City Council Meeting - May 13, 1997.

City Council Building

The transcript begins with members of the public addressing the City Council, for which they are allowed three minutes.


Before the 4-part issue of the Queen Mary proposal was discussed at the Long Beach city council meeting of May 13, 1997, the subject of the Long Beach charter amendment was discussed. An octogenarian resident of Long Beach, Thomas Murphy, had this to say during his 3-minute address:

"....currently, council members receive 21,000 dollars annually... Didn't these poor, underpaid council members know what the salary structure was before they were forced by public demand to seek the office? After being elected, they seemed to think the people of Long Beach are all stupid, after all, we did vote each of them into office. How dumb can we be? Maybe we will "smarten" up before the next election...

In the past administrations, if we paid the members what they [thought] they were worth, it would have bankrupted the city. If we paid them what they are really worth, they would starve to death. As far as I'm concerned, no more raises! Let's concentrate on worthwhile city expenditures such as the 911 police/fire/emergency system. Don't take my remarks personally. (Laughter)

At least one person present at this meeting did not find humor in Mr. Murphy's comments. Mayor O'Neill spoke up, "I must say...and I probably shouldn't say this but it is very amusing to hear aspersions cast on the council and people seem to think it's very funny. I don't think it's funny."

Mr. Murphy interjected, "I think it's hilarious!" (More laughter)

"Mr. Murphy, I think it's very good that you do and we gave you your three minutes to do it...and I would appreciate it if you would show some respect to the council, they have been elected and they are working very hard to make sure that they represent the people...but I do take offense at everyone laughing and thinking it's wonderful".

Ironically, the next speaker was Colette Marie McLaughlin who founded the Long Beach activist organization Citizens acting as Volunteers for Everyone. This acronym, C.A.V.E., was derived from Mayor O'Neill's own slighting remark of dissenting residents of Long Beach. She had said, "I am against C.A.V.E. people, those are the citizens against virtually everything".

McLaughlin has been an educator in the Long Beach area for many years. Of the proposed amendments to the Long Beach City Charter she stated her own provisos:

"One of the things that the C.A.V.E. people of Long Beach did come up with as our "State of the City" (proposal) was the concern that we need full time council members. To do that, [we would need to] get rid of the city manager who appears, from my experience (because you do know I'm here every week) and... it seems like at least 98 percent of what he proposes everyone...unanimously approves.

[Council members] don't seem to be hearing people. I would like it if we could have them directly accountable to us instead of having to go through Mr. Hankla...these people [should] start representing the concerns of constituents, not some special interest groups that seem to be running the city and making a lot of decisions...

...some of these people have up to three full-time staff people who are paid around 50,000...this was in some documents that I saw in city files...I would like it if we could reassess how our money is being spent...and I will volunteer to be on that task committee".

McLaughlin reinforced her presentation with a letter to each of the city council members. Les Robbins replied that he would never recommend her admission to such a body because of the controversial subjects she breaches at council meetings.

Item 24 on the agenda of May 13, 1997 had 4 suggested actions:

1. Deny request for the purchase of the Queen Mary.

2. Deny the request for the relocation of the Queen Mary.

3. Authorize City Manager to enter into an Exclusive Negotiating Agreement with Queen’s Seaport Development, Inc. for a period of 180 days and to negotiate a Disposition and Development Agreement with Queen’s Seaport Development, Inc., subject to final approval by the City Council.

4. Approve a lease agreement with Queen’s Seaport Development, Inc. for the development and operation of a special events park.

Mayor O'Neill reluctantly invited public comment on these agenda items:

"There are some of you that have spoken many times on this issue; if you could bring a new approach...I would like to also caution you, the last time we had this, there were personal attacks made on individuals and I would prefer that not to happen as you are making your remarks..."

Former manager of the Promenade Cafe aboard the Queen Mary, Liz Langlois, was the first to speak:

"...this is a truth. Even if you gave Joe Prevratil all the money in the world and a three-million year lease, he would not be able to do the job. His debt in so huge, 8-10 million dollars, his problems so severe, that the universal truth is he can only go one direction-down. Another, another bankruptcy! He has done nothing to develop the property in the past five years and he does not seem capable...look at his track record...

Mayor O'Neill, "Speak to the motion, please".

I am. I am. Joe Prevratil was hired to operate the ship at its present location and to develop the surrounding 55 acres. He should be left to sink or swim on his own. No more bail-outs by our city officials with tax payer dollars or tax payer assets. Thank you."

I(Diane Rush)was the next speaker:

"I want to register my endorsement of the proposed denial of RMS'request to purchase the Queen Mary or relocate the ship.

When the Queen Mary Foundation did its own investigation of the Japanese restoration plans as outlined by Prevratil,we discovered that if the vessel had gone to Tokyo, all the wood interiors would have been removed to comply with that city's strict fire code.

As for further lease amendments, development proposals, etc., why bother drawing up a document? The previous lease agreements are nothing more than words on paper. Where is the inventory list of archival items required by the original contract? Where is the development proposal from RMS that was supposed to have been presented to the city last July?

Why are maintenance and repairs needed since 1992 still being neglected?

Not only are the ship's archives being auctioned off, but members of the Queen Mary Foundation are followed, harassed and kept off the ship. Why is this? Could it be because the city has already decided the fate of the Queen Mary and is determined not to have interference from the public? Certainly, based on past experience with the city council's "done deals", this is a safe speculation.

How well do any of you know your city's greatest asset? How often do any of you actually go on board the Queen Mary and really have a look around?

It has been said, 'The things that matter most should not be at the mercy of things that matter least'. Don't barter this city's long-term worth for short-term gain.

Do what's best for the Queen Mary. People come to Long Beach because it has something unique, not because it's a generic industrial sea port".

Linda Howell DiMario, President and CEO of Long Beach area Covention and Visitors Bureau spoke in favor of keeping the Queen Mary in Long Beach:

"The Convention and Visitors Bureau does believe that, indeed, the great ship the Queen Mary must have significant infrastructure improvements to...serve as the asset that Long Beach deserves...We are hopeful, however, that this infrastructure improvement and all other remedies will be within the city of Long Beach..."

Long Beach educator and activist, Colette McLaughlin, presented the following material:

"As you note in your literature, [the Queen Mary] is one of the main attractions to our city; that people want to see it when they come to visit...

What concerns me deeply, and being very proud of living in the United States and having the liberties I have...I am greatly concerned that there seems to be an attempt to block dialogue that will add to a discussion.

I think that the concern that Mr. Prevratil may be having financial difficulties should be investigated...what concerns me is the [favoritism] this person gets. I was shocked when he went into that special room where you have all that food, where I am not admitted...Why [is] Mr. Prevratil, who is a private citizen, being treated differently...?

It is very peculiar that Miss Diane Rush...[was]arrested on the Queen Mary for no probable cause...That doesn't seem like democratic behavior..."

Community leader and spokeswoman, Ann Cantrell, has been widely acclaimed in local newspapers.

"I think maybe you remember back when the Press-Telegram used to publish my letters that I wrote a letter asking that the Queen Mary be kept here in Long Beach and not be sent to Tokyo. I have found that it is recognized all over the world... that Long Beach is the home of the Queen Mary. I used to...struggle saying where Long Beach was, that it was between Hollywood and Disneyland and nobody had ever heard of Long Beach until the Queen Mary got here.

I am concerned about the idea of the lease and the special events park. I did have a question, I understand... that when the port turned the Queen Mary back to the city that there was 6.5 million dollars given for immediate repairs and maintenance and that has gone for the redevelopment project of the Queensway Bay. Is that correct information?"

Mayor O'Neill replied, "I think that perhaps the question that you ask is going to be part of the discussion".

Beverly O'Neill indicated that audience participation had come to a close and it was time for council discussion:

"I'll bring this back to the council members. I think we have had at least three, perhaps four meetings on this particular item. We had at the very beginning the proposal, the next meeting we had was to have a further study which was 140,000 dollars to study whether or not this was a good proposal whether or not the ship would make the trip. The council voted that down at the time. It was thought...that additional proposals should be made, we've asked the city manager to look into this. This report has been presented by the city manager the suggested actions are: [This only needs to be listed once]

1. Deny request for the purchase of the Queen Mary.

2. Deny the request for the relocation of the Queen Mary.

3. Authorize City Manager to enter into an Exclusive Negotiating Agreement with Queen's Seaport Development, Inc. for a period of 180 days and to negotiate a Disposition and Development Agreement with Queen's Seaport Development, Inc., subject to final approval by the City Council.

4. Approve a lease agreement with Queen's Seaport Development, Inc. for the development and operation of a special events park.

O'Neill continued:

"...we all know that the Queen Mary needs additional refurbishment it needs at least 40 million dollars in upgrading all of the systems that are 30 to 60 years old, bringing the hotel up to ...the standards of today.

So there is much to be done with the Queen Mary and we have not got 40 million to do that so this proposal is to bring the attention of the council and to try to come to a direction because we have worked with this and have struggled with this issue for the last three months, I believe. So I would like to bring it to the council for further discussion.

We have heard from the community, perhaps Mr. Prevratil would like to speak to the group before we have a discussion of the council. Mr. Prevratil, would you like to come forward?

(Prevratil Speaks:)"...The time has clearly come to make some positive decisions. As you pointed out mayor, no one doubts that the Queen Mary, a 60-year old ship, is in need of some major repairs. Forgetting "soft costs" there is clearly 20 million dollars of hard capital costs that need to be taken care of. We are the operators of the Queen Mary, we do not own it, the city does. As lessees we are obligated to repair and maintain it and we do that; but not to replace major capital items. We feel that is the lessor's responsibility, which is the city.

To alleviate the expenses of major capital improvement costs to the city, I have proposed earlier this year, a innovative plan to take the Queen Mary to Tokyo for three to five years. The plan consisted of the following key points:

...40 million to refurbish the Queen Mary in Long Beach;(and these funds are available for the project).

...10 to 20 million to tug the Queen Mary to Tokyo and back.

The city manager's own report said the trip was feasible even though it would be costly. These are funds available for these costs including insuring the ship for 65 million and Lloyds is willing to do that. The city would receive 5 million per year per each year the ship was gone and when it was returned, it would return with a 20 million dollar maintenance endowment for future years. The project is economically feasible in Tokyo. An independent Tokyo consulting report verified that it was feasible. The Tokyo Metropolitan Government signed a memorandum of understanding to provide the dock site. The worldwide positive publicity to Long Beach for this project is immense.

I disagree with Linda Howell, though I have enormous respect for her, 'that a shadow will be cast over everything good and exciting happening in the city'. If the Queen Mary is allowed to leave quite the contrary would occur. The positive world-wide spotlight would eliminate any shadow. What is good and exciting would receive even greater publicity and the city would be promoted in Tokyo from the Queen Mary while it is there. The movie opportunitites, T.V. opportunities product development and other marketing activities created would enhance the city's image as a progressive city and it would get business from it.

The Queen Mary as a good will ambassador to Tokyo from Long Beach would create world-wide positive publicity for Long Beach. From the businsess standpoint, the Grand Tour is a win-win situation for the city. The Grand Tour proposal is clear and solves the renovation expense problems. In February there was some question on the feasibility and viability of the Grand Tour. There's no real question on that now. The money is available for renovation, it can be towed safely to and back from Tokyo and its financial viability in Tokyo is (inaudible). This morning's article in the L.A. Times certainly supports that premise.

However, if the Queen Mary is not permitted to go to Tokyo, how will the city finance some 20-plus million dollars in capital improvements? When last we were here in the council chambers, the city council asked Mr. Hankla to present a proposal to solve the problem so it could be weighed against the Grand Tour. That proposal is before you tonight. The key points to that plan as we understand it are:

For every dollar in future rent we would pay, those dollars would be spent in capital improvements. Mr. Hankla has limited that to incremental rent that is over our base rent at 360,000 per year or about 400,000 to 500,000 per year based on last year's rent. Even at a full rent-credit for capital improvements, that would be some 700,000 to 800,000 per year. With ordinary growth it could take over 50 years to earn the funds to replace the systems that are already well beyond their normal life.

The 5 million remaining in Queen Mary Fund would be made available for immediate system replacement expenses that is indeed welcome. That is the subject that Ann Cantrell mentioned. I respectfully submit that this approach runs the substantial risk of being inadequate to cover the replacement costs of systems well beyond their normal life. Even with our contribution of 6 million for hotel and and food and beverage refurbishment, this approach fails by comparison to the advantages of the Grand Tour.

As to our request for a longer lease to finance our development of the 45 acres we are prepared to accept the E.N.A. (Exclusive Negotiating Agreement) leading to a D.D.A. (a disposition and development agreement) if the conditions of the D.D.A. are reasonable. However, all the paperwork necessary to be done should be concurrent and once the E.I.R. (environmental impact report) is complete there should be no delaying sending the lease extension to the city council for approval.

As to the trade mark use, we already have it for our current lease, we are prepared to work with the city's outside council to perfect that trade mark. And to its use for a longer period, than our current lease, we agree with our city manager that it is reasonable to authorize trade mark use with a future leasehold term. However, as our project firms up in Las Vegas, we will return to the city council for a specific proposal approval.

In conclusion, I submit to you that the real solution to solving the Queen Mary's 20 million plus systems replacement costs is approving the Grand Tour. The money is there, moving the ship to and back is safe and the project is feasible and viable in Japan. And I believe the world-wide publicity will be very positive. If you don't approve the Grand Tour, there is a very real risk of there being inadequate funds to pay for all the necessary system replacement costs, but the window of opportunity on the Grand Tour will have closed. I disagree with Mr. Hankla that there is a considerable risk in taking the Queen Mary to Tokyo and back. If there was considerable risk, the ship would not be insureable. The real risk, however, in my opinion, is by not approving the Grand Tour. There may well not be adequate funds available on a timely basis to pay for the replacement systems which are so many years past their normal life cycle, as they cease to function.

Members of the city council, I believe that Long Beach is a world class city. In these world olympic times, let's not accept the silver medal when we can get the gold medal. The decision is yours".

Mayor O'Neill: "I would like to ask if the city auditor, Gary Borroughs, would like to make any statement or if Mr. Hankla would like to make a statement before we return to the council".

Gary Burroughs now approached the podium:

"...In 1992 (the fall of '92) there was a lease negotiated at that time which was a very strict lease. It was a lease which I think the city was fearful of being obligated for those expenditures regarding the Queen Mary. That lease provided for ordinary maintenance to be paid for by Mr. Prevratil during the operation of the ship it was initially estimated that that number was, I think, 3½ million a year. I'm using five-year memory to get that number.

In addition to that, there was a requirement for what we call extraordinary repairs and maintenance and improvements and it was anticipated that we wouldn't spend the money annually but that over each year there would be a certain amount of money collected...I think that fund was set at 2 million per year, it may have been 2½ million a year.

In addition to that there was another extraordinary maintenance fund that was stretched beyond that and I don't remember the numbers for that except that there was a third fund and there was a five-year lease. The projections at that time prepared by Mr. Prevratil and presented by him did assume that they could accomplish this...we've always been concerned about another item which was the capital. I've always felt that the ship's never been fully capitalized.

I said way back then (1992) it should have 8 to 10 million a year, somehow that got dropped to five and Mr. Prevratil ended up with 2...

In 1995 the lease was amended and at that point, from my understanding, two or three things were changed. Number one, the change in terms, the 20-year extension. Initially there was a change in not the responsibility of who was responsible for the obligation for the repairs and maintenance but there was a change in that Mr. Prevratil did not have to do the funding. Because...he didn't have the cash resources sufficient to do that.

And now here we are again with another proposal which, as I understand it, encompasses two or three things, and I say some of this for clarification because I've kinda heard two stories. One is about what the incremental rent is. I understood from the city manager that the incremental rent was above all the rent that's there today which includes the base rent and the percentage rent that is currently in the existing lease. And it would be from new revenues generated by just the development of the 45 acres. Additionally, is the concern I have about responsibility for repairs and maintenance. A lot of the items that I see in the 20 million dollar list or 32 million dollar list I would suggest that some of those still fall on Mr. Prevratil's shoulders. However, I think the city does have the responsibility for at least the 6½ million dollars which came from the port and the money was funded by the port.

So, I think in looking at the issues as, one, to deal with accepting that if the city is going to maintain the ship, keep the ship in Long Beach, the valuable tourist attraction (it's an icon to the city of Long Beach; it is the Eiffel Tower of Long Beach). If you accept that premise, I think you have to also accept with it that there is a price tag that goes with it, and I'm going to suggest to you that that price tag has really not changed over the last five years because now, I've always said it's five and a half million a year, maybe six...find a way to fund that and Mr. Hankla is proposing to fund that, not from the ship, but from the development of the 45 acres. Frankly, I think that that's the only place you're going to get the money.

The second proposal has been the Grand Tour of Japan.I wish I had more confidence that that was a real proposal. I have asked Mr. Prevratil for information regarding the documentation which was supplied in the L.A. Times today.

I have not received that documentation; I've received listings but I have not received documentation. The last conversation I had with Mr. Prevratil, he was in the process of acquiring it, so maybe he has acquired it as of now. But I think before we really figure out whether the Japanese deal is real at least we need to look at the documentation.

So, I think the question before you council people is, 1. the acceptance, if we are going to maintain and hang on to the Queen Mary, keep it in Long Beach, the acceptance that the Queen Mary by itself will not be sufficient to generate the revenues to support it...it will need a subsidy, and if that subsidy happens to be from the land, then it's from the land. That's your policy decision. And if there are other options, for example, the Grand Tour, then [we need] additional documentation..."

City Manager, James Hankla, comments:

Mr. Burroughs is essentially correct in the proposal to fund the extraordinary repairs on the Queen Mary proposed to come from incremental revenues that would be derived from the development of the 45 acres. Now bear in mind that Disney had some great plans for those 45 acres. Of course they wanted to expand it by a 250-acre landfill. The reason they were unable to proceed with those plans was that they were unable to secure a permit from the Coastal Commission to do so. They were unable to get legislation in Sacramento to permit that. But they felt from the outset that the Queen Mary site was a good venue; a good venue from which attractions could be staged attractively and competitively. And Mr. Prevratil has proposed (this?) attraction on the 45 acres that supports the Queen Mary.

I believe that his concepts, relative to future port, present port and port of the past are creative concepts. I believe that they could provide the requisite cash flow to generate sufficient cash to fund the improvements or repairs over time. That is the foundation upon which my recommendation is based.

I concur completely with Linda Howell DiMario that the Queen Mary is an important icon to the tourist industry in this community. Now I think it goes beyond that. I believe that the minute that we announce that we are contemplating the departure of the ship to Japan, whether or not it ultimately is determined to be feasible, that there will be an instant lapse in bookings not only for the Queen Mary but bookings for other convention venues in the city of Long Beach. I think that that is indisputable.

Mr. Burroughs raises a good point with regard to maintenance, and the fact of the matter is, that in the lease amendment of 1995 we clearly recognized...first of all we recognized the Queen Mary was under capitalized. The city council got into the transaction with regard to the Queen Mary expecting that 5 million dollars was going to be forthcoming to capitalize the operation of the ship. That subsequently shrank to 2 million dollars and I will say that in 1995 we recognized that the Queen Mary was, in and of itself, unable to throw off sufficient cash to finance the provisions of the original five-year leasehold. We also recognize that that five-year leasehold, in and of itself, was insufficient in terms of its terms to allow Mr. Prevratil to do even creative borrowing.

So, we amended the lease, we extended the lease term; we made some provisions. This is the letter that the city council approved which was dated July 25, 1995. The city will continue to monitor the level of maintenance performed on the Queen Mary and adjacent properties to ensure the level required by an annual base maintenance plan. (We have an annual base maintenance plan). The tenant shall pay for all maintenance and repair expenses necessary to maintain the Queen Mary and premises to levels established by the base maintenance plan. The city shall establish a reserve fund of approximately 6.5 million dollars plus future rent revenues to be used for improvements and the betterment of the Queen Mary.

There is no requirement under the lease that improvements will be paid for under this fund however, this fund is established per (Latin term?) to ordinance HD, which means "Harbor Department" -1605 which provided 6,500,000 dollars for funding the support improvements then contemplated for the Queen Mary. This fund should provide dollars for extraordinary incidents which cannot be foreseen. That fund currently has in excess of 7 million dollars. And that fund is also provided through interest earnings the where-with-all for the council to undertake the planning for the overall Queensway Bay Development of which the Queen Mary is an important part.

This letter goes on to say that the tenant demonstrates to the satisfaction of the city manager that it has insufficient reserves, cash flows or borrowing capacity to carry out a proposed repair project and the city manager agrees that the improvement is essential to the operation of the Queen Mary. The city manager (in his?) sole discretion may agree (to?) approve funds for any improvement.

The one improvement that sticks out in my mind; it has been approved from that source, is the repair of the teak decks of the Queen Mary. So that's an example of a project undertaken with that...which constitutes, really, the roof of the building. If it were a building those teak decks would be the roof. So I hope that answers some of the questions about where is the fund, the fund is intact and certainly as we have it and are proposing this concept to immediately commit 5 million dollars and in conjunction with 6 million dollars that Mr. Prevratil had received from the loan.

We met with Mr. Prevratil's lenders, we believe that that loan is certainly viable (without some conditions which we frankly considered onerous, initially) and that would accomplish the refurbishment of the Hotel Queen Mary straight away. It would also deal with the most pressing issues of repair and restoration regarding major equipment systems, heating/ventilating/air-conditioning and plumbing. Madam Mayor, that concludes my recommendations. My recommendation will remain that the Queen Mary stay in the city of Long Beach".

Mayor O'Neill thanks James Hankla and recognizes the first two respondents from the council, "Councilman Lowenthal and then Councilman Robbins:"

(Lowenthal:)"I want to first just ask a question really...when we have two proposals before us, there are questions about both proposals...that make it very difficult to quickly or easily say this one is a sure winner verses that...My major concern is the Queen Mary is an asset, how is the city going to preserve it, how are we going to maintain it and provide (it?) for future generations.

That we have before us a proposal for immediately of approximately 11 million dollars...6 million dollars...for the upgrade of the hotel, 5 million dollars that the city would put in for some kinds of infrastructure improvements. You also indicated that in your reports (that there is) approximately 32 million dollars needed in infrastructure improvements. So we're still short 27 million dollars.

...I'm going to be leaving this council... in the year 2000...so I use that as a [reference] point. When I leave, let's say there isn't any more money that comes from this development that's going to occur and it takes a while before some of these 45 acres and incremental money comes in. What, with the 11 million dollars...what is the Queen Mary going to look like, let's say, for the next 3 to 5 years in terms of where it is now...we don't have a concrete plan now for the other 27 million dollars."

City Manager, James Hankla breaks in with the following comments:

"I think that, to a certain extent, depends upon our ability, Mr. Prevratil's as well as the city's to carry forward a reasonable leasehold development on the 45 acres. It costs a million dollars an acre to build land on the Pacific Ocean. That property is worth a minimum of 45 million dollars. It sits at the end of the Long Beach arena. It has good transportation access...a reasonable cap rate it should be expected to return to the city 4½ million dollars a year".

Alan Lowenthal:

"So you're anticipating that we should have over 4 million...dollars a year which would be the incremental money to do the upgrade of the Queen Mary".

James Hankla:

"That would be a very conservative estimate from real estate development".

Alan Lowenthal:

"And therefore, your anticipation is that money should be forthcoming within a few years and that within a realistic time period the upgrade can be done. Is that what you're saying?"

James Hankla:

"That is my theory".

Mayor O'Neill recognizes councilman Les Robbins:

"...I don't think that it's any surprise to anyone in the audience what a dilemma we are faced with here with this particular item. What do we do with the Queen Mary? How to we repair the Queen Mary, how do we refurbish the Queen Mary, can we do it without sending it to Japan? Can we do it by keeping it here? I don't think that anyone in this room would argue with the fact that the Queen Mary is certainly the most prominent icon...but certainly the Queen Mary...is our most notable world-wide icon...

...It is an extremely important part of the package...of this city's portfolio when we try to go out and market our city as a destination resort for conventions and for individuals that would come to Long Beach to vacation.

I think that Mr. Prevratil's proposal certainly appears to be quite inviting. When this issue came before the council a couple of months ago...I was very surprised that there were not enough votes behind this rail to spend the money to go out and get an independent third party audit, appraisal of the viability both...financially as well as...from a practical standpoint of taking this ship to Japan for a period of 3 to 4 to 5 years; and doing all the things that needed to be done in order to make that happen.

I came to this meeting that particular evening thinking that that was a done deal; that that was a "slam dunk"...and I made the statement that particular evening that I could not make an informed decision on a proposal of this magnitude without having someone come in perhaps with the assistance of Mr. Burroughs, our elected city auditor, and take a look at the proposal and find out what was real and what wasn't real.

...I think that all of us behind the rail here were somewhat surprised this morning when we got up and read the L.A. Times article and found out a lot of the pieces that had not been brought to our attention before with respect to all of the little intricacies...what would appear to make this such a successful financial transaction in Japan...

We found out over the course of the last several weeks that an environmental impact report (E.I.R.) would be required before the ship could be moved. That's going to take 6, 8, 9 months in order to do an E.I.R. Before we can even knock the breakwater down around the ship, and tow it over to dry dock and see if...that ship can withstand a trip overseas... Councilmember Shultz... was very adamant and very passionate about his belief that that was "iffy" at best.

Of course, getting a ship insured is wonderful but if the ship sinks we've lost a heck of a lot more than that 65 million dollars could ever restore; could ever bring back to this city.

One thing that I don't want to see happen tonight is for this city council to continue to sit here and debate this particular issue and waffle back and forth...It's not the kind of publicity...that the Queen Mary would like to have, I don't think it bodes well for those of us behind the rail, I think it makes it more difficult for the Convention and Visitors Bureau to do their job, since they are booking conventions [years in advance]. People would like to have some assurances of what the situation is going to be...

...having had an opportunity to discuss this issue in closed session earlier today (sic), hear what staff had to say; what their concerns were...and basically say that I am unconvinced at this point in time that there is support from behind this rail to take that ship to Japan for any length of time...I believe that it is probably very feasible to put together a financing plan to restore the ship and to do the things that need to be done. I'm not convinced that this is a 40 million dollar price tag.

I don't think that anyone has been able to verify that it is in fact a 40 million dollar price tag. It could very easily be a 30 million dollar price tag or a 25 million dollar price tag. We know that it's going to take time to do all this anyway. We have a prioritized list of what needs to be done...we can do the things that are most important relatively quickly so that there won't be any major interruption in the quality of the experience on that ship, especially dealing with plumbing issues, heating, ventilation, air-conditioning..."

Mayor O'Neill recognizes councilman Del Roosevelt:

"...we have two choices, develop it here or look at the Japan deal. 140 thousand dollars, 150 thousand dollars for a feasibility study to send some people over there to Japan I thought was far too expensive of a proposition for us to engage in, especially when we have a city auditor here that is fully capable...of judging whether a deal is a deal or not.

To date, the only thing that I've seen with regard to the deal from Japan was the original three-page proposal that Mr. Prevratil sent over giving the outline. I haven't seen any letters of intent from any of the advertiser's companies over there that say they are going to sponsor this and I haven't seen any indication from the city of Tokyo itself... however I am hearing that these things exist...I am now charged to make a decision...and I haven't seen the whole deal. Being a businessman, someone just telling me it's in place, even though I have the highest respect for you, I have to see it...

Although I don't have any problem with suggesting that the city manager should move forward in negotiation of the lease...The offer was made before by Mr. Prevratil to have our city auditor, Gary Burroughs, accompany him to Tokyo to talk with these people and see if they are real or not...

Mayor O'Neill recognized councilman Jeffrey Kellogg:

"Of the four items on our agenda item, I really believe three are fairly simple to deal with...one is the [consideration of selling] the ship to Joe Prevratil and I have not heard or seen anything that would tell this council wants to do that... What I intend to do is make the motion...that we deny to sell the Queen Mary to Joe Prevratil. I would then follow that with the third item...to set forth in motion 180 days for our city manager to sit down and try to put together...some type of a plan or agreement...to see if indeed there can be development of that property. That is not signing an agreement, that is just opening up discussion for an agreement, because as many of you know, I have some great difficulties tying the ship to the land in any way...to at least have the 180 days to have negotiations that have to come back to us...if there are options...

...the final item is...the most important one of all, the special events park...and that, of course, is tied in with the Queensway Bay development...there is no controversy there, there is no hidden agenda there, there's not giving us a "sweetheart deal" there, these things we need to do.

The comments I have heard from one colleague in councilman Roosevelt I think you're going to hear from others. I think they're legitimate, I know we can go back, and I was adamant about the 150,000 dollar consulting fee. I don't know if you have to send Gary Burroughs again to Japan to find those things out. Let me again emphasize the fact that I cannot make good, sound decisions...unless I have the information. I have got more information reading the L.A. Times than I have in our council packet on what this deal included...

...I do believe that...even the value of an icon, even the value to our tourism industry, the investment the city has made into this ship and return on the value, I would argue with...the strongest supporters of the Queen Mary. I think it's been a quarter of a century that's it's proven financially it has done more damage to the city financially than positive.

All the people that say when you go to London or anywhere else in the world and they say, [isn't Long Beach the home] of the Queen Mary? That does have a value but it has more value if they said I went to Long Beach because the Queen Mary was there and I visited it...and that, I don't know if that's happening...

...I'll make the motion to deny the request for the purchase of the Queen Mary..."

Mayor O'Neill responds, "It's been moved and seconded to deny the request for the purchase of the Queen Mary. We have several council members that wish to speak and I would like to hold the vote unless all of you want to vote on this at this time".

Mayor O'Neill and Councilman Kellogg had a brief dialogue to clarify whether to debate and vote on one item at a time or whether to hold votes until all agenda items have been discussed.

Councilwoman Oropeza queries:

"May I ask for clarification from council? If the motion on the floor is to deny the request for the purchase of the Queen Mary, council, is debate then on that point, then we can vote and then we can go on to other points, is that correct? (Affirmative reply) Then I would request respectfully that the motion be accepted. (Call?) it to the floor and the debate be around that issue, we dispose of that motion, and move on".

Mayor O'Neill asks, "Are there members that wish to debate this particular motion?"

The mayor recognizes Councilman Drummond:

"One of the problems that I see in the long continuing struggle with the Queen Mary...particularly with the issue as presented before...taking the Grand Tour to Japan...the actual facts have never been laid on the table in front of the public. The proposal has been made but we haven't gone back to investigate..."

Mayor O'Neill "We're talking about the sale"

Drummond "Wait! We're talking about rejecting the sale outright. Is that a separate proposal?"

Mayor O'Neill "Yes"

Drummond "That's what I'm speaking to. I really believe it is my duty to gather as much information as possible and put it before the public. I believe that that's essential. And before I could vote, I would have to have information; that's the problem. And that's why I would vote "no" on this particular...

Mayor O'Neill "On the sale"

Drummond "That's right. I vote no in the proposal to oppose the sale, right? Isn't that it? Right. Right. I believe it's our duty to give all the information to the public before we make that decision."

Mayor O'Neill "Are there other comments on the motion, the motion is to deny the request for the purchase of the Queen Mary. Please record your votes on the first motion. To deny, if you say 'yes, deny it' or 'no, don't deny it'.

City Clerk "The motion carries 7 to 1"

Councilman Robbins (?) proposes the adoption of item 3: Authorize City Manager to enter into an Exclusive Negotiating Agreement with Queen's Seaport Development, Inc. for a period of 180 days and to negotiate a Disposition and Development Agreement with Queen's Seaport Development, Inc. subject to final approval by the city council.

Mayor O'Neill "The motion has been moved and seconded, is there someone that wishes to debate this motion? Councilmember Oropeza then councilmember Lowenthal".

"...this motion, if it's adopted, in lay person's language, basically directs the city manager to work with Mr. Prevratil to come up with an actual proposal for the development of the 44 acres, correct?...That is separate from the other issues that we're dealing with in terms of the maintenance of the ship. This is only on the development of the 44 acres, correct?"

Mayor O'Neill, "Councilman Lowenthal, and then we come back to the council".

"Although the city manager is proposing...[this] recommendation regarding only the incremental increase and Mr. Prevratil has initially requested that all the rent credits be done. We are not going to decide today...the length of the lease...but everything will be on the table. ...so we have not made any kind of commitments to moving in any specific direction".

James Hankla (?) "Madam Mayor, I think it's important to know that before you can get to a D.D.A. which would be to develop a specific program...with a schedule of performance, with time deliverables such as market studies, schematics, site design testing of financial assumptions. You would have to have a D.D.A., I'm sorry, E.I.R. That D.D. that E.I. that E.I.R. [E I E I O! - ed] can be prepared during the Exclusive Negotiating Agreement [E.N.A.]".

Councilman Lowenthal interjects:

"We have no agreements up front. We're just asking you right now to sit down and negotiate... after that negotiation ...we would look at what the impacts of that would be, right?"

Mayor O'Neill, "Yes. Council member Oropeza:"

"Am I correct, Mr. Hankla, that the cost associated with the E.I.R. would come out of the Queen Mary Fund?..."

Hankla: "...presently I believe that the cost of the E.I.R. would come out of the loan proceeds from the loan that Mr. Prevratil is currently (inaudible)".

Oropeza "It's not general fund money, was my point, really..."

Hankla: "No, ma'am".

Mayor O'Neill asks, "Is there further discussion from other council members about item 3? Hearing none, please record your vote on item 3 which authorizes the city manager to enter into an Exclusive Negotiating Agreement".

City Clerk "The motion carried unanimously".

Motion to approve item 4 on agenda which is seconded, "It has been moved and seconded to approve a lease agreement with Queen's Seaport Development, Inc. for the development and operation of a special events park. Are there council members that wish to debate this motion? Please record your vote on item 4".

Lowenthal recapitulates:

"I just want to again state that this is not anything in addition to what the Queensway Bay Plan...that that is a part of the plan we were to relocate a special events park on the south shore...a year ago we had agreed in concept that either the Queen's Seaport Development, Inc. would do that then come back with a specific plan...if that was not acceptable to this council then the city itself would develop that. All we're asking is to go forward with that which was already part of the lease agreement from a year ago".

(Hankla?) "This has already been studied and certified under the E.I.R. for the Queensway Bay Project".

O'Neill, "Hearing no further debate, I did ask you to record your vote on item number 4".

City Clerk "The motion carried unanimously".

O'Neill, "We have item 2 still left for discussion and I do have council members that wish to speak probably to that item and as I call your name if you wish not to please let me know. Councilman Drummond, did you wish to speak any further? No? Councilman Shultz?"

(Shultz) "I'm not going to express the same concerns and say the same things that I did several months ago over this issue... we've already heard the millions of dollars that would be required for this particular project and several hundred thousand dollars even to reach the point where we make a decision.

Significant risk: One of our reports in our packets states, 'no one with any professional credibility will give odds or percentages of probability of making a safe crossing'. You may recall several months ago I brought to your attention some research that I did; two ocean liners that were sent to Asia under similar circumstances, both sank to the bottom of the sea. And in both cases the predicted weather in advance of that crossing was foretold to be okay. They lost them both.

Questionable assumptions: marketing. I still don't see anyone here from Japan telling us from the other side exactly what they had in mind. What is the interest level in Japan?

We haven't seen it, we haven't read it; all assumptions.

Unproven financing: where's the money; tremendous amounts of money?

Wrong message: Linda Howell, in her letter to the city council, I would like to read her one line again, 'The departure of the Queen Mary under even noble circumstances will have immediate and long range...consequences. Once again a shadow will be cast over everything good and exciting happening in this city'. I suggest that this shadow folks, would not be leaving with the Queen as it sails out of the harbor. It will be staying in our city, for years to come.

And I think the best thing we can do tonight is send a clear and strong message that the Queen isn't going anywhere. And we have to do it tonight. Consequently, my motion for # 2 is to deny the request for the relocation of the Queen Mary".

O'Neill, "Is there a second? It's been moved and seconded. I think the rest of the speakers that Donelon, Lowenthal and Oropeza will speak to that in their debate. Councilman Donelon:"

"This is...a very complicated and controversial issue and for many people in the audience it's a very easy decision to make. Councilman Robbins had spoke earlier about the council waffling back and forth. I certainly don't have a problem with that...all nine of us are vested with the power to make a decision that could impact this city for many, many years to come...we can't make decisions based on emotion, accusations, personal dislikes for individuals...

I met at length with Mr. Prevratil, Mr. Hankla, I talked to my colleagues, my constituents, Linda Howell... As a policy maker...if the deal in Japan is viable, if that ship can go over there, and I'm not saying 100% guaranteed, but if it could go over there; make the trip, we could have assurance that it's going to come back, I would not have a problem supporting that. I do not have a problem sending the ship to Japan for a period of time and Mr. Prevratil is aware of that. But in order to make a decision like that,

I, along with councilman Roosevelt stated, [we] need to have... a lot more than discussions with Mr. Prevratil, a letter and an article in the L.A. Times...

I would not have a problem with us taking one more extra step...to have the city auditor receive the documents that he's asked for...we can't make a decision based on promises... If those documents that the city auditor reviews determine that he needs to take the next step and go to Japan, I wouldn't have a problem with that..."

O'Neill: "Councilman Lowenthal:"

"...I'm not really wild about the ship going to Tokyo and that it can safely make it really concerns me...I still have listened to what councilman Roosevelt has said and councilman Donelon...I too would be supportive of...putting off this vote until we at least have a report back from the city auditor. I would make a substitute motion to put off this vote for three weeks on this one issue...until we get a report back from the city auditor".

O'Neill, "There's a substitute motion to...not take a vote on item # 2...by talking to that, we're still talking on the main motion and we have others that wish to speak. Council member, Topsy-Elvord, Vice Mayor:"

"...It gets down to documentation; proof. We don't have that documentation. I believe in someone's mind that that is a real offer...If you remember, a few weeks back...we were discussing whether or not to take a 150,000 dollars...to do a feasibility study. Right in the middle of that, I said to the council, 'we're talking about doing a feasibility study to see if it can be towed away...but how many of you really want the Queen Mary to leave?' And at that point I believe we took a vote and it was 7-2. People did not want it to leave. So, if they did not want it to leave, why were we going to be paying for a study to see if it could leave? ...It appears we are saying that again tonight...That's the bottom line. I'm not against...tabling item #2, but when we do get back to it, the bottom line is going to be the same.

How many of us want it to stay and how many of us want it to leave? Where is the documentation and proof, and even if we have the documentation and proof, how many of us want it to leave?..."

O'Neill, "Council member Shultz and then council member Kellogg".

"...This will take months, take hundreds of thousands of dollars to get to that point. Even if it was 50,000 or 60,000, the point is, why are we rehashing this again? I suggest all of you here look out at these 4 cameras aimed in our face right now. They're here for one reason folks, the entire world is watching Long Beach, California. The tourists from Europe the travelers from Asia the conventioneers from the east coast who book in advance to come to our city are watching. Why are they watching? They want to know if the Queen will be here a year from now, two years from now...I suggest that we have to bring closure to this aspect of it tonight..."

O'Neill, "Council member Kellogg:"

"I think the concern has been mentioned a few times before that...it's not my responsibility...representing the city of Long Beach and the tax-payers of Long Beach and their money to spend 150,000 dollars...of our money to put a proposal together for somebody who's presenting the proposal back to us. I don't do those things. (Applause)

...the information we had to begin with; a three page document or so from Joe Prevratil outlined it very vaguely, ...we've never gotten the material to support that documentation...what we have today, because of the L.A. Times report... L.A. Times I don't think spent the 150,000 dollars with Ernst & Young (consulting firm) to gather that information. Yet... the deal that wasn't real...suddenly, by staff recommendations, ...[appears a] real, viable alternative. Yet, I haven't seen any information that got us from that point to this point.

...Doug Drummond said it many times, if indeed, when this decision is made, this alternative that we think we have, when we make the decision that, no, we're going to do it,we now are going to take more responsibility (we are the owners of the ship) to invest more money in that ship and more money in that ship.

...I think we have to have a tight time frame if we're going to make any decision. I'd like it to be tonight. But if it's not going to be tonight I don't know what you're going to ask Gary Burroughs to do with a short period of time, I think that's asking a lot.

I'm only going to make this point for my future debate, and that is, please don't do what I'm fearful of...we denied this option, we now have no options, and we start making poor decisions to maintain this ship because the Convention and Visitors Bureau...and the spokesperson for that industry is concerned because this is an integral part of her marketing...

But one more day, one more year that I can sit here as an elected official and realize the Queen Mary in the city of Long Beach has been for a quarter of a century, a financially poor decision. And my concern is, we're going to make a poor decision to maintain the ship longer and...it's never going to do anything viable financially.

That's why we're torn about this option, that we don't know if it's real or not, this is the only one we've heard of except for the fact we're going to take the responsibility. We're going to spend more money on this ship and are we going to get the return on the dollar investment, and I don't think we will. I just want to make sure when this agreement comes back, we just don't keep sliding down the path of just trying to make the Queen Mary survive, because it's a bad deal. As far as tonight, I wish we had the information, I wish we had the information that the L.A. Times did or anyone else...or whoever has...that's gone from 'not a real viable alternative' to 'yes, it's a real deal'..."

O'Neill, "Mr. Hankla:"

"...I feel compelled to say, that my recommendation for 150,000 dollar study was not frivolous, it was not frivolous at all. We own the Queen Mary...it is the property of the city of Long Beach, it is worth a lot of money. Doing business with Japan, and I've done a little bit of business with Japan, I think I had something to do with Kajima building an aquarium. I think I know something of the complexity of dealing with people who principally deal in a foreign language. There are incredible issues of translation and understanding.

Every day we read in the Wall Street Journal about one company or another who thought they had a deal with some company in the far east who suddenly realizes they don't have a deal at all...I urge you, in the firmest of terms possible as your city manager, do not undertake this adventure lightly. Do not set about to make a decision without availing yourself of some very, very sophisticated financial advice, people who do business in the country of Japan on a daily basis who have contacts in the Japanese government who can verify and who will understand what it is they say and when they're agreeing and when they're just saying, 'yes, I understand you'...I think that is absolutely necessary for you to do. Do I think 150,000 dollars is too much to certify to the State Lands Commission that we are planning to send the asset of the citizens of the state of California to Japan for five years? I do not."

O'Neill, "Council member Oropeza then council member Drummond:"

"...I would like to return to what our objective is...Our objective is to come up with a way to maintain the city-owned asset which is the Queen Mary...I concur with Mr. Hankla when he says that 150,000 dollars is not too much to spend to ascertain whether or not an option to send the Queen Mary to Tokyo is a financially viable way for us to meet that objective.

...The new information that I've heard today...[about] an Exclusive Negotiating Agreement, I heard some numbers. Some numbers in terms of revenues that we can potentially anticipate from the development of that 44 acres. And what I also heard in that was that there is sufficient dollars, if in this 180-day process that we're about to embark upon, it comes to fruition, what the anticipated revenues are...that there will be sufficient dollars to do maintenance and to meet our objectives relative to the Queen Mary".

(Omitted was a brief reiteration between Hankla and Oropeza about the estimated dollar return annually from the acreage around the Queen Mary after the proposed special events park was developed.)

Oropeza continues:

"If...we can do the development then we're going to have the money to do the repairs and we don't have to send the ship away...the most prudent action for us to take at this point is to not go forward on the Tokyo situation because it appears that we have a good opportunity to ...do this development...and none of us were dying to send the Queen Mary to Tokyo, I don't think, it was just an answer to the challenge that we had before us".

O'Neill, "We have about five council members that wish to speak and you've all spoken before. I hope that you can either add a new point or be very brief in your remarks. Councilman Drummond, did you wish to speak?"

"...One option is known, it is that we have 45 acres of land on the water that should return 4½ million dollars a year and that that money can be applied to the Queen Mary. While that isn't tax money, it is still public funds and those funds could also be used in the tidelands elsewhere. It does not have to be spent on the Queen Mary. If we use this option, we are basically converting 45 acres of key water front land only for the preservation of the Queen Mary, period. Now that is still an option and it's there and it's clear and I think it's plain.

But the one that is not plain is the Japanese option. And that is cloudy in the sense that we are not sure we have a proposal here; it's rather vague, it would do 30 million dollars worth of improvements, immediately, plus, at the end of five years it would put 20 million or so in the bank for future repairs. In any case, the ship would not go until after the aquarium were open. This is a circumstance, that in my opinion, compels investigation...I really believe that we should send over appropriate staff with appropriate consultant resources to come back with excellent information and provide it to this council. I can't imagine that we would pass by this opportunity without revealing it completely to the public. That's my point of view".

Request from council to call for the question.

O'Neill, "The question has been called for. We have a substitute motion. The substitute motion is to postpone action on item 2 which is to deny the request for the relocation of the Queen Mary for three weeks. And that was the substitute motion, is that the motion you were talking about? Until the city auditor comes back with a report, that's the substitute motion. Are you ready to vote on the substitute motion? You still wanted to debate that? What is your question, councilman Donelon?"

"To the city auditor, given three weeks...Auditor Burroughs,...if you had the information that you've been asking for...what I'm looking for the city auditor to do with the information he's requested is to look at it and then say, 'look, this thing's a real go-getter we should move forward' or 'you guys are wasting your time'...

This ship belongs to the people of Long Beach and whatever decision we make, good, bad or indifferent, it's gonna have this guy's signature on it (pointing to himself) so I just want to make damn sure that what we're doing, we're not passing up an opportunity and I share the concerns that councilman Drummond had...if we're going to spend 40 or 50 million dollars on a ocean front development and every penny of that revenue is going to go to maintain the Queen Mary, to me that's absolutely foolish.

We have some of the finest real estate on the west coast of the United States and to develop it not to benefit the people of Long Beach except to save, I mean, to maintain the ship, doesn't make any sense to me. So, with that, if you had all the information that you've been asking, could you give us some very firm direction as to whether or not..."

O'Neill interrupts, "I think we're asking a lot of the city auditor. It's as though he's going to come with a recommendation for us. He may find that everything is fine but he doesn't know about bringing the ship to and from..."

(A councilman, I think) interjected, "Madam Mayor, I believe he would be going with staff and appropriate support"

O'Neill replied, "Well, this was to find the documentation, I believe. There has been a call for the question and I would like to do so. The question is, the substitute motion is to postpone acting on the denial of the request for relocation of the Queen Mary for three weeks, until the city manager returns, the city auditor, (sorry) with documentation. Is that the motion as you understand it? Please record your vote".

Jeffrey Kellogg queries, "Madam Mayor?"

O'Neill, "What?"

Kellogg "My colleague asked a question of the city auditor and we're going to vote on it, and he didn't answer".

O'Neill, "That was my fault. I'm sorry, Gary".

Kellogg "Surely within three weeks, in fact, probably less than three weeks, we could ask Mr. Prevratil to respond to documentation questions, some of which have already been provided to him, at least I think we would likely know more than we know today. At least we could comment...on that documentation and what it means in relationship to Mr. Prevratil's representations and proposals about his proposed project in Japan".

O'Neill, "Are you ready to vote? Please record your vote, on the substitue motion which is to postpone action on item 2 for three weeks until the city auditor comes back with a report".

City Clerk "The motion lost, 5 to 4".

O'Neill, "Thank you very much. The main motion that was made by council member Shultz and seconded by council member Robbins, was to deny the request for the relocation of the Queen Mary. Please record your votes. Why are we waiting for, council member Topsy-Elvord, I mean...who's that down there? Council member Oropeza".

"Madam Mayor, I was waiting to see how the vote had come out and I was trying to see how people had voted and the motion was being called for when I was not even engaged in..."

O'Neill, "May we do it now? The motion has been made to deny the request for the relocation of the Queen Mary. Please record your vote".

City Clerk, "The motion carried, 6 to 3".

Jeffrey Kellogg objects to protocol, "Madam Mayor,...I'm going to say it again to my colleagues, I have never, in the eight years I've served on this council, after I've made my comment, turned to the chair and said, 'I call for the question'. I think it's discourteous to colleagues...this happened repeatedly. And I'm a little bit offended, I'm a lot offended when I can't ask a question such as...'what information did staff get that changed their position on this relocation of the Queen Mary from one that it was not a good proposal to one today, when we talked to them, that it is a viable proposal?' I wanted to ask the question, 'what information do you have that we don't have, that you came to that conclusion?' I didn't get to ask that because we called for the question. And you followed the rules and that's absolutely right but I really take offense, and I haven't done it to a colleague and I won't do it to a colleague...

I think that was a viable question..."

O'Neill, "If I neglected to call on you..."

Kellogg, "It was not your fault, you followed Robert's Rules, when people ask for the question, it's to vote on ending debate right then and there".

O'Neill, "Thank you very much. May we take about a 5 minute, seven minute break and come back to item 22"

END


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