OF LOS ANGE LES 425 S. Palos Verdes Street Post Office Box 151 San Pedro, CA TEL/ TDD 310 SEA-PORT

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1 THE PORT OF LOS ANGE LES 425 S. Palos Verdes Street Post Office Box 151 San Pedro, CA TEL/ TDD 310 SEA-PORT Antonio R. Villaraigosa Mayor. City of Los Angeles Board of Harbor S. David Freeman Jerilyn l opez Mendoza Kaylynn L. Kim Douglas P. Krause Joseph R. Radlslch Commissioners President Vice President Geraldine Knatz, Ph.D Executive Director May 25, 2010 Honorable Members of the City Council of the City of Los Angeles CD No. 15 Attention : SUBJECT: Ms. Sharon Gin, City Clerk's Office CHARTER SECTION PROPOSED FOURTH AM ENDMENT TO PERMIT NO. 888 WITH EVERGREEN MARINE CORPORATION FOR TEMPORARY CONSUMER PRICE INDEX REFI EF Transmitted herewith, pursuant to Charter Section 606 of the City Charter, is a copy of a Board report, assigned Resolution No , approving Fourth Amendment to Permit No. 888 with Evergreen Marine Corporation for Temporary Consumer Price Index Refief_ Please note that the Mayor's office is waiving Executive Directive No. 4 review for this item, therefore no CAO report is attached. RECOMMENDATION: The City Council, subject to approval of the Mayor, approve Fourth Amendment to Permit No. 888 with Evergreen Marine Corporation, and return to the Board of Harbor Commissioners for further processing. Respectfully submitted, km-~ ROSE M_ DWORSHAK Commission Secretary cc: Trade, Commerce & Tourism Committee Councilwoman Hahn, encs. Councilman Rosendahl, encs. Councilman LaBonge, encs. Pamela Finley, Mayor's office, encs. Tricia Carey, Legislative Representative, encs. Alvin Newman, CAO, encs. Christine ee Hollis CLA, encs. Jenny Chavez, CD 15, encs. An Affirn~ath/C! Action, Equa1 OpJ)oftQ1'oily EmpiPYer 1 (lec;yde<f c'lnd Recyclable 0

2 RECOMMENDATION APPROVED AND RESOLUTION N ADOPTED BY THE BOARD OF HARBOR COMMISSIONERS May6, 2010 ~/Yt.~ SECRETARY THE PORT OF LOS ANGELES Executive Director's Report to the Board of Harbor Commlulonars DATE: FROM: APRIL 21, 2010 REAL EST ATE DIVISION SUBJECT: RESOLUTION NO.!IJ~6931 ~PROPOSED FOURTH AMENDMENT TO PERMIT NO. 888 WITH EVERGREEN MARINE CORPORATION FOR TEMPORARY CONSUMER PRICE INDEX RELIEF SUMMARY: Permit No. 888 with Evergreen Marine Corporation (Evergreen) for container terminal operations includes a provision that adjusts compensation rates annually based upon the Consumer Price Index (CPI). Although the annual CPI adjustment mechanism is being introduced into City of Los Angeles Harbor Department (Harbor Department) permits over time, this provision is currently unique to Evergreen among the container terminal tenants. During the current period of economic downturn, it is important to maintain comparable and competitive TEU compensation rate ranges for similar Harbor Department tenants. Therefore, it is recommended that the Permit No. 888 annual CPI adjustment be waived for Evergreen's 2010 compensation year. The proposed Fourth Amendment to Permit No. 888 provides relief from the 2010 compensation year CPI adjustment. The change would be limited to a 12-month period effective January 1, through December 31, All other terms and conditions of Permit No. 888 would remain unchanged. RECOMMENDATION: It is recommended that the Board of Harbor Commissioners: 1. Approve the proposed Fourth Amendment to Permit No. 888 with Evergreen; 2. Direct the Board Secretary to transmit the Fourth Amendment to the City Council for approval pursuant to Section 606 of the City Charter; 3. Authorize the Executive Director to execute and the Board Secretary to attest to the Fourth Amendment upon approval by City Council; and 4. Adopt Resolution No. /tj ~? 3/

3 DATE: APRIL 21, 2009 PAGE 2.0F 3 SUBJECT: PROPOSED FOURTH AMENDMENT TO PERMIT NO. 888 WITH EVERGREEN MARINE CORPORATION DISCUSSION: Permit No. 888 grants Evergreen use of approximately 158 acres of terminal area, preferential nonexclusive use of Berths (3,000 linear feet), and secondary, nonexclusive use of Berths (1,750 linear feet) for container terminal operations.. _-n:;ction 4(g) of Permit No. 888 requires that the Minimum Annual Guarantee (MAG), the TEU rates, and the Terminal Island Container Transfer Facility (TICTF) compensation payable by the tenant be adjusted annually by CPI, up to a maximum of 3 percent. The CPI adjustment applicable for the 2010 compensation year has been determined to be 2.72 percent. The annual CPI adjustment in compensation rates is currently unique to Evergreen among the container terminal tenants. Consistent with the Harbor Department Leasing Policy, and the container terminal initiatives implemented by the Harbor Department during the current period of economic downturn, a one-time waiver of Permit No. 888's annual CPI adjustment for the 2010 compensation year is recommended to assist in maintaining comparable and competitive compensation rate ranges for similar Harbor Department tenants. All other terms and conditions of Permit No. 888 would remain unchanged. Other initiatives taken by the Harbor Department in 2009 and 2010 to assist in i, mintaining the competitiveness of Port of Los Angeles container terminals that have benefited Evergreen include: Discount for space assignment lntermodal cargo discount Empty container rate discount (ongoing until rescinded by the Board) 6 percent rent credit ENVIRONMENTAL ASSESSMENT: The proposed action is a Fourth Amendment to Permit No. 888 with Evergreen to provide financial relief from compensation rates for a 12-month period with no changes to all other permit terms and conditions. As an administrative action, the Director of Environmental Management has determined that the proposed action is exempt from the requirements of the California Environmental Quality Act.(CEQA) under Article II Section 2(f) of the Los Angeles City CEQA Guidelines. ECONOMIC BENEFITS: This Board action will have no direct employment effect.

4 DATE: APRIL 21,....J09 PAGE 3 OF 3 SUBJECT: PROPOSED FOURTH AMENDMENT TO PERMIT NO. 888 WITH EVERGREEN MARINE CORPORATION FINANCIAL IMPACT: It is estimated that the 2010 compensation year CPI increase of 2.72 percent would generate $1,113,345 of additional shipping revenues to the Harbor Department during a one-year period (includes TICTF and estimated impact of empty discount incentive). The financial impact of the proposed Fourth Amendment is that the Harbor Department would forego this additional revenue. The proposed Fourth Amendment is not expected to affect the Fiscal Year 2010/2011 operating revenue budget because no CPI adjustment was applied in estimating shipping revenues for Evergreen during the pertinent time period. CITY ATTORNEY: The Fourth Amendment has been prepared and approved as to form by the Office of the City Attorney. TRANSMITTALS: 1. Fourth Amendment 2. Site Map 11L~ l1 J2_ J~;~~ ;. G'A~IN II. Director of Real Estate 1(1j R. OVED: "'f/jhvlvn ~~E KNAtz, Ph.D. Executive Director.. FIS Approval:~(initials) L/({ti/Yu. ' KATHRYN cdermott Deputy Executive Director MJG:BG:ST:raw Author: S. Thappa BL334raw

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7 FOURTHAMENDMENTTO PERMIT NO. 888 EVERGREEN MARINE CORPORATION Permit No. 888, as amended, granted to EVERGREEN MARINE CORPORATION is hereby amended a fourth time as follows: 1. Notwithstanding any of the provisions of Section 4 of the Agreement to the contrary, for the compensation year commencing on January 1, 2010 and ending on December 31, 2010, only, the effective CPI adjustment, as that term is defined in Section 4(g)(S)(B) of the Agreement, shall be deemed to be 0%. 2. The effective date of this Fourth Amendment shall be upon execution by the. Executive Director and Board Secretary after approval of the City Council of the Resolution approving this Amendment. Except as amended herein, all remaining terms and conditions of Permit No. 888, as previously amended, shall remain the same. IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment to Permit No. 888 on the date to the left of their signatures. THE CITY OF LOS ANGELES, by its Board of Harbor Commissioners Dated: By Executive Director Attest. -,-- Board Secretary ORPORATION Typ Print Name and Title) Attest..::::/~ ~ ~ $'PA...J H s u, >'eh loc ll f. 1 (Type/Print Name and Title( SYO/dls 4/15/10