ORDER NO. 6825 ADOPTED BY THE BOARD OF HARBOR …clkrep.lacity.org/onlinedocs/2001/01-0723_rpt_pola_6-3-05.pdf · 6/3/2005 · AUDREY YAMAKI Commission Secretary Commerce, Energy

425 S. Palos Verdes Street

Post Office Box 1 51

San Pedro, CA 90733·0151

TelfTDD 310 SEA·PORT

1/'N/W.portoflosangeles.org

James K. Hahn, Mayor City of Los Angeles

Board of Harbor Commissioners

Nicholas G. Tonsich, President

Elwood Lui, Vice President

James E. Acevedo

Camilla T. Kocol

Thomas H. Warren

Bruce E. Seaton Interim Executive Director

An Affirmative Action/ Equal Opportunity Employer

June 3, 2005

Honorable Members of the City Council of the City of Los Angeles CD No. 15

SUBJECT: FIRST AMENDMENT TO PERMIT 999 WITH CHINA SHIPPING HOLDING COMPANY, LTD., BERTHS 100-102, SAN PEDRO

Transmitted herewith, pursuant to Charter Section 606 and, if applicable, Charter Section 607(a) requiring a 2/3 vote of the City Council, is a copy of Order No. 6825, which was adopted by the Board of Harbor Commissioners at its meeting held Wednesday, May 25, 2005. RECOMMENDATION: The City Council approve Board of Harbor Commissioners Order No. 6825, approving and authoring the proposed First Amendment to Permit 999, between the City of Los Angeles and China Shipping Holding Company, and return to the Board of Harbor Commissioners for further processing. ENVIRONMENTAL REVIEW: The activities at Berth 97-109 are governed by a California Superior Court Stipulated Judgment, Modification of Stay and Order that includes terms of a Settlement Agreement. The Settlement Agreement includes specific requirements that would allow the Port of Los Angeles to construct and operate Phase I of the Berths 100-102 Terminal Improvements while an Environmental Impact Report (EIR) is prepared for China Shipping Phase II, III, and I. The proposed Amendment provides the framework for settlement of China Shipping's claim for damages as a result of project delays and settlement requirements, and does not modify the physical premises or uses under the original Permit No. 999. In accordance with the Settlement Agreement, the Board of Harbor Commissioners would also need to reconsider Permit No. 999 at the time the proposed First Amendment to Permit No. 999 with China Shipping amends an existing entitlement without an expansion of use, and is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with Article III, Class I (18) of the Los Angeles City CEQA Guidelines. FINANCIAL IMPACT: The First Amendment will provide various credits to China Shipping to be applied against the MAG or TEU Charges, including a $12,224,583.33 credit applied during fiscal year 2005/06 and various credits amounting up to $7,050,000 if certain acreage or wharf improvements are not delivered from 24-48 months following approval of the environmental impact report for the project. The credits are made available as part of the claim settlement and allow the Port to lease the facility on a long-term basis. The settlement was negotiated based on China Shipping's claim for damages, which China Shipping maintains were in excess of the settlement amount.

On March 21, 2001, a CFO Analysis was prepared for Permit 999 and reflected a Minimum Annual Guarantee Rate of Return (IRR) and Most Likely IRR equaling 7.3% and 10.6%, respectively. When the settlement amounts are incorporated into the analysis, the Minimum Annual Guarantee IRR and Most Likely IRR is reduced to 5.4% and 8.3%, respectively. We do not anticipate the $7,050,000 in various credits will be provided to the Tenant and were not included in the analysis. If these various credits were provided to the Tenant, the rates of return would be further reduced.

cc:

Respectfully submitted,

~p.~ AUDREY YAMAKI Commission Secretary

Commerce, Energy & Natural Resources Committee Councilman Cardenas, encs. Councilwoman Hahn, encs. Councilwoman Miscikowski, encs. Adam R. Lid, City Clerk's office, encs.

u:j Recycled and Recyclable 16&

RECOMMENDATION APPROVED --ORDER NO. 6825 ADOPTED

BY THE BOARD OF HARBOR COMMISSIONERS

DATE: May 19,2005

Executive Director's Report to the

Board of Harbor Commissioners

SUBJECT: FIRST AMENDMENT TO PERMIT 999 WITH CIDNA SHIPPING HOLDING COMPANY, LTD., BERTHS 100-102, SAN PEDRO

SUMMARY:

The proposed First Amendment to Permit No. 999 with China Shipping Holding Company, Ltd. (China Shipping) provides the framework for settlement of China Shipping's claim for damages against the City of Los Angeles (City). China Shipping's alleged loss stemmed from courtordered delays of its Berth 100 terminal construction that precluded the on-time start of its operations there and from the imposition of additional operational costs required by a prior settlement of litigation concerning the terminal. Under the amendment China Shipping will resume terminal operations under Permit No. 999, as amended.

RECOMMENDATION:

It is recommended that the Board of Harbor Commissioners:

1. Adopt the Order authorizing the execution of the proposed First Amendment based on the following terms and conditions:

Premises:

Uses:

Effective date:

Settlement credit:

No change to premises granted under Permit No. 999

No change to uses granted under Permit No. 999

The proposed First Amendment shall be effective as of the date it is approved by the City Council following the process set forth in Section 606 and if applicable, Section 607 (a) of the Los Angeles City Charter.

Grants credit against MAG and TEU charges not to exceed $12,224,583.33 to compensate China Shipping for losses due to the following:

Delays in China Shipping's access to utilize premises at Berths 100-102;

Certain environmental mitigation impacts to China Shipping related to the Amended Stipulated Judgment resulting from the Los

DATE: May 19,2005 Page 2 of6


Angeles Superior Court Case filed by the Natural Resources Defense Council, Inc., et al (NRDC), against City; and

problems associated with installation of the four existing cranes at Berth 100.

Additional terms and conditions:

Incorporates Exhibit "B" of the Amended Stipulated Judgment into and makes it a part of Permit No. 999, attached as Exhibit "A" to the proposed First Amendment.

Amended terms and conditions:

Amends certain deadlines for providing premises at Berths 100-102 to China Shipping

An amended rate schedule attached to the proposed First Amendment as Exhibit "B" replaces the original rate schedule attached to Permit No. 999 as Permit Exhibit "B".

A revised Engineering Drawing is attached to the proposed First Amendment as Exhibit "C" that replaces Exhibits "A" and "A-1" to Permit No. 999.

Nonexclusive Berth Assignment 77-81 superseded

The proposed First Amendment provides that Permit No. 999 supersedes Nonexclusive Berth Assignment 77-81.

2. Direct the Board Secretary to transmit the Order and proposed First Amendment to the City Council for approval pursuant to Charter Section 606 and, if applicable, Charter 607(a) requiring a 2/3 vote of the City Council; and

3. Authorize the Executive Director to execute and the Board Secretary to attest to the First Amendment, upon Board approval, contingent upon approval by the City Council.

PREVIOUS BOARD ACTIONS:

1. At its meeting of March 28, 2001, the Board of Harbor Commissioners adopted Order No. 6722, thereby approving Permit No. 999 with China Shipping. The permit grants China Shipping use of premises at Berths 97-109 for operation of a container terminal facility for a term of twenty-five years with three five-year options to extend, exercisable by China Shipping. Permit No. 999 was approved by the City Council on May 8, 2001, but was



subsequently put on hold due to court action. An Amended Stipulated Judgment (Judgment) to the court action allowed China Shipping to resume activity inclusive of the requirements of the Judgment. A nonexclusive Berth Assignment was chosen as an interim agreement between the parties until settlement of a claim for damages made against the City by China Shipping could be reached and Permit No. 999 could be amended to include the additional requirements of the Judgment and settlement terms.

2. At its meeting of May 13, 2004, the Board approved Berth Assignment No. 77-81 to China Shipping at Berth 100 for nonexclusive use of premises at Berth 100 commencing June 1, 2004, and terminating on the commencement of use of Berth 100 pursuant to Permit No. 999.

DISCUSSION:

1. Permit No. 999 was approved in 2001 as a project to construct and lease to China Shipping a three-phase container terminal at Berths 97-109. A lawsuit filed by NRDC interdicted use of the terminal until additional environmental assessment and mitigations could be implemented, and it was determined that a new EIR based on all three phases of the project would be required. However, an Amended Stipulated Judgment (Judgment) allowed the Port and China Shipping to go forward with a portion of the work and activities of the first phase of the project, while work on the EIR for all three phases is in progress.

2. Delays in providing Berth 100-102 to China Shipping as part of the first phase and mitigation measures required under the judgment resulted in significant costs to China Shipping with the result that it filed a claim against the City to recover compensation for these costs. China Shipping then held back from reinstating Permit No. 999 until the parties could reach an agreement on allocation of reimbursement pertaining to mitigation requirements and delays in occupying the premises. The parties agreed to enter into Nonexclusive Berth Assignment 77-81 as the instrument that would allow terminal activities to proceed at Berth 100 until a settlement could be concluded.

3. The Port and China Shipping have agreed on the following settlement terms and conditions set forth within the First Amendment to Permit 999:

• China Shipping will receive a credit against MAG and TEU charges, not to exceed $12,224,583.33, for costs and damages, including, but not limited to delays in the provision of premises, problems associated with delivery of four cranes at Berth 1 00; and an environmental mitigation requirement that China Shipping's yard tractors must be powered by alternative fuels and all top picks and side picks must utilize emulsified diesel fuel and diesel oxidation catalysts.



• The terms and conditions of Exhibit "B" of the Judgment pursuant to the agreement to supply and use Alternative Maritime Power (AMP) are made a part of Permit No. 999, as amended, and are attached as Exhibit "A" of the Amendment. Under the requirements of Exhibit "A", the Port must pay the cost of equipping China Shipping's vessels to use AMP up to the aggregate cost of $5,000,000; the Port must pay for any additional operating cost of AMP above the cost of power supplied by vessel generators based on the prevailing cost of fuel and electricity on the date of the vessel's arrival, not to exceed $3,000,000 per

. calendar year and must pay for the costs of connecting and disconnecting the vessels to the power source at Berth 100. Costs required under Exhibit "A" are not included in the $12,224,583.33 credit applied to MAG and TEU payments.

• Certain deadlines for providing premises at Berths 100-102 in Permit No. 999 are amended to provide that if the Port cannot deliver specified land parcels within a deadline period, China Shipping will receive credits of $25,000 per non-delivered acre that will be capped at a total of$1,350,000 for an 18 acre parcel, $1,275,000 for a 17 acre parcel, and provides that if wharf area for either of both of these land areas is not timely delivered, China Shipping's obligation to pay TEU charges or MAG will be modified to the payment of rent at $3,600 per acre per month for each acre without wharf access in either of the two areas If the southerly wharf extension cannot be timely delivered, China Shipping will be entitled to a credit of $875,000 per year capped at a maximum of $2,625,000. In the event 24 additional acres are not made available to China Shipping by the stated deadline, China Shipping will receive a credit of $25,000 per non-delivered acre per year up to a cap of$1,800,000.

• An amended rate schedule is attached to the Amendment that increases TEU costs by 10% to adjust to current Tariff rates.

• MAG for the first 5-year period is increased to $149,015, based on the actual acreage of the terminal area subject to any increase in the N.O.S. rate. During the construction period to deliver Area 2 of the terminal, the MAG will be reduced to $131,173 per acre due to disruption of the terminal activity because of construction work, or if an efficiency bracket of not less than 3,500 TEU's per acre per year is reached China Shipping will be allowed a credit of $17,842 per acre per year of the total TEU charges paid.

4. The proposed First Amendment to Permit No. 999 incorporates the settlement terms that have been agreed upon by the parties; incorporates Exhibit "B" of the Judgment containing terms and conditions imposed by the Judgment pursuant to AMP as part of the



amendment; incorporates Exhibit "C" as part of the amendment as a substitute for Exhibits "A" and "A-1" to Permit 999; and provides that Permit 999 will supersede Berth Assignment 77-81 as ofthe effective date ofthe amendment.

ENVIRONMENTAL ASSESSMENT:

The activities at Berths 97-109 are governed by a California Superior Court Stipulated Judgment, Modification of Stay and Order that includes terms of a Settlement Agreement. The Settlement Agreement includes specific requirements that would allow the Port of Los Angeles to construct and operate Phase 1 of the Berths 100-102 Terminal Improvements while an Environmental Impact Report (EIR) is prepared for China Shipping Phases I, II, and III. The proposed Amendment provides the framework for settlement of China Shipping's claim for damages as a result of project delays and settlement requirements, and does not modify the physical premises or uses under the original Permit No. 999. In accordance with the Settlement Agreement, the Board of Harbor Commissioners would also need to reconsider Permit No. 999 at the time the EIR is completed. As such, the Director of Environmental Management has determined that the proposed First Amendment to Permit No. 999 with China Shipping amends an existing entitlement without an expansion of use, and is exempt from the requirement of the California Environmental Quality Act (CEQA) in accordance with Article III, Class I (18) of the Los Angeles City CEQA Guidelines.

FINANCIAL IMPACT:

The First Amendment will provide various credits to China Shipping to be applied against the MAG or TEU Charges, including a $12,224,583.33 credit applied during fiscal year 2005/06 and various credits amounting up to $7,050,000 if certain acreage or wharf improvements are not delivered from 24-48 months following approval of the environmental impact report for the project. The credits are made available as part of the claim settlement and allow the Port to lease the facility on a long-term basis. The settlement was negotiated based on China Shipping's claim for damages, which China Shipping maintains were in excess of the settlement amount.

On March 21, 200 1, a CFO Analysis was prepared for Permit 999 and reflected a Minimum Annual Guarantee Rate of Return (IRR) and Most Likely IRR equaling 7.3% and 10.6% respectively. When the settlement amounts are incorporated into the analysis, the Minimum Annual Guarantee IRR and Most Likely IRR is reduced to 5.4% and 8.3% respectively. We do not anticipate the $7,050,000 in various credits will be provided to the Tenant and were not included in the analysis. If these various credits were provided to the Tenant, the rates of return would be further reduced.

CITY ATTORNEY:



The City Attorney is prepared to approve the First Amendment as to form, upon review of the ·executed version of the First Amendment.

TRANSMITTALS:

1. First Amendment to Permit No. 999 2. Board Order

Director of Property Management

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APPROVED:

~J~ BRUCE E. SEATON

~ Interim Executive Director

.~ [, Q""'. >

DAVID L. MATHEW~· ----.--Director of Planning & Environmental Affairs

ORDER NO. &·82 5

IT IS HEREBY ORDERED by the Board of Harbor Commissioners that the First Amendment to Permit No. 999 granted by the City of Los Angeles, acting by and through its Board of Harbor Commissioners, to China Shipping Holding Company, Ltd., is hereby approved and the Executive Director and the Secretary of the Board are hereby authorized and directed to execute and attest to the same on behalf of the City of Los Angeles upon this Order being approved by the City Council as described below.

The Secretary shall certify to the adoption of this Order by the Board of Harbor Commissioners of the City of Los Angeles and shall cause a copy of the same to be presented to the City Council as provided in Section 606 (and Section 607(a), if applicable) of the Charter of the City of Los Angeles. If the Council shall approve this Order within 30 days after such Order shall have been presented to it, or if the Council shall fail to disapprove this Order within said 30 days, the Order shall be deemed approved and shall become effective upon such approval without publication (subject to Section 607(a), if applicable). The Agreement approved by this Order shall become effective immediately upon execution by the City's Executive Director and Board Secretary after such Council approval of the Order.

APPROVED AS TO FORM

-----_ ____;;;...J_v_I'\A..--___ 3 ____ , 2005

I HEREBY CERTIFY that the foregoing Order was adopted by the Board of Harbor Commissioners of the City of Los Angeles at its meeting of MAY 1 5 20~ ·

~,t./.~ - ·~ At1)::>RE~H. YAMAKI

Board Secretary

, ROC~ J. ~EJiADILLO, City Attorney

By (I L /V \._., & WILLIAM L. WATERHOUSE, Assistant

WLW:jpm 5/19/05

" ..

. " '

"

FIRST AMENDMENT TO PERMIT NO. 999 BETWEEN THE CITY OF LOS ANGELES AND CHINA SHIPPING HOLDING COMPANY, LTD.

Permit No. 999 between the City of Los Angeles (City) and China Shipping Holding Company, Ltd. (China Shipping) is hereby amended for the first time to provide that:

1. The following subparagraph (8) is added to permit No. 999, Section 3(e), Minimum Annual Guarantee:

"(8) Credit against MAG. and TEU Charges for Costs and Damages. including but not limited to. Delays in Providing the Premises at Berths 100-1 02 and Environmental Mitigation Impact to Tenant related to Amended Stipulated Judgment. It is recognized by and between the parties to the First Amendment to this Permit, that certain measures required under this Amendment have resulted in significant costs to the Tenant and its affiliates due to implementation of environmental mitigation measures and impacts on shipping and terminal operations, including delays in provision of terminal facilities, gate modifications, and problems associated with delivery of the four existing cranes at Berth 100. In consideration of these costs and anticipated impacts on operations of Tenant and its affiliates, there shall be a Credit of USD $12,224,583.33 given by the City to Tenant to be applied as directed by Tenant against accumulated TEU charges or the MAG payable by Tenant pursuant to this Section 2. The Credit shall be available to the Tenant commencing July 1, 2005, and thereafter until fully applied against accumulated TEU charges or MAG. In the event this First Amendment is not effective on or before July 1, 2005, the credit will be made available to Tenant on the effective date but may be applied by the Tenant retroactively to July 1, 2005."

2. The Tenant agrees that, at Berths 100-102, all yard tractors utilized by Tenant at the Premises shall be powered by "alternative fuels" (as defined by the California Air Resources Board) and that all top picks and side picks shall utilize emulsified diesel fuel and diesel oxidation catalysts unless they cannot be used for safety or technical reasons for a particular application, as provided in§ VIII:A.1 of the Amended Stipulated Judgment (hereafter "Amended Stipulated Judgment") in the Los Angeles Superior Court Case captioned Natural Resources Defense Council, Inc., eta/. v.

City of Los Angeles, et a/. (L.A.S.C. Case No. BS 070017). The credits set forth in Paragraph 1 of this First Amendment to Permit No. 999 include reimbursement from the City to China Shipping for these environmental mitigation costs.

3. The Parties agree that the document entitled "Agreement to Supply and to Use Alternative Maritime Power and Low Profile Cranes", which is Exhibit "8" to the Amended Stipulated Judgment, is hereby attached as Exhibit "A" to this First Amendment to Permit No. 999. The provisions of Exhibit "A" to this First Amendment, governing Alternative Maritime Power and provision of low-profile cranes, are hereby incorporated into and made a part of Permit No. 999. The credits set forth in Paragraph 1 of this First Amendment to Permit No. 999 do not include reimbursement from the City to China Shipping for the costs of Alternative Maritime Power or low profile cranes. The costs of Alternative Maritime Power and low profile cranes shall be separately paid by the City or reimbursed from the City to China Shipping as set forth in§§ VIII.A.2 and VIII.A.3 of the Amended Stipulated Judgment and as set forth in Paragraphs 1 through 8 of Exhibit "A" to this First Amendment. The City shall compensate China Shipping for any additional cost of AMP power above the cost of power supplied by vessel generators based on the prevailing cost of fuel on the date of the vessel's arrival. These costs shall include the costs of connecting and disconnecting the vessel to the power source and DWP charges for power and service. The City agrees to reimburse China Shipping for differential AMP electricity costs. Five years from the effective date of this First Amendment and every five years thereafter, the Parties shall review the compensation for the differential costs between AMP electricity costs and fuel costs and shall agree to adjust that compensation to reflect any changes in the industry standard or regulations for air emission controls. In no event shall the compensation exceed the cost of AMP power. The City shall also compensate China Shipping for the cost of equipping, retrofitting, or modifying Chi.na Shipping's vessels to use AMP, up to the limits provided in Exhibit "A", attached hereto. The parties have not reached agreement concerning the extent to which the City shall reimburse China Shipping for the differential costs of low profile cranes under Exhibit "A" and hereby agree to defer resolution of this issue to a future agreement.

4. Notwithstanding any deadlines for providing the premises at Berths 100-102 to China Shipping set forth in Permit No. 999 and notwithstanding any penalties for exceeding those deadlines set forth in Permit No. 999, including, but not limited to, all completion deadlines set forth in Section 6(a) of Permit No. 999 and all "credits" set forth pursuant to Section 1 (h) of Permit No. 999, it is agreed that each of those deadlines and penalties shall be amended as follows:

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. .

a. "In the event that City cannot deliver 18 of the 35 acres of backlands included in the "Phase II" premises described in the first paragraph of subsection (a)(2) of Section 6 of Permit No. 999 within 24 months of the date that the Environmental Impact StatemenVEnvironmental Impact Report for Berths 100-102 is certified by the Board of Harbor Commissioners (and subject to extension of the 24-month period as provided in Section 6(e) of Permit No. 999), Tenant shall be entitled to a credit in the amount of $25,000 per year per acre, up to a total of 18 acres City may fail to provide to Tenant by such date, for every year thereafter until the total 18 acres are delivered for Tenant's use, up to a limit of $1,350,000 of total credits. If the City cannot deliver the 925-foot northerly wharf extension included in such "Phase II" Premises, within such 24-month period (subject to Permit No. 999, Section 6(e), the Tenant's obligation to pay TEU charges or MAG for the 18 acres or portion thereof delivered pursuant to Phase II as described above shall be modified to require Tenant to pay rent for such portion of the 18 acres as may have been delivered at the rate of $3,600.00 per acre per month until delivery of such wharf. Any such rent shall be subject to any tariff adjustments in the same manner as set forth in Section

. 3(c)(2) of Permit 999. In the event that the City cannot deliver the additional 17 acres included in such Phase II Premises, within 34 months of the date that the Environmental Impact Statement/Environmental Impact Report for Berths 100-102 is certified by the Board of Harbor Commissioners (and subject to extension of the 34-month period as provided in Section 6(e) of Permit No. 999), the Tenant shall be entitled to a credit in the amount of $25,000.00 per acre per year up to a total of 17 acres City may fail to provide to Tenant by such date for every year thereafter until the total 17 acres are delivered for Tenant's use up to a limit of $1,275,000. If the City cannot deliver the 925-foot northerly wharf extension within such 34-month period (subject to Permit No. 999, Section 6(e)), Tenant's obligation to pay rent for such portion of the 17 acres as may have been delivered shall be modified to require Tenant to pay $3,600.00 per acre per month for the 17 acres until delivery of such wharf. Any such rent shall be subject to any tariff adjustments in the same manner as set'forth in Section 3 (c)(2) of Permit 999. In the event that the City cannot deliver the 375-foot southerly wharf extension included in such Phase II Premises, within 48 months of the date that the Environmental Impact Statement/ Environmental Impact Report for Berths 100-102 is certified by the Board of Harbor

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Commissioners (and subject to extension of the 48-month period as provided in Section 6(e) of Permit No. 999), the Tenant shall be entitled to a credit of $875,000 per year until delivery of such wharf extension up to a limit of $2,625,000 in such credit. Any credits or rent modifications adopted or provided pursuant to this Paragraph shall be determined at the end of each year following the elapse of the applicable 24-month, 34-month or 48-month period, ·and shall be decreased proportionately to reflect any fraction of the 35 acres delivered to Tenant and any portion of the year any of such acreage is available for Tenant's use. Tenant's credit may be applied to any monies payable to City by Tenant."

b. The last paragraph of subsection (h) of Section 1 of Permit No. 999 is revised to provide as follows:

"In the event that City cannot deliver at least 24 additional acres for Tenant's preferential use within 48 months of the date that the Environmental Impact Statement/Environmental Impact Report for Berths 100-102 is certified by the Board of Harbor Commissioners (and subject to extension of the 48-month period as provided in Section 6(e) of Permit No. 999), Tenant shall be entitled to a credit in the amount of $25,000 per year per acre, up to a total of 24 acres City may fail to provide to Tenant by such date, for every year thereafter until the total 24 acres are delivered for Tenant's use, up to a limit of $1,800,000 of total credits. Such credit shall be determined at the end of each year following the elapse of the 48-month period, and shall be decreased proportionately to reflect any fraction of the 24 acres delivered to Tenant and any- portion ··of the year any of such acreage is available for Tenant's use. Tenant's credit may be applied to any monies payable to City by Tenant."

c. The credits set forth above in this Section 4 of this· First Amendment shall be the sole and exclusive legal remedy available to Tenant for any future City delays in providing the premises defined in Permit No. 999.

5. An amended rate schedule is attached to this First Amendment to Permit No. 999 as Exhibit "8-2", which exhibit shall replace and shall be substitute for the rate schedule previously attached to Permit No. 999 as Exhibit "B". The Exhibit "B-2" rate schedule is subject to tariff adjustments that occur after May 1, 2005 pursuant to Section 3(c) of this Permit.

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6. The "Nonexclusive Berth Assignment Agreement No. 77-81" for Berth 100 is superseded by Permit No. 999 on the effective date of this First Amendment to Permit No. 999 (which shall be the date of City Council approval of this First Amendment), and the "Occupancy Date" as used in Permit No. 999 shall be the effective date of this First Amendment to Permit No. 999.

7. The TEU charge for the year 2005 shall be recalculated based on the rates set forth in Exhibit B-2 to this First Amendment and on TEU volume at the terminal for the entire year of 2005, commencing January 1, 2005. If a tariff adjustment occurs during the year 2005, the TEU charge to be applied shall be determined pursuant to Section 3(d)(4) of this Permit.

8. Subsections (2) ("MAG for the First 5-Year Period") and (3) ("Discount on MAG and TEU Charges for Construction Impacts") of Section 3(e) ("Minimum Annual Guarantee") of Permit No. 999 are revised to provide as follows. The rates set forth below are subject to Tariff adjustments that occur after May 1, 2005 pursuant to Section 3(c) of this Permit:

"(2) MAG for the First 5-Year Period. For the first 5-Year Period, the MAG shall be One Hundred Forty-nine Thousand Fifteen Dollars ($149,015), based upon the actual acreage of the Terminal Area, provided that the per acre amount shall at all times be subject to increase in accordance with any increase in the N.O.S. rate, pursuant to subsection (c)(2) of this Section 3, as illustrated in Exhibit "C" to Permit No. 999.

"(3) Discount on MAG and TEU Charges for Construction Impacts. It is recognized by and between the parties to this , Agreement that the construction to be undertaken by City pursuant to Section 6 for delivery of Area 2 will result in significant interference with Tenant's operations, the MAG payable by Tenant pursuant to subsection (e)(2) of this Section 3 during the period between the Occupancy Date through the date of delivery of Area 2 shall be reduced from $149,015 per acre to $131,173 per acre, or, if the applicable efficiency bracket for such period averages not less than 3,500 TEUs per annum, Tenant shall be allowed a credit of $17,842 per acre per year of the total TEU charges paid pursuant to this Section 3, provided that the per acre amount of the credit shall at all times be subject to increase in accordance with any increase in the N.O.S. rate, pursuant to

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subsection (c)(2) of this Section 3, as illustrated in Exhibit "C" to Permit No. 999. "

This adjustment in the MAG or the credit on TEU charges shall be prorated to reflect any period of less than one (1) year they shall remain in effect. For purposes of meeting the qualifying minimum average throughput of 3,500 TEUs per acre per. year, 'discounted empties,' as defined above in subsection (d)(5) of this Section 3, shall be disregarded.

9. The premises, including the additional acreage and wharves identified in Paragraph 4 of this First Amendment, are depicted in the diagram attached hereto as Exhibit "C" to this First Amendment, which is hereby substituted for Exhibits "A" and "A-1" to Permit No. 999.

Except as amended herein, all remaining terms and conditions of Permit No. 999 shall remain the same.

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Permit No. 999 on the date to the left of their signatures.

Date: S · V/ 12005

Date: _______ , 2005

APPOOVED AS TO FORM

THE CITY OF LOS ANGELES, Board of Harbor Commissione

·secretary

CHINASHI COMPA . "> 1 By .... X~~~

[PririifJ8me and Tftle]

Attest -----------[Print Name and Title]

J J Vv\.1- '3 t 2005 ROC~. DELGADILLO, Ctty Attorney

By: r\ L Aft_ . WLW:jpm 05/17/05

6

SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS BETWEEN THE CITY OF LOS ANGELES AND CHINA SHIPPING HOLDING COMPANY, L TO.

THIS SETTLEMENT AGREEMENT AND RELEASE (hereinafter "Agreement") between the City of Los Angeles, a California municipal corporation (hereinafter "City") and China Shipping Holding Company, Ltd (hereinafter "China Shipping") (individually referred to as "Party" and collectively referred to as "Parties") hereby agree to the following: ·

RECITALS

WHEREAS, China Shipping has filed a claim entitled the "Claim Of China Shipping Holding Company, Ltd. Against the City of Los Angeles" with the Los Angeles City Clerk on April 13, 2004, asserting costs and damages including, but not limited to, delays in providing the premises at Berths 1 00-102 (including, but not limited to, completion deadlines set forth in Section 6(a) of Permit No. 999 and "credits" set forth in Section 1 (h) of Permit No. 999), the provision of alternative fuels for yard tractors, the costs of electrification of ships in compliance with Alternative Marine Power ("AMP") requirements, and has claimed other damages including unexpected costs in installing four cranes at Berth 100, gate modifications, and other costs and damages;

WHEREAS, the City disputes the allegations costs and damages asserted by China Shipping in its claim and related documents; and

WHEREAS, the Parties have conducted extensive negotiations and have arrived at a compromise of their respective positions and, based upon mutual consideration including the reciprocal promises and obligations contained herein, now seek to enter into this Agreement which memorializes and effectuates such compromise and provides for a general and specific release of the claims referenced herein.

AGREEMENT AND RELEASE

NOW THEREFORE, the Parties agree as follows:

A. China Shipping shall receive the following payments and credits as complete consideration for settlement of release of claims described in Paragraph B below, including but not limited to, claims for costs and damages for delays in provision of the premises at Berths 100-102, and environmental mitigation costs including, but not limited to, provision of alternative fuel yard vehicles and utilization of AMP, and other costs, with those payments and credits to consist of the following:

1. The City shall pay to China Shipping USD $10,000,000 within ten (1 0) days of the later of City Council approval of: a) the First Amendment to Permit No. 999, or b) this Agreement (should the City Council assert jurisdiction over this Agreement);

2. Commencing July 1, 2005, and thereafter until fully applied against the monthly TEU charges or MAG, China Shipping shall receive credits against its MAG and TEU payments due under Permit No. 999 up to USD $12,224,583.33, as defined and set forth in the First Amendment to Permit No. 999; and

3. China Shipping shall be reimbursed by the City for the differential costs of utilizing AMP while at Berths 100-102, as defined and set forth in the First Amendment to Permit No. 999 and exhibits thereto. The Parties agree that the surcharge set forth in Item No. 1210 of Tariff No. 4 shall not be applicable to AMP electrical charges at Berths 100-102.

B. The Parties generally and specifically release any and all claims, known or unknown, that each may have against the other with respect to, arising out of, or existing on the Effective Date of this Agreement, including but not limited to claims with respect to gate modifications and costs of delivery of the four cranes at Berth 100, and with respect to, arising out of, or contained in the "Claim of China ~hipping Holding Company, Ltd. Against the City of Los Angeles" filed with the Los Angeles City Clerk on April13, 2004, except that the Parties have not yet resolved

. the sole issue concerning the extent to which the City shall reimburse China Shipping for the costs of low-profile cranes at Berth 102 and the Parties agree to seek resolution of this sole issue by separate future agreement, subject to the provisions of the First Amendment to Permit No. 999 and Exhibit "A" thereto.

C. China Shipping does hereby waive and relinquish, to the fullest extent permitted by law, the provisions, rights and benefit of California Civil Code Section 1542, which provides as follows:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE· RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

China Shipping expressly warrants that it has been advised by its legal counsel and understands and acknowledges the significance and consequence of this General Release and of this specific waiver of California Civil Code Section 1542, and recognizes and understands that the same applies to and covers all of the claims released by China Shipping as specified above, whether or not known or suspected to exist at the present time.

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D. By entering into this Agreement, neither Party makes any admission of fact or law regarding any of the claims released herein. This Agreement's terms have been reached solely as a compromise to avoid the uncertainties and costs of litigation and do not necessarily reflect any party's assessment of the merits of any party's claims or positions. Except as expressly stated herein, this Agreement is made without prejudice to the positions each party has taken in the course of their contractual relationship or in connection with Permit No. 999. This Agreement, and the acts, errors, or omissions of the Parties leading up to and including its negotiation and signing, constitute the compromise of disputed claims and are subject to the protections afforded by California Evidence Code Sections 1115 and 1152, the Federal Rules of Evidence Section 408, and similar statutes and rules. This is a public document and may be disclosed to individual members of the public and other persons and entities. As between the Parties, however, the terms of this Agreement, and the acts, errors, or omissions of the Parties leading up to and including its negotiation and signing, are without prejudice or value as precedent, and they shall not be used, referred to, offered or cited in any communication, proceeding or hearing for any purpose (apart from the enforcement of this Agreement), including without limitation as a waiver, estoppel or invalidation of any position any of the Parties may take with respect to any issue, claim or defense concerning any matter.

E. Each Party represents and acknowledges that it has been fully advised by counsel in connection with this Agreement, that the terms of this Agreement are the result of negotiations between the Parties, and that this Agreement shall not be construed in favor of, or against, any party by reason of the extent to which a party or its counsel participated in its drafting or by reason of differences between this Agreement and any prior drafts thereof.

F. This Agreement is intended to confer rights, benefits, and obligations only upon the Parties hereto, and is not intended to confer any right, benefit, or obligation whatsoever upon any other person or entity. Neither this Agreement nor any of the rights, benefits, or obligations arising from this Agreement may be assigned or delegated by any Party without the prior written consent of the others, which consent shall not be withheld unreasonably.

G. All the terms of this Agreement shall be binding upon, and inure to the benefit of, and be enforceable by the successors, assigns, heirs, administrators or trustees of the Parties hereto.

H. This Agreement is deemed entered into in Los Angeles, California, and shall be governed and construed in accordance with the laws of the State of California.

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This Agreement is being delivered and is intended to be performed in the state of California and shall be construed and enforced in accordance with the laws of this state. Any dispute arising under this Agreement shall be litigated exclusively in courts located in the State of California and County of Los Angeles in accordance with the local rules of court regarding venue for the Los Angeles Superior Court and not elsewhere.

I. In the event any provision of this Agreement is held to violate any applicable law or to be unenforceable by a court of competent jurisdiction, such provision shall be deemed null and void to the extent thereof, without affecting the balance of this Agreement.

J. This Agreement, together with Permit No. 999 and the First Amendment to Permit No. 999, contains and reflects the entire and final integrated agreement between the Parties concerning its subject matter, and supersedes any earlier agreements or understandings between the Parties, oral or written, with respect to the subject matter thereof. All other representations or statements heretofore made, verbal or written, are merged herein.

K. This Agreement shall not be effective unless and until the First Amendment to Permit No. 999 is approved by the Los Angeles City Council. The date of City Council Approval shall be the effective date ("Effective Date") of this Agreement. Permit No. 999 and the First Amendment to Permit No. 999 are incorporated by reference herein.

L. This Agreement may not be rescinded, changed or modified orally. No amendment, modification, addendum, or revision of this Agreement shall be valid unless it is in writing and signed by the Parties to be bound.

M. The Parties agree to cooperate with each other by taking such further and additional actions and executing such further and additional instruments, as may reasonably be required to give full effect to the terms of this Agreement.

N. This Agreement may be signed in any number of counterparts, each of which will be deemed to be an original and all of which together shall be deemed one and the same instrument.

0. Any descriptive headings used in this Agreement are for convenience only and are not intended to limit or enlarge the rights of any party.

P. Time is of the essence in this Agreement.

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' /

Date: _&:.::.t__;_v_1 __ , 2oo5

Date: _______ , 2005

APPR~D AS TO FORM v- 1 '2005

ROCKA~. DELGADILLO, City Attorney

By: (I L dL WLW:jpm 05/17/05

5

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THE CITY OF LOS ANGELE Board of Harbor Commissio

~ttest ---~--------

Board Secretary

CHINA SHIPPING HOLDING COMPA , LTD.

Attest

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-------------[Print Name and Title]

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~AVAILABLE 24 MONTHS AFTER ~ACCEPTANCE OF EIS/EIR

JQ$\(1 AVAILABLE 34 MONTHS AFTER IS2S22j ACCEPTANCE OF EIS/EIR

~ AVAILA6,LE 48 MONTHS AFTER ~ACCEPTANCE OF EIS/EIR

PROPOSED ADDmONAL ACREAGE AND WHARF EXTENSIONS ARE SUBJECT TO CEQA AND NEPA REVIEW.

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Documents

ORDER NO. 6825 ADOPTED BY THE BOARD OF HARBOR …clkrep.lacity.org/onlinedocs/2001/01-0723_rpt_pola_6-3-05.pdf · 6/3/2005 · AUDREY YAMAKI Commission Secretary Commerce, Energy