Writing Shotgun

SCHIPSKE’S COURAGEOUS PROPOSALS TAKE ON THE PORT’S POWERFUL STATUS QUO

Dave WielengaMon. January 21
 

Two of the five dynamic budget-related items that Fifth District Council member Gerrie Schipske has agendized for tonight’s City Council meeting — come on out; the fun starts at 5 p.m. — boil down to a question that few local politicians have the courage to ask: Why can’t the Port of Long Beach help solve some of the problems that it played such a big part in creating?

Schipske wants to let Long Beach citizens vote on an amendment to the City Charter that could increase the Port of Long Beach’s payments to the city’s Tidelands Trust — from a maximum of 10 percent of the Port’s annual profits to a maximum of 15 percent.

In that same item, Schipske also wants local representatives to the state legislature to propose transferring an additional five percent of the Port’s profits to the City’s General Fund, where the money can be used throughout town — rather than on waterfront projects, as mandated by Tidelands Trust rules.

In a separate item, Schipske wants sales tax re-applied to the high-polluting bunker fuel used by many ships that come into port — and the money used to fight health problems associated with breathing fumes from the fuel.

The silent reaction to Schipske’s proposals since she revealed them last week is the sound of another layer of concrete hardening around the city’s rich-and-entrenched status quo. The most-telling comment offered by any city council member was a scolding not-for-attribution suggestion that Schipske should “learn how to better work with others, especially when dealing with a subject she knows little about.” 

The relationship between the Port of Long Beach and the City of Long Beach can seem mysterious, but that’s mostly because of the way that choice appointments to the governing Harbor Commission tend to be doled out to political favorites of the mayor and city council.

In fact, it’s pretty simple. The City of Long Beach owns the Port of Long Beach through a grant-in-trust with the state, and it has grown into the city’s most-lucrative asset. However, that growth has become a source of increasing quality-of-life problems. It has robbed the city of its downtown waterfront, soiled its waterways, clogged its freeways and polluted its air.

Requiring the Port to offset some of the damage it causes by increasing the percentage  of its profits — from 10 to 15 — that it pays to the Tidelands Trust seems logical, especially during a time when budget problems have constrained the city’s abililty to provide basic services.

However, the secondary aspect of Schipske’s proposal — the part asking that an additional five percent of the Port’s profits go from the Tidelands Trust to the General Fund for citywide use — is problematic.

The City of Long Beach tried something similar in 1955 with oil-pumping revenues — which, like the Port, are Tideland Trust monies. The result was a disaster.

At the time, Long Beach was keeping nearly all the profits from its oil business. But it wanted the freedom to use this money throughout the city, not just in the coastal zone as mandated by the Tidelands Trust deal with the state. So the city convinced the state legislature to pass a law that freed half of the oil profits from the Tidelands Trust.

The case was appealed, however, and the city ultimately lost. Worse, the court ruled the city had abandoned the terms of its Tidelands Trust with the state. That violation basically nullified the entire agreement, re-routing nearly all the proceeds of the oil business back to the state. The city’s take of oil profits was reduced no nearly nothing.

The danger with Schipske’s proposal is similar. If the legislature were to pass a law allowing the City to use five percent of Port of Long Beach profits for non-Tidelands purposes, that could break the remaining trust and the City could be stirpped of all port profits, which would then go back to the state.

In any case, getting any part of the measure on the June ballot would require “yes” votes from five council members — six if it were vetoed by Mayor Bob Foster. That seems doubtful. Rich and powerful forces throughout the port — people with the means to fund political campaigns, here and for higher offices – have quietly but emphatically communicated their opposition to the people who can kill it. They’ve just-as-anonymously gotten their word out to the local press.

For example, the Press-Telegram’s Kristopher Hanson checks in on the issue — and does the early foot soldiering for the Port’s strategy for spinning it – in his On The Waterfront column today.  Hanson calls Schipske’s proposal “just the latest City Hall grab at the Harbor Department.” He points out that the Port has already written this year’s check for 10 percent of its profits – about $17 million. He warns that Schipske’s proposal would come at the expense of the health of people and the environment. He suggests that this would really pain the health-and-environment-conscious officials at the Port (and considering the Port just spent $400,000  on its new “green” logo, doesn’t that seem obvious).  Concludes Hanson: “Any city grab at port income now would likely result in less funding for future clean-air programs, and that’s a scenario port authorities and supporters would rather not see occur.”

Besides the fact that the Port has been dragged kicking-and-crying into its environmental commitments — and that the sleight-of-hand nature of these agreements provide no guarantee they will result in a net reduction of pollutants — this is not an either-or equation. The City can get its extra five or 10 percent and still demand  reductions in pollution. Again, the Port is the city’s asset! 

That $17 million check means the Port turned a $170 million profit last year. As Hanson points out, those profits are “plowed back into harbor-are road and rail improvements, bridge repairs and terminal maintenance and expansion.” In other words, they attract more shipping traffic to the port — which ultimately will offset whatever environmental measures are eventually put into practice. 

Perhaps the best that can be achieved at Tuesday night’s meeting is getting the council members on the record, one way or the other. Of course, for that to happen — for the issue to even be discussed – some council member is going to have to second Schipske’s motion. Is anybody that brave?

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    It is my understanding that the ten percent of the Port's profits paid to the Tidelands Trust is approximately 15 million dollars. BIG QUESTION. What happens to the remaining 90 percent or 135 million dollars of Port profit.
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    A big question and a good question, and I'm going to ask it. I'll get back with you tomorrow. Thanks.
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    According to Kristopher Hanson in the P-T, the profits are plowed back into the Port.
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    Thanks for the info Dave. I am stoked to have an "LA / OC Weekly- like" alternative voice in Long Beach.

    I know the port paid to restore Bolsa Chica for mitigation credits (used to offset pollution that Long Beach deals with). However, The Los Cerritos Wetlands, The LA River, and San Gabriel River have been ignored. Bolsa Chica is set for another huge restoration. Maybe this would make a good story? I am not a reporter, but we trust you guys to expose the truth.
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    Dave, maybe you could help me out with a question that never seems to be raised when port profits are discussed (and this aint the first time). Doesn't the Port actually use a great deal of their profits (the 90%) as "security" for the bonds they issue to finance their mega- expansions? The multi-year cash flows and retained profits serve as a secondardy repayment source for the investors, who otherwise are paid routinely from fees and wharfage. It would seem that any threat to those cash flows would jeopordize the covenants and the bondholders could demand immediate repayment.
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    Schipske's on-her-own and disdainful attitude and high handed method of serving results in her being marginalized by other members of the council. Several reps speak of problems in dealing with her. So, even if she came up with the second coming of Jesus as a sure-fire fundraising event for the city, only Gabelich and Uranga would support her. Gabelich is by far the most selfless, tolerant and long-suffering of the bunch. Uranga, I don't know.

    Whether or not you have the next great idea, don't present it with a cute pink and fuzzy cartoon character holding a sign. Makes her look like a moron, which she ain't.
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    The real story here - which none of the media has picked up on - is how the city "solved" its multi-million deficit. Sure it cut some positions, but it also played a big shell game, shifting a lot of general fund expenses to the Tidelands Fund. It's plain as day in the budget. All this talk about the Port funding city services is bunk - it already does. And if Port revenues and oil revenues don't keep up, the Tidelands Fund is going to be facing a deficit like the general fund - and LB will be back where it started.

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