Los Angeles Wants $31.5 Million : Impasse Over Price May Scrap Port Land Deal

The city and the Port of Los Angeles are once again at loggerheads over the value of 87.3 acres of land in San Pedro, and the dispute could scuttle a proposal for the port to purchase the property which it now leases from the city.

The sale was supposed to be the means to end another dispute--over how much the port should pay in rent.

Harbor commissioners have voted to buy the land for $26 million, and port officials say they have offered slightly more in negotiations. But at a public hearing Tuesday, harbor area Councilwoman Joan Milke Flores demanded $31.5 million and accused the port of applying a double standard by paying much more for private land than it wants to pay the city.

Just last week, Flores said, the port paid $9 per square foot for private property--32% more than the $6.83 it is offering the city.

She made her statements during a meeting of the council’s Industry and Economic Development Committee, which she chairs. She said she picked $31.5 million because it is halfway between the port’s offer and an independent appraiser’s valuation for the land, which is $35.5 million.

Improved Property

Port Executive Director Ezunial Burts appeared stunned. He said he thought the two sides had already reached agreement, and argued that the port should pay the lesser price because it has improved the property, which abuts the Harbor Freeway and stretches east to the port’s West Basin. Those improvements include the American President Lines terminal, the Korean Shipping America Inc. terminal, a railroad right of way, a bike path and John S. Gibson Boulevard.

“To pay for these improvements twice, I think, would not be fair,” Burts said to the committee.

Replied Flores: “On the other hand, these improvements have in no way benefited the City of Los Angeles. They have benefited the port.”

Burts said later that he thought Flores’ statements were “misinformed,” and said they “came as an absolute surprise to me.”

The committee, which must approve the proposal before it goes to the council’s Finance Committee and then the full council, voted to delay action for two weeks. In the meantime, both Burts and Flores said they intend to talk to the harbor commissioners. The issue will likely come up at the commissioners’ next meeting Nov. 12.

As to whether the port and the city will resume negotiations on the land sale, Flores hinted that the price she set is non-negotiable.

“I think, really, this is it unless they can come up with something that they think would be fairer and that we can get done quickly. But I think that this is very fair based on everything that I’ve looked into.”

Abandon Sale

Flores’ chief deputy, Bernard Evans, said afterward that the port and the city may have to abandon the sale and go back to negotiating on the lease. “I think the two parties are apart,” he said. “It will be interesting to see what happens.”

According to a city administrative report, the port, which agreed to pay rent for the property in 1977, has not paid anything for the past three years. Annual rental payments had varied between $378,000 and $852,000.

According to the report, the two sides cannot agree on whether the rental formula should include revenues the port collected from nearby docks and wharves that are related to operations on the city-owned land. The city says the docks and wharves would not be as productive without the port’s use of the city-owned land, and the port says that the city’s position violates the state Tidelands Trust, which governs port operations.

That disagreement prompted the port to propose buying the land outright.