The Redondo Beach City Council has tentatively decided to ask the Legislature for permission to extend King Harbor business leases to 99 years--a move that critics say would essentially amount to a sale of public property.
City Atty. Gordon Phillips said the City Council decided in a recent closed session regarding one of the leases to make the request to the Legislature. He emphasized, however, that the request will not be made until the council votes publicly to do so.
The matter is scheduled to be discussed at Tuesday's council meeting.
Gary Horn, a land agent for the State Lands Commission--which oversees King Harbor--does not support the idea.
"I don't know there's any benefit (to the city)," he said. "I know there's a benefit to the tenant. I don't know what the benefit would be to the landlord or the public. You might as well . . . sell it," he said, adding that he had not heard about the possible request until contacted by The Times.
The land and pier in King Harbor are owned by the city but are leased to 18 master lessees who operate businesses or sublease the property. Leaseholders own their buildings.
The state granted the land to the city and limits the time it can lease it. Under state law, leases in the Tidelands area--the area west of the mean high tide line--can now be leased for up to 66 years. The leases east of the high tide line--the Uplands area--now can be leased for up to 50 years.
13 Have Maximum Limits
Thirteen of the master lessees have leases to the maximum limits, said Harbor Director Sheila Schoettger.
In a report to the mayor and City Council, she wrote: "The fact that the city's leases are aging has prompted requests from several lessees and potentially interested buyers for the city to extend the terms of the leases"
In an interview, she said, "I really have to emphasize . . . we're not talking about extending leases. We're talking about ability (to extend leases). There is absolutely not a commitment to a soul in King Harbor to extend any leases."
The lessees who are faced with little time on their leases have difficulty getting financing for projects or improvements, she said.
The ability to extend the leases would give the city a powerful negotiating tool and be an economic incentive for businesses to reinvest in and upgrade the properties, Schoettger said. If a company is unsure whether it will remain in an area, it probably will not make improvements, she added.
Further, if a master lessee wanted an extension on the lease, the city could negotiate to get the lessee to pay for public improvements, such as a parking garage or a park, she said. "I believe it's in the public's long-term interest to do this."
Horn, of the State Lands Commission, disagreed. "There should be no compelling reason to lease it for any longer than that--the life of the project," he said.
"It's certainly not needed for financial reasons. Nobody makes loans for 99 years or even 50 years, and rarely do they give commercial loans for 30 years," he added.
Rents Could Be Too Low
A lease that extends over "several lifetimes" may not be the best use of the land in the long run, and the negotiated rents could be too low, he said. Both can be adjusted with leases of shorter terms, Horn said.
The State Lands Commission oversees state-granted lands, like King Harbor, and supervises and leases state-controlled properties such as Lake Tahoe. As a policy, the commission recommends that leases be for the shortest possible terms, and never for more than 49 years, Horn said, although the law allows the commission to grant leases up to 66 years.
"As a matter of practice, we rarely issue a marina lease for longer than 25 or 30 years maximum. We see no need," he said.
But Schoettger points out that the ability to grant extensions is not unprecedented. The Los Angeles County Board of Supervisors received permission from the Legislature a few years ago to give leases up to 99 years in Marina del Rey.
The county has not granted any lease extensions that long, but is negotiating possible extensions, said Richard R. Landon, property manager for the county Department of Beaches and Harbors.
Unlike Redondo Beach, which negotiates separate leases with individual leaseholders, the county negotiates with the Marina del Rey Lessees Assn., and any lease amendment is available to all 56 prime leaseholders, Landon said.
No period of extension has been agreed upon, but he said he believes most lessees would favor the longest term possible.
Schoettger said that if Redondo Beach is allowed to give lease extensions up to 99 years, they will do so only after tough negotiating with leaseholders.
But Mayor Barbara J. Doerr, who opposes the probable extension request, said the city could lose control over the harbor if it granted 99-year leases. "I think we shouldn't be getting a blanket approval. It's like giving a blank check to (the Harbor Department) to negotiate away," she said.