City Council One Step Closer to Acquiring Queen Mary : Tourism: Harbor commissioners give preliminary OK to the transfer. A scramble is on to pick a new operator and avoid layoffs.

The Board of Harbor Commissioners took the first step this week to transfer control of the Queen Mary to the City Council, while Long Beach officials scrambled to secure a new operator for the tourist attraction.

The harbor commissioners, who have had jurisdiction of the ship since 1978, gave preliminary approval Monday to an ordinance that would make the transfer. They are expected to give final approval on Monday, said David L. Hauser, board president.

The transfer would take place 30 days later, as long as the City Council agrees to accept the ship, Hauser said.

City Manager James C. Hankla said he expects the City Council to consider approving the transfer at its Dec. 15 meeting. In the meantime, city staff members are working on an operating agreement, one they hope will ensure that the city will not suffer any losses, Hankla said.

“It’s the most immediate problem that we have,” Hankla said. “We’re working to put together an appropriate operating lease that will protect the city’s interests.”

City officials are up against a deadline. The current operator, the Walt Disney Co., did not renew its lease and will leave the ship at the end of December. Disney reportedly has lost as much as $10.8 million a year on the Queen Mary since it started operating the ship in 1988.

If a new operator does not take over immediately, about 400 workers would have to be laid off. It also would be costly to restart the operation and more difficult to attract tourists, city officials said.

About 800 full-time and part-time workers already have been laid off by Disney, which closed the Queen Mary Hotel and the ship’s banquet services Sept. 30 to reduce losses.

The ship’s restaurants, bar and tour are still open.

Citing the ongoing negotiations, Hankla declined to release any details of the proposals or even to say how many proposals the city had received. The city manager said his staff had met with prospective operators and was awaiting additional information.

City officials would expect the new operator to run the ship for the next three to five years, until the City Council can decide if the ship fits into future waterfront development plans.

The Times has learned that at least three investment groups have submitted proposals. All of the proposals include plans to reopen the Queen Mary Hotel and to stage special events, such as concerts, in the Spruce Goose dome, the prospective operators said.

One of the proposals is from a group headed by Joseph F. Prevratil, a former executive director of the Harbor Department who is now a city consultant overseeing expansion of the Long Beach Convention and Entertainment Center.

Prevratil oversaw operation of the Queen Mary for the Wrather Corp., which ran the ship until 1988.

A group of Long Beach and area business people submitted another proposal. The group includes Long Beach marketing consultant Donald Butler and Orange County developer John Thompson, both members of a new civic group in Long Beach.

A third proposal is being spearheaded by Program Control Corp., a Camarillo-based management consulting firm that would like to buy the Queen Mary and operate it in Long Beach, said J.C. Jones, a vice president of the firm.

Prevratil and representatives of the two other potential operators maintain that they will be able to earn a profit.

Some city officials were optimistic that the transfer will take place next month and that the Queen Mary will continue operations.

“I think it’s going to sail right through,” Councilman Warren Harwood said.

But Councilman Thomas J. Clark said he still needs to be convinced that the city will not lose any money by taking over the ship. The Queen Mary needs about $6 million in immediate repairs and another $21 million in maintenance work within five years, according to a consultant.

“We don’t have any money to put in the deal,” Clark said. “We have to get the ship clean, and we have to get an operator that’s going to maintain it.”

The Board of Harbor Commissioners wanted to sell the money-losing tourist attraction but decided to offer the ship to the city. A Hong Kong firm reportedly offered $20 million for the vessel.

The transfer agreement that was endorsed by harbor commissioners Monday would provide the city with $6.5 million to make immediate repairs. In addition to the ship, the harbor also will transfer to the city 85 acres of land that is home to restaurants and other businesses near the Queen Mary. Those businesses generate about $840,000 in annual lease revenue that the city could use for future Queen Mary repairs.

A proposal for the Harbor Department to provide another $2.5 million to the city was dropped. The city eventually would have repaid the $2.5 million from the new lease revenue, but the City Charter prohibited such a transaction, Deputy City Atty. Einar C. Petersen said.

City officials are seeking bids to repair the ship. Hankla said the City Council probably will consider the bids the same day it considers whether to assume control of the Queen Mary.

So far, the city has received repair estimates only from consultants. If the needed repairs turn out to be more expensive, that could present a barrier to the transfer of the ship. But for now, city officials say they are optimistic.

“We think we’ll be able to get the work done with the $6.5 million,” Hankla said.