Speaker 1: Motion carries.
Speaker 0: Item 18.
Speaker 1: Communication from Councilwoman Zendejas, Councilmember Pierce, Councilmember Urunga, Councilmember Richardson, recommendation to request reports back in 14 days from city manager, financial management and energy resource departments on the city's plan to manage the California Resource Resources Corp. potential bankruptcy filing.
Speaker 0: The House.
Speaker 2: Thank you, Mayor. I'd like to thank our city staff for all their hard work over the last few weeks. From our city manager and his team to all of our fantastic department heads. That and their staff at Long Beach has been able to work through some very serious challenges due to incredibly important and unnecessary work in the last three months. So thank you. Thank you very much. A few weeks ago, staff gave a troubling but necessary overview of the severe budget shortfalls we we are going to be having to address. In the spirit of this, I think it's a good idea for us to hear a report on other potential liabilities for our city's finances . I'm specifically specifically imagining the expected bankruptcy filing of California Resource Corporation and the potential impacts of this with regards to the operations that they have here in our city of Long Beach. My intention is to bring this item was to use this as an opportunity to check in on other aspects of the city's finances and me and many of their other finances that may have been affected by the COVID 19 pandemic, including historically low prices of oil. And any effects of this we may see reflected in the city's islands fund. I'm hopeful that this is the information that will be give us a fuller picture of where our city is financially as we go into some very difficult budget conversations. For the next fiscal year. In conversation with Tom, he has conveyed that this potential impact of CRC bankruptcy is is likely less severe than we had originally feared, which gives me a little bit of relief. But let's, let's, let's let our city staff fill in and let us, you know, present us with a good report on this. And I urge my city council colleagues to please support this item.
Speaker 0: Council member Pearce.
Speaker 2: Thank you. I want to thank council members and De Haas for bringing this forward. I know that I, I too have concerns. I understand there are three different ways.
Speaker 1: That bankruptcy could.
Speaker 2: Happen. And so I'd like to just hear from staff a quick.
Speaker 1: Public conversation.
Speaker 2: About what's happened with CRC, what they think will happen. And then I'd like to ask.
Speaker 1: Council member Van de Haas.
Speaker 2: If she's okay with giving staff 30 days instead of 14 days. I know that we've asked for a lot of information on this item. So, Tom Modica, if you could give just a brief glimpse at what we're looking at here.
Speaker 5: Yes, thank you, Councilmember. So I'm not sure Bob Dow is on the line, but I can go ahead and start. So we have been following this very, very closely. CRC is the operator of the city's oil field, so it is a city run oilfield that is held in trust by the state. And so they are the the company that operates it for us. There are you know, there's a difference in that. And so, you know, we are not always we are not tied to their financial performance. From our financial standpoint. We are essentially looking at the price of oil and we do get a share of revenue based on the price of oil. So we can certainly talk about this and bring back a report to council any time any of our partners that has to do with the city operations in financial trouble. We follow that very closely. They're not allowed to talk to us about their bankruptcy and their financial challenges. We do believe this would be more of a restructuring where they would be able to maintain control of the oil field and all the environmental responsibilities and all all of the things that comes along with that. Thank you for the additional time. We can certainly get back to you quickly on some of the technical aspects of of bankruptcy and what that might mean. But we would require some additional time to really dove into the where the funds have gone historically and what that looks like. That should really be part of the budget process and we can provide those reports. So Bob, Dow, if you can add a little bit that I may not have made it clear enough. Thanks.
Speaker 3: Sure. Thank you. Tom, can you hear me?
Speaker 5: Yes.
Speaker 6: Okay. So, yes.
Speaker 0: I mean, the CRC is the contractor for the unit.
Speaker 3: And as such, they they basically really own nothing. The state and the city and the unit own all the assets there.
Speaker 6: So as the operator.
Speaker 0: It's our assumption that.
Speaker 6: If they decided to restructure, they.
Speaker 3: Would go with a Chapter 11 type of bankruptcy filing.
Speaker 6: And then there would be a trustee assigned to to the bankruptcy.
Speaker 3: And the first thing they would look at is the agreements that the contractor has with the city and the state and which is predominately governed by the contractors agreement. And we believe that there's still a lot of value in that agreement.
Speaker 0: So it's very.
Speaker 3: Likely that the trustee and the bankruptcy trustee would agree to continue to operate that.
Speaker 6: So then all terms and.
Speaker 3: Conditions in that agreement will be followed explicitly, and any deviation from that would not be something that they would allow.
Speaker 0: So in this case.
Speaker 6: Everything would operate status quo while they restructured their debt. But every operational.
Speaker 3: Aspect, from the environmental to the safety to the governing of all the documents would be.
Speaker 6: In place as they are today. So it's really a very simple.
Speaker 3: Type of arrangement, but it could be complex on.
Speaker 6: Other aspects of their operations.
Speaker 3: Throughout the state. But in this case, it's very simple.
Speaker 2: Thank you staff for that quick report. I'll close out my statements by saying I think it's important that we understand the financial situation, what the impacts could mean to Thailand, to a general fund, and that we also.
Speaker 1: Take a moment to.
Speaker 2: Recognize that we have said as a city that. That structural racism is something that, you know, affects people in our city on every aspect. And environmental racism is one of them. And the conversation around oil is one of them. I'm not saying this is the item to just say, let's get off of going, but I think that this is an item that will allow us to really better understand as the city council, what our oil revenues go to, how it's structured, and what happens whenever the price of oil drops down and just having a bigger, longer conversation about this.
Speaker 1: And so I think council members in Davos for.
Speaker 2: Having me sign onto this item and hope you guys support it. Thank you. Councilmember Pierson Yes. Now that I feel a little bit more comfortable with my concerns, I think that we can definitely extend it for a 30 day report. Thank you. Thank you.
Speaker 3: Dr. Richardson. Thank you, Mr. Mayor. Just a few thoughts. So we've been looking at this situation. We thought about moving an item a couple of weeks ago. With all this taking place. So we sort of fell back on it. But, you know, I'm particularly concerned about, you know, the impact here of CRC bankruptcy and how it could affect not just payments, appliances, how we balance our our general fund. And a lot of our core essential services are directly connected to public. Also know that if you know the type of the type of bankruptcy that the ICRC may engage in will may have an impact on the state oil trust fund. And so my understanding is they applied for about a half of $1,000,000,000 worth of funding. And if they receive that funding, they can go with Chapter 11 instead of Chapter 13. And Chapter 13 will require liquidation and would require the city of Long Beach to step up and take over some of the operations in the in the interim, which may require us to leverage the state oil trust fund. And so at this point, as far as I know, that there's been a conversation at State Ledge over the last few years about increasing the cap on the state oil trust fund is located in the state treasury. Tom, are you able are you or Tyler able to give a status update on where we are with the state oil trust fund?
Speaker 5: Yes. Tyler Kerley can give an update.
Speaker 6: Yes. COUNCILMEMBER So this is the third year that we worked with Assemblymember O'Donnell's office to push legislation to try and lift the cap on the oil trust fund. The last two years, the bill has failed to make it through the Appropriations Committees. So the first year was the Assembly. The second year didn't make it through the Senate appropriations. And this year, because of COVID and kind of realignment of priorities, as well as, of course, the $54 billion deficit that the state is facing, the bill did not move forward, passed the Policy Committee on the Assembly side. So we look forward to and welcome, you know, working with you in the state led committee to strategize, moving forward into the next legislative session how we can prioritize this this issue further.
Speaker 3: Sure. And I'll just say this. I know that we are able to engage in Sacramento, sometimes working through the big mayors, sometimes working through the governor's office. But I think the strategy of just moving it through Assembly Member O'Donnell, through the legislature, it hasn't worked and it's time to change strategies. So I think maybe we think about some of the other legislators. We have our senators, some of our other assembly members, because this could potentially if, you know, if we just have to think about worst case scenario and the worst case scenario. Chapter 13. The last thing I want to see is that there's not enough funding the state oil trust fund to support Long Beach and other cities that are going to be impacted by some of these bankruptcy at this moment. So I would say that we need to be a bit more assertive and change our strategy in terms of who carries this bill. And it's been three times and we need to change our strategy. Thanks a lot. I'll keep I'll keep an eye on this. But again, I'm concerned about this moment. Thank you.
Speaker 0: Thank you, the customary Rango.
Speaker 3: Thank you, Mayor. And I totally support the 30 day extension of getting the reports back. It's so important. And it's a fluid it's a fluid issue. So literally and figuratively that we need to get it right and we can't do anything until we know exactly the direction that's here CSC is going to be taking. So looking forward to getting the report back and then taking it from there. Thank you.
Speaker 0: Adam Courtney Public comment.
Speaker 1: There are two public comments on this item.
Speaker 4: The first speaker we have is Laurie Smith. You have 3 minutes.
Speaker 2: Right. Hi. Thank you. I'm a resident of 90803 in Council District three. And I first want to just commend the city council members and the House for bringing this item forward and for. Councilmember Richardson's very astute comments as well as Councilmember Pearce. This is for the protection of public interest. And I just want to expand upon two areas of the staff report. First is Long Beach history of the land sinking, sinking due to the oil production. And the second is the decreasing need for oil production. So in the forties and fifties in Long Beach, we had the drastic land subsidence issues. Due to oil production. And I want to make sure that we all understand that that means that the land sank, it went down and we live at the ocean. So in the fifties, the land sank up to 24 to 29 feet due to oil production. That's feet that's not inches. So in the staff report, it states that 1961 that the land subsidence issues were under control, meaning that they figured out how to stop the city from sinking. So in addition to city council requesting this report, I would like to make sure that they look at the what the cost is for maintaining water injection to assure property owners that if companies like CRC abandon the wells, we need to make sure there's enough money in the funds and for how many years to maintain water injection , which is what led the land to be kept at proper levels. So you need to know that the mechanical integrity of water injection and monitoring that system will. We need to make sure that it's going to be able to continue. We know that it's going to be needed after oil fields are no longer use in order to prevent future damage to city property and our homes from the land sinking. So the other thing we're not talking about is a dismal future of oil production. The president of the company stated that his company is suffering from transitory events, from the pandemic, and the price war between Russia and OPEC are to blame. But what he's failed to address is that oil consumption is being phased out in the world. And we see that very clearly here in our city, where the city is buying alternative fuel cars for the departments. The metro system is turning away from gas powered vehicles. And gas is just not the future. It's not the future for the transportation sector, which makes up 69% of the oil market. And it's not the future for the industrial sector sector, which makes up the other 25% of the market. An example of this is our East Alamitos Electric plant. It is no longer going to be gas powered, so it appears oil production will never be at the same level that we've known. And it would be prudent for the city to prepare for this new reality. The world is turning away from oil and gas, and it behooves the city to plan for oil production decreasing and make sure that that the CRC is actually.
Speaker 4: Thank you. We have Victor Boosie next. You have 3 minutes.
Speaker 3: We're sitting here talking about oil. Oil? So this company. Has the power to go into $5 billion worth of debt. Who made the contract with this company? Where are the people that are going to be held accountable? I will definitely be keeping my eye upon this. Like the previous citizen said, oil is not the future. We should not be looking towards oil. Sadly be the way Long Beach moves forward because at the bottom of all this. Is profit. Profits over people. The land is literally sinking under our feet. So a tiny few could make profits. Profits over, people will stop. Deep Fund help the idea of my time.
Speaker 0: Thank you. That concludes public comment. Please call.
Speaker 1: District one. A district to. I. District three. I. District four.
Speaker 3: I.
Speaker 1: District five. I. District six.
Speaker 0: I.
Speaker 1: District seven.
Speaker 3: I.
Speaker 1: District eight. District eight. District nine.
Speaker 3: Hi.
Speaker 1: Motion carries.
Speaker 0: Thank you. I think the last item before we get to the some of the more the staff ones and other with interest of the questions here, let's go to item nine.
Recommendation to request a report back in 14 days from City Manager, Financial Management, Energy Resources Departments on the City’s plans to manage CRC's potential bankruptcy filing;

Request report back in 14 days from Financial Management on the unfunded liabilities if the field contractor dissolves and potential impacts to Tideland and Upland funded projects and initiatives;

Request report back in 14 days from Financial Management on oil revenues to the City’s individual funds, revenues, and reserves for the last three fiscal years;

Request report back in 14 days from Financial Management on Inventory public expenditures from oil revenue in the Tidelands zone, such as bluff restoration, lifeguard staffing, Long Beach aquarium, and other such items to generate a listing of items at risk; and
 
Request report back in 14 days from Energy Resources Department on an inventory of the offshore THUMs oil islands and Tidelands onshore infrastructure and facilities.