TRADE, TRAVEL, AND TOURISM COMMITTEE. Tuesday, November 20, 2018 ROOM 1060, CITY HALL - 2:00 PM 200 NORTH SPRING STREET, LOS ANGELES, CA 90012

Transcription

1 TRADE, TRAVEL, AND TOURISM COMMITTEE Tuesday, November 20, 2018 ROOM 1060, CITY HALL - 2:00 PM 200 NORTH SPRING STREET, LOS ANGELES, CA MEMBERS: COUNCILMEMBER JOE BUSCAINO, CHAIR COUNCILMEMBER MIKE BONIN COUNCILMEMBER PAUL KREKORIAN (John A. White - Legislative Assistant - (213) or john.white@lacity.org) Click here for agenda packets Note: For information regarding the Committee and its operations, please contact the Committee Legislative Assistant at the phone number and/or address listed above. The Legislative Assistant may answer questions and provide materials and notice of matters scheduled before the City Council. Sign Language Interpreters, Communication Access Real-Time Transcription (CART), Assistive Listening Devices, or other auxiliary aids and/or services may be provided upon request. To ensure availability, you are advised to make your request at least 72 hours prior to the meeting/event you wish to attend. Due to difficulties in securing Sign Language Interpreters, five or more business days notice is strongly recommended. For additional information, please contact the Legislative Assistant listed above. MULTIPLE AGENDA ITEM COMMENT GENERAL PUBLIC COMMENT ITEM NO. (1) CD 15 CONTINUED FROM Motion (Buscaino Martinez) instructing the Los Angeles Department of Water and Power (LADWP) to report relative to land swap negotiations with the Port of Los Angeles (POLA), the next steps required to execute the land swap agreement, any outstanding roadblocks preventing the execution of the land swap agreement, and the capacity of and current and future usage of the LADWP Tank Farm in Wilmington. Fiscal Impact Statement Submitted: No Community Impact Statement: None submitted Tuesday - November 20, PAGE 1

2 ITEM NO. (2) CD 11 TIME LIMIT AND LAST DAY FOR COUNCIL ACTION: Board of Airport Commissioners and City Administrative Officer (CAO) reports relative to Resolution No for the Los Angeles World Airports (LAWA) Amended and Restated Lease with Clear Channel Outdoor, Inc., to remove one conflicting billboard, and to extend the term by five years through October 31, 2023, and add a rental rate option of 42.5 percent of gross annual revenues to the $13,000 annual base rental rate for the remaining billboard at Los Angeles International Airport (LAX); and, categorical exemption from the requirements of the California Environmental Quality Act (CEQA) as provided in Article III Class 1(18)(c) of the Los Angeles City CEQA Guidelines. Fiscal Impact Statement Submitted: Yes Community Impact Statement: None submitted ITEM NO. (3) CD 11 TIME LIMIT: ; LAST DAY FOR COUNCIL ACTION: Board of Airport Commissioners and CAO reports relative to Resolution No for the Third Amendment to LAWA Lease LAA-8388 with Mercury Air Cargo, Inc., to revise the space reduction effective date for a cargo facility located at 6040 Avion Drive within LAX; and, categorical exemption from CEQA requirements as provided in Article III Class 1(18)(c) of the Los Angeles City CEQA Guidelines. Fiscal Impact Statement Submitted: Yes Community Impact Statement: None submitted ITEM NO. (4) S3 CD 15 TIME LIMIT AND LAST DAY FOR COUNCIL ACTION: Board of Harbor Commissioners report and the CAO to report relative to Resolution No for the First Amendment to POLA Permit No. 904A with AltaSea, waiving rent from AltaSea in the amount of $136,222 for certain portions of the Business Innovation Hub in consideration of delays to secure electrical power; and, categorical exemption from CEQA requirements as provided in Article Ill, Class 1(14) of the Los Angeles City CEQA Guidelines. Fiscal Impact Statement Submitted: Yes Tuesday - November 20, PAGE 2

3 Community Impact Statement: None submitted ITEM NO. (5) CD 15 TIME LIMIT: ; LAST DAY FOR COUNCIL ACTION: Board of Harbor Commissioners and CAO reports relative to Resolution No for the Second Amendment to POLA Agreement No B with Pasha Stevedoring and Terminals L.P., extending the Green Omni Terminal Project by one year, reallocating grant funding, and modifying project milestones the disbursement schedule; and, administrative exemption from CEQA requirements as provided in Article II, Section 2(f) of the Los Angeles City CEQA Guidelines. Fiscal Impact Statement Submitted: Yes Community Impact Statement: None submitted ITEM NO. (6) TIME LIMIT: ; LAST DAY FOR COUNCIL ACTION: Board of Harbor Commissioners and CAO reports relative to Resolution No for the proposed POLA agreement with Bee Imagine, LLC, to lease warehouse and office space within Free Trade Zone 202 Site 54, located at 4832 and 4910 Azusa Canyon Road, Irwindale for a term of five years with three, five-year renewal options at an annual rental rate of $7,750; and, administrative exemption from CEQA requirements as provided in Article II, Section 2(f) of the Los Angeles City CEQA Guidelines. Fiscal Impact Statement Submitted: Yes Community Impact Statement: None submitted If you challenge this Committee's action(s) in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City Clerk at or prior to, the public hearing. Any written correspondence delivered to the City Clerk before the City Council's final action on a matter will become a part of the administrative record. Materials relative to items on this agenda can be obtained from the Office of the City Clerk's Council File Management System, at lacouncilfile.com by entering the Council File number listed immediately following the item number (e.g., ). Tuesday - November 20, PAGE 3

4 MOTION TRADE, TRAVELAND TOURISM The Wilmington Waterfront is an anticipated 58 acre project that will connect the Wilmington residential community to the Los Angeles Waterfront and Port of Los Angeles (POLA) by way of green space, pedestrian access points, transportation linkages, and commercial development. The project has been underway for over a decade, originating with a year-long community and stakeholder planning process in 2006 that resulted in the development s master plan and vision. The current design for the Avalon Promenade Gateway Project, one of the two central components of the development, requires the elimination of storage tanks located at the intersection of Avalon and Harry Bridges Boulevards. The two large oil tanks are over 200 feet in diameter and sit on a plot of land that is currently owned by the the Los Angeles Department of Water and Power (LADWP). If left in place, the physical, visual, and psychological disconnect between the Wilmington community and the waterfront would endure and the primary goals of the development could not be realized. As a proposed solution, LADWP and POLA began negotiations for a mutually-beneficial land swap that have now been under way for over a decade. LADWP continues to disregard the land swap agreement as a priority project, and progress on the Wilmington Waterfront has therefore stalled. In order to adhere to a series of deadlines surrounding the Wilmington Waterfront development, the LADWP/POLA land swap must be executed as soon as possible. I THEREFORE MOVE that LADWP be REQUESTED to report back in 15 days on progress made on the land swap negotiations with POLA, the next steps required to execute the land swap agreement, any outstanding roadblocks preventing the execution of the land swap agreement, any future plans for as well as current capacity and usage of the LADWP Tank Farm in Wilmington. A PRESENTED BY: ^ JOE BUSCAINO Councilmember, 15th District O l' SECONDED BY: Tuesday - November 20, PAGE 4

5 Los Angeles World Airports TM October 26, 2018 LAX Van Nuys City of Los Angeles Eric Garcetti Mayor Board of Airport Commissioners Sean 0. Burton President Valeria C. Velasco Vice President Jeffery J, Daar Gabriel L. Eshaghian Beatrice C. Hsu Thomas S. Sayles Dr. Cynthia A. Telles Deborah Flint Chief Executive Officer The Honorable City Council of the City of Los Angeles City Hall, Room 395 Los Angeles, CA Subject: Amended and Restated Lease with Clear Channel Outdoor, Inc. to allow for required removal of one conflicting billboard and to update the terms for the remaining billboard under said lease at Los Angeles International Airport. Pursuant to Section 606 of the City Charter, enclosed for your approval is the Amended and Restated Lease with Clear Channel Outdoor, Inc., approved at the October 18, 2018 meeting of the Board of Airport Commissioners. There is no impact to the General Fund. RECOMMENDATIONS FOR CITY COUNCIL: 1. Adopt the determination by said Board that the action is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to Article III Class 1(18)(c) of the Los Angeles City CEQA Guidelines; 2. Approve the Amended and Restated Lease with Clear Channel Outdoor, Inc. to allow for required removal of one conflicting billboard and to update the terms for the remaining billboard under said lease at Los Angeles International Airport; and 3. Very truly yours, Concur with said Board s action on October 18, 2018, by Resolution 26608, authorizing the Chief Executive Officer of Los Angeles World Airports to execute said Amended and Restated Lease with Clear Channel Outdoor, Inc. Grace Miduel - Commission Executive Assistant II BOARD OF AIRPORT COMMISSIONERS GM:lfc Enclosure CC: Trade, Travel and Tourism Committee Councilmember Buscaino, E-file Councilmember Bonin, E-file Councilmember Krekorian, E-file CAO (Airport Analyst), E-file CLA (Airport Analyst), E-file City Clerk s Office, E-file 1-World Way Cos Angeles California Mail RO. Box Los Angeles California Telephone Internet Tuesday - November 20, PAGE 5

6 Los Angeles World Airports TM RESOLUTION NO WHEREAS, on recommendation of Management, there was presented for approval, Amended and Restated Lease with Clear Channel Outdoor, Inc. to allow for required removal of one conflicting billboard and to update the terms for the remaining billboard under said lease at Los Angeles International Airport; and LAX Van Nuys City of Los Angeles Eric Garcetti Mayor Board of Airport Commissioners Sean O. Burton President Valeria C. Velasco Vice President Jeffery J, Daar Gabriel L. Eshaghian Beatrice C. Hsu Thomas S. Sayles Dr. Cynthia A. Telles Deborah Flint Chief Executive Officer WHEREAS, by Resolution 25129, the Board of Airport Commissioners approved the acquisition of Skyview Center, a two (2)-building office complex consisting of approximately 407,000 square feet, along with the associated billboard leases with Outfront Media and Clear Channel Outdoor, Inc.; and WHEREAS, in connection with said acquisition, Los Angeles World Airports (LAWA) assumed the Clear Channel lease that included two billboards comprising three billboard faces, located on the property s surface parking lot. The location of one billboard conflicts with LAWA s future plans for the underlying property. Rather than proceed with termination of the lease, the First Amendment will require removal of one billboard, as needed for implementation of the Landside Access Modernization Program, and update the terms for the remaining billboard to be more consistent with other LAWA leases; and WHEREAS, the following summarizes the terms of the previous and the Amended and Restated Lease: Terms Previous Lease Amended and Restated Lease Expiration Date Premises Waiver of Claims October 31, 2018; however, the Lease auto renews in perpetuity unless terminated by either party with 60 days' notice prior to the expiration date. Two billboards None October 31, 2023; however, either party may terminate at any time with 60 days' prior notice Auto renew provision is eliminated One billboard Lessee has no right to any payment, claims or damages should LAWA terminate Base Rent $18,000 annually Greater of: i) Base Rent totaling $13,000 annually, or ii) percentage rent Percentage Rent Base Rent Adjustments None None 42.5% of gross annual revenues Base Rent subject to annual increase based on the Consumer Price Index. A minimum of 2% and a maximum of 7% increase; and WHEREAS, staff conducted a comparative market analysis of similarly situated billboards to compare rates and terms, and found that the rates for the Amended and Restated Lease are V m Vi' 1 World Way Los Angeles California Mail PO. Box Los Angeles California Telephone Internet Tuesday - November 20, PAGE 6

7 Resolution No comparable in regards to base rent, which was calculated based on 80% of previous years gross revenues, a common approach typical in the industry. Regarding percentage rent, the rate for the new lease at 42.5% is superior as revenue sharing obligations are typically at a rate of 30% to a maximum of 40%, making the commercial terms under this action favorable to LAWA; and WHEREAS, within the next twelve (12) months, LAWA plans to develop a holistic strategy for all remaining billboards on LAWA property as part of the requirements of the Los Angeles International Airport Sign District; and WHEREAS, issuance of permits, leases, agreements, gate and space assignments, and renewals, amendments or extensions thereof, or other entitlements granting use of existing airport facilities or its operations is categorically exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article III Class 1 (18)(c) of the Los Angeles City CEQA Guidelines; and WHEREAS, Clear Channel Outdoor, Inc. will comply with the provisions of the Living Wage Ordinance; and WHEREAS, Clear Channel Outdoor, Inc. will comply with the provisions of the Affirmative Action Program; and WHEREAS, Clear Channel Outdoor, Inc. has been assigned Business Tax Registration Certificate ; and WHEREAS, Clear Channel Outdoor, Inc. will comply with the provisions of the Child Support Obligations Ordinance; and WHEREAS, Clear Channel Outdoor, Inc. will have approved insurance documents, in the terms and amounts required, on file with LAWA prior to execution of the Amended and Restated Lease; and WHEREAS, Clear Channel Outdoor, Inc. has submitted the Contractor Responsibility Program Questionnaire and Pledge of Compliance, and will comply with the provisions of said program; and WHEREAS, Clear Channel Outdoor, Inc. must be determined by Public Works, Office of Contract Compliance, to be in compliance with the provisions of the Equal Benefits Ordinance prior to execution of the Amended and Restated Lease; and WHEREAS, Clear Channel Outdoor, Inc. will be required to comply with the provisions of the First Source Hiring Program for all non-trade airport jobs; and WHEREAS, Clear Channel Outdoor, Inc. has submitted the Bidder Contributions CEC Form 55, and will comply with its provisions; and WHEREAS, actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section 606; NOW, THEREFORE, BE IT RESOLVED that the Board of Airport Commissioners adopted the Staff Report; determined that this action is categorically exempt from CEQA pursuant to Article III Class 1 (18)(c) of the Los Angeles City CEQA Guidelines; approved the Amended and Restated Lease with Clear Channel Outdoor, Inc. to allow for required removal of one conflicting billboard and to update the terms for the remaining billboard under said lease at Los Angeles International Tuesday - November 20, PAGE 7

8 Resolution No Airport; and authorized the Chief Executive Officer to execute said Amended and Restated Lease with Clear Channel Outdoor, Inc. after approval as to form by the City Attorney and approval by the Los Angeles City Council. 0O0 I hereby certify that this Resolution No is true and correct, as adopted by the Board of Airport Commissioners at its Regular Meeting held on Thursday, October 18, Grace MiguelW'Secretary BOARD'OF AIRPORT COMMISSIONERS Tuesday - November 20, PAGE 8

9 REPORT from OFFICE OF THE CITY ADMINISTRATIVE OFFICER Date: To: From: October 24, 2018 The Mayor Richard H. Llewellyn, Jr., City Administrative Office CAO File No.: Council File No.: Council District: 11 Reference: Subject: Communication from the Department of Airports d,ated October 16, 2018; referred by the Mayor for report on October 17, 2018 APPROVAL OF AMENDED AND RESTATED LEASE WITH CLEAR CHANNEL OUTDOOR, INC. TO REVISE THE FINANCIAL TERMS AND ALLOW THE DEPARTMENT TO REMOVE ONE OF TWO ADVERTISING BILLBOARDS AT THE LOS ANGELES INTERNATIONAL AIRPORT S SKYVIEW CENTER COMPLEX RECOMMENDATIONS That the Mayor: Approve the proposed Amended and Restated Lease Agreement LAA between the Los Angeles World Airports and Clear Channel Outdoor, Inc. amending the 37-year lease to revise the terms and allow the Department to remove one of two billboards on the Skyview Center parking lot at the Los Angeles International Airport, as needed, and extend the lease term by five years from October 31, 2018 to October 31,2023, to continue in place the one billboard that does not interfere with the Department's plans for implementation of the Landside Access Modernization Program (LAMP), subject to City Attorney approval as to form and the Lessee s compliance with the City s Standard Provisions for Contracting, including the Service Contractor Worker Retention and Living Wage Ordinances, Affirmative Action Program, Child Support Obligations Ordinance, the Department s insurance requirements, Contractor Responsibility Program, Equal Benefits Ordinance, First Source Hiring Program for non-trade Airport jobs, and the Bidder Contributions CEC (City Ethics Commission) Form 55 and related provisions; Authorize the Chief Executive Officer to execute the Amended and Restated Lease; and, Return the Lease to the Department for further processing, including Council consideration.. SUMMARY With the Los Angeles World Airports (LAWA; Department) June 2013 purchase of the Skyview Center s two-building office complex at 6033 and 6053 West Century Boulevard, the Department Tuesday - November 20, PAGE 9

10 CAO File No PAGE 2 acquired existing long-term billboard leases with two outdoor advertising firms: Outfront Media and Clear Channel Outdoor, Inc. The lease with Clear Channel Outdoor, Inc. (Clear Channel; Lessee) for two billboards with three sides or faces expires on October 31,2018. The location of one of the two billboards (consisting of one of the three billboard faces ) is now in conflict with LAWA s plans to implement the Landside Access Modernization Program (LAMP) and requires removal. Doing so will ensure that LAWA s designs for the site are maintained and the Lessee remains in compliance with the terms of the lease. Since all remaining space on the site is needed for parking for occupants of the Skyview Center complex or for the LAMP project, no alternative location for the billboard is available. The Department proposes to extend the current lease for five years to October 31, Furthermore, LAWA proposes to add a billboard space rental rate option of 42.5 percent of gross annual revenues (a rate favorable to LAWA since market studies show that between 30 and 40 percent of gross annual revenues is typical for similar locations) to the $13,000 annual base rental rate (whichever is greater), and include language in the lease that terminates the automatic renewal provision and allows for termination, by either party, with 60 days advance written notice. In addition to modifying the rental rate options, LAWA is developing a comprehensive strategy for application to its remaining billboard leases in conformance with provisions of the LAX Sign District Ordinance of June 17, 2015 (C.F S2). To facilitate removal of the billboard on the Skyview Center parking lot, extend the lease term, and modify the lease provisions for the remaining billboard, the Chief Executive Officer of the Los Angeles World Airports requests approval to execute an Amended and Restated Lease with Clear Channel to (1) remove one of two billboards, (2) reduce the space rental fee from $18,000 to $13,000 annually to reflect removal of the billboard and bring the fee into alignment with other Department billboard leases, and (3) extend the current lease term by five years to October 31, As part of the term extension, LAWA will receive approximately $68,000 in rental revenue over the five-year term, exclusive of annual Consumer Price Index increases. The Amended and Restated Lease Agreement with Clear Channel was approved by the Board of Airport Commissioners at its meeting of October 18, To become effective, the amendment must be approved by the City Attorney as to form and by the Council. FISCAL IMPACT STATEMENT Approval of the Amended and Restated Lease Agreement with Clear Channel Outdoor, Inc. to (1) remove one of two billboards on the Skyview Center complex parking lot to accommodate the Los Angeles World Airports implementation of the Landside Access Modernization Program, (2) reduce the space rental fee to reflect removal of the billboard and bring the fee into alignment with standard Department billboard rates for the area, and (3) extend the current lease term by five years to October 31,2023, will result in approximately $13,000 in annual rental revenue ($68,000 over the five-year term), a decrease of approximately $5,000 annually. This project complies with the Los Angeles World Airports adopted Financial Policies. Approval of the Amended and Restated Lease Agreement will have no impact on the City s General Fund. RHL.WDC: Tuesday - November 20, PAGE 10

11 Los Angeles World Airports TM November 13, 2018 The Honorable City Council of the City of Los Angeles City Hall, Room 395 Los Angeles, CA LAX Van Nuys City of Los Angeles Eric Garcetti Mayor Board of Airport Commissioners Sean 0. Burton President Valeria C, Velasco Vice President Jeffery J. Daar Gabriel L. Eshaghian Beatrice C. Hsu Thomas S. Sayles Dr. Cynthia A. Telles Deborah Flint Chief Executive Officer Subject: Third Amendment to Lease LAA-8388 with Mercury Air Cargo, Inc. to revise the space reduction effective date, covering a cargo facility located at 6040 Avion Drive within Los Angeles International Airport Pursuant to Section 606 of the City Charter, enclosed for your approval is the Third Amendment to Lease LAA-8388 with Mercury Air Cargo, Inc., approved at the November 1, 2018 meeting of the Board of Airport Commissioners. There is no impact to the General Fund. RECOMMENDATIONS FOR CITY COUNCIL: Adopt the determination by said Board that the action is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to Article III Class 1(18)(c) of the Los Angeles City CEQA Guidelines; Approve the Third Amendment to Lease LAA-8388 with Mercury Air Cargo, Inc. to revise the space reduction effective date, covering a cargo facility located at 6040 Avion Drive within Los Angeles International Airport; and 3. Concur with said Board s action on November 1, 2018, by Resolution 26636, authorizing the Chief Executive Officer of Los Angeles World Airports to execute the Third Amendment to Lease LAA-8388 with Mercury Air Cargo, Inc. Very truly yours, Grace Migue I- mission Executive Assistant II BOARD OF > AIRPORT COMMISSIONERS GM:lfc Enclosure CC: Trade, Travel and Tourism Committee Councilmember Buscaino, E-file Councilmember Bonin, E-file Councilmember Krekorian, E-file CAO (Airport Analyst), E-file CLA (Airport Analyst), E-file City Clerk s Office, E-file fwortctway- Los Angeles California Mail P0. Box Los Angeles California Telephone io2 Internet Tuesday - November 20, PAGE 11

12 Los Angeles World Airports TM RESOLUTION NO WHEREAS, on recommendation of Management, there was presented for approval, Third Amendment to Lease LAA-8388 with Mercury Air Cargo, Inc. to revise the space reduction effective date, covering a cargo facility located at 6040 Avion Drive within Los Angeles International Airport; and LAX Van Nuys City of Los Angeles Eric Garcetti Mayor Board of Airport Commissioners Sean 0. Burton President Valeria C. Velasco Vice President Jeffery J. Daar Gabriel L. Eshaghian Beatrice C. Hsu Thomas S. Sayles Dr. Cynthia A. Telles Deborah Flint Chief Executive Officer WHEREAS, on December 14, 2017, to accommodate construction of Los Angeles International Airport (LAX) Landside Access Modernization Program (LAMP) projects, the Board of Airport Commissioners approved the Second Amendment to Lease LAA-8388 for reduction of Mercury s lease premises effective December 1, The lease does not require Los Angeles World Airports (LAWA) to provide Mercury with replacement space. However, since that time, staff worked with the LAMP team and with Mercury to identify a solution to Mercury s loss of space. As a result, staff identified alternative space for Mercury and proposed to extend the space reduction effective date from December 1, 2018 to February 1, 2019 in order to maintain customer service to Mercury s clients and allow time for Mercury to move to the alternate location at LAX; and WHEREAS, in addition to the change in the space reduction effective date, the Third Amendment also includes a liquidated damages provision of $100,000 per day, effective February 1, 2019, in the event that Mercury fails to meet the revised premises reduction effective date; and WHEREAS, following is a summary of key elements of the Third Amendment: 2nd Amendment rd 3 Amendment Effective Date: December 1, 2018 February 1, 2019 Demised Premises: Warehouse/Office - 171,787 square feet Hangar - 0 square foot Land - 235,826 square feet Auto Paving - 91,609 square feet No Change Monthly Rent: $361,999.64* (12/1/2018) No Change Annual Rent: $4,343,996* (12/1/2018) *Board-approved building, land and paving rates apply. Adjusted July 1 annually, per CPI, minimum 2% No Change; and WHEREAS, the issuance of permits, leases, agreements, gate and space assignments, and renewals, amendments or extensions thereof, or other entitlements granting use of existing airport facilities or its operations is categorically exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article III Class 1(18)(c) of the Los Angeles City CEQA Guidelines; and WHEREAS, Mercury is required by contract to comply with the provisions of the Living Wage/Worker Retention Ordinances; and WHEREAS, Mercury is required by contract to comply with the provisions of the Affirmative Action Program; and J 1 World Way Los Angeles California Mail RO. 8ox Los Angeles California Telephone Internet Tuesday - November 20, PAGE 12

13 Resolution No WHEREAS, Mercury has been assigned Business Tax Registration Certificate ; and WHEREAS, Mercury is required by contract to comply with the provisions of the Child Support Obligations Ordinance; and WHEREAS, Mercury must have approved insurance documents, in the terms and amounts required, on file with LAWA prior to execution of the Third Amendment; and WHEREAS, Mercury has submitted the Contractor Responsibility Program Questionnaire and Pledge of Compliance, and will comply with the provisions of said program; and WHEREAS, Mercury has been determined by the Public Works, Office of Contract Compliance, to be in full compliance with the provisions of the Equal Benefits Ordinance; and WHEREAS, Mercury will be required to comply with the provisions of the First Source Hiring Program for all non-trade LAX jobs; and WHEREAS, actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section 606; NOW, THEREFORE, BE IT RESOLVED that the Board of Airport Commissioners adopted the Staff Report; determined that this action is categorically exempt from CEQA pursuant to Article III Class 1(18)(c) of the Los Angeles City CEQA Guidelines; approved the Third Amendment to Lease LAA-8388 with Mercury Air Cargo, Inc. to revise the space reduction effective date, covering a cargo facility located at 6040 Avion Drive within Los Angeles International Airport; and authorized the Chief Executive Officer to execute said Third Amendment with Mercury Air Cargo, Inc. after approval as to form by the City Attorney and approval by the Los Angeles City Council. ooo I hereby certify that this Resolution No is true and correct, as adopted by the Board of Airport Commissioners at its Regular Meeting held on Thursday, November 1,2018. Grace/Miguel - Secretary BOARD OF AIRPORT COMMISSIONERS Tuesday - November 20, PAGE 13

14 11/15/18 (Ana Guerrero) for Tuesday - November 20, PAGE 14

15 REPORT FROM OFFICE OF THE CITY ADMINISTRATIVE OFFICER Date: November 15, 2018 CAO File No.: Council File No.: Council District: 11 To: From: Reference: Communication from the Department of Airp s d d October 30, 2018; referred by the Mayor for report on October 30, 2018 Subject: REQUEST TO APPROVE A THIRD AMENDMENT TO LEASE WITH MERCURY AIR CARGO, INC. TO EXTEND THE DATE FOR RELOCATION OF A CARGO FACILITY TO ACCOMMODATE THE LANDSIDE ACCESS MODERNIZATION PROGRAM (LAMP) CONSTRUCTION AT THE LOS ANGELES INTERNATIONAL AIRPORT RECOMMENDATIONS That the Mayor: SUMMARY 1. Approve the proposed Third Amendment to Lease Agreement LAA-8388 between the Los Angeles World Airports (LAWA) and Mercury Air Cargo, Inc. to change the effective date, from December 1, 2018 to February 1, 2019, of a required space reduction at the company's air cargo operations facility at the Los Angeles International Airport, required to accommodate construction of the Landside Access Modernization Program (LAMP), and the imposition of a liquidated damages provision, subject to compliance with the City's Standard Provisions for Contracting, including the Living Wage and Service Contractor Worker Retention Ordinances, the Affirmative Action Program, Child Support Obligations Ordinance, the Department's insurance requirements, Contractor Responsibility Program, First Source Hiring Program for all non-trade LAX Airport jobs, and City Attorney approval as to form; 2. Authorize the Chief Executive Officer to execute the Third Amendment to the Lease Agreement; and, 3. Return the Third Amendment to the Department for further processing, including Council consideration. The Chief Executive Officer of the Los Angeles World Airports (LAWA; Department) requests approval to execute the Third Amendment to a 14-year (March 2007 to December 2021) lease with Mercury Air Cargo, Inc. (Mercury Air Cargo; Lessee) for 499,222 square feet of warehouse/office space, land, and parking space southeast of the Los Angeles International Airport (LAX), used for its international air cargo operations and cargo logistics. The purpose of the Amendment is to extend, Tuesday - November 20, PAGE 15

16 CAO File No. PAGE by two months, the original date by which the Lessee's airport operations are to relocate in order to (1) facilitate the impending construction of the Landside Access Modernization Program (LAMP) and (2) minimize disruption to the company's activities resulting from the move. The Second Amendment, approved in December 2017, reduces the leased space at 6040 Avian Drive from 590,845 square feet to 499,222 square feet (a reduction of 91,623 square feet), effective December 1, 2018, in anticipation of the LAMP construction. While the underlying lease and Second Amendment do not require LAWA to find replacement space, the Department, in an effort to help Mercury avoid significant disruption to its operations and that of its LAX customers, has located alternative space for Mercury's operations. To accommodate the company's move of certain elements of its operations to the alternative space, LAWA is proposing to extend the space reduction's effective date from December 1, 2018 to February 1, In addition to the 6040 Avian Drive location, Mercury operates from two additional facilities located at 5908 Avian Drive and 6041 West Imperial Highway. A third location, at 5600 West Century Boulevard, has been identified by LAWA as the alternative space for Mercury Air Cargo's use. Current annual lease revenue to LAWA for the primary 6040 Avian Drive location is $4,343,996. The relocation of some components of Mercury Air Cargo's operations to an alternative space will allow for LAW A's demolition of a hangar building near the company's present location that is required to maintain the LAMP project schedule. In addition to extending the space reduction's effective date, LAWA has added a liquidated damages clause whereby a $100,000 per-day penalty is imposed on Mercury if the company exceeds the new February 1, 2019 space reduction date. The liquidated damages provision is included to ensure that Mercury Air Cargo adheres to the relocation timeline so as to avoid negatively impacting the LAMP construction schedule. All other lease provisions remain unchanged. The proposed Third Amendment was approved by the Board of Airport Commissioners at its meeting of November 1, FISCAL IMPACT STATEMENT Approval of the proposed Third Amendment to Lease Agreement LAA-8388 with Mercury Air Cargo, Inc. to reduce space at its LAX air cargo operations in order to accommodate construction of the Landside Access Modernization Program (LAMP) project and extend the effective date from December 1, 2018 to February 1, 2019, will have no impact on the City's General Fund. This project complies with the Los Angeles World Airports' adopted Financial Policies. RHL:WDC: Tuesday - November 20, PAGE 16

17 LA THE PORT OF LOS ANGELES Eric Garcetti Board of Harbor Commissioners Eugene D. Seroka 425 S. Palos Verdes Street San Pedro, CA Post Office Box 151 TEL/TDD 310 SEA-PORT Mayor, City of Los Angeles Jaime L. Lee David Arlan Lucia Moreno-Unares Anthony Pirozzi, Jr. Edward R. Renwick President Vice President Commissioner Commissioner Commissioner Executive Director October 29, 2018 Honorable Members of the City Council of the City of Los Angeles CD No. 15 Attention: Mr. John White, City Clerk s Office SUBJECT: RESOLUTION NO PROPOSED FIRST AMENDMENT TO THE AMENDED AND RESTATED LEASE NO. 904A WITH ALTASEA AT THE PORT OF LOS ANGELES Pursuant to Section 606 of the City Charter, enclosed for your approval is Resolution No authorizing proposed First Amendment Permit No. 904A with AltaSea at the Port of Los Angeles (AltaSea); which was approved at the October 18, 2018 meeting of the Board of Harbor Commissioners. The proposed First Amendment will waive the required monetary compensation (rent) from AltaSea in the amount of $136,222 for certain portions of the Business Innovation Hub (generally Parcels B58 to 61A and B61C) in consideration of unforeseen and significant delays to secure the necessary electrical power for the site and receive revenues from prospective tenants. The waiver of rent will be effective from the time AltaSea took possession of the subject parcels, September 11, 2018, until the end of the Interim Compensation Period, August 22, 2019, when it is anticipated that the electrical power will be secured. The Harbor Department has received an Executive Directive-4 waiver for this item. There is no impact to the General Fund. RECOMMENDATION FOR CITY COUNCIL: 1. ADOPT the determination by the Board of Harbor Commissioners (Board) that the proposed action is categorically exempt from the requirements of the California Environmental Quality Act (CEQA) Los Angeles City CEQA Guidelines; in accordance with Article III, Class LL 2. APPROVE Harbor Department Resolution No authorizing proposed First Amendment Permit No. 904A with AltaSea at the Port of Los Angeles; and 3. Return to the Board of Harbor Commissioners for further processing. Respectfully Submitted, AMBER M. KLESGES Commission Secretary cc: Trade, Travel & Tourism Committee Councilman Buscaino Councilman Bonin Councilman Krekorian Mandy Morales, Mayor s Office Erick Martell, Harbor Representative Alvin Newman, CAO Dennis Gleason, CD15 Matthew Shade, CLA AN EQUAL EMPLOYMENT OPPORTUNITY - AFFIRMATIVE ACTION EMPLOYER Tuesday - November 20, Printed on recycled paper PAGE 17

18 RECOMMENDATION APPROVED; RESOLUTION (LEASE 904A) ADOPTED BY THE BOARD OF HARBOR COMMISSIONERS A. LA THE PORT October 18, 2018 OF LOS ANGELES Executive Director's Report to the Board of Harbor Commissioners AMBER M. KLESG Board Secretary DATE: OCTOBER 10, 2018 FROM: WATERFRONT & COMMERCIAL REAL ESTATE SUBJECT: RESOLUTION NO.t8 APPROVE FIRST AMENDMENT TO THE AMENDED AND RESTATED LEASE NO. 904A WITH ALTASEA AT THE PORT OF LOS ANGELES SUMMARY: Staff requests approval of the First Amendment to the Amended and Restated Lease No. 904A (Lease) with AltaSea at the Port of Los Angeles (AltaSea). The premises, located at City Dock No. 1 and consisting of acres, is for water-dependent, academic, and governmental uses, and a non-profit and for-profit marine research facility. AltaSea is a tenant in good standing and has complied with all provisions of the Lease. The proposed First Amendment will waive the required monetary compensation (rent) from AltaSea in the amount of $136,222 for certain portions of the Business Innovation Hub (generally Parcels B58 to B61A and B61C) in consideration of unforeseen and significant delays to secure the necessary electrical power for the site and receive revenues from prospective tenants. The waiver of rent will be effective from the time AltaSea took possession of the subject parcels, September 11,2018, until the end of the Interim Compensation Period, August 22, 2019, when it is anticipated that the electrical power will be secured. RECOMMENDATION: It is recommended that the Board of Harbor Commissioners (Board): 1. Find that the Director of Environmental Management has determined that the proposed action is categorically exempt from the requirements of the California Environmental Quality Act (CEQA) under Article III, Class 1 (14) of the Los Angeles City CEQA Guidelines; 2. Approve the First Amendment to Amended and Restated Lease No. 904A with AltaSea at the Port of Los Angeles; 3. Direct the Board Secretary to transmit the First Amendment to Amended and Restated Lease No. 904A to the City Council for approval pursuant to Section 606 of the City Charter; Tuesday - November 20, PAGE 18

19 DATE: OCTOBER 10, 2018 SUBJECT: PROPOSED FIRST AMENDMENT TO AMENDED AND RESTATED LEASE NO ALTASEA AT THE PORT OF LOS ANGELES PAGE 2 OF 4 4. Authorize the Executive Director to execute and the Board Secretary to attest to the First Amendment to Amended and Restated Lease No. 904A upon approval by City Council; and 5. Adopt Resolution No. DISCUSSION: Acceptance and Possession of Parcels: Under the Lease, AltaSea, at its sole option, may accept parcels from Berth 57.5 to Berth 61A over a period of time during the 12 months following the effective date of the Lease, August 23, 2017, pending satisfaction of certain obligations, conditions, and timelines. As of March 1,2018, AltaSea possessed 2.92 acres within the subject area for which monetary rent has been paid until December 22, AltaSea was required to accept all parcels from Berth 57.5 to Berth 61A by August 23, On August 23, 2018, AltaSea provided the City of Los Angeles Harbor Department (Harbor Department) its notice of acceptance and intent to take possession of 9.39 acres within Parcel B57.5 (slated for the Education Pavilion and Wharf Plaza), the remaining areas not previously taken within Parcels B58 to B60 (Business Innovation Hub), and Parcel B61A (U.S. Water Taxi, Inc./USWT). AltaSea also requested possession of a 12,155-square foot (s.f.) water parcel (subsequently referred to as Parcel B61C), a portion of which is occupied by the existing tenant, USWT. The Executive Director has the authority under the Lease to add Parcel 61C to AltaSea s existing acres. On September 5, 2018, after staff review of the documents submitted, a preliminary letter of determination of compliance was issued, which was to be finalized pending the execution of an amendment adding the 12,155 s.f. water parcel (subsequently identified as Parcel B61C) to the Lease permit premises; termination of the revocable permits of Catalina Sea Ranch, LLC (CSR) and USWT; and AltaSea s concurrence with the enclosed calculation of the rent; and receipt of the prorated Minimum Annual Rent in an amount to be determined after above conditions have been completed. On September 10, 2018, 30-day notices of termination were issued to CSR and USWT. Lack of Sufficient Electrical Capacity and Deficiency in Infrastructure: In a letter dated September 13, 2018, AltaSea informed the Harbor Department of adverse site conditions prior to taking possession of the subject parcels, the most significant of which was the lack of sufficient electrical capacity and infrastructure to support prospective tenants operations, compounded by the numerous delays in receiving the required power from the Los Angeles Department of Water and Power (LADWP). AltaSea also noted the existence of a sinkhole at Parcel B61A. The electrical issue has limited AltaSea s ability to secure land and water-based tenants. AltaSea provided a list of potential tenants and estimated rental income of $500,000 to $700,000 annually not realized as a result of the lack of adequate power to the site. Tuesday - November 20, PAGE 19

20 DATE: OCTOBER 10, 2018 PAGE 3 OF 4 SUBJECT: PROPOSED FIRST AMENDMENT TO AMENDED AND RESTATED LEASE NO ALTASEA AT THE PORT OF LOS ANGELES LADWP Delays: AltaSea has pursued meet and confer discussions with staff regarding the LADWP power issue. Staff has generally been aware of the ongoing issue that AltaSea has experienced with securing a power solution with LADWP. AltaSea s original plan assumed power would be available by June 2018 and that LADWP could use the existing service to provide interim power to Warehouse 58 and adjacent wharf areas. AltaSea planned to move tenants into Warehouse 58 in June 2018 after electrical service was made available to offset a large portion of existing operating expenses. According to AltaSea, they were notified in August 2017 that their proposed electrical plan could not be achieved. An agreeable solution was reached in May 2018 and currently, the plans are expected to be approved by LADWP within 30 days. If there are no further delays, AltaSea will have an interim power solution installed at Warehouse 58 between May and July of 2019, a 12-month delay from the expected date of completion. Monetary Compensation/Rent: Rent during the first two years of the Lease (August 23, 2017 to August 22, 2019) is established at the rate of $.42/s.f. for land and $. 10/s.f. for water areas so long as non-monetary compensation in the form of service and public benefit has also been provided, pursuant to Exhibit F of the Lease. AltaSea has complied with all non-monetary compensation provisions of the Lease, as depicted in their latest annual report from calendar year According to AltaSea, the loss of approximately $500,000 to $700,000 annually in potential revenue from rental income significantly constrains their annual budget. Rental costs to the Harbor Department of $14,262 per month would further burden this situation until potential tenants can be accommodated. Staff recommends waiving rent in the amount of $136,222 from September 11, 2018 to August 22, 2019 due to the unforeseen and prolonged delays in receiving adequate power to the premises. ENVIRONMENTAL ASSESSMENT: The proposed action is an amendment to an agreement to waive rent for certain AltaSea parcels for an interim period, which is an administrative activity with no expansion of use. Therefore, the Director of Environmental Management has determined that the proposed action is administratively and categorically exempt from the requirements of CEQA in accordance with Article III, Class 1 (14) of the Los Angeles City CEQA Guidelines. FINANCIAL IMPACT: If approved, the First Amendment will waive $136,222 in required monetary compensation from AltaSea over the period from September 11, 2018 through August 22, Tuesday - November 20, PAGE 20

21 DATE: OCTOBER 10, 2018 PAGE 4 OF 4 SUBJECT: PROPOSED FIRST AMENDMENT TO AMENDED AND RESTATED LEASE NO ALTASEA AT THE PORT OF LOS ANGELES CITY ATTORNEY: The Office of the City Attorney has reviewed and approved the First Amendment to the Amended and Restated Lease No. 904 as to form and legality. TRANSMITTALS: 1. Site Map 2. First Amendment FIS Approval: CA Approval: _ MICHAEL: J. GALVIN Directar/of Waterfront & Commercial Real Estate /tyici MICHAEL DiBERNARDO Deputy Executive Director APPROVED: EUGENE D. SEROKA Executive Director FofL ES:MD:MG:RV:raw Author: Rica Viola BL756raw AltaSea First Amend 904A Tuesday - November 20, PAGE 21

22 % A - - y. * SCALE 1: 57,282 3 Projection: W GS_1984_W eb_mercator_auxiliary_sphere }r m - November 20, *. < X r ^1 - i f.3 4 9,547.0 Feet 4' 'V r j fwm r. - rr k N.* _L- V.. : v A z 'X l V 213 ' m PAGE 22 TRANSMITTAL 1 THIS MAP IS NOT TO BE USED FOR NAVIGATION This map is a user generated static output from an Internet mapping site and is for reference only Data layers that appear on this map may or may not be accurate, current, or otherwise reliable * * ' Amended and Restated Lease No AltaSea MV Date Printed: 28 July Tuesday Transmittal OF LOS ANGELES THE PORT Legend 1

23 IA THE PORT OF LOS ANGELES Eric Garcetti Board of Harbor Commissioners Eugene D. Seroka 425 S. Palos Verdes Street Post Office Box 151 San Pedro, CA TEL/TDD 310 SEA-PORT Mayor, City of Los Angeles Jaime L. Lee David Arian Lucia Moreno-Unares Anthony Pirozzl, Jr. Edward R. Renwick President Vice President Commissioner Commissioner Commissioner Executive Director October 29, 2018 Honorable Members of the City Council of the City of Los Angeles CD No. 15 Attention: Mr. John White, City Clerk s Office SUBJECT: RESOLUTION NO PROPOSED SECOND AMENDMENT SUBRECIPIENT AGREEMENT NO B WITH PASHA STEVEDORING & TERMINALS L.P. FOR THE IMPLEMENTATION OF ZERO AND NEAR-ZERO EMISSION TECHNOLOGIES Pursuant to Section 373 of the City Charter and Section 10.5 of the Los Angeles Administrative Code, enclosed for your approval is Resolution No authorizing proposed Second Amendment Agreement No B between the City of Los Angeles Harbor Department and Pasha Stevedoring & Terminals L.P.; which was approved at the September 6, 2018 meeting of the Board of Harbor Commissioners. Proposed Second Amendment Agreement No B will extend the Green Omni Terminal Project by one year, reallocate grant funding, modify project milestones, and modify the disbursement schedule. No additional funds are being requested. There is no impact to the General Fund. RECOMMENDATION FOR CITY COUNCIL: 1. ADOPT the determination by the Board of Harbor Commissioners (Board) that the proposed action is administratively exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with Article II, Section 2(f) of the Los Angeles City CEQA Guidelines; 2. APPROVE Harbor Department Resolution No authorizing proposed Second Amendment Agreement No B between the City of Los Angeles Harbor Department and Pasha Stevedoring & Terminals L.P.; and 3. Return to the Board of Harbor Commissioners for further processing. Respectfully Submitted, AMBER M. KLESGES Commission Secretary cc: Trade, Travel & Tourism Committee Councilman Buscaino Councilman Bonin Councilman Krekorian Mandy Morales, Mayor s Office Erick Martell, Harbor Representative Alvin Newman, CAO Dennis Gleason, CD15 Matthew Shade, CLA AN EQUAL EMPLOYMENT OPPORTUNITY - AFFIRMATIVE ACTION EMPLOYER Tuesday - November 20, Printed on recycled paper PAGE 23

24 RECOMMENDATION APPROVED; RESOLUTION NO ADOPTED; AND AGREEMENTS B & B APPROVED BY THE BOARD OF HARBOR COMMISSIONERS September 6, 2018 AMBER M. KLESGES Board Secretary LA THE PORT OF LOS ANGELES Executive Director's Report to the Board of Harbor Commissioners DATE: AUGUST 28, 2018 FROM: ENVIRONMENTAL MANAGEMENT SUBJECT: RESOLUTION NO. SECOND AMENDMENT TO GRANT AGREEMENT NO WITH THE CALIFORNIA AIR RESOURCES BOARD AND SECOND AMENDMENT TO SUBRECIPIENT AGREEMENT NO WITH PASHA STEVEDORING & TERMINALS L.P. FOR THE IMPLEMENTATION OF ZERO AND NEAR ZERO EMISSION TECHNOLOGIES SUMMARY: Staff requests that the Board of Harbor Commissioners (Board) approve the proposed Second Amendment to Agreement No with the California Air Resources Board (CARB) and the proposed Second Amendment to Subrecipient Agreement No with Pasha Stevedoring & Terminals L.P. (Pasha or Subrecipient) to extend the Green Omni Terminal Project (Project) by one year, reallocate grant funding, modify Project milestones, and modify the disbursement schedule. No additional funds are being requested. RECOMMENDATION: It is recommended that the Board of Harbor Commissioners (Board): 1. Find that the Director of Environmental Management has determined that the proposed action is administratively exempt from the requirements of the California Environmental Quality Act (CEQA) under Article 11 Section 2(f) of the Los Angeles City CEQA Guidelines; 2. Approve the Second Amendment to Grant Agreement No with the California Air Resources Board to add time, change project milestones and the disbursement schedule; 3. Authorize the Executive Director to execute and the Board Secretary to attest to said Second Amendment to Agreement No with the California Air Resources Board for and on behalf of the Board; Tuesday - November 20, PAGE 24

25 DATE: AUGUST 28, 2018 PAGE 2 OF 5 SUBJECT: SECOND AMENDMENTS TO AGREEMENT NO AND SUBRECIPIENT AGREEMENT NO Approve the Second Amendment to Subrecipient Agreement No with Pasha Stevedoring & Terminals L.P. to add time, modify project milestones disbursements schedule, and increase the amount by $88,000 for a total not-toexceed amount of $14,510,400; 5. Direct the Board Secretary to transmit the Second Amendment to Subrecipient Agreement No to the City Council for approval pursuant to Charter Section 373 and Administrative Code Section 10.5; 6. Authorize the Executive Director to execute and the Board Secretary to attest to said Second Amendment to Subrecipient Agreement No with Pasha Stevedoring & Terminals L.P. for and on behalf of the Board upon approval of City Council; and 7. Adopt Resolution No. DISCUSSION: Backqround/Context - On June 23, 2015, CARB released a grant solicitation to implement and administer Multi-Source Facility Demonstration Projects under the Cap and Trade Grant Program. On September 24, 2015, the Harbor Department submitted a grant application to CARB seeking funds under the Cap and Trade Grant Program for the Project. On January 13, 2016, CARB notified the City of Los Angeles Harbor Department (Harbor Department) that the Project was selected and had received a preliminary grant award offer in the amount of $14,510,400. On May 19, 2016, the Board accepted the grant and approved Subrecipient Agreement No with Pasha to implement the Project. In March 2017, the Board approved the first Amendments to these agreements to modify project milestones and modify the disbursements schedule. Green Omni Terminal Project - The Project is designed to test pre-commercial zero and near-zero emission technologies that will encourage the sustainable movement of goods throughout the Southern California region, The Project includes the demonstration of four electric yard tractors, two electric (Class 8) on-road trucks, three electric hi-tonnage forklift retrofits, and an at-berth vessel emissions control system. An additional Project component is the construction of a solar powered microgrid, which will be supported by 2.6-megawatts of backup battery storage intended to provide critical power to the charging units for the plug-in electric equipment as well as terminal systems during a grid power outage. The status of the Project is summarized in Transmittal 1. Tuesday - November 20, PAGE 25

26 DATE: AUGUST 28, 2018 PAGE 3 OF 5 SUBJECT: SECOND AMENDMENTS TO AGREEMENT NO AND SUBRECIPIENT AGREEMENT NO Second Amendments - Staff proposes a Second Amendment to Agreement No (Transmittal 2) and a Second Amendment to Subrecipient Agreement No (Transmittal 3) to extend the term of the Agreements, redistribute $88,000 of grant funding to the Subrecipient, modify the project milestones, and modify the disbursements schedule. The primary driver for the extension of the grant until March 2020 is to allow adequate time for the one-year demonstration of the electric vehicles and ShoreKat emissions treatment system. Delays in equipment fabrication and deployment require a schedule extension. The redistribution of $88,000 of grant funding to the Subrecipient is recommended to cover the purchase of data loggers necessary to analyze the equipment and to cover additional Project management costs that will be incurred due to the 11-month Project extension. In 2016, the Harbor Department intended to retain this funding for unanticipated Project or administrative costs. However, to support additional administrative activities due to the extension of the Project and to help cover unanticipated data logger expenditures, the $88,000 in grant funding will be passed through to the Subrecipient. This is reflected in the Subrecipient Agreement total amount change from $14,422,400 to $14,510,400. The modifications to the Project milestones and disbursements schedule are necessary to move funding from tasks that do not require the funding, to tasks that require more funding to complete. These changes are detailed in the proposed amended scope of work and disbursement schedule. Specifically, funding will be reallocated from the repower of a top handler to the infrastructure construction. Pasha s operations currently do not involve the movement of containers and the electrified top handler would not be used. Instead, a 21-ton forklift will be repowered since it will incur more operating hours and will provide a better demonstration opportunity and greater emissions reductions. The difference in the cost of the two pieces of equipment is $575,255. This funding is proposed to be used to cover unanticipated costs associated with infrastructure construction such as permitting, temporary installation of power to operate a cooling system for the battery storage systems, conversion of foundations from housekeeping pads to spread footings, conversion of above ground conduits to underground, and addition of a new 480-V switchboard. Tuesday - November 20, PAGE 26

27 DATE: AUGUST 28, 2018 PAGE 4 OF 5 SUBJECT: SECOND AMENDMENTS TO AGREEMENT NO AND SUBRECIPIENT AGREEMENT NO ENVIRONMENTAL ASSESSMENT: The proposed action is approval of a Second Amendment to Agreement No with CARB and a Second Amendment to Agreement No with Pasha to extend the term of the agreements, modify the project milestones, and modify the disbursement schedules for the Green Omni Terminal Project, which is an administrative activity. As such, the Director of Environmental Management has determined that the proposed action is exempt from the requirements of CEQA in accordance with Article II Section 2(f) of the Los Angeles City CEQA Guidelines. FINANCIAL IMPACT: The proposed Second Amendment to Grant Agreement No extends the Project term by eleven months, modifies Project milestones and the disbursement schedule. These same changes are incorporated into the Second Amendment to Subrecipient Agreement No as well as increasing the disbursement amount to the subrecipient by $88,000. These funds were initially allocated to the Harbor Department for administrative costs but they will be reallocated to the subrecipient for the purchase of the data loggers and project management costs over the eleven-month Project time extension. The grant award of $14,510,400 remains the same. The Harbor Department is financially responsible for administrative costs to manage the grant agreement which to date is $48,000 in staff time. The Harbor Department has received $9,557,181 in grant funds and distributed them to Pasha. As a pass through grant, funds are drawn from CARB only after the subrecipient has performed work and submitted an invoice to the Harbor Department. CITY ATTORNEY: The Office of the City Attorney has reviewed and approved the two Second Amendments as to form and legality. Tuesday - November 20, PAGE 27

28 DATE: AUGUST 28, 2018 PAGE 5 OF 5 SUBJECT: SECOND AMENDMENTS TO AGREEMENT NO AND SUBRECIPIENT AGREEMENT NO TRANSMITTALS: 1. Project Status 2. Second Amendment to Grant Agreement No Second Amendment to Subrecipient Agreement No FIS Approval: CA Approval: Uh/C CHRISTOPHER CANNON Director of Environmental Management frk. MICHAEL DiBERNARDO Deputy Executive Director APPROVED: EUGENE D. SEROKA Executive Director fop-. CC/yo AUTHOR: T. PISANO FILE: Y:\_ADMIN\_BOARD REPORTS\_AIR QUALIPACARB GRANT APPLICATIONS\2015 MULTISOURCE - AMENDMENT 2\ENV_MULTI-SOURCE GRANT AMENDMENT 2 - FINAL.docx UPDATED: 8/20/2010 1:19 PM - YO Tuesday - November 20, PAGE 28

29 TRANSMITTAL TO DATE COUNCIL FILE NO. Eugene D, Seroka, Executive Director Harbor Department OCT FROM The Mayor COUNCIL DISTRICT 15 PROPOSED SECOND AMENDMENT TO SUBRECIPIENT AGREEMENT NO WITH PASHA STEVEDORING & TERMINALS L.P. FOR THE IMPLEMENTATION OF ZERO AND NEAR-ZERO EMISSION TECHNOLOGIES Transmitted for further p sing and CounpH'eonsideratlon. See the City Adrprfiistrajive Officer r attached. /I/ ' MAtOR Ana Guerrero RHLABN CAO 649-d Tuesday - November 20, PAGE 29

30 REPORT FROM OFFICE OF THE CITY ADMINISTRATIVE OFFICER Date: October 24, 2018 To: The Mayor ( CAO File No Council File No. Council District: 15 From: Richard H. Llewellyn, Jr., City Administrative leer Reference: Subject: Correspondence form the Harbor Department dated September 12, 2018; referred by the Mayor for report date September 13, 2018 PROPOSED SECOND AMENDMENT TO SUBRECIPIENT AGREEMENT NO WITH PASHA STEVEDORING & TERMINALS L.P. FOR THE IMPLEMENTATION OF ZERO AND NEAR-ZERO EMISSION TECHNOLOGIES RECOMMENDATIONS That the Mayor: 1. Approve Harbor Department (Port) Resolution No authorizing proposed Second Amendments to Subrecipient Agreement No with Pasha Stevedoring & Terminal L.P. for the implementation of zero and near-zero emission technologies: and, 2. Return the document to the Port for further processing, including Council consideration. SUMMARY The Harbor Department (Port) Board of Harbor Commissioners (Board) requests approval of Resolution No authorizing the proposed Second Amendments (Amendment) to Subrecipient Agreement No with Pasha Stevedoring & Terminal L.P. (Pasha/Subrecipient) to implement a zero and near-zero emission technologies project. In addition, the Board approved a Second Amendment to Agreement No with the California Air Resources Board (CARB) for a competitively-bid grant award of $14.5 million to the Port to implement the emission project. In 2016, Pasha and the Port of Los Angeles (POLA) initiated the Green Omni Terminal Demonstration Project (Project), with a full-scale, demonstration of zero and near-zero emission technologies at a working marine terminal, with the projected goal to reduce and eliminate pollution from port-related operations. Pasha operates two marine terminals at the POLA, including the Project site. i Pursuant to the grant award agreement, the Board has the authority to execute the Amendment with CARB, but Council approval is required for the Second Amendment with Pasha pursuant to Charter Section 373 and Administrative Code Section Tuesday - November 20, PAGE 30

31 CAO File No PAGE 2 BACKGROUND In 2016, the Port received notification from the CARB for receipt of a grant award, from a competitive bid grant application submitted in 2015, to implement and administer a multi-source Demonstration Project. The Project was funded in part by the $14.5 million grant from the CARB for reducing greenhouse gases and pollutants. The grant required matching funds of at least 25 percent. The Port states that Pasha, the Port and other partners have exceeded the matching funds threshold. The Port received a preliminary grant award of $14,510,400 and approved an Agreement with Pasha to implement the Project. According to the Port, Pasha committed approximately $11.4 million in cash and in-kind participation. Pasha and the Port could have one of the first marine terminal able to generate its energy needs mostly from renewable sources. Pasha operates terminals in the POLA and throughout the world. Pasha serves the maritime transportation, automotive, and relocation industries, including shippers and trucking companies and consignees. In addition, Pasha provides cargo-handling, container loading and unloading (stevedoring), railcar loading, and truck/vessel delivery services. PROPOSED SECOND AMENDMENT The proposed Amendment will do the following: Extend the Project by approximately 11 months (contract began in June 2016), to June 2020; Reallocate $88,000 from CARB grant funding of $14,510,400 to Pasha/Subrecipient to cover the purchase of the data loggers to analyze the equipment and cover additional Project costs, (a data logger or recorder is any device that can be used to store data); and, Modify Project milestones and disbursement schedules to move funding from initial tasks that no longer require funding to projected tasks that require more funding for completion. The proposed Amendment will extend the Agreements by approximately 11 months, to June 2020, to allow additional time for the one-year demonstration of the electric vehicles and emission treatment systems. The Port s request to reallocate $88,000 from the allocated grant funding to Pasha is to cover the purchase of data loggers necessary to analyze equipment and cover additional Project costs incurred during the 11-month contract extension. The reallocated amount is from the funding retained by the Port for unanticipated Project and administrative costs. The grant compensation of $14,510,400 will remain the same. The POLA, Pasha, CARB, and other partners are collaborating through the Project to demonstrate how developing and increasing clean energy solutions can reduce and eliminate pollutions from port-related operations. The Port states that the Project is designed to test pre-commercial zero and near-zero emission technologies to sustain movement of goods and freight throughout regions outside of POLA. The Project includes electric operated yard tractors, on-road trucks, hi-tonnage forklifts, an emissions control system, and solar powered micro-grid (solar panels). Tuesday - November 20, PAGE 31

32 CAO File No. PAGE The Port states that Pasha plans to integrate a fleet of new and retrofitted zero-emission electric vehicles and cargo-handling equipment into its terminal operations and demonstrate the latest zero and near-zero emission technologies for handling and moving freight and improving air quality. The Project will attempt to achieve greater emission reductions from port-related sources and improve air quality in the neighborhoods near the Port. According to the Port, the Pasha terminal will be able to operate independently off the grid in case of a power loss and features a micro-grid that includes solar generation, battery storage and an energy management system to maximize usage. The Port states that changes to the Project scope of work milestones and disbursements schedule are necessary to move funding from various tasks that do not require a certain level of funding to tasks that require more funding. These changes, as detailed in the proposed amended scope of work and disbursement schedule, include the following: design and construction of infrastructure; administration and project management; vehicle and cargo handling equipment; data collections and analysis; and, other work tasks. The City Attorney has approved the proposed Resolution as to form and legality. The Agreement is in compliance with applicable City ordinances and requirements. In accordance with City Charter Section 1022, the Port states that contractors were more feasibly able to perform the work because of the intermittent or limited nature of the work and expertise required. The proposed action is approval of Amendments with CARB and Pasha to extend the term of the Agreements and amend the project milestones and disbursement schedules for the Project. The Port has determined that the proposed action is exempt from the requirements of California Environmental Quality Act (CEQA) in accordance with Article II, Section 2(f) of the Los Angeles City CEQA Guidelines. FISCAL IMPACT STATEMENT Approval of the proposed Amendment by the Harbor Department (Port) will extend the Agreement with Pasha Stevedoring & Terminal L.P. (Pasha) by approximately 11 months, and modify the scope of work milestones and disbursement schedules for the Green Omni Terminal Demonstration Project. The Amendment will reallocate approximately $88,000 from the Port s administrative portion to the operation budget of Pasha for equipment purchase and project management costs. The grant award of $14,510,400 from the California Air Resources Board will remain the same as the original contract amount. RHLABN: Tuesday - November 20, PAGE 32

33 LA THE PORT OF LOS ANGELES Eric Garcetti Board of Harbor Commissioners Eugene D. Seroka 425 S. Palos Verdes Street Post Office Box 151 San Pedro, CA TEL/TDD 310 SEA-PORT Mayor, City of Los Angeles Jaime L. Lee David Arian Lucia Moreno-Unares Anthony Plrozzi, Jr. Edward R. Renwlck President Vice President Commissioner Commissioner Commissioner Executive Director November 13, 2018 Honorable Members of the City Council of the City of Los Angeles CD No. 15 Attention: Mr. John White, City Clerk s Office SUBJECT: PROPOSED FOREIGN-TRADE ZONE GENERAL RESOLUTION NO PURPOSE OPERATING AGREEMENT BETWEEN THE CITY OF LOS ANGELES HARBOR DEPARTMENT AND BEE IMAGINE LLC, FTZ 202 SITE 54 Pursuant to Section 373 of the City Charter and Section 10.5 of the Los Angeles Administrative Code, enclosed for your approval is Resolution No authorizing proposed Agreement No between the City of Los Angeles Harbor Department and Bee Imagine LLC; which was approved at the October 4, 2018 meeting of the Board of Harbor Commissioners. The proposed Agreement will allow Bee Imagine to operate its warehouses within FTZ 202 Site 54, located at 4832 and 4910 Azusa Canyon Road, Irwindale, California Site 54 consists of office space and two warehouses totaling approximately 122,735 square feet on 2.82 acres located approximately 40 miles from the Port of Los Angeles. Bee Imagine will be operating its warehouses under FTZ procedures as a multi-usage site for a term of five years with three, five-year renewal options. If approved, the Harbor Department will receive $7,750 annually from Bee Imagine. There is no impact to the General Fund. RECOMMENDATION FOR CITY COUNCIL: 1. ADOPT the determination by the Board of Harbor Commissioners (Board) that the proposed action is administratively exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with Article II, Section 2(f) of the Los Angeles City CEQA Guidelines; 2. APPROVE Harbor Department Resolution No authorizing proposed Agreement No between the City of Los Angeles Harbor Department and Bee Imagine LLC; and 3. Return to the Board of Harbor Commissioners for further processing. Respectfully Submitted, AMBER M. KLESQf S Commission Secretary cc: Trade, Travel & Tourism Committee Councilman Buscaino Councilman Bonin Councilman Krekorian Mandy Morales, Mayor's Office Erick Martell, Harbor Representative Alvin Newman, CAO Dennis Gleason, CD15 Matthew Shade, CLA AN EQUAL EMPLOYMENT OPPORTUNITY - AFFIRMATIVE ACTION EMPLOYER Tuesday - November 20, Printed on recycled poper PAGE 33

34 RECOMMENDATION APPROVED; RESOLUTION NO ADOPTED; AND AGREEMENT APPROVED BY THE BOARD OF HARBOR COMMISSIONERS 0]i \0 October 4, 2018 AMBER M. KLESatS Board Secretary LA THE PORT OF LOS ANGELES Executive Director's Report to the Board of Harbor Commissioners DATE: SEPTEMBER 19, 2018 FROM: CARGO MARKETING SUBJECT: RESOLUTION NO. \ ft - APPROVAL OF FOREIGN-TRADE ZONE GENERAL PURPOSE OPERATING AGREEMENT BETWEEN THE CITY OF LOS ANGELES HARBOR DEPARTMENT AND BEE IMAGINE LLC, FTZ 202 SITE 54 SUMMARY: Staff requests approval of the Foreign-Trade Zone (FTZ) Operating Agreement between the City of Los Angeles Harbor Department (Harbor Department) and Bee Imagine LLC, (Bee Imagine) to operate its warehouses within FTZ 202 Site 54, located at 4832 and 4910 Azusa Canyon Road, Irwindale, California On August 1, 2018, the FTZ Board approved a minor boundary modification of FTZ 202 under the alternative framework to establish a usage-driven Site 54 for the use of Bee Imagine. The Harbor Department, as the FTZ grantee, establishes General Purpose Operating Agreements with FTZ site operators to oversee their FTZ operations. Site 54 consists of office space and two warehouses totaling approximately 122,735 square feet on 2.82 acres located approximately 40 miles from the Port of Los Angeles. Bee Imagine will be operating its warehouses under FTZ procedures as a multi-usage site. The proposed FTZ Operating Agreement (Agreement) is for a term of five years with three, five-year renewal options. If the proposed Agreement is approved, the Harbor Department will receive $7,750 annually from Bee Imagine (per FTZ Tariff No. 2) RECOMMENDATION: It is recommended that the Board of Harbor Commissioners (Board): 1. Find that the Director of Environmental Management has determined that the proposed action is administratively exempt from the requirements of the California Environmental Quality Act (CEQA) under Article II Section 2(f) of the Los Angeles City CEQA Guidelines; 2. Approve the proposed Foreign-Trade Zone Operating Agreement between the City of Los Angeles Harbor Department and Bee Imagine, LLC; Tuesday - November 20, PAGE 34

35 DATE: SEPTEMBER 19, 2018 PAGE 2 OF 4 SUBJECT: FOREIGN-TRADE ZONE GENERAL PURPOSE OPERATING AGREEMENT WITH BEE IMAGINE LLC. FTZ 202, SITE Direct the Board Secretary to transmit the proposed Foreign-Trade Zone Operating Agreement to the Los Angeles City Council for approval pursuant to Section 373 of the Charter of the City of Los Angeles and Section 10.5 of the Los Angeles Administrative Code; 4. Authorize the Executive Director to execute and the Board Secretary to attest to the proposed Foreign-Trade Zone Operating Agreement; and 5. Adopt Resolution No. DISCUSSION: Background and Context - The FTZ Act of 1934, as amended (19 U.S.C. 81a-81u), was established to support U.S. commerce and create jobs by reducing import duties or excise taxes by deferring payment of duties, thereby making it attractive for companies to perform some work on their products in the U.S. rather than offshore. The definition of an FTZ is a restricted access site located in the U.S. Customs and Border Protection territories. The importer may defer payment of duties and other fees until the merchandise is brought into the U.S. for consumption. Need for Agreement - The Harbor Department, as the grantee, is required by the FTZ Board to have an Operating Agreement with FTZ site operators. The term of this proposed FTZ Operating Agreement is five years with three, five-year extensions (Transmittal 1). Bee Imagine is a U.S. company with its head office located in Irwindale, California employing approximately 88 full-time and part-time employees working within the FTZ activated area. Bee Imagine will operate its FTZ warehouses at 4832 and 4910 Azusa Canyon Road, Irwindale, California, FTZ 202 Site 54. These buildings are owned by ILIAKUS, LLC and Rexford Industrial Realty, Inc. These facilities consist of approximately 122,735 square feet of warehouse and office space on 2.82 acres (Transmittal 2) and is within the FTZ 202 service area (Transmittal 3). Bee Imagine shall follow the rules and procedures as outlined in the Department of Homeland Security s FTZ manual, such as providing a secured area within the FTZ. Bee Imagine agrees to keep its warehouses open to support the PierPass Program and shall notify truck drivers, truck brokers, and trucking companies that the trucks serving the container terminals must confine their routes to the designated Wilmington Truck Route. Need for Approval - Bee Imagine is requesting approval from the Harbor Department to execute the proposed FTZ Operating Agreement to operate Site 54 as a multi-usage FTZ warehouse. Bee Imagine plans to provide FTZ warehouse and distribution services to its importer/exporter customers. Tuesday - November 20, PAGE 35

36 DATE: SEPTEMBER 19, 2018 PAGE 3 OF 4 SUBJECT: FOREIGN-TRADE ZONE GENERAL PURPOSE OPERATING AGREEMENT WITH BEE IMAGINE LLC. FTZ 202, SITE 54 If Bee Imagine does not obtain approval as an operator with FTZ status from the Harbor Department, they potentially have the choice of going to another FTZ in California such as Long Beach, San Diego, Palmdale, etc., or even going out of state. Since FTZ facilities exist in every state, a company can potentially shift its employees to work elsewhere as a result of seeking FTZ status in another location. ENVIRONMENTAL ASSESSMENT: The proposed action is approval of a proposed FTZ Operating Agreement with Bee Imagine, to operate its site within the FTZ 202 service area at Site 54, located in Irwindale, California, which is an administrative activity. Therefore, the Director of Environmental Management has determined that the proposed action is administratively exempt from the requirements of the CEQA in accordance with Article II Section 2(f) of the Los Angeles City CEQA Guidelines. FINANCIAL IMPACT: If the proposed Agreement is approved, the Harbor Department will receive $7,750 annually from Bee Imagine (per FTZ Tariff No. 2). Approval of the Operating Agreement is not anticipated to result in additional, incremental FTZ-related consulting service expenses being incurred by the Harbor Department. During Fiscal Year (FY) 2018, unaudited revenues of $344,746 were collected from Harbor Department FTZ operators relative to FY 2018 unaudited expenses of $36,575 incurred by the Harbor Department for FTZ-related consulting services. Tuesday - November 20, PAGE 36

37 DATE: SEPTEMBER 19, 2018 PAGE 4 OF 4 SUBJECT: FOREIGN-TRADE ZONE GENERAL PURPOSE OPERATING AGREEMENT WITH BEE IMAGINE LLC. FTZ 202, SITE 54 CITY ATTORNEY: The Office of the City Attorney has prepared and approved the proposed Agreement as to form and legality. TRANSMITTALS: 1. Proposed FTZ Operating Agreement for Bee Imagine LLC, FTZ 202 Site FTZ 202, Site 54 Map 3. FTZ 202, Service Area Map FIS Approval: CA Approval: ft it c*. <- ERIC CARTS-* Director of Cargo Marketing MICHAEL DiBERNARDO Deputy Executive Director APPROVED: r EoGENE d. seroka Executive Director ES:MD:EC:ms Author: Masa Morimoto Tuesday - November 20, PAGE 37

38 TRANSMITTAL TO DATE COUNCIL FILE NO. Eugene D. Serofca, Executive Director Harbor Department 11/13/18 FROM The Mayor COUNCIL DISTRICT 15 PROPOSED FOREIGN TRADE ZONE OPERATING AGREEMENT NO. 1B-3604 WITH BEE IMAGINE LLC, FTZ NO. 202, SITE NO. 54 RHLrABN:t0190t>4n CAO 049-<i Transmitted tor further processing and Council consideration. See the City Administrative Officer rennrt attached. 7/ r, MAYOR ^Ana Guerrero) for V Tuesday - November 20, PAGE 38

39 REPORT from OFFICE OF THE CITY ADMINISTRATIVE OFFICER Date: October 25, To: The Mayor CAO File No. Council File No. Council District: 15 From: Reference: Subject: Richard H. Llewellyn, Jr., Interim City Administrative Officer Correspondence from the Harbor Department dated October 10, 2018; referred by the Mayor for report dated October 15, 2018 PROPOSED FOREIGN TRADE ZONE OPERATING AGREEMENT NO WITH BEE IMAGINE LLC, FTZ NO. 202, SITE NO. 54 RECOMMENDATIONS 1. Approve the Harbor Department (Port) Resolution No authorizing a proposed Foreign Trade Zone (FTZ) Operating Agreement No with Bee Imagine LLC, in FTZ No. 202, Site No. 54 in the City of Irwindale, California, for an initial term of five years, with three subsequent five-year renewal options, for a contract term up to a total of 20 years; and, 2. Return the document to the Port for further processing, including Council consideration. SUMMARY The Harbor Department (Port) Board of Harbor Commissioners (Board) requests approval of Resolution No authorizing a proposed Foreign Trade Zone (FTZ) Operating Agreement No (Agreement) with Bee Imagine LLC (Bee Imagine), in FTZ No. 202, Site No. 54. Bee Imagine is located at 4832 and 4910 Azusa Canyon Road, in the City of Irwindale, approximately 40 miles from the Port of Los Angeles (POLA). The proposed Agreement with Bee Imagine is for an initial term of five years, with three subsequent five-year renewal options, contingent upon Board approval, for a total contract term of 20 years. Bee Imagine plans to activate, operate and manage its FTZ warehouse facilities and operations as a multi-usage FTZ warehousing site. A multi-usage FTZ site provides services to the general public. The Port, as the FTZ grantee, establishes Agreements with FTZ site owners to oversee their operations. The Port states that Bee Imagine is a United States (U.S.) company with its headquarters located in the City of Irwindale. The Bee Imagine FTZ site includes approximately 122,735 square feet of office and warehouse facility spaces on approximately 2.82 acres of land. Bee Imagine employs 88 full-time and part-time employees within the FTZ activated area. Bee Imagine will provide FTZ warehouse and distribution services to its importer and exporter customers. Tuesday - November 20, PAGE 39

40 CAO File No PAGE 2 The Port states that Bee Imagine has committed to use the Pier Pass program, which reduces daytime truck traffic operations and allows open operations in the evenings. Bee Imagine will notify truck drivers, brokers and companies that trucks serving the FTZ site and Port container terminals must confine their routes to the designated Wilmington truck routes. The Federal FTZ Board designated the Port as the Grantee/Administrator of FTZ 202 region for the City of Los Angeles and the surrounding region. All activities are performed in accordance with Federal FTZ procedures. The Port, as the FTZ grantee, establishes General Purpose Agreements with FTZ site owners to oversee FTZ operations. Bee Imagine operates FTZ Site No. 54 under Federal FTZ Operating rules and regulations. The FTZ Agreement requires no direct use of Port funds. See the Attachment for an overview of FTZ policies and guidelines for this Agreement. The proposed Agreement is in compliance with City requirements and has been approved as to form by the City Attorney. Pursuant to Charter Section 373 and the Los Angeles Administrative Code Section 10.5, Council approval is required because the cumulative contract term exceeds three years. The Port has determined that the Amendment is an administrative action and therefore exempt from the requirements of CEQA in accordance with Article II, Class 2(f) of the Los Angeles City CEQA Guidelines. FISCAL IMPACT STATEMENT Bee Imagine has paid the Port a one-time application fee of $5,000. In addition, Bee Imagine will pay an annual administrative fee of $7,750 per year or $38,750 for one five-year contract term, and each subsequent five-year contract term. Bee Imagine will have three additional renewal options, subject to approval by the Board, up to a total 20-year contract term. Total revenue amount may generate up to $160,000, including the $5,000 application fee. In Fiscal Year 2017/2018, the Port incurred expenses of approximately $36,575 for FTZ-related consulting services and collected $344,746 in revenue from Port FTZ operators. The Port provides FTZ sites as a service to its customers to promote international trade and commerce in the region. RHL:ABN: Attachment Tuesday - November 20, PAGE 40

41 CAO File No PAGE 3 ATTACHMENT OVERVIEW OF FOREIGN TRADE ZONES, OPERATING AGREEMENT The Federal FTZ Board designated the Harbor Department (Port) as the Grantee/Administrator of FTZ No. 202 for the City of Los Angeles and the surrounding region. The following is an overview of FTZ policies and guidelines. The FTZ Operating Agreements are entered into with various companies who have applied for FTZ status with the Federal FTZ Board and have been approved by the United States (U.S.) Department of Homeland Security Customs and Border Protection (Customs) to activate a site. Authority is granted by the Federal FTZ Board under the amended FTZ Act of 1934, which is administered through Federal FTZ and Customs Regulations. The FTZ Act was established to support U.S. commerce and create jobs by reducing import duties or excise taxes by deferring payment of duty thereby making it appealing for companies to perform work on their products in the U.S. instead of offshore. The goal of the Port and FTZ program is to stimulate economic growth and development in the U.S., facilitate efficient cargo transit and support the local, State and national economy. An FTZ is a secure area located in or near the port of entry for Customs, but legally considered to be outside the Customs territory for the purpose of tariff laws and Customs entry procedures. It is the U.S. version of what are known internationally as free-trade zones. An FTZ is sponsored by qualified public or private companies, which may operate the facilities themselves or contract for the operation with public or private firms. The operations are conducted on a public use basis, which opens its services to the public, with published tariff rates. In this case, the published rates applicable are the Port Tariff (No. 1) rates, terms and conditions. These spaces and operations will be under the supervision of the Federal FTZ Board and Customs and will be required to operate within U.S. law. The Port FTZ No. 202 is a multi-zone FTZ currently operating 23 sites with 15 contracted FTZ general purpose operators and five Subzone operators. The sites include facilities in the Port area, Los Angeles International Airport, nearby industrial parks and other outlying locations. The FTZ does not generate a profit for the Port, but is provided as a service to its customers to promote international trade in the U.S. These operations will be monitored by the Port, but under the supervision of the Federal FTZ Board and Customs and required to operate within U.S. law. The FTZ Operator is normally required to pay a one-time application fee of $5,000 and an annual administrative operating fee of $7,750 per year for an initial term of five years, with three subsequent five-year renewal options, in the same amount, for a contract term up to a total of 20 years. The proposed Agreement renewal options will be subject to approval by the Board and based upon terms and conditions negotiated prior to the end of each one-year term. The proposed Agreement with the FTZ Operator will become effective the first of the month following Council approval and will remain in effect for an initial term of five years. Either the Port or FTZ Operator can terminate the proposed Agreement at the end of the each term or by submitting a 180-day prior written notice. Tuesday - November 20, PAGE 41