It’s an understatement to say that 2020 challenged Long Beach and the Downtown area in ways that no one saw coming.
Heading into 2021, the impacts of the coronavirus pandemic will likely linger for years. But other economic and development efforts remain on the horizon.
Here are a few things to watch for in the coming year.
Development of the Elephant Lot
Two years ago, Mayor Robert Garcia announced the city’s intentions to develop the 13-acre surface parking lot adjacent to the Long Beach Arena. The space, unofficially known as the “elephant lot” from the days of the Ringling Bros. and Barnum & Bailey Circus, is Long Beach’s largest parcel of undeveloped coastal land.
Months later, in February 2019, details emerged that city leaders were in advanced discussions with the Los Angeles Angels for the baseball team to relocate from Anaheim to Long Beach and play in a new waterfront stadium anchoring the elephant lot site.
While the Angels ultimately opted to remain in Anaheim, Garcia later announced that a sweeping visioning process would still occur for the entire planned development district in the Downtown shoreline area, known as “PD-6,” including the elephant lot.
Development of the elephant lot, which is roughly the size of 10 football fields, would have construction complexities and limitations of building on in-fill land reclaimed from the ocean, along with a high water table under the site, but it remains an economically-lucrative, highly-sought-after waterfront site for potential developers.
Earlier this year, in the months leading up to the pandemic shutdowns in March, the city was preparing a request for proposals for development of the elephant lot, with notable developers like Tim Leiweke’s Oak View Group among those actively interested in the site and pursuing details from city leaders.
The city’s FRP plans were ultimately delayed by the focus on the pandemic response, but nevertheless, development of the elephant lot will ultimately happen, likely sooner rather than later—serving as an economic boom and potential tax revenue boost for the city.
Planning for the 2028 Olympics
While 2028 may still be years away but with the Summer Olympics returning to Los Angeles and multiple events planned to be hosted along the Long Beach waterfront, the harbor and in the Convention Center, now is the time to figure out the economics of how the city will pay for the improvements needed for its part in the games.
In February 2018 the City Council identified “8 by 28” projects as priorities for the Olympics. Some projects are privately funded, including a new Convention Center hotel; other projects are funded by transit sales taxes to improve the A Line (formerly Blue Line) and passenger fees for improvements at Long Beach Airport.
But the majority of Olympic-related projects remain unfunded, with no plan having yet emerged on how to pay for completion. A city projection of the need ranges from a low of $75.5 million to as much as $85.5 million for Olympic improvements to the Belmont/Veterans Pier, the Belmont Pool, new lifeguard towers and the Long Beach Arena.
That amount of money won’t materialize overnight.
Historically, Olympics have a way of swinging toward financial extremes, from billion dollar boondoggles burdening host cities for generations, to streamlined financial successes, kicking off residuals into community investments years later, like the last time Los Angeles hosted the games in 1984.
Hopefully Long Beach’s involvement in the Olympics eight years from now is later regarded as an economic triumph, like the ‘84 games, rather than an economic tragedy.
Investing in the Long Beach Convention Center and the tourism/hospitality sector
With long stretches of docks and towering cranes, the Port of Long Beach is the centerpiece of the local logistics and goods movement that drives a significant portion of the city’s economy.
But the other major local economic driver is the hospitality and tourism industry—which Beacon Economics found last year to have a $1.8 billion economic impact in the city, supporting 18,652 jobs, 15,000 of which are supported by direct visitor spending.
At the center of that local industry and the cornerstone of its economic success is the Long Beach Convention and Entertainment Center campus.
The Convention Center has benefited from approximately $65 million in public-facing renovations and ongoing improvements over the past decade to create industry-pioneering new event spaces and flexible solutions for convention guests and visitors, but behind the scenes, a longer-term problem lurks outside public view.
A looming facility assessment study led by the city’s public works team will soon be wrapped up, likely revealing tens of millions of dollars in deferred maintenance, systems and machinery long-past lifespans, and urgent issues in back hallways and equipment rooms, out of public view, which will need to be addressed to keep the building functional, modernized, and a centerpiece of a major local economic sector.
Also on the near horizon is the expiration and renewal of the Convention Center’s operating agreement—long-held by a successful operator, ASM Global, which until last year was known as SGM.
Passage of Measure B by voters earlier this year increased the city’s hotel transient-occupancy tax by 1% to, in part, potentially provide funds to support the costs of improving and maintaining the Convention Center, but the limited funds expected to be raised annually by Measure B would only cover a small portion of the enormous costs to fully modernize the campus.
The city’s relationship with and reliance on oil
Nearly 100 years ago, California granted the tidelands in and around Long Beach to oversee as trustee. In the 1930s, oil was discovered under the city in the Wilmington Oil Field. Fast forward across the decades and the field now kicks off around nine million barrels of oil annually, across 2,000 active producing and injection wells.
The oil revenue flowing into the city budget over the years, into the legendary Tidelands Fund, and to a lesser extent, the Uplands Fund, has financed every conceivable type of civic effort—from beach operations, to the Convention Center, to playgrounds. It backstops the bonds used to improve the Queen Mary, the Aquarium and its expansion, and scores of other major capital projects in the Tidelands area.
A five-year planning report presented to the City Council in 2015 outlined 35 different Tidelands-funded projects across the city, in various stages of planning or construction priority. That same plan included a list of even more Tidelands projects not yet fully funded or in need of significant future funding—totaling $137 million at that time—for everything from the Belmont Pool to repairing the next phase of seawalls in Naples to new lifeguard towers.
The problem noted in 2015 and still a problem today is the volatile nature of oil prices, combined with the slowly declining amount of oil being produced locally. Oil production in the area will come to an end someday. It’s inevitable. And in the meantime, the city has to set aside funds for the slowdown in production, for land subsidence costs and for future abandonment costs. When the oil eventually stops following, the city won’t be able to simply walk away. There will be significant costs to safeguard the environment and shutdown operations.
Meanwhile, voters in a sense just doubled down on our oil reliance in the November election, passing Measure US, which increases the city’s general tax on business licenses for oil production to 30 cents per barrel, with the revenue being pledged to address problems in areas of the city that have lacked community and youth programs and have been hit hard by the impacts of climate change.
An impartial analysis by the city attorney’s office estimates that the tax could generate approximately $1.6 million in new revenue for the city’s general fund.
The city already has a special tax of 33 cents per barrel that, since 2007, has provided millions of dollars each year for police, fire and other public safety needs. That earlier measure, Proposition H, was approved by 70% of voters.
No matter how oil revenue is used or how oil production is taxed, it’s inevitable this financial stream will continue to slow and will eventually end. Fewer dollars will be available from this lucrative source to pay for many of the things that make Long Beach what it is.
The time to consider our economic future without oil needs to start today.
Meaningful, sweeping economic recovery from COVID
Heading into 2021, perhaps no greater, more urgent economic challenge is facing our city today than how we will recover from the damage caused locally by the ongoing COVID pandemic.
Thousands of Long Beach residents have lost their jobs. Dozens of businesses, local retailers and restaurants have closed. A looming eviction crisis is on the horizon and will impact countless local families.
And, as of this writing, 279 of our neighbors have died in the city from COVID.
The full scale and impact of the economic calamity facing our city and region heading into next year won’t be fully known for some time, but the economic response and recovery can’t wait until the pandemic ebbs.
Early signs of meaningful local action are starting to emerge.The city council’s Economic Development and Finance Commission is discussing ways Long Beach could provide monetary support for small businesses affected by COVID-19 closures if additional federal funding becomes available
Last week, Mayor Garcia and several councilmembers proposed a $5 million “resiliency fund” to aid struggling restaurants, bars and breweries—again, contingent on more federal dollars flowing into local government.
The next cohort of City Council, set for their first meeting on Dec. 15, looks to take up a meaningful economic recovery plan conversation in coming weeks as well.