Wednesday, July 28, 2010

Long Beach Officials Seek More Than 25% Increase in Port Profits Transferred to City Hall

A proposed Long Beach City Council amendment to the City Charter could result in millions more in Port of Long Beach profits siphoned away to city coffers each year.

The nine-member city council voted 8-1 Tuesday to advance a charter amendment that would provide for the port – which is operated by the city's semi-autonomous Harbor Department – to turn over 5 percent of the port's annual gross revenues to the city.

The charter currently provides for the transfer of 10 percent of the port's net income to the city.

The city council move comes after the port's governing commission rejected a recommendation from the City Auditor to accelerate the port's 10 percent transfer schedule – a change that would have seen the port pay an addition one-time $10 million payment to the city this year. Port commissioners voted earlier this week to move the payment schedule forward by three months, but this fell short of the six-month acceleration City Hall was seeking.

If approved by city voters, the charter change would result in several million dollars more in port funds going to the city each year. This year the port is set to transfer $12.4 million to the city.

Based on the port's latest audited financial numbers, the port had gross revenues of $311.4 million in FY2008-2009 and net income of $124 million. Under the city council's proposed charter amendment, 5 percent of the port's gross revenues for FY2008-2009 would have come to $15.6 million, instead of the $12.4 million based on 10 percent of net income – a $3.2 million, or nearly 26 percent, increase.

While the city charter does not require the port to turn over the funds – it merely provides that the city can request the transfer – the city has made the request each year since the 1990s. The port can refuse to make the annual payment, but only if such a payout would interfere with port operations. Port officials have never refused to honor a City Hall request for the transfer. Since 1995 the port has transferred more than $146 million in port profits to the city.

The city council also advanced a separate charter amendment that would reassert city hall authority over oil wells on port property.

Like all ports in California, the Port of Long Beach is owned by the state but operated in trust by a local authority – in this case the City of Long Beach – for the benefit of all the citizens of the state.