RECOMMENDATION APPROVED AND ORDER NOS AND ADCBTED BY THE BOARD OF HARBOR COMMISSIONERS. April 16,2009
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1 RECOMMENDATION APPROVED AND ORDER NOS AND ADCBTED BY THE BOARD OF HARBOR COMMISSIONERS April 16,2009 THE PORT OF LOS ANGELES Executive Director's Report to the Board of Harbor Commissione~s DATE: April 9, 2009 FROM: GOODS MOVEMENT DIVISION SUBJECT: TEMPORARY ORDER NO f 927 AND PERMANENT ORDER NO.bQ-649b AMENDING PORT OF LOS ANGELES TARIFF NO. 4, SUMMARY: On December 18, 2008, the Board of Harbor Commissioners approved the amendment to the Infrastructure Cargo Fee (ICF) tariff, in the amount of $6/loaded (imports and exports) twenty-foot equivalent unit (TEU), to commence July 1, This fee was predicated upon environmental clearance of several projects occurring in late 2008learly Due to additional delays in the environmental documentation phase for some of the projects, and to provide further financial relief for shippers, staff recommends the postponement of the collection of the ICF at least until July 1, 2010, and at an amount to be determined by March 31, 2010, at the latest. This ensures shippers, steamship lines, and terminal operators have this information when negotiating their contracts for 2010/2011 period. The Port of Long Beach (POLB) Board is expected to approve this same postponement of the ICF on April 20, RECONIMENDATION: It is recommended that the Board of Harbor Commissioners: 1. Approve the amendment to Port of Los Angeles Tariff No. 4, Section 21, ltem No. 2105, to (i) amend the date of ICF collection to commence on July 1, 2010, and (ii) revise the amount of the ICF to be unspecified at this time, but such amount to be deterrrrined by March 31, The "Computation Methodology".referred to in the Tariff will also be revised accordingly at such time as the ICF is recomputed. This amendment shall be subject to California Association of Port Authorities (CAPA) review and approval, and the Executive Director is authorized to present the tariff amendment to CAPA to secure CAPA approval or proceed to take independent action in accordance with CAPA procedure; 2. Adopt a Temporary Order and a Permanent Order to amend the Port of Los Angeles Tariff No. 4, Section 21, ltem No ; 3. Approve the form of the Ordinance approving the Order; Transmittal 2
2 DATE: April 9, 2009 PAGE 2 OF 6 SUBJECT: TEMPORARY ORDER NO. d? AND PERMANENT ORDER NO.b?-6??L AMENDING PORT OF LOS ANGELES TARIFF NO. 4, SECTION 21, ITEM NO. 2105, INFRAS'TRUCTURE CARGO FEE 4. Authorize the Board Secretary to certify to the adoption of the Order by the Board of Harbor Corr~missioners and cause the same to be published once in a newspaper printed and published in the City of Los Angeles, to take effect prior to adoption by Ordinance for a period not to exceed 90 days pursuant to Charter Section 653(b);. 5. Direct the Board Secretary to transmit to the Mayor and City Council for approval the Order and Ordinance approving and authorizing the amendment to Tariff No. 4 pursuant to City Charter 653(a); 6. Authorize the Board Secretary to execute tlie proposed Board Order and Ordinance amending Tariff No. 4, and upon its publication, transmit the Order and Ordinance to the Chief Wharfinger for implementation of the tariff change and posting the amended Tariff No. 4 to the Port of Los Angeles (POLA) website as regulated by the Federal Maritime Commission; and 7. Direct the Board Secretary, following the publication of the Order, to notify the Mayor and the City Council that permanent Order No (approved December 18, 2008) and the proposed Ordinance adopting same may be withdrawn from consideration as they shall be superseded by the Order adopted herein. DISCUSSION: 1. On January 14, 2008, the Board approved Order No. 6950, which established a new tariff for the ICF to cornnience January 1, 2009, in the amount of $I5/loaded TEU, to partially fund the following projects: Gerald Desmond Bridge Replacement (POLB) SR-47 Expressway (Alameda Corridor Transportation Authority or ACTA) Navy WayISeaside Avenue Interchange (POLA) Connectors Program (POLA) South Wilmington Grade Separation (POLA) e. Ports Rail System (PortsIACTA); includes West Basin (Berth 200) Railyard (POLA) 2. The following briefly describes the general ICF methodology (see the document entitled "Methodology for Estimating Infrastructure Cargo Fee" for details, which is attached to Order No adopting the tariff) (Computation Methodology): Firstly, the POLA ICF share of project funding is determined, which will always be 5 the derived transportation nexus; the share may be less than the derived nexus because the latter may be offset by non-port programmed andlor
3 DATE: April 9, 2009 PAGE 3 OF 6 SUBJECT: TEMPORARY ORDER NO AND PERMANENT ORDER N PI AMENDING PORT OF LOS ANGELES TARIFF NO. 4, committed funds (e.g., State Trade Corridor Improvement Funds or TCIF, Federal, regional, local, etc.); the transportation nexus is defined by the proportionate share of POLBIPOLA vehicular and train volumes on the facilities inder~tified above. Once the total ICF share is defined for each project, the ICF rate is then computed based upon annual projected cash 'Flow needs for all projects combined and projected annual cargo volumes. The ICF rate will be set every calendar year (CY) and adjusted annually based upon updated schedules (which accounts for projects that commence and finish in a given year), cash flow needs, and non-icf funding. -The ICF will be increased or reduced as projects are completed or new ones are added, and eliminated completely when all projects are completed. 3. The Computation Methodology resulted in the original ICF rate of $15lloaded TEU commencing in January 2009, and was predicated upon environmental clearance occurring in 2008 for the following projects: South Wilmington Grade Separation, SR 47 Expressway, Connectors, and elements of the Ports Rail System (including the West Basin Railyard). At that time, it was anticipated that the Board would need to adjust the ICF rate, most likely on an annual basis, based on the following: updated container volumes and projections, project schedules, public funding availability, anticipated expenditures, ICF fund balance, and also to add a fee for non-containerized cargo (excluding liquid bulk). The South Wilmington Grade Separation and West Basin Railyard projects have been eligible for the ICF since January 1, 2009, as they both received environmental clearance prior to that date. 4. On December 18, 2008, the Board approved Order No. 6976, which amended the ICF amount to $6/TEU, with collection to commence on July 1, This amended fee was predicated upon enviror~mental clearance of several projects occurring in late 2008learly Order No included an updated Computation Methodology dated December 9, 2008, which applied the same formula to the assurr~ptions known as of that date, regarding project schedules, project cash flow needs, and cargo volumes. A temporary Order No has been published and is currently in effect and a permanent Order No and proposed Ordinance adopting same is currently pending approval by the City Council. 5. Due to delays in the environmental documentation phase for some of the projects, and to provide further financial relief for shippers, staff now recommends a tariff amendment postponing the ICF collection until at least July 1, 201 0, and at an ICF
4 DATE: April 9,2009 PAGE 4 OF 6 SUBJECT: TEMPORARY ORDER NO. d AND PERMANENT ORDER N0.~ AMENDING PORT OF LOS ANGELES' TARIFF NO. 4, amount to be determined by March 31, 201 0, at the latest, which ensures shippers, steamship lines, and terminal operators will have this information when negotiating their contracts for period. Therefore, staff will return to this Board for approval of the specific ICF amount in a future tariff amendment, prior to March 31, 2010, using an updated Computation Methodology that incorporates the niost current information regarding project schedules, cash flow needs and cargo volumes. If the Board approves the recommendations herein, then staff further recommends that the Board direct the Board Secretary, following the publication of the temporary Order, to notify the Mayor and the City Council that the permanent Order No and proposed Ordinance adopting same may be withdrawn from consideration, as they will be superseded by the new temporary Order adopted pursuant to these recommendations. 6. The attached table shows the estimated ICF eligible expenses for the POLA projects during this deferment period of January I, 2009 to June 30, These estimated expenses will be recouped via a modified fee rate in the first year of the construction phase. It should also be noted that any delays in the project schedules could jeopardize the receipt of previously awarded State Proposition 1B TClF that can only be used for construction. These funds will be forfeited if construction does not commence by December 31, 2013, as stipulated in a California Transportation Commission (CTC) resolution passed in April Project delays could also jeopardize the potential for obtaining American Recovery and Reinvestment Act (ARM) of 2009 funds (i.e., federal stimulus funds). The POLA will be submitting an ARM - United States Department of Transportation (USDOT) National Surface Transportation Discretionary Grants program application for the West Basin Railyard, South Wilmington Grade Separation, and possibly Connectors Program. Hence, the Los Angeles Harbor Department (Harbor Department) will need to conti~iue to cover ICF eligible expenses to maintain schedules. Estimated Eligible ICF Expenses: Jan. 1,2009 -June 30,2010 ICF Eligible Expenses Project Jan. 1, June 30,2010 C Street Access Ramps $738, Fwy Ramp & SR NB $454,500 connector widening West Basin Railvard $ South Wilmington Grade Separation $1 ;092;500 POLA Subtotals $5,986,500
5 DATE: April 9, 2009 PAGE 5 OF 6 SUBJECT: TEMPORARY ORDER NO. 0'6995 AND PERMANENT ORDER NO.&?-6476 AMENDING PORT OF LOS ANGELES TARIFF NO. 4, ECONOMIC BENEFITS: This Board action to postpone the ICF implementation to July 2010 will not delay the project implementation, but will merely defer the ICF collection. ENVIRONMENTAL ASSESSMENT: The proposed action is an Order amending the Port of Los Angeles Tariff No. 4, Section 21, Item No The Director of Environmental Management has determined that the ICF is exempt from the California Environmental Quality Act (CEQA) as provided by I5273 (rates, tolls, fares, and charges), and I 5061 (b) (3) (no possibility of significant adverse effect on the environment) of the State CEQA Guidelines. Infrastructure Projects proposed to be funded by the ICF shall only qualify for funding after CEQA assessment and project approval by the applicable lead agency. FINANCIAL IMPACT: The POW will likely incur various administrative and operational costs to collectladminister the ICF. These costs would be covered by monies collected from the ICF. Construction on tliese projects is expected to begin in 2010 and 2012, and is programmed in the POW Capital Improvement Program (CIP). As stated previously, all expenses incurred after environmental approval that are paid with budgeted Harbor Department general revenue will be recouped via the ICF during the construction phase. The total cost for these projects is estimated at $232.6 million which includes staff and consultant/contractor costs for: preliminary engineering, environmental, PS&E, right-of-way/utilities, and construction). The ICF eligible Engineering Design Services (Account No. ) expenses estimated to be incurred during January 1, 2009 through June 30,201 0, are as follows: Project C Street/ Access Ramps O/SR 47 Connector Improvements West Basin Railyard S.Wilmington Grade Separation Total ICF Eligible Jan. I, June 30,2010 $738,000 $454,500 $3,701,500 $1,092,500 $5,986,500 Account# Job# W.O.#
6 DATE: April 9, 2009 PAGE 6 OF 6 SUBJECT: TEMPORARY ORDER NO. 6 7-L7 7s AND PERMANENT ORDER NO AMENDING PORT OF LOS ANGELES TARIFF NO. 4, CITY ATTORNEY: The office of the City Attorney has reviewed and approved as to form and legality the proposed Tariff, Temporary Order, Permanent Order and Ordinance to amend the ICF Tariff. 'TRANSMITTALS: 1. Tariff 2. Temporary Order 3. Permanent Order 4. Ordinance A' KERRY CARTWRIGHT, P.E. Director of Goods Movement AEL R. CHRISTENSEN Executive Director APPROVED: /7 Ph.D. KC:jb POLA ICF Board memo tariff amendment
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