OF LOS ANGELES 425 S. Palos Verdes Street Post Office Box 151 San Pedro, CA TEL/TDD310 SEA-PORT

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1 THE PORT OF LOS ANGELES 425 S. Palos Verdes Street Post Office Box 151 San Pedro, CA TEL/TDD310 SEA-PORT Eric Garcetti Mayor, City of LosAngeles Board of Harbor Cindy Misclkowskl David Arian Douglas P.Krause Sung Won Sohn, Ph.D. Commissioners President Vice President Geraldine Knalz, Ph.D. Executive Director July 31, 2013 Ms. June Lagmay, City Clerk City of Los Angeles 200 N. Spring St., Room 360 Los Angeles, CA MAIL STOP SUBJECT: RESOLUTION NO FUNDING REQUEST TO REMEDIATE THE FORMER SOUTHWEST MARINE SHIPYARD SITE At its meeting held on Thursday, June 6, 2013, the Los Angeles Board of Harbor Commissioners adopted Resolution No , approving the funding request to remediate the former Southwest Marine Shipyard Site. Pursuant to Section 343(d) of the Charter of the City of Los Angeles, we are transmitting, for your information, the Board report, assigned Resolution No and the Mayor's communication dated June 27, 2013, approving the internal transfer of funds. Respectfully submitted, ~~ JULIE WICHMANN HUERTA Acting Commission Secretary AN EQUAL EMPLOYMENT OPPORTUNITY-AFFIRMATIVE ACTION EMPLOYER Printed on recycled

2 .. THE PORT OF LOS ANGELES Executive Director's Report to the Board of Harbor Commissioners DATE: MAY 29,2013 FROM: ENVIRONMENTAL MANAGEMENT SUBJECT: RESOLUTION NO. ~ - FUNDING REQUEST TO REMEDIATE THE FORMER SOUTHWEST SUMMARY: The City of Los Angeles Harbor Department (Harbor Department) is proposing a budgetary transfer in the amount of $5 million from the Unappropriated Balance (UB) to the Harbor Department's Operating Expense Budget, Remediation Center The transfer will recognize, in the Harbor Department's Statement of Expenses, the estimated landside cost to reniediate the former Southwest Marine shipyard site (SWM Site) at Berth 240. This recognition complies with the Government Accounting Standards Board (GASB) Statement No. 49. This budgetary transfer requires the approval of the Board of Harbor Commissioners (Board) as well as the Mayor, in compliance with the Los Angeles City Charter Section 343(b). RECOMMENDATION: It is recommended that the Board of Harbor Commissioners: 1. Approve a $5 million budgetary transfer from the Unappropriated Balance to Account 59960, Center 0331, Program 000 to record the remediation obligation at the former Southwest Marine shipyard site at Berth 240 in compliance with the Government Accountlnq Standards Board Statement No. 49; 2. Direct the Board Secretary to transmit the Resolution to the Mayor for approval pursuant to Section 343(b) of the City Charter; 3. Direct the Board Secretary to notify the City Clerk of such transfer pursuant to Section 343(b) of the City Charter at the time such transfer is made; and 4. Adopt Resolution No\ 6 "-}4Q D

3 DATE: MAY 29,2013 PAGE 2 OF4 SUBJECT: FUNDING REQUEST TO REMEDIATE THE FORMER SOUTHWEST DISCUSSION: Background and Context - In November 2006, the GASB issued Statement No. 49 establishing standards for accounting and financial reporting for pollution. remediation obligations by state and local governments~ Under this standard, when a government knows or reasonably believes that a site is polluted, the government should determine whether one or more components of a pollution remediation obligation are recognizable as a liability on its flnanclal statements when certain obligating events occur. In the -case of the SWM Site; obligating events have occurred compelling the Harbor Department to now recognize the remediation liability. In addition to being named by a regulatory agency as :a potentially responsible party, the Harbor Department has decided to rernediate a portion of the site in order to relocate the. Jankovich Company (Jankovich), a marine fueling facility, from Berth 74 in Ports 0' Call to the SWM Site. While remediation work will commence next fiscal year, the estimated cost must be recognized now in compliance with GASBrules.. In doing so" the estimated $5 million in. remediation work will be expensed this fiscal year. Since this was not budgeted, a UB transfer is necessary.... Former 8WM Site, - On November 5, 2008, the Department of Toxic Substances Control (DTSC) issued Remedial Action Order No. Has-:RAO 08/ (Order) to the Harbor Department and BAE Systems Ship Repair as Hesponslble' Parties for the cleanup.of releases of hazardous 'substances at the SWM Slte.: An assessment of the site identified rriultiple contaminants in the landside soils and groundwater, as well as in the adjacent harbor sediments, including various metals, polychlorinated biph~nyls. (PCBs), and petroleum hydrocarbori$~.'..... Before the SWM Site is developed. for Jankovich's relocation, the Harbor Department must comply with DTSC's Order. At this time, the cost to remediate the entire landside area is estimated at $5 million.. This includes excavation, stockpiling of soil on site, sampling, and the transport and disposal of hazardous waste but does not include. groundwater treatment. This cost estimate will be evaluated on an annual basis and may change depending upon results from surveys and 'sampllnq during the remediation, management's land use decisions, DTSC's remediation requirements for such decisions, and the City's decision whether or not to pursue cost recovery from former tenants. Although this expense is being recognized on account of.jankovich's relocation, liabilities associated with future investigations and monitoring, and remediation of other segments of the site are not being recognized due. to uncertainties in quantifying them and the potential for cost recovery.

4 DATE: MAY 29; PAGE30F4 SUBJECT: FUNDING REQUEST TO REMEDIATE THE FORMER SOUTHWEST ENVIRONMENTAL ASSESSMENT: The proposed action is for the approval of a budgetary transfer from the Unappropriated. Balance to the Remediation Center.0331 to record the estimated remediation cost at the former SWM Site. This action is limited only to the transfer of funds. Remediation of the SWM Site was previously assessed as part of the San Pedro Waterfront Final EISIEIR which was.certified by the Board in September of2009. Therefore, as an administrative activity for which the underlying project has previously been evaluated for environmental significance 'and processed according to the requirements of the Ca.lifornia EnVironmental Quality Act (CEQA), the Director of Environmental Management has determined that.the proposed action is exempt from CEQA in accordance with Article II, Section 2(f).and 2(i) of the Los Angeles City CEQA Guidelines. '. FINANCIAL IMPACT: An appropriation of $5 'million is requested from. the. UB to' the Operating Expense Budget to record the pollution remediation obligation for the SWM Site at Berth 240. The pollution remediation will be expensed in FY2012/13 in Account 59960, Center 0331, Program 000,' and recognized as a liability in Account 21995, Center 7000, Program 000: Remediation work wlll.cornrnence next fiscal year and likely reduce the liability as follows: FY 13/14 FY 14/15 $2,500,000 $2,500,000 The budgetary transfer will increase" the overall FY 2012/13 Adjusted Operating Expense Budget by $5 million from $213.9 million to $218.9 million. The Adjusted Operating Expense Budget includes $827,000 in budgetary transfers previously approved by the Board on February 21, ECONOMIC BENEFITS: Remediation associated with the proposed action will support 40 construction jobs for the five-county region.

5 '. DATE: MAY 29,2013 PAGE 40F4 SUBJECT: FUNDING REQUEST TO REMEDIATE THE FORMER SOUTHWEST CITY ATTORNEY: The, proposed action raises no legal issues at this time. FIS Approval: ~ (initials) CA Approval:'T(initials).. CHRISTOPHER CANNON Director of Environmental Management fv1~~ ~ MICHAEL R. CHRISTENSEN U Deputy Executive Director APPROVED: rv/~.~ ~ GE:RALDINE KNATl, Ph.D: l) Executive Director AUTHOR: G. DIAZ. BOARD MEETING: 06/06/2013 FILE: G:\...ADMIN\_BOARD REPORTS\...HAZMAT\SWM FUNDING\ENV_SWM FUNDING - FINAL.docx UPDATED: 5/29/2013 9:21 AM -YO

6 TO Harbor Department FROM The Mayor TRANSMITTAL DATE COUNCIL FILE NO. 'JUN \ COUNCIL DISTRICT APPROVING A $5 MILLION BUDGETARY TRANSFER FROM THE UNAPPROPRIATED BALANCE TO ACCOUNT 59960, CENTER 0331, PROGRAM 000 TO RECORD THE REMEDIATION OBLIGATION AT THE FORMER SOUTHWEST Transmitted for your consideration. ' I~ ~ f'~ ij,i{a{ca)~ ANTONIO R. VILLARAIGOSA Mayor

7 FORM GEN. 1 GO (Rev. 6-80) CITY OF LOS ANGELES INTER-DEPARTMENTAL I CORRESPONDENCE DATE: TO: FROM: June 12,2013 The Honorable Antonio R. Villaraigosa, Mayor, City of Los Angeles Julie Wichmann Huerta, Commission Secretary, Harbor Department, 'SUBJECT: CHARTERSECTrdN,343(b) - FUNDING REQUEST TO REMEDIATE THE.FORMER SOUTHWEST - RESOLUTION NO At its meeting held on June 6, 2013 the Los Angeles Board of Harbor Commissioners adopted Resolution No; approving a TUfldingrequest to remediate the former'southwest Marine Shipyard Site. ' In accordance with the provisions of Charter Section 343(b), the Board requests 'the Mayor to approve a $5 million budgetary transferfrom the Unappropriated Balance to Account 59960, Center 0331, Program 000 to record the remediation obligatiqn at the former Southwest Marine shipyard site at Berth 240 in compliance with the Government.Accounthig Standards' Board Statement No. 49" ' " Charter'Section343(cI)requires that notice of your approval be sent to the City Clerk, who shall notify the President of,the City Council, the.controller, and the CAO:' ', ' A copy of the Board report is attached for your review. If you have any questions, please contact,?ob Henry at (310) co:' Mandy Morales, Mayor's office" encs. (3 sets) bcc: Robert Henry, enos.' City Attorney, encs..envlronrnental Management Aaron Gross, POLA Legislative Rep., encs.

8 ."c.i... THE PORT OF LOS ANGELES Executive Director's Report fo the Board of Harbor, Commissioners DATE: MAY 29,2013 FROM: ENVIRONMENTAL MANAGEMENT SUBJECT: RESOLUTION NO. - FUNDING, REQUEST TO REMEDIATE THE FORMER SOUTHWEST SUMMARY: The City of Los Angeles Harbor Department (Harbor Department).is proposing a, budgetary transfer in the amount of $5 million from the Unappropriated Balance (UB) to the Harbor Department's Dperating Expense Budget, Rernedlatnm Center The transfer will recognize, in the Harbor Department's' Statement of' Expenses" the' 'estimated landside cost toremedlate the former Southwest Marine shipyard site (SWM,Site) at Berth' 240. This recognition.cornplles with the Government Accounting Standards Board (GASH) StaternentNo. 49. This budgetary transfer requires the approval of the Board of Harbor Commissioners (Board) as well asthe Mayor, in compliance with the Los Angeles City Charter Section 343(b). ' RECOMMENDATiON: Itis recommended that the Board of Harbor Cornmtssloners:, 1. Approve a $5 million budgetary transfer from the Unappropriated Balance to Account '59960, Center 0331, Program 000 to record the remediation obligation at the former Southwest Marine shipyard site at,berth 240 in compliance with the Government AccountlngSiandards'BoardStaiement No. 49: ' 2. Direct the Board Secretary to transmit the Resolution to the Mayor for approval pursuant to Section 343(b) of the City Charter; 3. Direct the Board Secretary to notify the City Clerk of such transfer pursuant to Section 343(b) of the City Charter at the time such transfer is made; and 4. Adopt Resolution No. _

9 DATE: MAY 29,2013 PAGE20F4 SUBJECT: FUNDING REQUEST TO REMEDIATE THE FORMER SOUTHWEST DISCUSSION:. Background and Context ~..In November 2006, the GASS issued Statement No. 49 establishing standards for accounting and financial,reporting for pollution remediation. obljgations by state and local governments. Under this.standard, when a. government knows or reasonably believes that a site is polluted, the government should determine whether one or more components of a pollution remediation obligation are recognizable as a liability on its financial statements when certain obligatingeverits occur. In the. case.of the SWM Site, obligating events have occurred compelling the Harbor Department to now recognize the remediation liability. In addition to being named by a regulatory agency as' a potentially responsible party, the Harbor Department has decided to rernediate a portion of the site in order to 'relocate the. Jankovich Company (Jankovich), a marine fueling facility, from Berth '74 in Ports 0' Call to the S\NM Site. While remediation work will commence next fiscal year, the estimated cost must be recognized now in compliance with GASB rule's. In doing so, the estimated $5 million in. remediation' work will be expensed this fiscal year. Since this was not budgeted, a US. transfer is necessary..'... Fotmer SWM SJte.r: On NovemberS, 2008, the Department of Toxic Substances Control (DTSC) issued, Remedial Action Order No. Has-RA008/09'-056 (Order) to the Harbor Department and 8AE Systems Ship Repair as Responsible Parties for the cleanup.of releases of hazardoussubstances at the 8WM Site : An assessment ofthe site identified multiple contaminants in the landside soils and groundwater, as well as. in the adjacent harbor sediments, including various metals; polychlorinated biphenyls (PCBs), and petroleum hydrocarbons. Before the SWM Site is developed for Jankovich's relocation, the Harbor Department. must comply with DTSC's Order. At this time, the cost to remedlate the entire landside area is estimated at $5 million; This includes excavation, stockpiling of soil on site, sampling, and the transport and disposal of hazardous waste but does not include. groundwater treatment. This costestlmatewlll be evaluated on an annual basis and may change dependirrqupon results from sulileysand:samplingduring the remediation, management's 'Iand use deolslons, DTSC's remediation requirements for such decisions, and the City's decision whether or not to pursue cost recovery from former tenants. Although this expense is being re.cognized on account of.jankovlch's relocation, liabilities associated with future investigations and monitoring, and remediation of other s.egments of the site are not being recognized due. to uncertainties' in quantifying them and the potential for cost recovery.

10 DATE: MAY 29; 2013 PAGE 3 OF4 SUBJECT: FUNDING REQUEST TO REMEDIATE. THE FORMER SOUTHWEST ENVIRONMENTAL ASSESSMENT: The proposed action is for the approval of a budgetary transfer from the Unappropriated Balance to the Remediation Center to record the estimated remediation cost at the former SWM Site, This action is limited only to the transfer of funds, Remediation of the SWM Site was previously assessed as part of the San Pedro Waterfront Final EIS/EIR which was certified by the. Board in September of Therefore, as an administrative activity for whichthe underlying project has previously been evaluated for environmental significance and processed.according to the requirements of the California Environmental Quality Act (CEQA), the Director of Environmental Management has determined that the proposed action is exempt from CEQA in accordance with Article II, Section 2(f) and 2(i) of the Los Angeles City CEQA Guidelines, FINANCIAL IMPACT:. An appropriation.of $5 million is requested from the UB to the Operating E~pense Budgetto record the pollution remediationobligatidn for the 8VVM Site at Berth 240. The pollution rsmedlatlon.wlll beexpenssd in FY2nl2113 in Account 5996'0, Center 0331, Pro.gram 000,' and recognized as a liability in Account 21995, Center 7000, Program 000; Remediation work will commence next fiscal year and likely reduce the liability as ( follows: FY 13/14 FY 14/15 $2,500,000 $2,500,000 The budgetary transfer will increase the overall FY 2012/13 Adjusted Operating Expense Budget by $5 million from $ million to $218.9 million. The Adjusted Operating Expense Budget includes $827,000 in budgetary transfers previously approved by the Board on February 21,2013. ECONOMIC BENEFITS: Remediation associated with the proposed action will support 40 construction jobs for the five-county region.

11 '" t, -W DATE: MAY 29, 2013 PAGE 4 OF4 SUBJECT: FUNDING REQUEST 'TO REMEDIATE THE FORMER SOUTHWEST CITY ATTORNEY: The. proposed action raises no legal issues at this time., FISA.ppro:v.al:. ' (initials). CA Ap.proval:., (initials)... CHRISTOPHER CANNON, Director of Environmental Management rv1~~ -flt MICHAEL R. CHRISTENSEN V Deputy Executive Director APPROVED: