Why is the City Council being asked tonight to chop $3,000 a month off the rent it charges the mighty BANCAP Investment Group—headed by two of Long Beach’s most prominent and prosperous citizens, Stephen T. Conley and John W. Hancock—to lease a swath of Long Beach Marina-front property?

According to city documents attached to the agenda item—No. 21 on your scorecard—it’s because the Seal Beach Yacht Club is having financial problems and needs a $3,000 reduction in the rent it pays to BANCAP to sublease part of the property. In other words, capitalism is rearing its sometimes-ugly head, and Conley/Hancock want taxpayers to come to their rescue.

This is actually the second time this year that this identical proposal—submitted and recommended by top city officials Dennis Thys of the Community Development Department and Phil Hester of the Parks, Recreation and Marine Department—has appeared on a city council agenda. Why wasn’t a vote taken the first time, on Feb. 16?

According to city documents, the last two months were used for further study.

But according to the city’s political calendar, Councilmember Gary DeLong used the last two months to run for re-election. A sweet little favor to a pair of his supporters—Conley and Hancock were maxed-out contributors to DeLong’s campaign—certainly wouldn’t have looked good. One week after DeLong secured another four-year term, the item is back on the agenda. Coincidence?

Retired Deputy City Attorney Jim McCabe—who used to supervise the City’s lease with BANCAP—doesn’t buy it, and on Monday (April 19) he sent a letter to every member of the City Council saying so. McCabe shared the letter with Redistricted!

“[This] is a clear example of taking a questionable agenda item off calendar and putting [it] back on the Agenda, after the election [emphasis in original],” wrote McCabe. “It is not too bold a statement to suggest that this was done because this item has a bad odor about it.”

A phone message left at DeLong’s council office seeking comment this morning has so far not been returned.

Beyond the aroma of whatever political machinations may or may not have been in play is a stickier—and potentially stinkier—question: Why are Long Beach taxpayers being asked to cover the possible losses of a multi-million-dollar investment group like BANCAP—or by extension, the members of a social group like the Seal Beach Yacht Club?

City staff has an answer for that—the conclusions it reached from the study that was undertaken during the past two months.

“The result of this analysis determined the City would lose significantly more revenue by not entering into the proposed temporary rental reduction, assuming that not reducing the rent would lead to a sublease default by SBYC [Seal Beach Yacht Club] and temporary vacancy of the space,” reads the recommendation submitted by Thys and Hester, and signed by their boss, City Manager Pat West. “Specifically, the analysis projected the City would likely expect to lose $110,387 in future revenue from the project by not providing the requested assistance versus $47,376, which is the City’s total share of the cost of the two-year rental reduction.”

Who, exactly, came to these financial conclusions? According to the document, it was “one of the City’s brokerage firms.” Oh, and also “an evaluation by BANCAP.”

 But if the Seal Beach Yacht Club is asking for a $3,000-per-month cut in its rent, shouldn’t the answer and the impact fall completely to BANCAP?

To McCabe, the scenario looks like a case of taxpayers subsidizing the potential losses of a private financial powerhouse during bad times but not sharing in the added rewards during good times.

“In the good years, BANCAP got the benefit of rising subtenant rents. It obviously did not offer to share these increased rents with the taxpayers,” McCabe wrote. “Now times are tough. It wants the taxpayers to pay for the decreased rents it is getting from one of its sub-tenants. BANCAP was willing to take the risk of fluctuating sub-lease rents when times were good. Now it wants the taxpayers to foot the bill when we have been in a recession.”

McCabe’s got a couple of followup questions for the City Council, too. 

“Should the City’s hundreds of other tenants now flock to the City for rent reductions?” he asks. “What sort of precedent would the approval of this Agenda item be?”

Fact is, BANCAP is not much like many of the City’s other tenants—or more to the point, Conley and Hancock aren’t. Both are deeply involved in the fabric of the city, both for personal profit and altruistic contribution.

Hancock was a Harbor Commissioner for nine years, three of them as president. He is a director and past chairman of Memorial Health Services, is a past president of the Long Beach Symphony and is affiliated with the boards of the Long Beach City College Foundation,  Rancho Los Alamitos, Long Beach Public Library Foundation and is past president of Boy Scouts of America.

Conley’s is past president and a current member of the Long Beach Board of Water Commissioners, he’s on the board of directors of the Aquarium of the Pacific (where he’s also a volunteer diver) and is on the executive board of the Western Region of the Boy Scouts. He’s also on the advisory board of Joie d Vivre Hospitality, Inc., of San Francisco—and if that company sounds familiar, it’s because his son, Chip Conley, is founder and CEO of the company that wants to build a hotel in the proposed Second+PCH development … just across the street from where BANCAP is seeking the rent reduction.

“The men who want the taxpayers to take on this burden are the ultimate political insiders,” says McCabe. “No other leases in Long Beach are getting special deals from the taxpayers. Only these political insiders are. This is just plain cronyism [emphasis in original].

  1. Dick Barnes
    April 20, 2010 at 11:04 am

    Lovely story, Dave. Rake that muck!

  2. Dan
    April 20, 2010 at 12:09 pm

    As Always, You do a Bang-Up job on shining the light in those dark places. Hmmm, wonder why there dark?

  3. wrongbeachjohn
    April 20, 2010 at 2:10 pm

    Not just plain cronyism…

  4. April 20, 2010 at 4:13 pm

    Come on Dave, don’t you know it takes money to make money?!

  5. Uncle Mike
    April 20, 2010 at 8:28 pm

    As you can see from the attached link, both Steve Conley and John Hancock were on Gary DeLong’s election advisory committee and Steve Conley was the Chairman. And now re-elected Councilman DeLong is paying back his gazillionaire buddies with our taxpayer’s money.


  6. Will Cullen
    April 22, 2010 at 11:15 am

    I could sure use a reduction on my property taxes… Could you tell me where to send my belated campaign contributions to and how much money do I need to send for my reduction?

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