Monday, April 05, 2010

Are the Port District and the Convention Center giving away public money?

The Union-Tribune is negotiating for the Port District
by Pat Flannery

In hiring Ron Powell, a veteran Union-Tribune reporter as its spokesperson, the Port District hired the ability to get friendly editorials to run in the U-T at critical moments like today.

This is a critical moment for the Port District's North Embarcadero (Cruise Ship Terminal) plan.

It needs to pull off another switcheroo.

Powell joined the San Diego Evening Tribune back in the 1970s. He was with the Union-Tribune from 1991 until the Port hired him last year. He knows the San Diego political game. He knows the strategic use of a U-T Editorial.

The "hitch" that Powell and his old friends at the U-T want to "un-hitch" for the Port District, is a Coastal Commission requirement of legal indemnification by the Port District.

The deal before the Coastal Commission calls for "the port to indemnify the Coastal Commission for all costs related to any lawsuits that might be filed against the project". The Port wants to "amend the amendment" to eliminate the indemnification clause and the U-T is trying to help. What are friends for?

Are the Port District and the Convention Center giving away public money?
by Pat Flannery
Blog of San Diego

At its monthly meeting tomorrow the Port District will be asked to consent to the assignment and assumption of a lease from Fifth Avenue Landing LLC (FAL) to the San Diego Convention Center Corporation (SDCCC).

"SDCCC entered into an agreement to purchase FAL's leasehold interest in September 2008 and paid FAL $1 million for a one-year due diligence process. SDCCC now desires to acquire FAL's remaining leasehold interest for $13.5 million. FAL will finance SDCCC's acquisition by providing a $12.5 million deed of trust secured by the leasehold interest. SDCCC will pay FAL $1 million at the close of escrow and make annual payments of $500,000 for up to five years. Consequently, SDCCC is requesting District consent to the assignment of a portion of the FAL leasehold interest to SDCCC, the grant of a new Amended, Restated and Combined (ARC) lease to SDCCC and consent to a lease encumbrance."

Here is the published Agenda. On page 4 of 9 it shows that FAL's option to lease the land in question from the Port District, expires this Friday, April 9, 2010. After Friday Fifth Avenue Landing LLC will have nothing to sell. In fact, on page 4 of 9 it is also clear that a sale escrow must close by Friday.

It would appear therefore that the Port District and the Convention Center are giving Fifth Avenue Landing LLC a big fat present of $12.5 million of taxpayer money. They are trying to rush this deal through and close it by Friday, when all SDCCC has to do is wait until next week and it can have a whole new Port District lease for nothing. Is that what is going on?...

I called and asked both the Port and SDCCC whether the lease or option being "negotiated" in closed session tomorrow is the same one that is being decided upon in open session tomorrow. Both declined to answer...

Apart from a closed session action being taken on the same day as an open session action on the same matter, there are huge unanswered questions regarding the value of the leasehold interest being purchased by SDCCC from Fifth Avenue Landing LLC.

Recent press reports have described that interest as a "land interest" when in fact it is a "leasehold interest". Was the press misinformed? It may not even be a leasehold interest, it may only be an "option" interest. We just don't know. Without full disclosure of the actual lease document or the lease option, it is impossible for the public to know the value of what is being purchased by SDCCC for $13.5 million of taxpayer money.

I was today informed by a reputable title company that a lease on this property, if one exists, has not been recorded at the San Diego County Recorder's Office. Is the County Recorder hiding it? If so, on what authority?...

No comments: