Letters to the Editor

Neighborhoods Threatened

Your neighborhood has a target on its back and your state Legislature is taking direct aim at fundamentally changing it right now. Yet too few Californian residents are even aware of what is about to happen to them.

What would it mean to you if a real estate speculator bought the house next door you and replaced it with four to eight units on two new parcels without notice, with inadequate parking and with no parking whatsoever if the property is within ½ mile walking distance of a transit stop. What would it mean to your privacy if all the backyard and front yard trees are removed and replaced with people overlooking your home just four feet away from your property. Would you be surprised to hear your city councilmember tell you “There’s nothing we can do about it.”? Well, that councilmember would be telling you the truth if SB 9 becomes law.

SB 9 (Atkins) is a direct state-sponsored attack on California’s single-family neighborhoods and the self-determination of its local governments. On May 26, 2021, the State Senate passed SB 9 and forwarded it to the State Assembly for its consideration. It was heard by the Assembly Local Government Committee on June 9. Meanwhile, a growing number of individuals, organizations and neighborhood and homeowner groups are working together to defeat it. It is in that house that SB 9 must be defeated if your neighborhood is to remain livable.

SB 9 is the worst of at least seven bad housing bills that include SB 10, SB 478, SB 8, AB 1401 and AB 1322 that are threatening California’s neighborhoods. Concocted and pushed by special interest legislators, SB 9 is simply the wrong solution to the wrong problem. California doesn’t have a market rate housing crisis. It has a dire housing affordability crisis. Yet SB 9 does nothing about this real crisis while maximizing and promoting high-end market rate housing.

SB 9 would allow “urban lot splits” to divide existing residential lots in single-family zones into two parcels and develop them with at least two units each resulting in up to four units where one home once existed. Moreover, since SB 9 would not prohibit local governments from issuing permits for ADU’s and JADU’s on urban lot splits, it would make for a total of four more units for a sum total of eight units where one home once existed on one lot.

SB 9 is a state mandated dictate that will affect every single-family neighborhood (except in historic districts) throughout California, including every one of its 482 cities and 58 counties. By increasing the development potential of every single-family parcel in California, SB 9 will further jack up the value of every home at a time when housing prices are soaring out of control. This will only push the American dream of homeownership further and further away from younger Californians who won’t be able to compete with well-financed real estate speculators in buying a home.

SB 9 pays lip service to the housing affordability crisis, noting “that ensuring access to affordable housing is a matter of statewide concern and not a municipal affair.”, a provision that will apply to all cities including charter cities. This is the disingenuous excuse the state Legislature uses to evade its responsibility to reimburse local governments for state-mandated programs. But what’s really galling about this provision is that SB 9 will do nothing to produce or fund affordable housing.

SB 9 is a really bad idea. It’s a solution in search of the wrong problem. The real problem of housing affordability will only be made far worse by SB 9.

It’s time for Californians to rise up against this legislative overreach and defeat this and other terrible pieces of misguided housing legislation. Contact your State Assemblymember NOW and make your objections heard before the State Assembly votes on this bill. The livability of your neighborhood depends upon it.

T. Keith Gurnee

T. Keith Gurnee is a member of the Board of Directors of Livable California, a statewide nonprofit organization representing thousands of Californians fighting to protect their neighborhoods and for the self-determination of local governments. He is also a professional planner and urban designer, a former San Luis Obispo Councilmember and Past President of the California Planning Roundtable.


SOS Queen Mary

Friends from my banking days will understand why city incompetence and possibly unethical practices by Mayor Garcia, our prior City Council, Jeannine Pearce and City Auditor Laura Dodd have contributed to the potential sinking of this ship. There are a lot of articles about the Queen Mary and more to come as the City of Long Beach vs. Urban Commons ensues.

The city owns the Queen Mary and set up a lease with Urban Commons to operate the ship as a hotel/tourist attraction. The city also agreed to fund $23 million for repairs and maintenance.

Here’s some financial and accounting background to help understand the various articles and tidbits of information released.

When a bank or private commercial investor lends money for construction or renovation, the money is lent in stages, AKA, draws on the funds. Each draw is monitored to ensure the work has been completed from the previous draw (or at a minimum, parts have been ordered) prior to releasing funds for the next draw. As funding amounts go up, the detail and intensity of due diligence involved for draws goes up. Periodic (physical onsite) inspections of work completed is common for high dollar amounts.

What happens when a project derails as the Queen Mary project did? Any bank or qualified private investor that lends $23 million on a project that was not completed will investigate! Did the bank fail to adequately understand the true cost of the project prior to lending? Was fraud involved? Did staff involved follow protocol for managing the draws?

In the case of the Queen Mary, the City of Long Beach put up $23 million to the tenant and operator Urban Commons. There are numerous unanswered questions regarding this failed operation. First and foremost is whether Urban Commons actually completed the work for invoices submitted. The ship was painted but as a resident I’ve heard no confirmations of other work performed. News reports indicate an audit was completed but the article in the local paper doesn’t explain the results very well.

Here is some background. During Jeannine Pearces’ tenure as our City Council representative in the district where the Queen Mary resides, she took a consulting job with lessee operator Urban Commons and received $40,000 in payment. This was unethical since she was a city representative and the payment looks like a bribe to many of us. Did the city or our mayor demand a potential fraud investigation when this information came out? No.

What about City Auditor Laura Dodd? Did she investigate? Not that I know of. How did $23 million go out the door for maintenance and repairs and end up with the ship at risk of sinking soon? According to our local paper, the “after the fact” audit shows Urban Commons submitted expenses and received reimbursement for those expenses. The dates of the expenses submitted to the city prior don’t match the date stamps on the actual vendor invoices received by Urban Commons.

That’s pretty common in banking – receiving the draw to cover pre-expensed costs. Either our paper doesn’t understand pre-expensed costs for accounting or the after-the-fact audit is withholding information that explains what really went down because invoice dates not aligning with pre expense book dates does not explain whether the pre-booked expenses submitted were falsified or whether the work was or was not actually completed.

The more important aspect in the audit should have indicated whether the amounts of the pre-booked and submitted expenses matched the amounts of the vendor invoices received. If the city had a competent accounting process during the release of funds this would have occurred while the money was being distributed vs. being done after the funds are gone. In my opinion that’s strike one against the city. The after-the-fact audit has been difficult as (allegedly) not all information was released by Urban Commons to complete the audit. For an after-the-fact audit that’s a valid claim but shouldn’t derail an adequate investigation.

As someone who made a career investigating and auditing for compliance my expectation of a bonafide after-release-of-funds audit in the case of the Queen Mary would be:

Obtain an engineering report to verify the work done or not done based on the city records of expenses submitted

Obtain a sopoeana for Urban Commons bank records as well as bank records for the principals to follow the money trail of funds released (if the city has an adequate funding process these records would have been submitted every month as part of the lease and repair fund arrangement)

Investigate the city process for releasing the funds ( was the process followed and equally important was it adequate?) and

Did any of the city staff involved with the release of funds receive any large payments in their personal accounts during this process?

All we know from the current audit to date is that the dates for some paper expenses submitted to the city don’t match up with date stamps on paper invoices released by Urban Commons. That’s a pretty lame audit. Again, either the paper is ignorant and not qualified to report the results or the audit is lame. Probably both.

It’s still unclear whether the cost of repairs was grossly underestimated. A competent lender will analyze and verify costs up front before entering into a funding arrangement as cost over runs can derail a project.

It’s still unclear whether Urban Commons committed fraud or was simply incompetent. It’s also unclear whether the city had an adequate oversight process to manage a major commercial lease with a complicated renovation funding agreement. (I think not).

It’s also unclear whether internal city fraud is involved. We know at least one city player received $40,000 in an unethical conflict of interest arrangement. We also know the city has a reputation for lack of transparency. There you have it. Many, many unanswered questions.

It’s pretty clear to me that Mayor Garcia may have an appetite for commercial real estate deals but his track record shows the Queen Mary debacle is one of many failed local city real estate projects he and his selected staff and council members are not competent to manage.

Katherine Kelton
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