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Unresolved Business 2018

As 2018 draws to a close, there are a number of unresolved or unfinished matters that stand to impact the City of Long Beach in the future. The Business Journal has compiled a list of updates for several of these issues, including: the state’s minimum wage increase, the city’s Styrofoam ban, the future of Community Hospital, the future title sponsor of the Grand Prix of Long Beach, the status of repairs to the Queen Mary, recreational marijuana, a proposed short-term rental ordinance, revisions to the city’s conditional use permit process, the East San Pedro Bay Ecosystem Restoration Feasibility Study, BNSF Railway Co.’s proposed railyard project adjacent to Westside neighborhoods and major capital improvement projects at the Port of Long Beach.

While not discussed below but covered extensively by the Business Journal over the past year, the unpredictability of lingering tariff disputes is another issue affecting the local economy. Ongoing discussions surrounding tariffs between the Trump administration and various countries, particularly the trade war with China could significantly impact trade flowing through the San Pedro Bay ports.

Minimum Wage Increase

The minimum wage in California is set to increase to $11 an hour for companies with 25 employees or fewer, and $12 an hour for companies with more than 25 employees starting January 1. The increase is part of a six-year plan, in which a $1 minimum wage increase is scheduled for the beginning of each calendar year until 2023. Smaller businesses received a one-year delay at the beginning of the increase schedule in 2017, placing them $1 behind each upcoming year.

While California cities may choose to instate a higher minimum wage for workers within their jurisdiction, Long Beach doesn’t have a local minimum wage requirement, meaning that employers in the city must comply with the minimum wage standard set at the state level.

Phase Two Of Styrofoam Ban Begins In March

The second phase of Long Beach’s expanded polystyrene ordinance, known informally as the “Styrofoam ban,” is scheduled to take effect on March 3, 2019. The ordinance prohibits the use of single-use food and beverage containers made of expanded polystyrene (EPS) foam and non-recyclable and non-compostable material in prepared food distribution.

The first phase of the ordinance began on September 3 and banned EPS foam from use in city government. The second phase expands the ordinance’s reach to include prepared food sales at large businesses, which include restaurants seating more than 101 persons, franchise restaurants, grocery and convenience stores, any food truck and the Long Beach Unified School District.

The third and final phase of the ban is scheduled for December 3, 2019. This will include prepared food sales at small businesses, defined as seating fewer than 100 persons. After this phase takes effect, retail sales of polystyrene ice chests and polystyrene bean bags and crafts will also be prohibited.

Lease Negotiations Continue For Community Hospital

The city and Molina, Wu, Network, LLC (MWN), the selected operator for Community Hospital, may be nearing a final lease agreement. In July, the hospital’s previous operator, MemorialCare Health System, relinquished its lease following a review that found the facility to be critically vulnerable to earthquakes. The Long Beach City Council selected MWN as the new hospital operator and set a deadline of January 3 to reach a final lease agreement.

John Keisler, director of the Long Beach Economic Development Department, updated the city council on the latest negotiations in a closed session held on November 20. While the details of MWN’s third and latest proposal are confidential, Diana Tang, the city’s manager of government affairs, said the final agreement could be reached and go to council for approval in December.

John Molina, former CFO of Molina Healthcare and partner in MWN, told the Business Journal that MWN’s goal is to open the hospital “as soon as we can.” There are still details to be finalized, he continued, such as negotiations with MemorialCare regarding equipment on site and having Community inspected by an outside agency. Molina said MWN is hoping to open the hospital by January 1, but would provide a more formal date soon.

Grand Prix Of Long Beach Still Seeking Title Sponsor

Earlier this year, Toyota bowed out as the title sponsor of the Grand Prix of Long Beach. Event organizer Jim Michaelian, president and CEO of the Grand Prix Association of Long Beach, said that the process of securing a new title sponsor is still underway. “We’re diligently out in the marketplace looking to find the best kind of deal we can put together and hope to have something finalized soon,” he told the Business Journal.

Michaelian said his organization might consider a nonautomotive company as title sponsor, which would in turn create an opportunity for an automotive sponsor as well. “We have had numerous conversations and are talking to a number of different entities,” he said, adding that “time is of the essence.” The next Grand Prix is scheduled for April 12-14, 2019.

City Staff To Report On Queen Mary Repairs In December

This month, city staff plan to update the city council on outstanding safety and structural concerns at the Queen Mary. The update will follow up on a list of 27 historic preservation and capital investment plan (HPCIP) programs that the ship’s master leaseholder, Urban Commons, agreed to fulfill when it accepted its lease in 2016. At present, while seven of the most critical repairs to the historical ship have been completed, a remaining 20 projects are only partially funded or unfunded. The department reported that, without additional funding, the HPCIP could remain incomplete until as late as 2027.

Dan Zaharoni, the chief development officer at Urban Commons, said that his firm has addressed most of the urgent issues that would affect the health and safety of its visitors, as well as the structural stability of the ship. Regarding funds for the additional repairs needed, Zaharoni was sanguine on the issue. “Between our own funds and investor funds and activities that we have planned over the next three to five years, we feel we are adequately funded to handle the ship’s repairs.”

Johnny Vallejo, property services officer for the Long Beach Economic Development Department, said that his department is in the process of preparing a written update on the remaining HPCIP projects.

Recreational Cannabis Update

California voters approved the legalization of recreational – or “adult use” – cannabis in form of Proposition 64 on the 2016 General Election ballot, but it wasn’t until January 2018 that the state allowed the cultivation, manufacturing and retail of cannabis products for recreational use. Following the statewide legalization, Long Beach decided to instate a six-month moratorium to flesh out its new rules and regulations for recreational cannabis licenses, which were signed into law by Mayor Robert Garcia in mid-July.

The city allowed the sale of recreational cannabis starting August 17, and since then, 12 businesses have successfully secured licenses to sell recreational cannabis, according to data provided by the city manager’s office. All shops licensed to sell recreational cannabis are co-located with medical marijuana dispensaries, as required by the local ordinance. The city is currently processing 396 applications for cannabis-related businesses, with a majority of applicants hoping to secure licenses for medical manufacturing and cultivation. The total number of dispensaries to be licensed is capped at 32, leaving 20 spots for businesses hoping to sell medical cannabis, recreational cannabis or a combination of both.

City Council To Vote On Short Term Rental Ordinance

The Long Beach City Council is scheduled to vote on an ordinance to regulate short-term rental units, such as those listed on platforms like Airbnb and HomeAway, tonight, December 4. After a period of community outreach this year, city staff created three options for a new ordinance, with each option providing a higher level of regulation.

The staff recommended option would limit the number of STRs per host and establish maximum occupancy for STRs. The Long Beach Department of Development Services recommends the adoption of this option “because it addresses the primary concerns and quality of life issues consistently voiced by the community.” If approved, this ordinance would generate 40% to 50% less revenue and incur higher administrative and enforcement costs. To view the complete proposal with other options, visit https://bit.ly/2Rm7bSH.

Fee For Conditional Use Permits Reduced

In December 2016, 2nd District Councilmember Jeannine Pearce asked that the city manager, city attorney and the relevant city agencies conduct a study of the city’s process for awarding conditional use permits (CUP). The purpose of the study was to make the CUP process more cost effective, streamline the public notification process, expedite CUP modifications for existing businesses and make it easier for those businesses to receive a CUP for an additional location.

In September, the city council approved a series of amendments to the city’s municipal code that reflected the recommendations made by the consulting firm. The amendments focused on the removal of use permit requirements for laundromats, thrift stores, live-work units and daycare facilities, and a reduction of the public notification radius for most projects to 300 feet as required by state law accompanied by an increased use of digital and newspaper notices. As a result of the anticipated decrease in notification costs, the city has reduced the fee for all use permit categories by $950.

East San Pedro Bay Study Reviews Breakwater Alternatives

The East San Pedro Bay Ecosystem Restoration Feasibility Study, a project that was kicked off by the City of Long Beach and the United States Army Corps of Engineers in February 2016, is in its environmental review phase, according to Diana Tang, manager of government affairs at the city manager’s office. This process began after the last official update on the project released by the city in late September. The update outlined outreach efforts to local stakeholders and presented multiple alternatives to Long Beach’s current breakwater structure.

The study aims to propose alternatives to the breakwater that would continue to protect the harbor, while also restoring and improving the aquatic ecosystem, and increasing biodiversity and ecosystem value. The value of an ecosystem is assessed by policymakers based on the natural resources or other benefits an ecosystem provides to the surrounding community, according to the Washington, D.C.-based Environmental Literacy Council.

BNSF Project Still In Limbo

BNSF Railway’s proposed Southern California International Gateway (SCIG) project at the Port of Los Angeles is still in limbo. BNSF and the port must address deficiencies found in the project’s environmental impact report (EIR) by a state court of appeals in order to move forward with the project, but as of yet have not taken action to do so.

In 2016, a trial court found that certain environmental impacts conducted by the parties through the initial EIR process were insufficient. A court of appeals later overturned this ruling, except in the case of two specific air quality issues it found needed to be addressed. In April this year, the California Supreme Court denied petitions for review of this decision.

An official port statement sent to the Business Journal said, “The city [of Los Angeles] has suspended all SCIG project activities, which shall not resume unless the city and BNSF take future actions to certify a revised EIR under CEQA [California Environmental Quality Act] and adopt related environmental and project approvals. . . . The Port of Los Angeles believes in the need for these types of environmentally progressive infrastructure improvements that improve efficiency in marine cargo intermodal transportation from the ports.”

Update On Port Of Long Beach Projects

The Port of Long Beach is undertaking a more than $4 billion capital improvement program, which includes significant projects that will prepare its facilities for larger vessels and improve quality and operational efficiencies. Below are updates on the largest ongoing projects, as provided by port staff.

  • Gerald Desmond Bridge Replacement: The $1.467 billion bridge will be higher to allow additional clearance for larger, more efficient cargo ships, and will also be wider to ease the flow of cars and trucks that use the bridge. The new bridge’s towers are already the tallest points in the city at 515 feet. Construction started in 2013 and is scheduled for completion by the end of 2019.
  • Middle Harbor Terminal Redevelopment Project: The $1.493 billion modernization project is creating the greenest, most technologically advanced terminal in North America. Construction began in 2011, with the first half of the new Long Beach Container Terminal opening in 2016. Completion is expected in late 2020. The project adds on-dock rail capacity, shore power hookups and a longer wharf, which will allow the new terminal to move twice the cargo with half the air pollution of the terminals it replaces.
  • Pier B On-Dock Rail Support Facility: Designed to shift cargo containers from trucks to rail, the planned $870 million facility will help the port stay competitive and meet environmental targets. The facility will allow railroads to assemble longer trains that will move goods more efficiently into and out of the port while also limiting truck traffic. Construction is scheduled to start in March 2022, with the entire project completed by 2032.
  • Port Headquarters: The new harbor department administration building at the civic center in Downtown Long Beach will encompass 239,000 square feet of highly efficient, flexible and sustainable space. Set for completion in June 2019, the $235.2 million structure will feature photovoltaic energy generation and use of natural light.

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