City, County Pension Funds Avoid Hit in Energy Stocks.

WHILE they might be increasingly nervous about the impact of the state's energy crisis, L.A. city and county officials are breathing a sigh of relief on one front. Unlike some of their colleagues in Orange and Riverside counties, city and county investment and pension funds are not heavily exposed to the stocks and bonds of the struggling utilities Southern California Edison and Pacific Gas & Electric.

In Orange County, where former Treasurer Robert Citron plunged the county into bankruptcy six years ago with bad investments that resulted in a $1.6 billion loss, current Treasurer John Moorlach has been called on the carpet for buying $40 million in bonds issued by Edison International last fall. The bonds are now part of that county's $1.3 billion schools portfolio. Half of the investment matures this week and the other $20 million matures on July 18; however, it is far from certain that Edison will pay Orange County back in part or even at all.

For their $1.9 billion investment pool, Riverside County officials bought $39.7 million in Pacific Gas & Electric bonds that matured on Jan. 17. PG&E failed to pay either the principal or interest, prompting credit-rating agency Fitch to downgrade the county's rating from "AAA" to "AA."

But the situation is far different in L.A., where the investment and pension pools are much larger but the investments in Edison and PG&E much smaller. For example, Los Angeles County's huge $30 billion pension fund has only $4.2 million worth of Edison and PG&E stock, representing less than 0.02 percent of the fund. Even if the share values for both companies went to zero, the loss would not even make a dent in the fund's annual earnings.

"We are primarily passive investors, meaning that we invest in index funds," said Chief Investing Officer Ken Shaffer. "That $4.2 million represents our share of Edison and PG&E stocks in our index fund, which by the way was selected not by us but by our fund manager, Barclay's Global."

The $11.5 billion county investment pool, unlike its counterparts in Orange and Riverside counties, has no investments in either Edison or PG&E.

"We're happy to say that we have no money invested in either utility," said county Treasurer spokeswoman Debbie Lindholm.

The City of L.A. -- which has had plenty of opportunity to gloat as its municipal utility, the Department of Water & Power, has energy to spare -- is in similarly good shape on the investment front.

For example, the $12 billion L.A. Police and Fire Pension System portfolio has less than $2 million in total investments in Edison and PG&E, all through its index fund, according to investment officer Tom Lopez.

And the city's $7.7 billion retirement portfolio has less than $1 million in total exposure to Edison -- about $520,000 in Edison bonds and less in Edison stock through its index fund. No figures were immediately available for the portfolio's exposure to PG&E, but a spokesman said it is smaller than the Edison investment.

"Yes, we are feeling pretty lucky," said chief investment officer Dan Gallagher. "We didn't take any huge bets on either of the utilities, even though there was absolutely no reason for anyone to think a year or even six months ago that anything was going to happen to them."

Port Tussle

Another battle is brewing between the ports of Los Angeles and Long Beach. It's not over precious cargo, but rather over which city will lay claim to the regional headquarters of the U.S. Customs Service. Caught in the middle is Republican U.S. Congressman Steve Horn, whose district includes the port area.

Right now, the Customs Service headquarters, which employs about 300 people, is located on Terminal Island. The site technically falls under the jurisdiction of Los Angeles, and is less than a mile from the Long Beach-controlled portion of the island. But the 35-year-old building sits a couple hundred yards from a huge petroleum coke terminal, and for years employees have complained about health impacts from the coke dust. Last month, several employees filed suit against the operators of the coke terminal and the ports of Los Angeles and Long Beach, alleging violation of environmental standards.

In response to those complaints, the local Customs Commissioner last August requested that the federal General Services Administration find another site for the approximately 300 Customs employees.

Enter the cities of Los Angeles and Long Beach. Los Angeles is trying to keep the Customs office as a tenant by putting forward a site in the Beacon Street Redevelopment Project Area in San Pedro, just west of the Port of Los Angeles. Long Beach has offered two sites: the World Trade Center, which currently is home to a small U.S. Customs field office; and Shoreline Square, on Ocean Boulevard next to the Convention Center.

Both cities have mounted a full-court press. In L.A., termed-out City Councilman Rudy Svorinich is leading the charge. "We're offering lower rent," Svorinich said.

Earlier this month, Svorinich sent a letter to Horn asking him to encourage the GSA to consider the San Pedro site.

Not to be outdone, Long Beach officials have also contacted Horn's office requesting his assistance.

"We have great amenities and a trade community already here," said Seyed Jalali, development project manager for Long Beach's Economic Development Bureau.

But Horn, understandably unwilling to come down on one side or the other, chose to sidestep the issue completely and referred the cities directly to the General Services Administration.

"The Congressman has absolutely no role in this process," a spokeswoman for Horn said, "The GSA has a competitive bidding process and that process is going forward."

The GSA is expected to pick a site next month.