OAKLAND -- A deal that could help net the city a waterfront baseball stadium also risks exposing the Port of Oakland to retaliatory lawsuits from two waterfront conglomerates each seeking fresh public concessions.
For the fourth time in the last two weeks, port commissioners on Thursday will consider settling a lawsuit filed by one of the port's two biggest terminal operators, SSA Terminals. The company claimed that the port had violated federal shipping law that prohibits unfair treatment of maritime companies by giving its main competitor a sweetheart deal.
The proposed settlement is being championed by Oakland stadium boosters because it would end maritime operations at Howard Terminal, which given its proximity to Jack London Square is seen as the most viable spot for a new Oakland A's ballpark.
But port unions oppose the settlement as does Ports America, the port's other dominant player operating terminals where container ships are loaded and unloaded.
If the deal is approved, Ports America intimated that it would turn around and sue the port under the same statute for skewing competition in favor of SSA.
In a letter to port officials, Ports America said the settlement would give SSA "tens of millions of dollars in publicly-funded concessions" allowing it to discount prices to shipping companies by as much as $20 per container. The subsidy, Ports America added, is "more than enough to seriously distort competition between the port's major operators."
The prospect of two well-heeled terminal operators taking turns suing a port for allegedly favoring their competitors is very rare, but not unheard of in an industry that is rapidly consolidating, said Jean-Paul Rodrigue, who teaches maritime economics at Hofstra University. "When you're stuck with two powerful players, you have to deal with them," he said.
The port is trying to satisfy both companies, interim Executive Director Deborah Ale-Flint said. "We can't control any party from filing a lawsuit against the port, but we can work closely with all our customers. And that's what we're doing," she said.
The port is one of the region's biggest economic engines, generating an estimated 73,000 jobs across the Bay Area. But its long-term viability and its negotiating leverage with terminal operators are hampered by huge debt and stagnant cargo traffic.
Despite more than $1 billion in infrastructure improvements over the past two decades, the port still lacks large terminals and adequate rail access, which have hindered its competitiveness against busier ports in Southern California and the Northwest.
Further weakening the port's negotiating leverage is that several terminal leases expire around 2017. Those agreements allow lease holders to notify the port of their intent not to renew just months before the leases expire. That means that if the leases aren't renewed, the terminals could sit empty for months costing the port millions of dollars as it scrambles to find new tenants.
The deal with SSA would consolidate several of those terminals and keep them from going dark. In return for being let out of its lease at Howard Terminal, which will cost the port $40 million in lost lease payments, SSA would extend its lease at a different terminal to 2022, and take over leases at two contiguous terminals that had been operated by different companies.
The three terminals leased by SSA would encompass nearly 400 acres along Oakland's waterfront, which is more land than Ports America received when it signed a 50-year deal to take over a different set of terminals.
Flint said the agreement would safeguard terminal revenue and set the stage for Oakland's first mega-terminal, which can service a new generation of bigger ships.
"There is tremendous upside potential," she said.
SSA declined to comment for this story.
Several unions insist the port would be better off fighting the lawsuit and maintaining smaller terminals with multiple operators. "They're allowing SSA to blackmail them," said Sean Farley of the International Longshore and Warehouse Union, which stands to lose jobs to other unions that do more work with SSA.
Dozens of longshoremen protested the settlement on Tuesday. They said the deal would hurt workers over the long haul because it would cement SSA and Ports America -- two companies with close ties to Wall Street -- as the dominant players on the waterfront.
"We're not dealing with companies anymore, we're dealing with corporations," ILWU, Local 10 President Mike Villeggiante said. "And those corporations have big business investors who want to cut costs, and those costs are us."
Contact Matthew Artz at 510-208-6435.