LB Harbor Department to Move by Year’s End

Byline: Taylor Hill

LB Harbor Department to Move by Year’s End

LONG BEACH — The Long Beach Harbor Department could be one step closer to moving from its current location into a new home, following a ruling by the California Fair Political Practices Commission (FPPC) that could allow Harbor Commission president Susan Wise a vote that she had recused herself from in October of last year.

Over the past several years, port officials have been looking to move from their current location, in a 52-year-old building at 925 Harbor Plaza Way that has been deemed seismically inadequate. Many employees currently work out of trailers next to the Pier G building, built in 1959.

Last year, harbor commissioners identified the 27-story office tower known as 1 World Trade Center as a potential new home and voted unanimously at an Aug. 29 meeting that began the purchase process for the 573,000-square-foot building, priced at $130 million.

But the new location sparked a potential conflict of interest for Wise, as she currently subleases space in the tower, and her husband leases space as part of a principal member of a maritime law firm. With Wise being advised by city attorneys to recuse herself, the decision to move came up one vote short, which resulted in a 2-2 split of Harbor Commission members, effectively ending plans to purchase the downtown office building.

Prior to entering into a Letter of Intent with Legacy Partners for the purchase of the 4.1-acre 1 World Trade Center property, the port had been working on plans to construct a new headquarters. But the estimated cost for a new administrative building was approximately $220 million, and Long Beach Mayor Bob Foster vetoed the plan in his 2010 budget.

With the lower cost associated with moving into the downtown office building, the immediate response from the Harbor Commission at the Aug. 29 meeting was positive, with newly appointed Commissioner Richard Dines supporting the move. “This will benefit port staff and every Long Beach resident,” Dines said. “Hopefully, our move will make us more accessible to the public and attract more business to the downtown area,” Dines said.

But the tide had changed by the Oct. 10 meeting, with harbor commissioners Richard Dines and Doug Drummond changing their vote. The two agreed that after seeing the total cost of the building — with security, loan penalty payments and refurbishments that would exceed $162 million — other options should be entertained. Legacy Partners purchased the building for $150 million in 2007.

“The total cost for the purchase of the building could be up to $180 million, and that’s before we build our boardroom,” Dines said at the October meeting. “We’re going into 2012, and the signals don’t look good for the shipping industry.”

“I really believe that this price is way too high for that property,” Drummond added.

As the deadlock Oct. 10 meant no action could be taken toward the purchase of 1 World Trade Center, the 60-day due diligence period was scheduled to end Nov. 1; and following another 2-2 vote Nov. 7, the sale period ended.

At the Nov. 7 meeting, attorney Jerold Neuman, speaking for World Trade Center owners Legacy Partners, said the owners had appealed to the FPPC for a ruling on whether Wise had to stay out of the debate because of her tenancy at 1 World Trade Center.
Harbor Commission vice president Thomas Fields noted that the deal should not be nixed until a ruling is issued by the FPPC on whether Wise can participate in discussion and votes. The FPPC has a maximum 45-day response window from the date a request is made.

“I don’t think it serves us well to have an item go down by a non-majority vote,” Fields said. “We have issues with the public looking at us saying, ‘are we transparent enough?’”

Deputy city attorney Dominic Holzhaus said that the conflict of interest rules on when a commissioner should recuse himself or herself go beyond the practical and actual effects a vote could have on one’s personal finances and stated that the mere appearance of such interest — whether financially beneficial or not — should be avoided.

But Neuman noted that without Wise’s vote, the commission was essentially participating in “government by inaction.”

“We’re not here to decide on whether or not the purchase moves forward; we have no idea of how Ms. Wise will vote,” Neuman said. “But we do know that transparent government requires that an action should take place — and to allow a matter of this magnitude to be undertaken by virtue of a 2-2 tie, and never in the light of day have a discussion about what were the actual due diligence items, seems to me to be the absence of transparency.”

Five months later, the FPPC ruled that Wise is now allowed to vote on future decisions by the Harbor Commission regarding 1 World Trade Center becoming its new home — but, so far, no plans have been scheduled to reopen the topic for discussion.             According to letters obtained by the Long Beach Business Journal, Dominic Holzhaus, the principal deputy city attorney for the port, sent a letter to the FPPC on behalf of Wise Dec. 30, 2011.

In response, FPPC general counsel Zackery P. Morazzini stated, “Yes, President Wise may participate in the decisions relating to the purchase, lease or construction of a building to house the Harbor Commission, so long as there is no reasonably foreseeable material financial effect upon her economic interest.”

Currently, the Long Beach Harbor Department remains in its outdated and overcrowded facility.

The Port of Long Beach has formed a new committee headed by port managing director of engineering Doug Thiessen to locate a new home for the Harbor Department by year’s end, or sooner.

The committee has determined that roughly 170,000 square feet of office space is needed for the new location, to keep up with the expanding Harbor Department staff, along with a boardroom for Harbor Commission meetings that is large enough to seat 300 people.

A Request for Information was also sent out by the Port of Long Beach April 5, asking Long Beach office building owners to submit information on buildings that could be used as interim headquarters for the Harbor Department.

According to the request, the building must be within the city of Long Beach, have a minimum of 568 parking spaces and be available for the department to move into by July 1.

The deadline for building owners to submit information is April 20.

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