This is a story you should read all the way through.
As many of you know, I placed a bid on the taxpayer-owned Balboa Theater in August of last year. I bid the full asking price, in cash. In the real world, this bid would have closed in 5 days– but government isn’t the real world.
I sat on it for months and months before finally receiving any word back from the city. I found out that there were 6 bidders. I asked how much the other bids were, and was told I could not have that information. Again, in the real world, an auction would occur and the highest bidder would walk away with the item– that is how to obtain maximum value for the property. That is what someone who was looking after taxpayer interests would do. Awarding the property to the highest bidder is what I repeatedly asked them to do, even if I was not the highest bidder– it was the responsible and honest thing to do when someone is tasked with managing the property of other people.
Did that happen? No. In fact, the city is voting tomorrow to enter an exclusive negotiating agreement with “The LAB Holdings Company”– the same people who run The Lab. That’s a pretty trendy place, right? Wouldn’t it be cool to have a draw down here on the peninsula? Well, perhaps someone in the city didn’t do their homework or perhaps someone is getting some nice political contributions, because this deal is sideways from the start. First off, why would the city enter into a year-long “exclusive” negotiating agreement when they already had full-price offers on the table for the property? Clearly, this is fiscal irresponsibility at its finest.
Second– and perhaps the most eye-opening– did the city do the research on this person beforehand?
Here is just a partial list of the projects that this builder has been a part of:
1) In 2008, LAB Holdings wanted to build at Playa del Norte development in San Clemente. The council had approved the plan but the city voted against it as a whole. So what did LAB Holdings do? They sued the entire city. Then they sued the Registrar of Voters. Yes, seriously.
2) In 2010, the city of Anaheim entered into an agreement with LAB Holdings for the Packing District plot of land, owned by the city. At the end of their negotiating period, the city would pay $9m in improvements for the site and LAB would get the option to buy at any time for $11.5m. So LAB puts up zero risk and reaps all the rewards of taxpayer money. Additionally, LAB will be managing the property and the city would be paying them $10k/mo to do so. The LAB Holdings keeps all the profits from the rentals until NET (not Gross) income reaches $250k. The easy way to make your Net never reach $250k is by increasing your own salary to ensure it never does. Not bad for $0 out of pocket.
3) In 2011, LAB Holdings entered into an exclusive negotiating agreement with the city of Portland Oregon. Things didn’t go according to plan, and once again, the city was sued. This time, the company sued for $1.7 million dollars of the city’s money.
Now, the city of Newport is set to vote on a one-year exclusive negotiating agreement with LAB Holdings, despite having full-ride offers still pending– including my own bid which I previously never mentioned the rate of– it was for $1.6m. I know others who have bid higher than me, too– and they should have won the bid, not me. So what is the hold up on selling this land? Is the city doing a crony deal, or is it simply trying to decide who wins and who loses, rather than allowing the free market to take its course?
And given the history of this particular vendor– what do you think is going to actually happen here?