker, please.
Traci Wilson-Kleekamp: Good evening members of the council; Traci Wilson-Kleekamp. I have the same comment as Diane about the Preliminary Official Statement. The clerk was great; she got a copy for me on Friday—but the appendixes that are attached—the hotel report, the market analysis, the financial statements, et cetera, are not available.
I did make a call to the treasurer's office yesterday and they did say the documents were not available yet and they would not be available tonight before you would vote on it. My concern is that there should still be a substantive discussion on the profitability of tourism. I am, unfortunately, not a great proponent of three "T"s and an "R". I happen to think tourism is very economy-sensitive and it perpetuates the cycle of poverty with low, wage-earning jobs and I would like to see us really focus on boosting our per-capita income beyond 37,000 dollars a year.
The other thing that's great about having a market analysis and a hotel report is we get a really good idea if we're on the right footing with our investment. Just so that no one thinks I don't like the Queen Mary—I do like the Queen Mary. I went to the Cirque du Soleil the other day. I think it's one of the best things that's happened for the Queen Mary in a long time in terms of bringing people there.
But, I don't think that you can vote to do something if you don't have all the information and I know the public counts on all of you to have all the facts before you make a 35 million dollar decision. Thank you.
O'Neill: Thank you. Next speaker, please.
Jim Sturm: We're assured by the Second District Councilman, Mr. Baker, that this was all talked about and shouldn't be much of a problem. But it seems to me that you're being asked to approve something; therefore you are responsible. Approval requires and indicates responsibility for something. I'm not ready to predict the bonds are good, bad or indifferent but apparently, from what the mayor (I think) said, that this is just a routine and it's just to sign something and we're NOT going to be responsible and that's a contradiction in terms.
Of course we weren't in favor of this to start with—this is a valuable piece of property that's gotten steered off into an ocean liner problem [Carnival Cruise]. Now, whether it goes forward or not I don't care. But I think that you ARE responsible if you sign this off. And if you're responsible (you represent the city) and there will be a time, if it comes to lawsuits and who is going to pay what, that you'll be on the list of people they will be pursuing and the city will be on that list. And I think you should not sign this or go forward with it, particularly since the reports that I hear about are not quite yet available. And you could put it off a couple of more weeks and then look at it again. But again, you are responsible, quit kidding yourselves. We don't like you to get into trouble; we love you all so much.
O'Neill: [Sarcastically] And we believe you. [Then directing herself to the next speaker] Yes.
Colette Marie McLaughlin: Colette Marie McLaughlin, Fifth District. I am here asking you to listen to the people that you're not answering their questions. And I'm also asking you to wonder why you don't have the nerve TO answer the public's questions that is supporting this.
I also was interested in how you said [there] was a long and lengthy discussion of it. This is a long and lengthy loan and I do know the majority of Long Beach residents are well aware that they were told that there would be no costs involved with the aquarium. And, this ship (that is owned by myself and other residents of the city) are the ones that are floating this bond (because, if you read the little bit of information that you were given—that you're being asked to make a major decision about—that's going to impact all the residents).
If you read the limited information that you have (that's inadequate to make a decision) it's noting that the leasehold which we own, is being mortgaged. So what you're doing with this, is you're taking what we own—that we gave to him [Prevratil] several years ago—and we're mortgaging our interests, which is incorrect information even provided by your support staff. Which, most of the public—as you're well aware—in the polls you're taking, don't trust the city. So [the] statement I'd like [to make] is:
...you put this off until we have a new mayor and we have new councilmembers that are going to represent the people—because the people are beginning to wonder why you keep spending our money and telling us that it isn't going to cost us anything when it does. And, they keep saying you're going to make all this money and we don't and there is a lack of trust.
And I'm hoping that we can have a more favorable decision-making body that will be more representative of the people of Long Beach to make this decision. And, finally, you keep talking about how everybody is benefiting from the Queen Mary making us money (that you're giving it). And it's to retire the debt that somehow they incurred almost 15 million dollars worth of debt which is about half of this [bond amount]—a little less.
But, I'm wondering when was the last time the people of Long Beach were given access to the ship? When I bring my family and relatives, I have to pay for the parking, I have to pay to get on and I have to pay to use something that's my asset. I would hope that when you're giving away our money and our childrens' future without adequate information, that you'd at least demand something given back to the people that are funding this. Thank you.
O'Neill: I think I had said a little bit earlier that this had been discussed and we received all the information at that time. I think that the decision to go ahead with this was based on adequate information even though it isn't showing in this document because this is an affirmation of what was done earlier. [Giving a nod to the public speakers] Please.
Adrea Stoker (Long Beach activist): My name is Adrea Stoker. Well, where IS that information?
O'Neill: It was the first time it came to the council—I can't remember when—
Stoker: I mean in THIS document. [Indicating the Preliminary Official Statement]
O'Neill: No. This document is not the complete document. The complete document was when we approved it to begin with.
Stoker: I'd like to ask a question and you can add it to one that maybe you can answer later—sometimes you answer questions and sometimes the council doesn't. If the payments are not made on the bonds, can the bond-holders take the ship?
O'Neill: [stuttering] Well, uh, give all your answers—questions and we'll put them together—
Stoker: Well, we're giving a lot of money to Mr. Prevratil—but he has really nice suits!
O'Neill: Next speaker, please.
Ann Cantrell (Long Beach educator): Good evening; Ann Cantrell. And I [also] tried to get this information today. Usually, the packet is put on the table back here in the foyer; it was not there. I finally found it back by the clerk's office and I had the clerk copy some of it for me and I read the rest of it. There is a section in your staff report that says, "Hotel Room Report" by Ernst & Young [consulting firm]—it's absolutely blank! If you will look at your information—in your packet, there's blanks for dating—which, the dates aren't there; the same for the financial report. Now you're saying that this was given to you before? I would think it would be put in this information [holding up the Preliminary Official Statement] because I think this is a very big part of why you would indebt yourself—I can't understand this, saying that there's no fiscal impact to the city! What happens if this goes bankrupt; if all these tourists do not come? And, all these improvements have been made; they have to be paid for. Surely, Mr. Prevratil is not going to be able to pay for them; he's not even able to get this loan without the city's help!
So, I would plead with you, not to vote on this until you have more information and if you're satisfied that truly the taxpayers will never have to bear this cost, then this would be a correct vote. But reading this—I'm no financial expert—but just reading this—it certainly smells to high heaven!
O'Neill: Thank you. We'll bring it back to the council at this time...