There was one other provision. The council wanted to know if the revised deal could bring in $230 million. It's not clear why it chose that figure, but it was effectively a poison pill. With the new restrictions, there was no chance that bids would go that high.
In February, Santana announced that the bidders had rejected the deal. But the bidders' written responses, since made public, show that several still were interested in getting a deal done.
The two most serious bidders — Morgan Stanley Infrastructure Partners and CIM/LAZ — were reluctant to put a hard number on the revised proposal. CIM/LAZ would say only that it "yields an up-front value substantially below $230 million."
But both wanted to keep talking. Interestingly, neither expressed any concern over the new rates. Both did have a problem with the revised noncompetition zone, and with other issues that were not part of the public debate, such as possessory interest tax and potential parking-tax increases.
Santana wanted to keep talking, too. He planned to go into closed session and determine whether the council would back off on any of its restrictions.
But it didn't get that far. Instead, the council voted unanimously to scrap the deal. "This is a terrible idea," Councilman Tony Cardenas said. "We should just kill it once and for all."
That's a defensible position. But the time to take such a stand would have been before Cardenas and the other council members voted to hire consultants and lawyers to investigate the concept.
Before voting to kill the deal, Garcetti says he had only supported exploring the idea to see if it made financial sense. But in the end, the council's decision was not based on any of the consultant work. It was based on a shift in the political winds.
Perhaps a deal could have been done for $200 million or more, with the reduced rates and a modified noncompetition zone. Perhaps not. After two years and $2 million, the council didn't bother to find out.
"I thought the policy objective was to maximize the value of the asset," Santana says. "It's not clear to me what the specific reason was for not moving forward. ... We never had an opportunity to discuss it."
