Negotiating means getting the best of your opponent.
When Ed Harris and Scott Sherman, San Diego City Council members of different political stripes, see their conversations turn disagreeable, they often resort to a common-ground topic: a mutual love of fishing.
Question is, whos the better angler? Oh, Im way better! Harris boasted to Spin recently.
Last week may have represented the dueling duos nadir in interpersonal relationships, when the City Council on Sept. 22 battled it out along party lines over a proposed 55-year lease extension for the operators of Belmont Park, Mission Beachs landmark amusement and retail center. In the end, the council voted 5-3 to reject the proposal, hoping instead for a return to the negotiating table.
Republicans Sherman and District 6 Councilmember Lorie Zapf—two months shy of replacing council-appointed Democrat Harris as the representative of District 2, which includes Belmont Park—acted as the loyal soldiers for the leaseholder, Rancho Santa Fe-based Pacifica Enterprises, a privately held real-estate-investment company.
Harris, who said he first learned of the proposed long-term lease in July, even though behind-the-scenes negotiations had begun a year prior, had questions about the length of the proposed lease and whether the city was getting the best deal for its 7.2 acres of prime oceanfront parkland.
Apparently, in Shermans world, thats heresy.
Why do we have an appointed member of this council come in and start jackin this up? Sherman seethed. This has been a deal thats been in the works for a while. In five minutes of venomous diatribe, Sherman managed to call the proposed lease a good, very good or excellent deal eight times.
You know, I hear a lot of people talking about appreciating your efforts and appreciating the citys efforts, Sherman told proponents. We appreciate it so much, we want to make sure we try and squeeze more money out of you.
Zapf, meanwhile, seemed completely flustered by the turn of events. She used the term we frequently when mentioning negotiations, raising the question of whether the future D2 representative was involved in the lease deal more than its current councilmember.
Noting that the property—dominated by the historic Giant Dipper roller coaster—has brought the city a paltry $1.6 million during the last 26 years (an average of less than $62,000 a year) while a backlog of deferred maintenance there continues to mount, Harris told Spin that the deal is emblematic of the citys inconsistent stewardship of its assets.
Pacifica argues that it needs the long-term lease to offset the costs of renovating the property. The company claims its already sunk upwards of $25 million into sprucing up the property with new restaurants, a community center and more activities. It also proposes to spend $5.9 million repairing the now-shuttered Plunge, billed as the largest indoor heated swimming pool in Southern California.
In exchange, the company wants more than $5 million in rent credits to help deflect those costs. Harris said that means the city would be picking up the tab for the improvement costs. Theyre putting in whats appropriate for their business, he argued. Their business model is to keep the place up.
Pacifica also wants to acquire the lease for the roller coaster from San Diego Coaster Company and lump that into the deal, but executives claimed that it had only until Tuesday to make that happen.
Dario De Luca, president of Pacifica, regaled council members with tales of failed California seaside amusement parks that have shut down. Obviously, we want to see to it that Belmont Park does not make the permanently closed list, De Luca warned. If we lose this opportunity, the park will remain in a mismanaged, uncompleted, unfinished fashion, as its been for the last several years.
How the city got to this point would make a Hollywood producer jump out a window in disbelief. Start in the 80s with the late environmental populist City Councilmember Mike Gotch, who infamously promised to prevent retail creep into what admittedly at the time was a rather disheveled amusement park, only to reverse course and support a retail plan proposed by the husband of his political fundraiser.
Today, the park is little more than a glorified shopping center adorned with a few throwbacks from the past and some other nods to the present, like a climbing wall and a wave-making machine introduced by the previous leaseholder, Tom Lochtefeld, who last year settled a $25-million lawsuit over his bankruptcy that he contended occurred due to the citys refusal to consider his plan for a hotel.
While the terms of the settlement were never revealed, the issue still hovered over last weeks council like a black cloud. De Luca reminded the council that since taking over the lease in 2012, Pacifica played a significant role in dismissing a lawsuit to the tune of about $25 million against the city.
The citys Independent Budget Analyst (IBA), in a report requested by Harris, did question the length of the proposed lease and the percentage of rents proposed to be paid to the city, noting that similar California venues like the Santa Monica Pier and Santa Cruz Boardwalk do better.
Minimum rents, De Luca said, would rise from nearly $900,000 annually to about $1.1 million in five years.
City Councilmember Sherri Lightner noted that a surf camp and kayak concession at La Jolla Shores alone bring in $1 million annually to city coffers.
Such low rents, Harris told Spin, give a large corporation an advantage over neighboring small businesses. Theyre not paying market rents, so they can sell things cheaper. As a representative of those small businesses, I cant buy off on that.
Going forward, Harris would like to see such large leases and real-estate deals vetted more thoroughly, perhaps through the IBAs office, contracting with an external consultant.
These companies can afford to hire the best, he said. The city should, too.
Hooking a better deal for the city. What a concept!