Guest column by Councilmember Ed Harris
Recently, the City Council was asked to grant an extension to the lease at Belmont Park in Mission Beach. Pacifica, a local developer and current leaseholder of the park’s commercial buildings, wanted the Council to approve a deal that would extend its current lease to 55 years. Pacifica has held the lease for two years.
After reviewing the proposed lease, I asked the Independent Budget Analyst (IBA) to determine whether it was consistent with best practices of other cities, and whether a longer-term lease would be in the City’s long-term economic interests.
The IBA concluded that the 50 year term of the proposed extension is longer than the average municipal ground lease, and that its rental rates seemed lower than the percentage-rent average of comparable municipal leases in other California cities.
I was also told by the City’s Real Estate Assets Department (READ) that the City has collected a total in net rent of $1,639,166 from the Belmont Park lease since 1988.
This actually looked like a bad deal, and you never double down on a bad deal.
It is important to note the following. First, if a lease extension is not granted to Pacifica, 23 years will still remain on that lease. Second, the estimated cost to repair the Plunge is $6 million dollars, and will be paid entirely by the taxpayers in the form of rent credits.
For 26 years, the City gave millions of dollars in rent credits to the former leasee to maintain the facility, including the Plunge. That maintenance did not occur.
With this knowledge, extending the lease didn’t seem like a good deal for the taxpayers. This actually looked like a bad deal, and you never double down on a bad deal.
While Pacifica was negotiating this lease extension with READ for over a year, my office was never a part of any of those negotiations. I became aware of this issue in late July.
When the matter finally came to Council on September 22, I had real concerns: The projected revenues; the insistence on a 55-year lease; and the lack of accountability to the City to maintain the property over time. Furthermore, the lease numbers I had been provided kept changing: The total amount of square footage; the total revenue Pacifica had already invested into the property; and the amount of revenue the City would realize.
The proposed new lease also called for valet parking at Belmont Park. Since when do we encourage paid parking at the beach? That’s a slippery slope that will undermine the character of our beach communities, and the ability for residents of all income levels to enjoy access to the public seashore.
At the Council hearing when I asked how this was a good deal for the City, I never received a good explanation. It’s my job on the Council to hold our private sector partners and myself accountable for the good of San Diego’s taxpayers.
Why would we not want to ask questions and work harder to get a better deal for the City and for the taxpayers?
While it’s important to have a lean budget, we must always be looking at the other side of the ledger to see how we can best leverage the City’s assets for revenue to pay for basic City services. Let me be clear. I’m not opposed to partnering with the private sector to lease City property.
In fact, earlier this month I asked Mayor Faulconer to prioritize lease extensions on City-owned property in the Sports Arena area. These leases have varying expiration dates and certain tenants whose leases expire in 2015 have been trying to obtain extensions from the City for almost two years. Furthermore, the Black Angus building has been vacant for years and has fallen into disrepair, and the City has lost valuable revenue because of this.
Crucially, by ensuring that we are able to lease these properties, we will be better positioned to help fund neighborhood services such as libraries, code enforcement, and police officers.
If this Belmont Park matter is any indication of business as usual, it looks to me like there’s actually a war on taxpayers and small business owners in San Diego.
Apart from the particulars of the Belmont park lease proposal, I’m struck by a larger point. Why would we not want to ask questions and work harder to get a better deal for the City and for the taxpayers? Which of my constituents does not want that?
I’ve heard a mantra lately on how there’s a “war on business” in San Diego.
If this Belmont Park matter is any indication of business as usual, it looks to me like there’s actually a war on taxpayers and small business owners in San Diego. Deals like the Belmont Park lease further shrink our middle class in an era when it’s under siege.
By not making the most of our City’s assets, we come up with cost shortfalls that we pass along to taxpayers. That results in small businesses having to hire private security because we don’t have enough police officers, and for Business Improvement Districts having to self-fund the upkeep and beautification of their neighborhoods.
At the end of the Council meeting, the Belmont Park lease matter was continued for 60 days. I am optimistic all stakeholders can return to the table during that time to address the concerns raised, and come up with a deal that’s mutually beneficial to Pacifica and to the City.
Actively addressing quality of life issues has been my priority since I took office five months ago. As a Marine veteran, a City lifeguard for 25 years, and now as the councilmember for District Two, I am more mindful than ever that democracy should always require vigilance, transparency, and accountability.
This is the tenth installment of the Who Runs San Diego? series, a project of the Democratic Woman’s Club, published weekly in the San Diego Free Press. The Democratic Woman’s Club mission is to promote Democratic Party principles including equality of opportunity, a level playing field, and fair and equal treatment for all.
Ed Harris is the City Councilman representing District 2, which includes the Belmont Park property.
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Corporate capital groups seem able to invert their small-government, austerity, no handouts mantra any time they perceive an opportunity to grab a government subsidy. There can never be too much money from government for them at that point. They’re like Catholic priests and little boys; they can’t keep their hands off.
Schools, post offices, sidewalks, bike lanes, housing for homeless, footbridges over canyons… those happen to be a burden on taxpayers, but a near-free gift of acres of public beach, now that there’s real good government.
Thank you, Ed Harris, for stimulating us to think about the lengths to which hypocrisy can reach.
Ridiculous…is all I have to say.
Private business needs to and should be involved in more. The government can’t seem to do much right most if the time. Pacifica is an excellent, top notch commercial real estate company with a longstanding reputation.
Folks in many places and at many levels are wondering: if you took a look at every public/private enterprise in San Diego (accomplished, suggested or thwarted) – at leases and stadiums and convention centers and parking structures and redevelopment/Civic San Diego – would you find that taxpayer money has been spent wisely?
Or would you find that taxpayer money and the precious assets of our city – the beaches, the bays, the waterfront, the parks, the ocean itself – have been parleyed at rock bottom prices or given away for free to further enrich the already rich?
Amen.
Ditto.
thank you Councilmember Harris- your forthright account of a clearly broken real estate management and leasing process is refreshing and appreciated.
Where is the accountability in the “rent credit” provision? As you note:
“For 26 years, the City gave millions of dollars in rent credits to the former leasee to maintain the facility, including the Plunge. That maintenance did not occur.
“With this knowledge, extending the lease didn’t seem like a good deal for the taxpayers. This actually looked like a bad deal, and you never double down on a bad deal.”
If this is a common contract point: Where are the reports from other leasees to ensure similar arrangements on city property are being properly monitored? Are these accounts open to the public to review?
Related question: I live near the building on Mission Bay Drive that used to house a Visitors Information Center. It was under private operation (not city employees), and is ideally located to provide people information and easy access from the freeway as they approach San Diego.
It is now closed and becoming an eyesore.
Likewise, the clubhouse at the nearby Mission Bay golf courses has tremendous potential, and last time I visited was in disrepair.
Any plans in the works for these buildings?
Mission Bay golf course clubhouse in disrepair? Why? The golf courses are operated as an Enterprise Fund, which means they are operated on a fee/cost recovery basis. The Golf Enterprise Fund, which operates the city’s 3 municipal golf courses is sitting on a $16Million reserve.
The Visitors Center is closed and an eyesore? What’s going on with the Mission Bay Improvement Fund? It’s supposed to be used for permanent public capital improvements and deferred maintenance of existing facilities.
There are pots of money floating around that lack transparency and accountability in their use.
It is a glaring omission from our civic conversation that no studies have been done to assess the value of public investments upon community residents and businesses, the city and the region. We are only provided glossy consultant reports touting the “benefits” of public subsidies of stadiums, convention centers and cruise ship accommodations.
Yet parents will move from one neighborhood to another that provides better public schools; real estate agents will tell you that a public library and public park or easy access to public beaches are meaningful selling points. Conservatives would privatize all of these in a heartbeat. They will provide pages of statistics and financial forecasts and pretty pictures to convince us of the benefits. We have nothing I know of to compare it to in terms of analyzing impacts of public investment. We are left for the most part with the anecdotal evidence of citizens showing up a council meetings in support of continued public investment in and control of our core services. And we all know how that goes.
Amen.
Great points everyone.
I often wonder how private companies and entities like Maritime Museum can rent portions of public parks and then turn around and charge me money to access those areas, or even just deny me access. I’m thinking specifically of the Spanish Landing and the South Embarcadero parks and just how often the general public is denied access to them because of on going or special events.
Or how about Seaport Village that has signs restricting the publics’ use of it’s “private property?” How can the walkway on the shore be private property?
Amen
Here is the most salient point from this excellent commentary:
I’ve heard a mantra lately on how there’s a “war on business” in San Diego. If this Belmont Park matter is any indication of business as usual, it looks to me like there’s actually a war on taxpayers and small business owners in San Diego.
Along with the comment from Linda P, this illustrates what I consider to be a basic truth that is often overlooked; the elephant in the room.
Thank you Mr. Harris. I certainly hope this temporary tenure on the council will not be your last in public service.
Agreed.
Watch Lori Zaph try to give away the store when she takes over the second district council seat. Zaph has been the poster child for corporate welfare in her current city council seat, having given away huge zoning concessions and taxpayer subsidies for the massive Quarry Falls housing development project in Mission Valley, in return for campaign contributions in the second district council race against Sarah Boot. I predict Zaph will rubber stamp the lease extension Pacifica is demanding and will help Pacifica get the property upzoned so they can build a giant new high rise hotel complex blocking off public access to Mission Beach. You read it here first.
I hope that Ed Harris will run against Zaph when she comes up for reelection. He represents the kind of analytical adult representative second district voters deserve.
AH HA
There is a way to stop the give-a-ways. It’s called RECALL.
I would like to echo comments made by Lori Saldana and Michael-Leonard:
“thank you Councilmember Harris- your forthright account of a clearly broken real estate management and leasing process is refreshing and appreciated.”
“Thank you Mr. Harris. I certainly hope this temporary tenure on the council will not be your last in public service.”
Bob Dorn,
you hit the nail on the head squarely…
“They’re like Catholic priests and little boys; they can’t keep their hands off. Schools, post offices, sidewalks, bike lanes, housing for homeless, footbridges over canyons… those happen to be a burden on taxpayers, but a near-free gift of acres of public beach, now that there’s real good government.”
Don Wood,
You the same,
“Zaph has been the poster child for corporate welfare in her current city council seat, having given away huge zoning concessions and taxpayer subsidies for the massive Quarry Falls housing development project in Mission Valley”
Lori’s embarrassment should be her campaigning for re-election citing poverty issues when she was being raised. Now’s she in a position to help out folks in similar challenges today and she’s just a spokesperson for the “Keepers of the Poor”. She has drunk the Chamber of Misery’s potion.
I worked for the City of Miami, Florida doing public/private joint ventures on waterfront property in my early career. Practical and beautiful development concepts and adaptive reuses, the necessity of public benefit, 3rd party determination of value (both as-is and potential) and feasibility analyses (economic and physical) were integral parts of our process. I admit I was a relative peon, but my bosses were good people with incredible public vision and a fair perspective – it’s a joint venture, so both sides have to benefit. That’s the public side and the private side.
When our projects got to City Council, they were typically warped, thwarted, modified and/or destroyed by narrow minded, self-centered, corrupt and/or greedy staff and politicians. Think I am judging unfairly? The year after I left the FBI busted that City wide open and removed the City Manager, a few council members, and a host of staff lackeys and private sector collaborators. It was gross beyond measure. But the greatest irony – the City was going broke.
I see this happening in San Diego, and only hope intervention is on its way. I salute Ed for doing the right thing, and holding out hope for a fair system, one that actually serves both sides of the table. I like business, I support business, I own and operate a small business in San Diego, I just don’t understand why a lessee in technical violation of their lease is being given the opportunity to renew for what amounts to a lifetime. And at below market rates?? And without clear public benefit!?
I like Belmont Park, but has any City planner considered the highest and best use for this property? My bet – its not the continuation of a relatively run-down “chucky cheese type” tourist trap on the pacific waterfront. But maybe that’s just me.
Lori Zapf will almost certainly vote for the renewal sight unseen, as jgeary pointed out here.
Ed, please do all you can, while you can, and then contact me to help you run again – I’ll be there, and clearly I won’t be alone.
We can only hope Court gets his wish and Ed Harris gets back onto the Council.
I’d also join Court’s attempt to establish this reality; urban corruption seldom
lies in deals between developers/moneymen on one side and city employees.
The corruption occurs between developers/moneymen and elected officials
trying to join the developers/moneymen class.
Thank you Court! Way to go Ed!
“I like Belmont Park, but has any City planner considered the highest and best use for this property? My bet – its not the continuation of a relatively run-down “chucky cheese type” tourist trap on the pacific waterfront.”
Mr. Court, please do some historical research before you make such a suggestion.
Our San Diego City Charter “Section 219: Pueblo Lands” states “… No lease shall be valid for a period of time exceeding fifteen years.”
http://tinyurl.com/20130108
Currently Cory Briggs is suing the City for its long term lease with the City exceeding the 15 year time limit. The City Council’s other choice would be to put the issue of an extended lease to voters for approval.
http://www.utsandiego.com/news/2014/sep/26/reality-tarnishes-city-real-estate-dreams/
The UT wants to give public land away, without any enforcement.
San Diego’s ‘public’ needs & deserves other sites in San Diego, such as one, decades old & successful business in Zapf’s present district that has yet to receive a long-term lease, though it’s Revenues to the City are nearly 5 times that of the Belmont Park…and it’s not even in the Coastal Zone… on less than 1/10th the size! The site, a few years ago slated to be ‘given away’ to a non-profit with Zero track record in Revenue-generations made headlines..yet nothing has changed to be able to have improvements (by the present owner-long desired) with only a month-to-month lease. No lender will fund it. This business is the epitome of a needed public-serving business…removing hundreds of bored kids off the streets and out of trouble in a ‘lower-income’ area. Why these businesses are not ‘paid-attention-to’ is everyone’s question. We must ‘hold accountable’ all council people for the real estate assets in their districts for the benefit of all of San Diego. All our Councilpeople need to be contacted & asked WHY an effective ‘accounting’ of real estate properties in their Districts have Not been done and Publicized, as this definitely is “the people’s business.” Remember? The Brown Act demands that our elected officials (and the administration) disclose how they ‘manage’ the ‘public’s lands! Just as the SD Unified School District’s ‘sale’ of both Barnard School (at $42/sq. ft.) and Mission Beach’s former school site (at apprx. $190/sq. ft.) in the Coastal Zone were grossly undervalued (after sitting vacant and unused for years..or that removed an active, soon-needed site, never again available in the highest density coastal zone!), the loss and mismanagement of publicly-owned sites must not continue.
Repost of comment to “follow the money” on Belmont Park and do something to protect it from climate change impacts and help in efforts to reduce Green House Gases. Fabulous to get article from Councilmember Harris direct on this matter. I am reposting my comment on Frank Gormlie’s September 24 OB Rag article on the same topic — (the lease terms) “are pathetic”– posted in SDFP. I did not see a link to that article.
I brought up this issue to C-3 breakfast meeting panel on urban parks and the public realm last week. Panelist Martin Poirer responded that there appears to be little or no coordination between departments such as park and rec, planning and real estate assets department. That is an important systemic and process issue that needs to be ddressed by the City Council.
Here are other points from September 24: Follow the money axiom is advisable for any decisions with public assets. As noted by others, in waning days of Sander’s administration a number of long term leases were finalized for cronies on Mission Bay.
Who gave who what when is supposedly in the public record. The Manager of the “Symphony Asset Pool IV, LLC” is Pacifica Enterprises, Inc out of Rancho Santa Fe (they should not be confused with Pacific Development Group). Their principles are public record.
I was at the hearing because of the climate action resolution and put in an opposition slip after hearing Middle Class Taxpayers Association representative Pat Zaharapoulos speak in opposition to the lease terms.
The Mayor’s representative piped up as the project was “heading south” to suggest that the Council might ought to continue the item. Councilmember Zapf dutifully made a continuance for discussion motion. She also cited the approval of the previously mentioned long term leases as justification for this long term lease (!) — “we should be doing things how we do it in San Diego, not what they do in LA or other places….”.
Ultimately, Councilmember Harris modified his motion at suggestion of Council President Gloria to not insist on keeping the existing 2038 lease deadline in order to facilitate discussions over the next 60 days. Councilmember Harris made a good point that fixing the Plunge with rent credits is still public funds.
Some additional observations: At the rate our planet is melting land mass ice, the entire Mission Beach and Belmont Park should be underwater by 2069 — anticipated end of extension if exercised in 2019). If they are going to have a lease for that period they should be contributing to necessary climate adaptation for the area. Maybe advisable to include a future facility for water taxis instead of valet parking.
Speaking of parking, the vast areas of asphalt shown in the article’s aerial photo could be put to much better use. Build it up higher and cover it with solar PV panels and charge real cost to park there. Maybe squeeze in a boutique coaster themed hotel over the parking and under the panels, too.
The paltry $70,000 traffic mitigation fund requirement is at least an order of magnitude off from what would be necessary to actually alleviate traffic. How about providing beach and park access via real transit to and from inland communities, especially those that are classified as “disadvantaged” and “communities of concern” by federal, state and regional agencies.
I hope Middle Class Taxpayers Assoc.and others will outline some stronger lease points for public benefit. Could probably demonstrate nexus for a climate mitigation and adaptation fund to include more transit service and some heavy duty measures to deal with sea level rising and storm protections.
If they want an option to extend, they need to really pony up on the sea level adaption and infrastructure work that will be necessary for at least the next two generations.
The question is how do we replace Lorie Zaph in January 2015 with Ed Harris before she does any more damage to this city like her proposal to break one of our 30 ft height limits along the extension of the trolley line from Old Town to University City?
So what are you thinking, coup d’etat?
Look, it’s now-mayor Faulconer’s old district and Mr. Harris was appointed by the democratic-majority council. I don’t like Zapf (please note correct spelling) politically either, but she was, ahem, ELECTED. And it’s a four-year term.
That’s how representative democracy works.
Yes…Michael-Leonard…. she was elected …but it was in an off year election….which means a lower representative turnout…. Thanks for the correction ….some spell it “Zitz.”
I would like to offer the City of San Diego $2/sq.ft./month for Belmont Park, to start the bidding. I will also offer to provide low-cost swimming and surfing lessons to ALL San Diego City children using the facility for the period of the lease (preferably 50 years). This contract is negotiable, but the only thing I’d like in return is the full reinstatement of lifeguard outreach and year-round funding to open the City Pools run by Park & Rec.
The beach is a community resource, it should be available to everyone, and every child in San Diego should be able to swim in the ocean safely by age 10.
http://pointlomadem.org/2013/03/08/san-diego-lifeguards-michael-russell-raises-questions-concerning-gender-diversity-and-salaries/