AltaSea rearranges agreements with Port of Los Angeles

Parties cancel one agreement to allow the nonprofit to seek more federal grant funding; lease amendment, meanwhile, is updated to ‘reflect changes in AltaSea’s monetary commitments.’

LOS ANGELES—The Port of Los Angeles adopted two changes to its contractual arrangements with AltaSea during the Board of Harbor Commissioners’ Oct. 1 meeting in Los Angeles. Board members specifically adopted a second amendment to the port district’s lease agreement with AltaSea, allowing the nonprofit to meet its tenant obligations.

The board also canceled an agreement the port district had with AltaSea. The cancelation will allow the nonprofit to seek new federal grants as a result of the Covid-19 pandemic.

AltaSea entered into an agreement with the port district in 2013, allowing the nonprofit organization to build, operate and maintain an urban marine research facility at City Dock No. 1. Both parties entered into a 50-year lease agreement, according to a port district staff report prepared for Harbor Commission members.

Each action was adopted as separate action agenda items.

Lease Amendment

Board members first approved a second amendment to the AltaSea lease, during its Oct. 1 meeting. The 50-year lease agreement was originally enacted on Dec. 23, 2013, and called the nonprofit to construct, operate and maintain an urban marine research facility on as many as 11 parcels at the port district (totaling 32.73 acres in size).

The lease was amended for the first time in August 2017 and permitted AltaSea to “expedite activation and development of the premises,” according to port district staff.

The first lease amendment also reduced certain financial obligations “without compromising the original mission and goals including providing comparable public access infrastructure, educational and public programming, job creation and economic activity.”

Covid-19 and a few other factors forced the port district and AltaSea to amend the lease agreement a second time, according to port district staff.

“Various milestones and tenant obligations under [the lease] will not be met due to a combination of factors,” port district staff said in a report to commissioners. “Continued delays from the Los Angeles Department of Water and Power, project cost increases, revisions to project scope, schedule and investment, project development sequencing related to a partnership with UCLA and, most recently, Covid-19 pandemic effects have hindered AltaSea from meeting certain deliverables required by the lease.”

The second lease amendment includes an adjustment of parcel acceptance dates, leeway for timeline extensions for the marine research facility project, schedule updates, changes to monetary commitments, rent credit amendments and the possibility of extending the lease to 66 years.

AltaSea’s financial commitments, under the second lease amendment, would increase from $19.6 million to $35 million.

Cancelation of Grant Agreement

The Board of Harbor Commissioners also canceled a grant award agreement it had with AltaSea (through the U.S. Department of Commerce’s Economic Development Administration grant),

AltaSea’s marine research facility project was eligible for a $3 million federal grant, through the Economic Development Administration, or EDA. Los Angeles’s Harbor Department was a co-applicant on the grant.

“With the current financial climate due to Covid-19, AltaSea expects a significant increase in available EDA funding in a post-pandemic environment,” port district staff said in a report to commissioners. “According to AltaSea, based on recent discussions, the EDA has been favorable to AltaSea reapplying for more funding than was provided in the current EDA Grant agreement.

“According to AltaSea, the EDA will not allow amendments to the current five-year limit to complete the proposed project scope,” port district staff continued. “AltaSea cannot complete the scope of work within the current timeframe under the most optimistic circumstances during these adverse times. Therefore, AltaSea has proposed the Harbor Department … terminate the EDA Grant agreement.”

Terminating the grant agreement (and an associated Memorandum of Understanding) will allow for a new grant application to be processed.


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