City closes book with $2 million CenterCal settlement
by Garth Meyer
Last Friday evening, Redondo Beach City Attorney Mike Webb announced the city will pay $2 million to settle five lawsuits by CenterCal/Redondo Beach Waterfront. The statement followed a 5-0 closed session vote by the council to approve the settlement.
Upon Webb’s announcement, the five councilmembers applauded.
The lawsuits were related to breach-of-contract claims after a $400 million plan to revamp the waterfront in a public-private partnership ended in 2018.
The settlement was also agreed to by Fred Bruning, chairman and founder of CenterCal, the City of Redondo Beach, and W. Gregory Geiger, principal and portfolio manager of Westport Capital, the lead investor in the project.
“This is a great victory for the City and its residents,” Webb said. “After years of uncertainty, the City can now move forward to create the waterfront that its residents want and deserve – free of the cloud of uncertainty created by a disgruntled developer.”
The lawsuits had sought almost $20 million.
During the litigation Redondo waterfront tenants’ leases were subject to termination at 30 days notice.
The pier-area development efforts stalled when then-city councilmember Bill Brand led a coalition to rezone the waterfront, which disallowed the CenterCal/city plans.
“We spent many millions effectuating the vision the city told us to follow,” said Bruning. “Don’t you think they should at least reimburse you for your costs?”
Brand, now the Redondo Beach mayor, and all five city council members were pleased with the settlement.
“Have you ever before heard a council clap when it adjourned,” Brand said after the March 24 special session.
El Segundo-based CenterCal has finished 11 (large-scale) projects in California, Oregon and Washington since the Redondo Beach endeavor started in 2011.
While pending, CenterCal’s lawsuits left open the possibility that a court would rule that CenterCal still had control of 15-acres of the harbor.
Fred Bruning, CenterCal chairman and co-founder
“It was certainly one of the possible outcomes,” said Webb.
The lawsuits were scheduled to go to trial this summer..
So was this a surprise, or was a settlement inevitable?
“At different times, I thought it would be settled and at others I thought for sure it was going to trial,” Webb said.
Why agree to pay $2 million?
“They were seeking $20 million, it was a way to settle for an amount that would cost less than to defend the remaining case and free the waterfront from any shadow,” Webb said.
Mayor Brand estimates that legal costs to the city, to this point, was “definitely in the five figure range.”
The partnership with CenterCal would have allowed the company to build a hotel, a movie theater, restaurants and retail stores in the harbor. CenterCal would also have been responsible for constructing a new parking garage at the Redondo Pier, addressing sea-level rise and installing a water runoff system that fed into the ocean.
CenterCal perspective
CenterCal’s Bruning contends the city did not work with him in good faith.
“In my 45-year career, I had never before sued anybody. I never had the occasion to (react) to offensive behavior,” he said. “Redondo Beach paid us a check instead of the other way around, so why are they saying it’s a victory?”
“My personal view is we didn’t want the city to suffer. It was individuals who had acted without character,” he said
The Palos Verdes resident grew up in Sierra Madre, with fond childhood memories of coming to Redondo Beach with his father in the 1950s to fish.
“Our company motto is ‘Creating Happiness’,” he said. “We weren’t able to do that in Redondo Beach. I think our project would have been extremely successful, but sometimes you just can’t change people’s opinions.”
Bruning counts the number of local meetings he went to about the waterfront effort at 200 to 300.
“What I heard was that it is rundown, ‘I never go there,’ and also, ‘Leave it as it is, we don’t want those people to come here.’ Those people are minorities. To me, those are kind of fighting words. I’ve always been on the liberal side of things. Neanderthal?”
The size of the project was a major point of contention.
“I met with Bill Brand, (Harbor Commissioner) Jim Light and they said, do it smaller. I said, you need to talk to the city council,” Bruning said. “The city council had told us you need the most revenue possible.”
Increased traffic was another concern about the CenterCal proposals.
“We try to create neighborhoods (in which you don’t have to drive), the traffic is already here,” said Bruning. “A small footprint means someone has to pay the bill. We estimated $200 million to rebuild the parking structure, and retrofit (the pedestrian front) for sea-level rise. The number now is probably $300 million.”
CenterCal’s plan included an expanded Seaside Lagoon, a market hall and other features; some more well-received than others.
It would not have changed the Pier itself (except to upgrade its supports).
“The community wanted to go in a different direction,” said City Attorney Webb. “The idea was to have the private sector pay for the public infrastructure that was needed. When the community wants to change direction after a good way down the path, lawsuits are probably an inevitable outcome.”
The settlement agreement establishes that the cases cannot be re-filed.
Vision
Webb noted that a series of recent court wins helped the settlement along, including an appeals court ruling in January that found the city could change its land-use designation by ballot measure – and that elected officials opposed to the CenterCal project were allowed to participate in decisions about it.
“The community is absolutely free to elect people to not go forward with a project they oppose,” Webb said.
Will this case set any kind of precedent in California, or beyond?
“I really think it is a stand-alone, unique case, because of the decade-long timeframe, across multiple city councils…” said Webb.
“The feeling was, we were invited to Redondo, we were asked to participate. We came up with a program to match existing zoning,” Bruning said. “We could’ve done such great work in Redondo Beach, had we been allowed to. It was a lack of vision that kept us from doing it.”
A 2016 CenterCal 3-D model showed the scale of the public/private partnership. Photo by Easy Reader staff
Who lacked vision was another debated element, with Brand, Light and others representing the view that the waterfront, as it is, had a look and feel that should be preserved.
“They could be right. How do they pay for it?” Bruning said.
He cites certain advertising and propaganda at the time as unfairly depicting the project.
“I call it the Mayberry effect,” he said “I feel like we were blindsided by a lot of mistruth. We’re not bringing in the Rollin 60 Crips here. I think there were enough people honestly misled by that. It’s like the people campaigning against Dr. King in Atlanta.”
Mayor Brand declined an opportunity to respond to Bruning’s comments.
“Bill Brand never came and looked at any of our projects,” Bruning said. “I (considered) 35 different waterfronts around the world… and we came up with a plan to make Redondo Beach one of the best in the world and nobody cared.”
Bruning and CenterCal are now at work remaking an existing open-air commercial center in Emeryville, Calif.
“I wish the best for Redondo Beach. I wish Mayor Brand well. I want everybody to be happy. I just feel we’ve been really badly used by politics in the city that really didn’t reflect our true intent,” Bruning said.
Communities
CenterCal has built 25 mixed-use and retail projects around the West in the past 20 years.
“They’re 98 percent leased,” Bruning said.
He noted that the tires on his car were slashed four times during the extent of the Redondo project.
“I think the moral of the story is that the outside can never know the inner workings of a community. And sometimes the community itself is misled by its own leaders,” he said.
“Do you want the Redondo Beach of 1950; white, quiet or a city of the future? Multi-racial with high-density which is where California needs to be, or just fight for the past, and fighting for the past is Jim Crow.”
“ I hate to see a community being lied to. Find another mayor who doesn’t like CenterCal. We’re really good stewards of the communities we’ve served.”
Mayor Brand
Mayor Brand opposed the CenterCal project since before he was on city council, and rode the issue to winning the mayor’s seat in 2017 over incumbent Steve Aspel.
“The settlement is exciting, we’re looking forward to our plans for the waterfront, we’re not looking back, we’re looking forward,” Brand said.
Both sides were preparing for trial when the settlement was reached.
“We were gearing up. Look, after years of litigation, our time and money is better spent,” said Brand, estimating that CenterCal/Westport Capital spent double the money the city did in legal fees.
“Two million is a greatly reduced (settlement) than what they were originally asking for,” said the mayor.
What will the Pier and waterfront look like in 10 years? 20 years?
“I think everybody is going to be quite pleased with it,” Brand said, noting $10 million from the state for Seaside Lagoon, a new boat ramp planned for, a skate park being built now and a preliminary design and contract for a marine science center.
“I’m really looking forward to bringing inner city kids out to the ocean,” Brand said. “Years ago, I was tutoring kids in L.A., I realized they didn’t even realize what (truly experiencing) the ocean was. This is a great project, and it’s not just another restaurant. We’ve got plenty of restaurants.”
The future of the parking garage is less clear.
“An ongoing project,” Brand said. “And will always be needing attention. We’re excited about doing it on our own terms, where we own it, and we operate.”
“I hope they do, but I don’t know how they do,” Bruning said. “I think we were their best bet and they blew it.”
“The residents didn’t want a mall on the waterfront,” Brand said.
“Wal-Mart, Best Buy. That’s a complete lie,” Bruning said. “We were thinking restaurants, fitness, entertainment. Is Riviera Village a mall? Neither would we be.”
City councilwoman Laura Emdee (District Five) compares the Pier parking garage to an old car.
“At some point, rather than keep paying the maintenance, it’s better to buy a new one,” Emdee said. “But if you love that old car, you can just keep paying for the maintenance. We put in $1.5 to two million every year to maintain that parking garage.”
“For right now, yes, I think it’s sustainable (to do the above).”
Avoiding the lawsuits?
Just over a month before Measure C went before Redondo voters in 2017, which ultimately re-zoned the waterfront with the purpose to stop projects like CenterCal, then-Mayor Steve Aspel and the city council approved an Agreement for the Lease and Property and Infrastructure Financing (ALPIF) with CenterCal.
It called for the developer to lease 15 acres within King Harbor, where it would spend $400 million to build 500,000-plus square feet of commercial space.
Brand, as a councilmember, cast the sole vote against it.
“If the previous mayor and city council would’ve just waited 35 more days (until Measure C went to voters) and see if the public wanted it, we would’ve never been in six years of litigation,” he said.
“It’s not that simple. We weren’t in a lease, just an agreement to have a lease,” Emdee said. “That was it. CenterCal was already a few million dollars in, creating an EIR (environmental impact report). I think there would’ve been a lawsuit either way, because it was too far gone in the process.”
Bruning has a similar view.
“I think the previous council and mayor believed in our project just as much as I did,” he said. “We had worked with them for years. So why would they wait? That’s a little bit like saying it’s why Merrick Garland didn’t become a Supreme Court justice… Measure C arguably wouldn’t have applied to us.”
That distinction ultimately became part of the lawsuits too.
“We’ve got a lot of support behind us, the (new) city council is revitalizing, not supersizing the waterfront. It’s what people want,” Brand said. “That’s what they voted for. Revitalizing not supersizing has always been a winning platform.”
“There’s no way they wouldn’t have sued either way,” said Emdee. “It wasn’t CenterCal that invested all that money and was pissed about it. It was Greg Geiger.”
Supporters
Emdee and Councilman Christian Horvath, who both finish their two terms on the city council next week, cast votes in support of the CenterCal plan – which started before they came to the council in 2015.
“(The settlement) really closes an entire chapter. A topic that really tore the city apart,” Emdee said. “It was a perfect time to solve this, with the new council coming in. This is a fresh start. I’m really excited that the acrimony is gone.”
The moral of the story?
“I wasn’t there from the beginning. I think CenterCal felt they did a lot of (community outreach, asking the public),” Emdee said. “Dinner table politics – it’s never as simple as people think. Nothing about this is simple.”
The waterfront was an issue she said she would have liked to spend less time on.
“Whenever the city staff is focused on the Pier, they don’t have time for the rest of the city,” Emdee said. “My focus was, ‘How can we stop talking about the Pier? When I got there it was almost over… When can we work on North Redondo issues?”
Closing
The same day that Brand was elected mayor, residents approved Measure C, downzoning the harbor.
CenterCal would contend Measure C should not be applied retroactively.
“Why can’t we just make the project smaller? If we cut 100,000 feet,” Emdee said.
“(CenterCal) said, then the infrastructure the city wants has to go down. I thought the residents would’ve been okay with that.”
In 2018, after the city council unilaterally withdrew from the agreement, CenterCal pulled its development application, and filed suit for $20 million.
“I thought it was too big. When it got to the lease, I definitely would have argued to make it smaller, and thus less infrastructure,” Emdee said. “I think it could’ve been 40 percent smaller.”
The settlement holds that the city and CenterCal are responsible for their own legal costs.
“Bill Brand’s not a villain, and CenterCal’s not a villain, and neither am I. I’m just happy that the new council gets to start fresh,” Emdee said. “And we get to put this whole ugly chapter in Redondo Beach history behind us.”
“We’re very pleased that both parties could settle this and go forward their separate ways,” Webb said.
As for the city council’s applause at its adjournment last Friday, that was news too.
“I’ve not seen that before, in my 29 years with the city,” Webb said.
Efforts to reach Greg Geiger for comment on this were unsuccessful. ER