Mea Culpa for City Leaders Posted

By: 
Stephen Downing

On April 26, the Long Beach Post broke a story announcing that the on-line media organization had acquired a letter sent to the city from the state’s Housing and Development Agency that said the “Agency determined the city cannot transfer ownership of the 8.7-acre property” – known as Community Hospital – due to a 2019 law meant to encourage construction of affordable housing. That story can be read here: : https://lbpost.com/news/community-hospital-affordable-housing-surplus-property-state.

A review of the contract between the city and operators of the closed hospital – the Molina Wu Network (MWN) – by the Beachcomber following that announcement revealed that the contract in fact made no mention the city’s obligation to consider the possibility that if the deed restriction were to be changed to allow any use other than a hospital that the 1968 Surplus Land Act required the land to be declared surplus and made available to affordable housing developers registered with the state.

The Surplus Land Act was signed into law in 1968 and amended in 2019.

The 2019 amendments to the act became effective two months prior to the 45-year lease agreement between the city and Molina Wu Network.

The Beachcomber was unable to find any evidence that the city held a public hearing to declare the property surplus or made a written finding, as required by the act.

The Beachcomber’s review the contract also found other inconsistencies that raised questions posed to City Attorney Charles Parkin and City Auditor Laura Doud on April 29.

Parkin was asked:

  • Who wrote the contracts between the city and MWN?
  • Did the city request and receive documentation of MWM expenditures as provided in the contract?
  • Why was the city auditor (as provided in the City Charter) not included in the contract but instead allowed (MWN) to participate in selection of an auditor?
  • Did the city attorney ever contact the attorney general to determine if the Surplus Land Act applied to the Community Hospital property?
  • Has a geological study been performed by the city or Signal Hill Petroleum, which has done several in the area to determine if the location has oil?
  • What is the value of the mineral rights?
  • Why did the city contract give the mineral rights to MWN rather than keep them for the city?

The city attorney did not acknowledge receipt of the emailed questions or respond prior to publication.

Questions sent to City Auditor Laura Doud on the same day included the following:

  • Are you aware that the contract between the city and MWN does not include any reference to you auditing expenditures but instead provides that a private firm be selected?
  • Is it customary to exclude the city auditor from oversight of city contracts?
  • Have you reviewed (audited) any of the $30 million in expenditures being claimed by MWN?
  • Have you determined the appraised value of the land, property and mineral rights?

The city auditor did not acknowledge receipt of the emailed questions or respond prior to publication.

Schipske Critical of City Attorney

On April 30 Gerrie Schipske – currently a candidate for the office of city attorney – issued a press release critical of Parkin for “Not properly vetting the Community Hospital deal.”

Schipske said: “I think the city attorney should explain why his office did not properly vet the transaction between the city and the Molina Wu Network with the State Department of Housing and Community Development. The Surplus Land Act has been in existence since 1968 and clearly requires local governments to prioritize affordable housing when selling or leasing public lands no longer necessary for agency use. (Government Code § 54220 et seq.)

“In 2019, the court held that this requirement applies to both general and charter cities, such as Long Beach. The law requires Long Beach prior to any action disposing of the land to declare the land as either surplus or exempt surplus land at a regular, public meeting. It must also provide written findings that the property is either surplus or exempt and to file those findings with the state at least 30 days before the sale of the land. (Government Code § 54222(f).

“The agreement between the city and MWN fails to reference that any of these actions would need to be taken prior to entering an arrangement that allows MWN to take the property as payment by the city for expenditures made by MWN while operating Community Hospital.

“While I never supported this agreement, I do think it unfair to MWN that the city attorney failed to properly advise concerning restrictions under state law. This sends an ominous warning to businesses that want to do business with the city.

“The agreement, approved by the city attorney, also contains another serious omission as it fails to include a clause giving the city auditor the right to audit MWN’s records and books within six months of the end of each fiscal year and following the expiration or termination of the lease. This clause is included in the lease of the Queen Mary and should be for all leases of city-owned property.”

The City Mea Culpa

On May 2 the Long Beach Post issued a “Special Report” entitled, “To save Community Hospital, Long Beach leaders took a risky gamble – and lost.”

Apparently, because the news organization (and the Long Beach Business Journal) is owned by John Molina, a principle in the MWN organization, the executive editor of both publications, Melissa Evans, issued a “note” to accompany the special report titled: The Community Hospital story hit close to home; here’s why we felt compelled to confront it. “

Evans followed that statement with: “Our mission at the Long Beach Post and Long Beach Business Journal is to give the news impartially, “without fear of favor” – words famously written by the publisher of the New York Times in 1896. Holding those with power to account is one of our core duties.”

The LB Post’s Special Report then went on to make the case that “Molina – whose Pacific6 Enterprises owns the Long Beach Post and downtown real estate interest – insists the demise of Community Hospital had nothing to do with management issues or his favorable lease terms” and then went on to detail all of the “troubles from the start’ skewing all the Long Beach leaders who “were well aware of the challenges confronting Community (Hospital) long before their unprecedented lease deal with the new operator – Molina Wu Network, or MWN.”

The special report – which serves Mayor Robert Garcia and the other city leaders who voted 7-0 to approve the contract as an apt mea culpa for their complicity in the scheme, can be read here: https://lbpost.com/news/

An Insider’s Take

The Beachcomber reached out to a City Hall insider familiar with the MWN deal – as well as other contracts made by the city. She provided her views related to the contract and the LB Post’s Special Report – on the condition of anonymity.

The insider wrote: “What a complete mess. Another catastrophic failure of the political establishment.

“These electeds only care about short term, political expediency. No concern for long-term financial outcomes.

“This time, Economic Development was correct in their analysis, as opposed to the Queen Mary. And Supernaw is now blaming them for not being loud enough?

“Unbelievable. Honestly, the Queen Mary had a lot of unknowns. This hospital’s red flags were clearly there.

“Price shouldn’t be bragging about voting down the Urban Commons contract, given that she approved this one.

“There are no checks and balances. Parkin was there to push through the mayor and council agenda.

“The contract was obviously written with the expectation of failure, and that Molina takes no risk and will be on the winning side no matter what.

“This is all very similar to how the Urban Commons agreement was written.

“The city gets fleeced all the time in these deals.

“The city auditor should really be the last “line of defense,” if you will. But like during so many other city failures, she was asleep at the wheel.

“Corliss Lee did much more analysis of the Molina contract than Laura Doud ever did. And that is just sad. Even after staff gave Doud the synopsis of the contract. I’m sure she still hasn’t read the contract.

“And even if Doud had concerns, with council voting 7-0, especially with Price and the mayor supporting it, she would have stayed silent.

“I don’t know why the city is hiring an outside accountant to verify Molina’s operating cost numbers. The contract seems clear to me that those numbers are final.

“Might just be for show. And why isn’t the LB Post reading the contract, instead of relying on the city for interpretation?

“My guess is that Molina probably doesn’t want to point out another favorable contract term.”

 

Stephen Downing is a resident of Long Beach and a retired LAPD deputy chief of police. Stephen.Beachcomber@gmail.com

 

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Comments

The city of LBC a criminal organization is at it again. SMH

Incompetence and corruption in the city of Long Beach, who would have ever guessed that to be possible. SMH. Let me guess no one will be or has been held accountable right?

Vote them out. Vote them ALL out. Every single one of them. The city’s survival depends on it!! Vote June 7th.

Heck with voting them out. They should all be prosecuted for fraud.

Queen Mary, Community Hospital, Salvation Army, LBPD, etc etc would be funny if not so sad. Wrong Beach at it-again.

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