Tuesday, December 21, 2010

Los Angeles Port Ends Negotiations Over Shipyard Re-Use

Two years of contentious back and forth between the Port of Los Angeles and a Long Beach firm hoping to redevelop a shuttered shipyard at the port essentially ended with two words and a vote on Thursday.

"We're done," said Port of Los Angeles Executive Director Geraldine Knatz, just before the five-member port board voted to officially terminate negotiations with Gambol Industries over the shipyard re-use project.

However, the port board's decision, which now allows the port to move forward with its original plans to use the former shipyard site as a dump site for dredge material, did not sit well with Gambol plan supporter and City Council member Janice Hahn.

Following the port vote, Hahn, whose district covers the port, said she plans to take the issue back to the City Council. The port is operated by the city's Harbor Department, which answers to the Los Angeles mayor and city council.
In addition, as recently as last month, Gambol threatened litigation over what it claims have been bad faith efforts by the port during negotiations on the shipyard re-use plan.

Gambol's plan called for a $50 million re-development of the shuttered South West Marine shipyard along the main channel of the port into a modern ship repair facility. The firm, which claims it has a solid business plan that would create hundreds of jobs at the proposed facility, has faced stiff criticism from the port, shipping industry, and longshore unions. However, under pressure from Los Angeles City Hall, the port signed a memorandum of understanding with Gambol in 2009 to consider the development of the ship repair facility.

Port officials have maintained that the Gambol plan was unrealistic and could seriously delay an Army Corps of Engineers channel-deepening project and ongoing terminal development at the port. The port envisioned the former shipyard slips as a perfect location to deposit dredge material from the Army Corps project.

Earlier this year, Gambol proposed sending the dredge material to the neighboring Port of Long Beach's Middle Harbor project as landfill, saving Los Angeles the $30 million cost to build a retaining dike at the shipyard, according to Gambol. Port of Long Beach port officials shot down the idea, stating in an Oct. 18 memo that Los Angeles port officials had failed to respond to a Long Beach port request for design plans for the reuse of the Los Angeles fill material in Long Beach.

In an Oct. 27 letter to officials at both ports, a Gambol attorney claims that Los Angeles port officials purposely failed to submit the design plan to Long Beach in an effort to undermine the Gambol project.

The Gambol letter went on to claim that the firm had lost million of dollars in development costs due to Los Angeles port officials' actions and warned that Gambol would seek all "available remedies" for what the firm's attorney describes as "the port's conduct, actions and/or inactions, and numerous violations of the MOU."
Following the port vote, Gambol officials indicated the firm would continue to fight for the shipyard re-use project.

In the early 2000s, the adjacent Port of Long Beach engaged in a similar process, searching for several years for a firm that could present a viable plan to redevelop several massive dry docks vacated by the U.S. Navy into a shipyard. While several firms stepped forward, the plans never materialized and the drydocks were eventually filled with dredge material and paved over to add additional acreage to a massive container terminal development.