OFFICIAL ACTION OF THE LOS ANGELES CITY COUNCIL

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1 HOLLY L. WOLCOTT CITY CLERK SHANNON D. HOPPES EXECUTIVE OFFICER When making inquiries relative to this matter, please refer to the Council File No.: City of Los Angeles CALIFORNIA ERIC GARCETTI MAYOR OFFICE OF THE CITY CLERK Council and Public Services Division 200 N. SPRING STREET, ROOM 395 LOS ANGELES, CA GENERAL INFORMATION - (213) FAX: (213) BRIAN E. WALTERS DIVISION CHIEF CLERK.LACITY.ORG January 26, 2018 OFFICIAL ACTION OF THE LOS ANGELES CITY COUNCIL Council File No.: Council Meeting Date: Agenda Item No.: Agenda Description: January 24, CATEGORICAL EXEMPTION and TRADE, TRAVEL, AND TOURISM COMMITTEE REPORT relative to a proposed Foreign Trade Zone General Purpose Operating Agreement with Boardriders, Inc., for the use of office and warehouse space. Council Action: TRADE, TRAVEL, AND TOURISM COMMITTEE REPORT - ADOPTED Council Vote: BOB BLUMENFIELD MIKE BONIN JOE BUSCAINO GILBERT A. CEDILLO MITCHELL ENGLANDER MARQUEECE HARRIS-DAWSON JOSE HUIZAR PAUL KORETZ PAUL KREKORIAN NURY MARTINEZ MITCH O'FARRELL CURREN D. PRICE MONICA RODRIGUEZ DAVID RYU HERB WESSON HOLLY L. WOLCOTT CITY CLERK AN EQUAL EMPLOYMENT OPPORTUNITY - AFFIRMATIVE ACTION EMPLOYER

2 File No CATEGORICAL EXEMPTION and TRADE, TRAVEL, AND TOURISM COMMITTEE REPORT relative to a proposed Foreign Trade Zone (FTZ) General Purpose Operating Agreement with Boardriders, Inc., for the use of office and warehouse space. Recommendations for Council action: 1. ADOPT the determination by the Board of Harbor Commissioners that the proposed action is categorically exempt under the California Environmental Quality Act (CEQA) in accordance with Article III, Class 1(14) of the Los Angeles City CEQA Guidelines. 2. APPROVE the Port Resolution No authorizing a proposed Port of Los Angeles (POLA) Agreement No between the City of Los Angeles Harbor Department and Boardriders, Inc., for the use of 683,200 square feet of office and warehouse space on acres located within FTZ 202, Site 20C, located at Cantu Galleano Ranch, Mira Loma. Fiscal Impact Statement: The City Administrative Officer (CAO) reports that Boardriders has paid the POLA a one-time application fee of $5,000 and an annual fee from the beginning of its FTZ Agreement. Boardriders will pay the POLA an annual administrative fee of $10,000 per year or $50,000 for one five-year contract term, and each subsequent five-year contract term. Boardriders will have three additional renewal options, subject to approval by the Board of Harbor Commissioners, up to a total 20-year contract term. Total revenue amount may generate up to $205,000, including the $5,000 application fee. In 2016, the POLA incurred expenses of approximately $48,606 for outside consultants for all FTZ related consulting services and collected $336,688 in revenue from POLA FTZ operators. The POLA provides FTZ sites as a service to its customers to promote international trade and commerce in the region. Community Impact Statement: None submitted. SUMMARY TIME LIMIT FILE - MARCH 6, 2018 (LAST DAY FOR COUNCIL ACTION - MARCH 6, 2018) In a report to the Mayor dated December 27, 2017, the CAO states that POLA requests approval of a proposed FTZ Operating Agreement with Boardriders, Inc. Boardriders plans to activate, operate and manage its FTZ facilities and operations as a single-usage FTZ warehousing site. According to the CAO, Boardriders will store, receive, re-label, repackage, manage inventory, and distribute consumer products for apparel, accessories, and other merchandise which will be distributed for domestic and international consumption. Boardriders will operate its warehouse under FTZ procedures as a single-usage site within the FTZ service area. On November 16, 2017, the Board of Harbor Commissioners approved POLA s request. The CAO concurs with this action. At its meeting held January 16, 2018, the Trade, Travel, and Tourism Committee recommended that Council approve the proposed FTZ agreement with Boatriders, as recommended by the

3 Board of Harbor Commissioners and the CAO. Respectfully Submitted TRADE, TRAVEL, AND TOURISM COMMITTEE MEMBER VOTE BUSCAINO: BONIN: KREKORI AN: jaw -NOT OFFICIAL UNTIL COUNCIL ACTS-

4 n RECOMMENDATION APPROVED; RESOLUTION NO ADOPTED AND; AGREEMENT NO APPROVED BY THE BOARD OF HARBOR COMMISSIONERS November 16, 2017 AMBER M. KLESGES Board Secretary LA THE PORT OF LOS ANGELES Executive Director's Report to the Board of Harbor Commissioners DATE: NOVEMBER 1,2017 FROM: CARGO MARKETING SUBJECT: RESOLUTION NO. \APPROVAL OF FOREIGN TRADE ZONE GENERAL PURPOSE OPERATING AGREEMENT BETWEEN THE CITY OF LOS ANGELES HARBOR DEPARTMENT AND BOARDRIDERS, INC. FTZ 202, SITE 20C SUMMARY: Staff requests the approval of a Foreign-Trade Zone (FTZ) Operating Agreement between the City of Los Angeles Harbor Department (Harbor Department) and Boardriders, Inc. (Boardriders) to operate its warehouse within FTZ 202, Site 20C, located at Cantu Galleano Ranch, Mira Loma, California The Harbor Department, as the FTZ grantee, establishes General Purpose Operating Agreement with FTZ site operators to oversee their FTZ operations. Site 20C consists of a warehouse totaling approximately 683,200 square feet and office space on acres located approximately 50 miles northeast of the Port of Los Angeles. Boardriders will be operating its warehouse under FTZ procedures as a single usage site. The proposed FTZ Operating Agreement (Agreement) is for a term of five years with three, five-year renewal options, with compensation set at $10,000 annually and a total of $50,000. 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 proposed Foreign-Trade Zone Operating Agreement between the City of Los Angeles Harbor Department and Boardriders, Inc.; 3. 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;

5 DATE: NOVEMBER 1, 2017 PAGE 2 OF 4 SUBJECT: FOR FOREIGN-TRADE ZONE GENERAL PURPOSE OPERATING AGREEMENT WITH BOARDRIDERS, INC. FTZ 202, SITE 20C 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. wgnn, 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 (CBP) 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). Boardriders is a U.S. company with its head office located in Newport Beach, California. At this FTZ warehouse, they are employing approximately 265 full-time and part-time employees working within the FTZ activated area. Boardriders will operate its FTZ warehouse at Cantu Galleano Ranch, Mira Loma, California FTZ 202, Site 20C. This facility approximately 683,200 square feet and office space on acres (Transmittal 2) and is within the FTZ 202 service area (Transmittal 3). Boardriders 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. Boardriders agrees to keep its warehouse 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 - Boardriders is requesting approval from the Harbor Department to execute the proposed agreement to operate Site 20C as a single-usage FTZ warehouse for a term of five years with three, five-year renewal options to operate this site as a FTZ warehouse. Boardriders receives, stores, re-labels, repackages, manages inventory, and distributes for consumer products, apparel, accessories, and other merchandise which will be distributed for U.S. consumption. Occasionally, products are re-exported from this warehouse.

6 DATE: NOVEMBER 1, 2017 PAGE 3 OF 4 SUBJECT: FOR FOREIGN-TRADE ZONE GENERAL PURPOSE OPERATING AGREEMENT WITH BOARDRIDERS, INC. FTZ 202, SITE 20C If a company 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. Harbor Department Fiscal Requirements -This proposed Agreement will not require funding by the Harbor Department. Boardriders will pay an annual fee of $10,000 to the Harbor Department for the term of the proposed Agreement. ENVIRONMENTAL ASSESSMENT: The proposed action is approval of a proposed FTZ Operating Agreement with Boardriders, to operate its site within the FTZ 202 service area at Site 20C, located in Mira Loma, California which an activity is involving the issuance of a permit to use an existing facility involving negligible or no expansion of use. Therefore, the Director of Environmental Management has determined that the proposed action is categorically exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with Article III Class 1 (14) of the Los Angeles City CEQA Guidelines. FINANCIAL IMPACT: If the proposed five-year Agreement with three five-year renewal options is approved, the Harbor Department will receive $10,000 annually from Boardriders per FTZ Tariff No. 2. Although there is no direct cost to the Harbor Department arising from this proposed Board action, the Harbor Department does incur FTZ related expenses. During calendar year 2016, approximately $48, was spent on outside FTZ related consulting services, while $336,688 in revenue was collected from the Harbor Department FTZ operators. CITY ATTORNEY: The Office of the City Attorney has prepared and approved the proposed Agreement as to form and legality.

7 DATE: NOVEMBER 1,2017 PAGE 4 OF 4 SUBJECT: FOR FOREIGN-TRADE ZONE GENERAL PURPOSE OPERATING AGREEMENT WITH BOARDRIDERS, INC. FTZ 202, SITE 20C TRANSMITTALS: 1. Proposed FTZ Operating Agreement for Boardriders, Inc. FTZ 202, Site 20C 2. FTZ 202, Site 20C Map 3. FTZ 202, Service Area Map FIS Approval: /l)b (initials) CA Approval: ^ZWinitialsj ERIC CAR IS Director of Cargo Marketing MICHAEL DiBERNARDO Deputy Executive Director APPROVED: f OfL EUGENE D. SEROKA Executive Director