More than a dozen critical Queen Mary maintenance projects approved in 2016 have been sidelined or have yet to be started due to cost overruns and unforeseen expenses, according to documents obtained by the Press-Telegram.
The projects, identified in a 2015 marine survey that analyzed the ship’s condition, were recommended by a team of naval architects and marine engineers who predicted a bleak future for the Queen Mary — including some internal collapse over the next 10 years — if work wasn’t done soon.
The survey was released to the public in March 2017 with repairs estimated to cost $235 million to $289 million, figures the ship’s operator disputes.
The city approved $23 million in November 2016 to pay for the most urgent repairs, such as structural issues, leaks and water breaches that could lead to flooding. The remaining costs were to be footed by Urban Commons, a Los Angeles real estate investment firm that operates the ship through a lease agreement with the city.
City officials believed their share of the funding, a combination of preservation money and a bond debt, would cover 27 projects, and executives at Urban Commons said the remainder of the work could be done later, after revenues started to flow in from a $250 million proposed shoreside development, Queen Mary Island, which has yet to be built.
To date, 20 of the 27 city-funded projects planned for completion by year’s end have either not begun or have been shelved due to significant cost overruns on other projects, including:
- Repairs and replacement of rotted teak wood decking and roofing. The work was budgeted for $2.1 million, but has so far cost over $7 million, with an anticipated June completion date.
- Safety corrections to a lengthy list of issues aboard the ship, ordered by the Long Beach Fire Department , which was budgeted for $200,000. The work, which is nearly complete, has so far cost $4.8 million.
- A revamp of the Ghosts and Legends Tour, a supernatural journey through the ship’s haunted history, is the only major project on the list to have been completed. Budgeted for $2 million, it cost $3.8 million, including repairs to the ship’s boiler rooms.
“A lot had to be put on hold,” said Dan Zaharoni, chief development officer for Urban Commons. “There are projects that unfortunately had to get crossed off the list based on where we are and the cash available.”
Six additional projects, including the fire upgrades and flooring fixes, are slated for completion this year.
Smaller projects including renovations to exhibits like the Princess Diana display, and upgrades to restaurants have also been completed. And a new state-of-the-art 4D theater was recently installed to use in a series of educational programs rolled out last year. One of the offerings, the Ellis Island Experience, saw some of its first students last summer.
The Long Beach Fire Department put the Queen Mary on fire watch last July, which required intensive ‘round the clock checks for smoke or signs of fire. The department simultaneously imposed an obstructive investigation, which required repairs to all inoperable pipes and sprinkler heads, according to city documents.
That turned out to be a much bigger project than anticipated, Zaharoni said.
Deputy Fire Chief Richard Brandt, who issued the correction list, said it is not unusual to put a building on fire watch until safety items are corrected. Any property required under state law to have fire alarms and a sprinkler system could be subject to such an order, he said.
“We don’t like to impose that, but our biggest concern is to make sure that the systems function properly in case of an emergency, especially when you have people on board that ship,” he said. “I am not going to put these people at risk.”
Disputed cost of repairs
Management of the Queen Mary, a floating hotel and tourist attraction, has changed operators several times over the past 50 years as the historic vessel descended into a state of disrepair.
Two years ago, Urban Commons stepped in with a vision to revive the Queen Mary and develop the 45 acres of harbor land surrounding the ship.
Prior to signing a 66-year lease agreement to run the Queen Mary, however, Urban Commons spent months challenging the city over the marine survey’s findings. During contract negotiations, Zaharoni pushed back on that $289 million figure, a number his team felt was “grossly exaggerated.”
“When that marine survey came out that was as shocking to us as anybody else,” Zaharoni said in a recent interview. “It was not a number that we ever believed.”
Even though the initial projects have cost more than expected—in some cases more than double the initial estimate—Zaharoni said his team believes it will cost between $50 million to $60 million to fix all the safety and structural issues, a figure based on supplemental studies and estimates, he said.
Zaharoni pointed to a secondary structural engineering study Urban Commons commissioned that he said showed the “true health” of the Queen Mary. The 95-page document, which Zaharoni provided to the Press-Telegram in late March, is a study specific to one section of the ship below the Exhibit Hall, an area that was closed off to the public because of safety concerns outlined in the marine survey.
The report by John A. Martin and Associates created a digital blueprint of the Queen Mary’s hull based on original drawings and documents. It recommends welding quarter-inch steel plates over areas of tank tops that are severely thinned or rusted through. The project area in the study makes up about one-seventh of the total area of tank top throughout the ship, reporting it will cost $300,000 to repair that part of the ship.
Although the consultants did not analyze other project areas, Zaharoni said they can “reasonably anticipate” it will be a similar scope of repairs since they have undergone the same deterioration and conditions as the area inspected.
Johnny Vallejo, the city’s property services officer who oversees the Queen Mary, meanwhile, said: “I don’t think from a technical perspective that you can take that and apply it across the board yet, but I do believe it’s a very good sign.”
Urgent repairs
Although work is underway, it remains unclear when the remaining 20 critical projects will be completed or how they will be funded. Urban Commons is under no obligation to disclose those to the city or the public because it is a private company.
“We are aware that we have to bring in private money to not only maintain the ship but to develop the property around it,” Zharoni said, explaining that a portion of the project investment will come from bank loans while the remainder will come through private equity.
“In any construction endeavor, increases in costs are not unusual so that’s something we’re used to as developers,” he said. “The projects we undertook immediately were the most crucial projects and also the ones that were most difficult to gauge.”
Vallejo agreed, saying priorities often shift throughout the year.
Any projects funded with the $23 million do require regular reporting and approvals, Vallejo said, because they were paid for with public money. But beyond that, Urban Commons has sole discretion of its spending.
“If they are using their own funds they are welcome to spend that as they may,” Vallejo explained, adding that the city’s third-party inspector would still need to determine whether the work was done properly.
Ultimately, Urban Commons and the city are banking on the $250 million Queen Mary Island shoreside development to bring in some of the revenue needed to continue investing in the ship for future generations.
Last March Urban Commons proposed its vision to redevelop the Queen Mary and the harbor land surrounding the ship. At the time, executives unveiled renderings of an ambitious development that included an indoor adventure park, outdoor amphitheater, and unique dining and retail options.
That proposal is still winding its way through the approvals process, with a full build-out anticipated in the next decade.
In the meantime, however, Vallejo said, “the improvements are being made and controls are being put in place. It’s obviously not perfect; we don’t have the funding to do what we want to do overnight, but I really feel like we are really doing something better for the ship.”
