PORT—Shippers Object as Long Beach Transfers Port Funds

0

Unlike a successful attempt nearly a decade ago to stop L.A. Mayor Richard Riordan’s diversion of port funds to hire police, shipping companies in Long Beach are being stymied in their efforts to stop that city from shifting some of its port’s monies to its general fund.

The Steamship Association of Southern California, which represents the major cargo shipping lines, contends that port money should be put back into port facilities, which are burdened with debt. But the city’s charter apparently allows the fund diversion, leaving the shippers powerless to do anything about it.

“My feeling is that, if they don’t need the money (for port purposes), their rates are too high,” said Jay Winter, executive secretary of the Steamship Association. “They ought to give it back to the (port) tenants. We pay them the money to build port facilities. We expect that’s what our fees should go toward. Our fees are not taxes.”

Despite such protestations, Long Beach harbor commissioners have awarded 10 percent of the port’s net profits to the city in each of the past five years.

The commissioners began the appropriations in fiscal 1994-95 and have since signed off on the transfer of $41.8 million, including an allotment of $6.2 million this month, which was approved before the fiscal year 1999-2000 books were audited, records show.


Charter allows diversion

The Long Beach city charter allows transfers of up to 10 percent of profits only if the money is not needed for port operations. Net profits have been earmarked specifically for the city’s tidelands operations for salaries, maintenance and improvements to the beaches and marinas.

The city charter seemingly prevents the shipping association and California State Lands Commission from repeating the stunning legal battle they won against the city of Los Angeles, which agreed in January to return $62 million of the $68 million it had siphoned from its harbor department since 1995.

State law requires all Los Angeles harbor-generated revenues to be used for the promotion of commerce, fisheries, navigation and recreation.

Winter conceded that there is no bargaining position to be found in threatening Long Beach officials with the prospect of relocating shipping companies because the port tenants are locked into long-term leases.

Company officials would need a stronger reason than disenchantment over spending priorities to pack up their operations, he said.

“Tenants don’t just leave for the heck of it,” Winter said. “The principal reason why people leave is for a better piece of land if someone needs a larger facility. That’s why Maersk Sealand moved. There was a better piece of real estate available in Los Angeles than in Long Beach.”

Winter said he believes the Long Beach Harbor Commission has been more receptive to his group’s complaints in recent years and will eventually see things his way a prediction that Long Beach Harbor Commissioner John Hancock sidestepped.

“Once we have done it doesn’t mean we’ll do it next year,” said Hancock. “But I’m not going to make a (commitment) one way or another. We feel (the appropriation) is a reasonable request for the city to make.”

But the port has accumulated more than $1 billion in debt stretching back to 1993 from a laundry list of capital projects that are part of its master plan to reduce the number and increase the size of its terminals to handle the increasingly larger cargo ships docking in Long Beach, records show.

Most of the debt is tied to construction and expansion of port terminals, including Pier T, a $500 million project on 375 acres that is scheduled to be complete in June 2003, and Pier S, a $275 million project on 160 acres that is set to open about the same time.


Slower growth

The battle over money comes at a time when revenues at the port are projected to grow by only 2 or 3 percent this fiscal year the first time in a decade that there will not be double-digit growth.

“We have seen a slowdown over the last few months, but it hasn’t been anything dramatic,” said Mike Slavin, the port’s finance director. “I think we’re sound fiscally. We have a very healthy balance sheet.”

Outside officials believe that Long Beach’s use of port funds is legal, unlike the case in Los Angeles.

Shortly after taking office eight years ago, Riordan was hunting high and low for money to fulfill his campaign promise of putting more police on the streets.

A study commissioned by Riordan suggested that the Los Angeles port had been undercharged for city-provided police, fire and other services since 1977, and recommended that the city begin charging the port an additional $11 million annually to rectify the problem.

“I think everybody recognizes that (Long Beach’s appropriations) are legal and the Steamship Association would have a hard time getting the kind of case going against Long Beach as they did in Los Angeles.” said George Cunningham, who publishes a newsletter tracking West Coast international trade. “They are two different cases.”

But Cunningham said politics is at the root of the choices made by commissioners, who have far more autonomy than their Los Angeles counterparts but are nevertheless appointed by the mayor and confirmed by the City Council.

No posts to display