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 notwant 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.
Ed Harris is the City Councilman representing District 2, which includes the Belmont Park property.
This article first appeared in the San Diego Free Press September 26, 2014.