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By George Economides - Publisher's Analysis
December 17, 2013 – With another year drawing to a close, Long Beach is better positioned than most big cities to meet the ongoing challenges of a still unpredictable economy. Most economists are expecting a flat 2014 nationally and statewide, with a few industries – technology and health care are two – poised for growth. U.S. exports are certain to rise as economies around the world rebound from recession and demand for U.S. goods increases. Home sales are expected to be the strongest in years. Most sectors, however, fall under the “modest growth” category.
Long Beach, anchored by an economically healthy port and airport, a growing health care industry, and heavy investment by the hospitality industry to attract more visitors and conventioneers, should move forward faster than the state or the nation. The area north of the airport is continuing its growth spurt with more businesses opening at Douglas Park and, across the street, Mercedes is renovating more than one million square feet of former commercial airplane facilities.
Most importantly, city government is financially stable thanks to the fiscal discipline enforced over the years by Mayor Bob Foster. While most big cities in the country have struggled to provide necessary services to their constituencies, Long Beach residents and businesses have experienced no interruptions and few cost increases for local services. That’s testament to the work and leadership provided by the mayor, councilmembers, the city manger and his department heads.
Less certain is the direction of the city’s new leadership that takes office in July. A new mayor and five new councilmembers are going to be elected in 2014, providing a significant overhaul of the city’s top decision makers and thus uneasiness within the business community. Left alone, businesses in Long Beach – which for the most part are optimistic about the city’s future – can thrive and create good-paying, clean jobs. But union pressure on elected officials to impose a “living wage” and employ other anti-business tactics may force some sectors to scale back employment and work hours.
Several local items/projects and unresolved issues are carrying over into 2014. Business Journal Assistant Editor Tiffany Rider and Staff Writer Samantha Mehlinger take a look at several of those items and provide the following update:
Long Beach’s Unfunded Liabilities Still Top $1 Billion
As of December 4, the City of Long Beach has $1.1 billion in unfunded liabilities, approximately $700 million of which is associated with CalPERS (California Public Employee Retirement System). CalPERS is increasing its rates in 2016 and for at least the next four years thereafter in order for the city and all other CalPERS employers to pay down its public employee retirement unfunded liability. “It will be a huge cost for the city,” according to John Gross, the city’s director of financial management.
At an August meeting of the Long Beach City Council, Gross presented cost sharing with employees as an option to control those costs. “Currently the city pays about 70 percent of the pension cost with employees picking up about 30 percent through payroll deductions,” Gross said.
The council has begun to address the balance of the total unfunded liabilities by setting aside 5 percent of all surpluses; a new financial policy enacted this year. “They’re paying attention and beginning to address it,” Gross said. “There is still more work to do.”
Enterprise Zone Program Sunsets December 31
California’s Enterprise Zone program is repealed effective the close of business December 31. However, businesses are able to submit tax credit applications in 2014 for employees hired in 2013. All applications must be submitted and processed and vouchers must be issued next year, according to Craig Johnson, program manager for the Long Beach Enterprise Zone. “Then everything is completely gone,” he said. Johnson anticipates a high volume of applications next year, as businesses play catch up. “I hope our businesses are going to continue to get the paperwork in, get it done and get the credits that are due them,” he said.
Based on legislation passed earlier this year, the state is crafting regulations for a three-pronged plan: a new hiring tax credit program administered by the state franchise tax board, a California Competes credit program from the governor’s business and economic development office, and a business sales tax exemption program managed by the state board of equalization.
In partnership with Glendale Community College and the Los Angeles Economic Development Corporation, the California Governor’s Office of Business and Economic Development will host a workshop on the California Competes tax credit proposed regulations from 10 a.m. to noon on December 19. Learn more at http://business.ca.gov.
City Anticipates Funding For New Finance, HR Systems
According to Gross, the city continues to operate on dated finance and human resources systems. Approximately $6.2 million for updated systems is included in the city’s 2014 budget, he said, and another $3.7 million is contingent based on end of the year revenues. The city hopes that surplus from the year provides the balance of that funding. “We are preparing to go to council, hopefully in December, to recommend a consultant to help us put together an RFP (request for proposals),” Gross told the Business Journal in early December.
Port Travel Spending Audit Release Set For Early 2014
An audit of Long Beach harbor commissioners’ travel expenses should be completed late January or early February, according to Olivia Maiser, director of communications for the city auditor’s office. The audit covers fiscal years 2012 and 2013. In September, the city council capped port-related travel expenses by harbor commissioners at $40,000 per year, per commissioner. At the time, the council criticized harbor commission travel expenses, particularly by former Harbor Commission President Thomas Fields, for being excessive.
Mayor Bob Foster Works To Fill City Commission Vacancies
According to the Office of Long Beach Mayor Bob Foster, there are currently 41 vacancies on city commissions. “In recent weeks, Mayor Foster has interviewed about a dozen candidates to fill vacancies on both charter and non-charter commissions, but there are still applications coming in,” Stacey Ann Fong Toda, Foster’s deputy chief of staff, told the Business Journal. Recently, two seats were vacated on the Long Beach Board of Harbor Commissioners, including Vice President Nick Sramek. In November, Lori Ann Farrell, a boardmember on the Long Beach Transit (LBT) Board of Directors, was appointed to Sramek’s seat, leaving a vacancy at LBT. Toda said that the mayor’s office “is actively looking for and accepting applications to fill the vacancy on the Long Beach Transit Board.”
City Awaits Approval To Sell Off Former RDA Properties
A long-range management plan for former Long Beach Redevelopment Agency (RDA) owned properties has been submitted to the state finance department for review. The department must sign off on plan so that the city, as the successor agency to the former RDA, may begin offering the properties for sale. Mike Conway, director of business and property development for the city, told the Business Journal that the city does not expect to receive a response from the state until March or early spring.
Rail Yard Project Lawsuit Awaits Trial
The City of Long Beach’s lawsuit against the City of Los Angeles over Burlington Northern Santa Fe Railway Co.’s Southern California International Gateway (SCIG) rail yard project has yet to go to trial. In August, Long Beach’s lawsuit was combined with those of several other entities, all of which oppose the project, contending that Los Angeles’ harbor department did not follow state guidelines related to the California Environmental Quality Act in its environmental impact report for the SCIG project. In an e-mail statement to the Business Journal, Assistant City Attorney Michael Mais said, “The City of L.A. has filed a motion for a change of venue to have the matter transferred out of the Los Angeles Superior Court and to another jurisdiction (county). All of the petitioners have opposed the motion to transfer and we anticipate a ruling on the change of venue motion soon.” He added, “As soon as the venue issue has been decided, the administrative record will be completed and the court will determine dates for the trial and a briefing schedule.” Mais also said that the City of Carson recently filed a motion to join the suit.
City Continues In Lehman Brothers Bankruptcy Lawsuits
In its battle to recover lost investment funds from the bankruptcy of Lehman Brothers, the City of Long Beach has recouped $4.6 million of its initial $20 million investment as of October. According to Long Beach City Attorney Charles Parkin, the city anticipates one more distribution out of the bankruptcy to the various parties involved. “We don’t anticipate that to be a huge dollar amount,” he told the Business Journal, noting that money could come through in spring of next year. The city continues its litigation with Ernst & Young, the organization that suggested the city invest with Lehman Brothers within days of the firm’s collapse. “We’re in the discovery phase with them,” Parkin said. “Unless we can settle it, and we are hopeful to do that, I don’t think the trial will be until 2015.”
Delays In Fire Department’s Rapid Medic Deployment Pilot
The Los Angeles Emergency Medical Services (EMS) Commission reviewed the Long Beach Fire Department’s rapid medic deployment (RMD) pilot program proposal at its November meeting and found it is not yet in line with the EMS Agency’s pilot program requirements. According to EMS Commission Assistant Director Richard Tadeo, the department must meet the following requirements: successfully implement its electronic medical records system; prepare a contingency plan allowing department operations to revert back to current operations if the RMD pilot is unsuccessful; and have the city manager submit a letter of approval to the EMS Commission for the pilot program.
Breakwater Feasibility Study May Commence In Early 2014
The East San Pedro Bay Ecosystem Restoration Feasibility Study, also referred to as the “breakwater study,” may begin some time in the first quarter of 2014, according to Tom Modica, deputy city manager. The city is awaiting approval from the U.S. Army Corp of Engineers, which is sharing the $3 million cost of the study.
Construction On Naples Seawalls May Begin In February
Construction on the Naples seawalls may begin as soon as February, according to 3rd District Councilmember Gary DeLong. The seawalls are in a “significant state of disrepair,” according to the city. New cantilevered sheet pile walls and a public walkway on the northwest shoreline of Naples Island are to be financed by $9.2 million in Tidelands funding. “This project is long overdue, and I’m pleased we are finally able to move forward with construction,” DeLong told the Business Journal. “The process has been an excellent example of a strong partnership between city hall and the community in ensuring the final design meets the community’s needs.” The California Coastal Commission approved the project in October.
Shoreline Gateway West Phase Approved
In July, the Long Beach City Council approved a site plan review for the west phase of the Shoreline Gateway Project, which consists of a 17-story, 224-unit residential tower at 635 E. Ocean Blvd. The project also includes 275 parking spaces and 9,182 square feet of retail space. The site plan review passed on the condition that developer Shoreline Gateway LLC (which is a subsidiary of real estate developer Anderson Pacific, LLC) will provide offsite parking for construction workers and will explore options for creating additional permanent parking spaces for the project.
Uptown Property And Business Improvement District Moves Forward
The Uptown Property and Business Improvement District (PBID) in North Long Beach is having its first board meeting in early January, according to Rex Richardson, chief of staff for 9th District Councilmember Steven Neal. In a PBID, business and property owners assess themselves a fee to pay for services outside of those that the city offers, such as additional security. A nonprofit board oversees the funds. The first action by the board is to approve its bylaws, Richardson said. The board will also likely appoint more boardmembers, since the seats on the board have not all been filled.
Long Beach Common Operating Picture Grows
The Long Beach Police Department (LBPD) surveillance system known as Long Beach Common Operating Picture (COP) has been connecting to about four privately owned cameras in the city per month, according to LBPD Deputy Chief Laura Farinella. Long Beach COP is also connecting to new cameras installed at or near city parks, adding even more vantage points for surveillance. Despite staffing challenges – Farinella said the department has not yet hired an analyst or someone to monitor the cameras – the goal is to build a model where the department can layer in sworn officers and civilian staff to ensure someone is in front of the surveillance system full time. “When people know that there are video cameras around, it is a deterrent,” she said. “Someone is watching. We do our best to monitor the camera system Thursday, Friday, Saturday and Sunday during the evening hours. We want tourists and visitors to feel safe.”
Detectives are also leveraging the Long Beach COP cameras to look for suspects or review footage to see how a crime occurred. According to Farinella, “Sometimes it’s hours of video that detectives have to look through, but if you have video of someone committing a crime it shrinks the amount of time adjudicated in a courtroom.”
Mobility Element Awaits California Coastal Commission Certification
The new Mobility Element of the City of Long Beach’s General Plan, which was adopted by the Long Beach City Council in October, is being sent to the California Coastal Commission for certification this month. The Mobility Element provides guidelines for the movement of people, goods and vehicles throughout the city. At this time, there is no estimate for when the document’s certification will be complete.
Measure K Funds Long Beach Unified School District Projects
All schools in the Long Beach Unified School District will have wireless networks by fall 2014, thanks to funding from Measure K, a ballot measure approved by Long Beach voters in 2008. Measure K also funds the creation of two new high schools. Hill Classical Middle School in East Long Beach is being converted into a science and math oriented high school and is scheduled to open in 2015. Another high school, called Browning, is being built from the ground up in Signal Hill and should open by 2016. Browning High School’s curriculum will focus on the convention and tourism industries. Renaissance High School is also being renovated with Measure K funds starting in 2016.
Long Beach Airport Traffic Dips From Last Year
According to a traffic report from the Long Beach Airport, total year-to-date passenger traffic through October is down 8.6 percent from the same period last year. A five-year comparison shows that total passenger traffic is 2.5 percent higher from January to October of this year than in the same time period in 2008.
The Search For A New CSULB President Continues
The search for a new president of California State University, Long Beach is ongoing, according to Michael Uhlenkamp, director of media relations and new media for CSULB. The trustee search committee and an advisory committee met on December 6 in a closed session to “review qualifications and to determine which candidates would advance on to the next round,” Uhlenkamp said. A selection may be made “early next year,” he added.