Why does Long Beach City Council control Port plans?

Under Long Beach's City Charter, the council wields the power of the purse over the port, which is actually the city Harbor Department.

A five-member Board of Harbor Commissioners - chosen by the mayor to no more than two, six-year terms with council approval - submits an annual budget to the city.

Although it's a government agency, some observers say the port functions best when it's run as if it were a private business and at arm's length from the city.

The city benefits from the powerful economic engine of the port's international commerce, creating thousands of local jobs, and providing oversight authority.

Port officials estimated its contribution to city coffers will be in the tens of millions of dollars for 2013 alone. That includes $26 million for police, fire and other services in the harbor and $16.8 million in tidelands funds for waterfront upkeep and costs related to the Convention Center and the Aquarium of the Pacific.

Since 1995, the port has given $204.7 million for the tidelands, said port spokesman Art Wong.

The port also gives at least $35 million in oil revenue, which the city gets more of thanks to voter-approved Measure D, which in 2010 recalculated a profit-sharing pact between City Hall and the Harbor Department.

- Karen Robes Meeks

LONG BEACH - A contentious rift between City Hall and the Port of Long Beach over the location of a new port headquarters may, for now at least, have reached a cease fire.

The Harbor Commission on Monday will vote on a deal to buy a temporary building near the Long Beach Airport, and then look toward finding a permanent space in or near downtown.

The decision could quell two years of strife marked by what one former commissioner called Mayor Bob Foster's interference into port financial operations and peaking in recent months with allegations of illegal activity among harbor commissioners.

In 2010, Foster vetoed the construction of a multimillion port headquarters he dubbed a "Taj Mahal" and criticized another possible choice at the World Trade Center. He and other city officials have sought more control over port decision-making in recent years.

However, port supporters countered that the success of the nation's second busiest seaport lies in its autonomy from the city.

Over the past two months, the Press-Telegram interviewed key players involved in the issue and examined hundreds of pages of emails and other documents related to the port headquarters selection that were obtained through a public records request.

Whether Monday's vote will help mend the schism remains uncertain, but some say the tug-of-war has put the Port of Long Beach's reputation at risk during a time of increasing competition.


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"I've been in Long Beach for 72 years and at no time have I ever known the city to get into the port's business, except now," said former Harbor Commissioner and former City Councilwoman Doris Topsy-Elvord. "And I have never known a mayor to try to direct where the money goes."

Foster issued a statement Friday regarding the port's latest plan to purchase a facility for $14.25 million at 4801 Airport Plaza Drive, which formerly housed Boeing's C-17 operation.

"If they vote to approve the purchase, the Harbor Commission is making the right and most fiscally responsible decision for their current situation and in the long term, as it should," he said.

The plan will require City Council approval because the port will have to amend its budget to make the purchase.

Foster said in an earlier interview with the Press-Telegram that it has become increasingly necessary to provide strong oversight of the port.

"I worry about the culture in the port," he said. "I think they've had a lot of money and they've been very complacent. There has been no effective oversight of them. Harbor commissioners haven't provided it and the city hasn't provided it.

"I can't do it all because I'm not there every day, but I can do enough to try to instill in them the fact that this is the people's money, it's public money, and it needs to be spent appropriately."

Foster concluded the port was spending too much, $306 million, for a new building and maintenance facility. He also said port officials hadn't negotiated properly for a better deal for the World Trade Center.

Executive Director Christopher Lytle, who took over the top job late last year, argued that the port has a "top-notch" credit rating touted by professionals who factor in the port's policy practices and finances.

"Consistently, what they've come up with is the fact that this is one of the best run ports in the country," Lytle said.

Former port Executive Director Richard Steinke, who ran the port for more than a decade before retiring in 2011, didn't return phone calls seeking comment.

City officials have privately expressed concerns serious enough to warrant the extraordinary step of adding an amendment to next year's harbor budget that requires council approval for a new headquarters.

The airing of the port's dirty laundry hasn't gone unnoticed by the international community, said the Pacific Merchant Shipping Association's John McLaurin, who has penned op-ed pieces about the growing "divisive, political and controversial" Harbor Commission meetings and about how the commission's reputation is "quickly eroding."

"Our members are fully aware and recognize the growing dysfunction of the port," said McLaurin, whose members include terminal and fuel operators.

"It is a matter of concern."

A `Taj Mahal' vision

The problems began when studies showed that the port's 53-year-old Harbor Plaza headquarters may not withstand the next major earthquake.

Since 2001, port officials have been working on getting their staff out of the building.

They saved for a $306 million administration building and maintenance facility across from their current home and pushed for higher green building standards. They even picked out the office furniture.

Foster vetoed the plan in 2010, saying the price tag was too high. However, the $53.6 million maintenance facility was allowed to move forward.

Since becoming mayor in 2006, he and the council have been battling budget deficits and pushing city staff to cut from every department, including police and fire.

"There is nobody in the construction industry that will tell you that's warranted - no one," he said. "It was a Taj Mahal; it was not appropriate."

Harbor Commissioner Nick Sramek, however, defended the project.

"The cost at that time to us did not seem exorbitant, and we had money to allocate and it was approved by the City Council," Sramek said.

World Trade Center

After the veto, port officials began surveying office buildings for their new headquarters. They settled on leasing the 27-story World Trade Center downtown on Ocean Boulevard.

Then, Legacy Partners, the owners of the World Trade Center, offered to sell the building to the port. For nearly a year, the pair worked on crafting a $130 million deal. In anticipation of the move, the port in May 2011 acquired a 5.6-acre, 659-space parking lot at Golden Avenue and West Broadway for $8 million.

Foster said commissioners initially approached him regarding the headquarters move with only one possibility - One World Trade Center.

Foster called it a "conclusion without any process" and claimed the port was paying at least $40 million more than it is worth.

"I can't imagine negotiating with a seller by giving that seller the impression, and everybody knew, that they were the only structure they were looking at," he said. "Even if you were looking for a house, and even if you settled on buying a house, wouldn't you give the potential seller of that house the impression that you had other options?"

Sramek said the port did look at other options, including the building near the Long Beach Airport, but some commissioners didn't want the site because it wasn't downtown or at the port. Driving from downtown to the airport, depending on traffic, could take 12 to 20 minutes.

Sramek and Commissioner Thomas Fields said they supported buying the World Trade Center for its proximity to the port, its ability to revitalize downtown and being able to quickly recover its investment.

Sramek said the port wouldn't occupy the whole building and that by leasing the remaining space, the purchase could pay for itself in 11 to 15 years.

"That made it attractive," he said.

But commissioners Rich Dines and Doug Drummond were concerned about security at the building.

"I was wary of underground parking and the potential for a bombing," Drummond said. "There are several entries into the building. It turned me off on it. In my personal opinion, it would cost millions of dollars and considerable staff to provide security."

Commission President Susan E. Anderson Wise couldn't vote on the project because she is a subtenant in the World Trade Center, so the vote to buy it failed 2-2.

Web of controversy

Again, port officials had to reboot their search.

They explored several options in Long Beach, including 11 Golden Shore, the City National Bank building, and 400 Oceangate, the Union Bank Building, which was negotiated by 400 Oceangate Ltd.

Controversy continued to hound the process when Drummond allegedly accused Fields and Sramek of "improper, unethical and illegal acts" during an Aug. 20 closed session about the relocation.

Fields detailed the accusations in an Aug. 21 letter to Foster and City Attorney Bob Shannon that was obtained by the Press-Telegram.

Drummond accused them of being "improperly influenced" by former city and port officials.

Those mentioned in the letter either did not return calls for comment or denied the allegations to the Press-Telegram.

Fields requested an investigation - to be made the public - into Drummond's comments.

Drummond wouldn't comment on the issue because it was in closed session, but said he apologized to Fields.

City Councilmen Al Austin and Steve Neal also called for an independent probe into the alleged allegations, but Shannon quashed the request, saying the inquiry cannot legally proceed because of privacy issues.

Shannon said he interviewed most everyone involved in the closed session and those mentioned in Fields' letter.

"I formed my own conclusions into actually what was said and it wasn't exactly the way it was framed by Mr. Fields, and that's one of the problems," Shannon told the Press-Telegram. "You have the allegations but you don't have my conclusions - nor will you have my conclusions - to what was actually said or what the other people in the room indicated was said."

Fields couldn't be reached for comment.

Sramek said there should have been some closure.

"I haven't seen any resolution," Sramek said. "The allegations are still hanging over us."

Moving forward

Kimball Wasick, senior director for Cushman & Wakefield, the realty firm handling the site near the airport, said this location is best in terms of security and cost. The building was used by the C-17 program, so it met the the Department of Defense's stringent security requirements, he said.

Before Friday's announcement, Wasick expressed frustration with the politics surrounding the issue.

"We see the process, the politics going on, with people hiring a lobbyist and having third-party representatives at the Harbor Commission meeting and keeping the pressure on these commissioners," he said.

Losing the port in the downtown will be a huge blow affecting 76 percent of businesses downtown, said Kraig Kojian, head of the Downtown Long Beach Associates.

"We would feel the impact, regardless of how long or how short they would be gone," he said prior to the Friday's announcement. "We rely on the port as an economic driver."

Meanwhile, the maintenance facility - which was originally designed jointly with the proposed administration building - is well underway and is expected to be done next year, said port spokesman Art Wong.

Even if the battle for an interim location ends, the quest for a permanent home remains.

Is it moving into an empty facility or building a cheaper, permanent headquarters, which even Foster has said he supports as long as it's cost-effective? Will it be downtown, on port property or elsewhere?

On Friday, Kojian spoke of a resilient downtown that will be there for the port, which may be leaning toward a final home in or near downtown.

He also pointed out that things could change.

"Am I encouraged by it? Yes," he said. "However, it still has to play out. Three to five to seven years from now ... we don't know what's going to happen between now and then."

Regardless of the permanent solution, port officials said they must act now.

"We have to do it," Sramek said. "It's paramount that we do it. We have to do something."


Staff writer Eric Bradley contributed to this report.

karen.robes@presstelegram.com, 562-714-2088, twitter.com/KarenMeeksPT