Inyo Supervisors talk LADWP leases

By Deb Murphy

The Inyo County Board of Supervisors broke from tradition at Tuesday’s meeting with a discussion of the Los Angeles Department of Water and Power’s commercial leases.

The Board opted to draft a letter to the department’s Board of Commissioners asking for lease transfers, reasonable evaluations if the City opts to sell the land, water availability and a contact name for lease holders to call for accurate information.

Rumblings started with the City of Bishop’s workshop in January. Members of the business community were concerned with what appeared to be changes to the department’s lease policies.

Then, at LADWP’s Board of Commissioners’ meeting last month, a vote was taken on ranch leases but a commercial lease decision was postponed at the request of Inyo’s Administrative Officer Kevin Carunchio. The sticking point was the 80-year tradition of a lessee’s ability to sell his business and transfer the lease.

The Commissioners’ agenda package replaced that policy with a family transfer policy and a one-time assignment policy, the latter effectively putting an end to past practices. A letter from the Inyo supervisors to the department’s commissioners expressed the fear that the one-time transfer policy would seriously hurt Inyo, devaluing existing businesses and discouraging capital improvements.

Mike Allen, owner of Allen’s Outdoors in Bishop, told his story during the public comment period. Allen was told 16 years ago when he bought the business the five-year limit was “no big deal,” with lease renewals a near certainty.

When he starting thinking retirement and selling the business, which includes a U-Haul rental, he contacted the Bishop LADWP real estate office and was told he couldn’t sell. Instead he was told to get an appraisal on the improvements and inventory and the department would advertise, seeking competitive bids.

In a phone conversation, Allen said two other commercial lessees considered selling and were told they couldn’t.

Allen described a worst case scenario provided by local LADWP staff. A prospective buyer comes in with a low bid on the business but willing to pay a higher rental rate and the department goes with that bid. “I think he (the staffer) was putting his personal twist on this,” Allen said.

“We’re reaching out to lessees,” said Amanda Parsons, LADWP’s public information officer, in a phone interview. “We’ll hear their concerns and input and do the best we can” with the leases.

LADWP’s Aqueduct Manager Jim Yannotta will make a presentation at Monday’s Bishop City Council meeting and at next Tuesday’s Board of Supervisors. The department will also hold a meeting with lessees at the Tri-County Fairgrounds on November 22.

The Supervisors’ primary concern was a stable, viable business community which would require a “reasonable, flexible lease policy” for area businesses. “DWP doesn’t seem to recognize there is a business community here,” said Supervisor Rick Pucci. “It’s insane. Nobody seems to know who to talk to regarding business leases,” he said adding that if the department opts to sell the leased land, the property valuations have to be reasonable.

Supervisors Mark Tillemans and Jeff Griffiths expressed concern the one-time transfer and competitive bid policies would lead to more abandoned, dilapidated commercial buildings in Owens Valley communities.

Supervisor Matt Kingsley suggested the County’s letter be addressed to the department’s Board of Commissioners, cc’ing Los Angeles Mayor Eric Garcetti. Pucci agreed. “When we send letters, they get lost in LA,” he said.

 

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6 Responses to Inyo Supervisors talk LADWP leases

  1. Philip Anaya November 9, 2016 at 8:44 pm #

    Although not a commercial real estate expert, I do know that increases in lease expense
    is a component of the cost of goods sold for a business. For everything sold this means a price increase for the customers of that business. In the Owens Valley that would be you and you and me.
    The value of a business usually includes its physical location whether it is owned by the business or even leased. You know what they say “Location, Location, Location”. A location that is vacant is not as valuable or beneficial to the local economy as a location with a viable business. LADWP needs to be reminded that leased holders with viable business’s pay their rent, maintain the property and provide it’s employees and all of the rest of the population, products and services and contribute to the economic health of a community. LADWP also needs to be reminded that they were supposed to release City owned properties for sale for economic development in accord to the Long Term Water Agreement.
    These important issues for the Owens Valley economic viability seem to have been obscured or lost somewhere maybe in the LADWP 2015-16 Operating Budget of 4.8 billion Dollars and not a penny wasted.

    https://d3n8a8pro7vhmx.cloudfront.net/ladwp/pages/42/attachments/original/1434671564/FY_15-16_Final_Budget_Presentation_FINAL051915.pdf?1434671564

     
    • Pedro November 10, 2016 at 7:36 pm #

      PA. they did have an auction a few years back and very few sold. Looked into it, was not ready to buy. It was during the downturn so I imagine many locals were not in a position to buy either.

      Asked how they set the minimum bids, why they couldn’t take less, and why they didn’t just have them on the market continuously like private real estate. The answer was there a lot of specific rules about how the city of l.a. sells property. They can’t take low ball offers under appraised value, have to offer in public auction format, etc. etc. etc. Basically rules for fiduciary responsibility, misappropriation of public assets, preventing fraud, etc. Ya know, keeping the mayor from turning the City Hall into Trump Towers or Clinton Whitewater West Wing in exchange for a penthouse or two.

      I think dwp would love to just sell those lagreed on local properties to the highest bidder over a dollar tomorrow just to be done with it. They can’t do it legally though. If you could figure out a way to do it, I’m sure you’d be a hero to dwp and the county. Imagine that, you’d be an epic legend if you made them both happy.

       
      • Philip Anaya November 11, 2016 at 4:31 pm #

        Thanks for the information P . LADWP has plenty of excuses for not doing what they are required to do. Obviously DWP appraised values and the minimum bids do not reflect the real time market value or those properties would have been sold. The only heroes out there might be an inspired lawyer who will find a solution, litigate and take them down a notch just like Great Basin was able to do.

         
  2. Trouble November 10, 2016 at 5:13 am #

    There are solutions to this, but no one is going to walk away with everything they want. This is where are supervisors all walk away and refuse to face the Land L0ock issue . At least call it what it is.

     
  3. Daris November 13, 2016 at 9:11 am #

    DWP says they want fair and competitive bids on leased property but they refuse to say in writing what that process will be. I have a ranch lease and I am very confused as to how the so called bidding will work if and when a leased property is vacated and is then issued to other parties by the bid process. So I hope the business community gets answers in writing as to how a lease changes to another party.

     
  4. Indygal November 15, 2016 at 10:09 am #

    We have inquired about commercial rental property in Independence and have been given quite the runaround! Common thought around here is that LADWP wants our communities to whither up and die. It’s nearly impossible to start a small business here!

     

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