Port could skirt revised leasing policy for tenant.

The Port of Los Angeles is considering leasing additional acreage to one of its major tenants without offering the property to other operators--a move opposed by City Controller Laura Chick, who has criticized the facility for not putting available space out to bid.

Trans Pacific Container Service Corp. has expressed interest in a 25-year lease that could double the terminal space it now uses. Port officials say they may proceed with the deal after an environmental impact report is complete.

For years, the port had leased terminal space without opening the process to public view through an RFP, or request for proposals. This has raised concerns that qualified parties might not have access to the process and that the port might not be receiving the best deal possible. Those concerns were at the heart of overhauls proposed by Chick in an audit her office released in 2003.

"Right now it's too early to tell if it's going to go out for an RFP," said Arley Baker, the port's spokesman. "By and large, the rationale would be that we have a tenant in place."

TraPac has been operating at Berths 136-147 on a month-to-month basis since its 15-year lease expired on Sept. 30, 2002. If the expansion is granted, its terminal space would increase to 250 acres.

"How dare they remotely even consider awarding any lease without an open competitive process?" said Chick. "Open competition is a step forward. Without competition, it's a step backwards and I'm not going to let them do it."

In June 2003, Chick's office issued an audit of the port in that was critical of a number of its practices, including approving leases in private. Ten months after the release of that audit, the port created a draft land lease policy that said it would use RFPs when space for cargo movement operations becomes available.

While the port has been operating under terms of the draft since April 2004, it included a number of exemptions that would allow it to enter into leases without issuing an RFP.

Among those were sites under a "temporary assignment," property leased for less than five years (including month-to-month leases), property used by governmental agencies or for national security, sites adjacent to a parcel under an existing lease permit, or property where harbor commissioners deem a use to be in the "best interests" of the city based on financial, environmental, security, strategic or competitive factors.

In an April 22, 2004 letter accompanying the draft policy, then-Executive Director Larry Keller told Chick the port would abide by the draft until it was approved by the Board of Harbor Commissioners.

"In the meantime, as property becomes available, the (harbor) department will follow the lease process outlined in the draft policies until final action is taken by the Board of Harbor Commissioners," he wrote.

The "best interests" clause could allow the TraPac deal to be approved.

Chick has said she expected the commission to approve the changes, but Baker said the port staff was still waiting for feedback from the controller's office before sending a final policy proposal to the Board of Harbor Commissioners.

"Whatever is the policy that is adopted by the board, that's what's going to guide the of moving forward with a new lease with TraPac or opening this up to a competitive bid," Baker said.

The controller launched a follow-up audit in November to determine how much the port has changed the way it does business.

Last month, P&O Nedlloyd was awarded the first-ever lease that came as a result of an RFP, a process that started after allegations arose that members of the Hahn administration had exerted pressure on port officials to lease the site to another operator.

Chick again criticized Mayor James Hahn for the lack of action by the Harbor Commission on leasing practices.

Shannon Murphy, a spokeswoman for Hahn, rebuffed claims that Hahn hadn't taken action to force changes in business practices at the port, citing his establishment of a "blue ribbon" panel that is compiling guidelines for future leasing practices.

"Mayor Hahn is certainly for transparency in government and cleaning up the air at the port," said Murphy. "RFPs would help address both these issues."

Environmental impact reports have become an increasingly important part of the leasing process. Port officials expect the final EIR conducted on the TraPac site to be complete by the end of the year, after which there could be a vote to extend and expand its lease.

Frank Pasiano, general manager of the TraPac terminal, did not return calls.

The terminal operator has been interested in renewing its lease since it lapsed in 2002, but delays were caused in part by an October 2002 ruling by a panel in the 2nd District Court of Appeal that halted construction of the China Shipping Holding Co. terminal due to an insufficient EIR.

Port officials later settled the suit by investing an estimated $60 million over five years in mitigation programs.

"Given the recent history of the port and some of the deals in the past, you would think they would want to have an open process," said Julie Masters, the Natural Resources Defense Council's senior project attorney who served as lead counsel in the China Shipping suit.

But Baker said that "the difference between this and (China Shipping's) Berths 206-209 is we already have a tenant there. It's not a vacant property. It's a benefit to us if we have an existing customer that we can keep there."