Golden Shore Project Wins Long Beach City Council Approval

The Long Beach City Council recently amended its Local Coastal Program and the Downtown Shoreline Plan Development District to allow for the largest single project ever proposed for Long Beach-the Golden Shore Master Plan. What led the council to a unanimous vote for this development plan?

It is probably going to be the iconic downtown development, with a maximum of 1,370 residential units, close to 350,000 square feet of office, and a potential 400-room hotel. More specifically, it will be an attractive addition; it is located in the heart of downtown, near the water. Second, it will bring additional property tax, additional sales tax, and additional bed tax, so there is substantial potential revenue for the city. And lastly, it is consistent with the downtown redevelopment. It is a very attractive project.

Describe the planning process that the Golden Shore Master Plan survived.

It is has been in the Long Beach planning process for sometime. Within 8-10 years, it will replace two existing buildings; one is a fairly low-rise structure where Molina Healthcare is located today. Another is the building where the law firm of Keesal, Young & Logan is located. Those will be replaced with two new buildings. After passing through the Planning Commission process in Long Beach, the City Council had to pass an amendment to the Coastal Development Plan. Now the EIR can move forward to the Coastal Commission for approval. It is a phased, long-term project, and we are hopeful that it will get those approvals. Now is a perfect time to begin construction, while material costs and development costs are down. Hopefully, the development will come online at just the right time.

No one has ever questioned your political courage and public vision, but isn't this a tough time for a developer and city to process a dense urban development project?

This was very easy. First of all, the individuals involved in this project, Skip Keesal, the Molina family, and George Medak, are the kind of people you love to have in your city. They have been involved in civic affairs; they are an integral part of the community in terms of giving to charities and non-profits as well as civic participation. Plus, the project is consistent with the increase in densities that we want in downtown and is designed in such a way that it will be consistent with the downtown plan. Frankly, there was virtually no opposition. The only opposition was on a related labor issue having to do with the hotel portion.

The Long Beach planning process requires that we developers go out to the community, the community is notified, and we have community meetings to discuss the project. The developer tries to mitigate issues that arise during those meetings. That is what happened here. That is what the process is designed to do-to take the people who live, work, or own businesses in the surrounding area who might have issues with the project and see if those issues can be resolved. In this case the issues were fairly few and most of them were resolved. By the time it came to us the only issue was a labor issue relative to the potential hotel workers.

The Planning Commission and the City Council chose not to lock the developer into a particular number of units or a particular mix of uses. Why?

The Golden Shore Master Plan developers are going to need some flexibility when they go to the Coastal Commission. I don't know what the Coastal Commission is going to require. The City wanted to provide the developer with enough latitude that they can scale this project to what might be required from the Coastal Commission.

Regarding a related development, what are your reactions to the proposed 2nd+PCH project? Some have argued that it is too large, but won't reducing the project's size undermine revenue support for the promised community amenities?

This project needs to go through the city's planning process, so I won't second-guess or comment. I will only say that the proposal by the original developer on that piece of property had far too much residential density.

It is in the coastal zone, it is going to need a coastal permit, and it will, under its former or present guise, need a variance on the height of the limit.

There are issues on that project, but that corner is probably the premier corner in Long Beach at this point. The intersection has one of the highest rates of vehicular traffic and consequently, there are traffic issues that I know the developer is trying to mitigate.

I have looked at the renderings and it is certainly an improvement over the previous plan. But, again, there are still issues that the developer needs to resolve. That corner does need an iconic project or a project that will add value. Right now it is a very, very old hotel-some would even say motel. It is antiquated; it is not being kept up. The city is potentially losing revenue as a result of that. The amenities that could be provided to the community, particularly on the retail side, are important. One of the most common complaints I hear from people on the east side is that there are not many places to shop. This development would add a significant amount of commercial space. I am not advocating or opposing the project. That corner needs a great project that will bring the amenities that people want to Long Beach, but it needs to go through this process.

Moving to other issues on your agenda, the Port of Long Beach in April saw an increase of over 20 percent in container imports and 15 percent in exports from last year. What is the significance of this uptick in container traffic for Long Beach?

The port is a very good barometer of the economic activity in Southern California. In the 1990s, we lost 50,000 good-paying aerospace and defense jobs in and around our city. Then the Navy moved from Long Beach. To be candid, this area experienced depression level conditions in the early 1990s. The civic leaders from that time deserve a lot of credit. They didn't cower; they didn't run; they didn't shrink from the challenge in front of them.

They wanted to reinvent the city, which we have done based on three economic clusters. One was international trade. That has been more successful than anyone could have dreamed. The second was tourism, which I would argue has been wildly successful as well. Long Beach is now a very popular destination for middle-tier and upper-tier conferences and conventions, becoming more popular all the time. Third was a technological piece, which hasn't materialized to the extent that everyone had hoped. We are still looking at filling that void.

International trade has really picked up where aerospace and defense left off. We now have over 30,000 direct jobs related to international trade and over 300,000 connected to international trade in Southern California. It is a substantial economic engine. When the port lost 22 percent of traffic from 2008 to 2009, it was a serious issue. People in the ILWU will tell you that some of their senior-most people were not getting 40-hour weeks working on the docks. It is gratifying to see trade starting to come back. You love to see more imports, but the exports, quite frankly, are better in many ways because that helps us balance our trade picture. I am hopeful that continues to grow. But we should never get euphoric about these things. I remember seeing projections for TEUs that by 2020 the ports of Long Beach and Los Angeles were going to be handling 30 million and maybe 36 million TEUs by 2025. At current levels they are handling around 12 million TEUs. Those projections were unrealistic, but trade will continue, in both imports and exports.

We're trying to make sure that the Port of Long Beach has the infrastructure to accommodate new trade. We have embarked on very large infrastructure projects. The first is Middle Harbor, which is a 10-year, $800 million project to renovate the center part of the harbor, with deeper berths, longer berths, and a significant increase in on-dock rail so we can handle greater volumes of cargo and move them out with greater velocity. That is a very large project with a lot of employment. At the end there will be 14,000 new permanent jobs. That project will create 1,000 construction jobs every year.

In addition, we are trying to accelerate the rebuilding of the Gerald Desmond Bridge. We have to replace it. It is very antiquated. It is the only bridge in the country with a diaper: it has a net underneath to catch the concrete that falls off the rebar underneath the bridge. And the bridge is not high enough for some of the new ships. We are going to accelerate that development, which is another $1 billion construction project that would create 4,000 jobs a year for five years. I am fairly confident we are gong to find a way to embark on that project soon. We are initiating several other infrastructure projects at the port. Within ten years the port is going to be remarkably more efficient, probably with significant automation in addition to being much cleaner for the environment.

Regarding the Gerald Desmond Bridge and the need for infrastructure investments, Congress is now considering the reauthorization of transportation bill and there continues to be discussion in California, under Dale Bonner, arguing for public-private partnerships (PPP) to accelerate infrastructure projects. Are you open to PPP or design build?

We are certainly open to PPP or a design-build project. I am an advocate of PPP where it makes sense. There is some difficulty in using PPP on this bridge. The cost estimates for the bridge right now are about $1.1 billion or $1.2 billion. It is my belief that if we went out to bid on that bridge right now we could get it for a significant reduction. Every significant construction project is coming in well under estimates.

The problem with PPP is that you need a revenue source for making payments to the private party. We have $500 to $600 million of the money needed for that bridge right now from either federal or state sources. Even if we could bring the bridge in under the $1 billion mark, the question is how you bridge the gap. I am not optimistic about federal funds. There will be constraints on federal spending that are going to come, certainly, in the next two or three years. I would hope that they fund the bridge because it is a national asset. The ports of Long Beach and Los Angeles handle nearly half the goods that come into the United States through containers. You also have to be realistic. The federal government has to curtail spending as well. We are going to do everything we can to obtain federal dollars to bridge that gap.

We are looking at PPP to see if there is a way to make payments to a private party to help build that bridge. Or we have to look at a design-build option, in which we go out very quickly. Just for argument's sake, let's say that the bridge comes in at $800 million, which could happen. If it comes in at $800 million, I am fairly confident we could find a way to bridge the $250 million we are short. We are looking at all those options.

My goal is to get that bridge built as quickly as possible, not only because it will be cheaper now, but also because if that bridge fails our port revenues are going to be significantly at risk. The bridge has the same design as the bridge that went down in Minnesota. We provide a lot of very costly maintenance to that bridge. I am not saying it will go down anytime soon, but it is at risk, and we need to make sure that anything that would impair the revenues at the port is repaired or replaced as soon as possible.

What is the status of the Long Beach Port's Clean Air Action Plan and its Clean Trucks Plan?

That is another case where the port has been much more successful that we dreamed when we embarked on the program. We embarked on the Clean Air Action Plan in 2007. It had several components. On the vessel side, which is a significant part of air pollution, we have instituted vessel speed reduction programs, first at 20 miles out, now at 40 miles out. We had a voluntary program to switch ships from bunker fuel to distillate fuel. That is now covered by the ARB. We did it early, before the ARB regulations came in, and now the ARB is covering that portion. That reduces emissions significantly.

We are increasing the amount of cold ironing. When the ships are "hotelling" in the port they are on eclectic power rather than using auxiliary engines. Not every ship is using cold ironing but more and more are. As leases expire, new leases are required to have the ship cold iron while they are hotelling in the port. Those programs have had significant effect. The second piece was to have port handling equipment moved from diesel fuel to electricity, and we have embarked on that. The yard house and the gantry cranes are in the process of being electrified. The Middle Harbor project will add a significant step in that all the handling equipment will use electricity.

The third was the trucks. We have anywhere from 12,000 to 14,000 trucks that do the drayage at the port. We embarked on a program beginning in 2008 that requires the trucks to become cleaner every year. In 2008, you had to have a 1989 or newer truck to enter the port. That moved up to 1994 or newer in January of this year. It will ratchet up continually until 2012, when you will have to have a 2007 or newer truck to enter the port.

We thought a lot of this would have to be done with subsidies, grants, and loans, but private capital stepped in and bought the new trucks now. Well over 7,500 trucks that are now visiting the port are clean trucks-all 2007 or newer trucks. This program is two years ahead of schedule. It will reduce pollution from trucks by 80 percent. That was the goal for 2012, but we should reach it by the end of the year. It has been a remarkably successful program, and we have done it without disturbing the driver community or the corporate community. Business has gone on very smoothly.

You served in a senior position with Edison. You worked for the Legislature as a young man. California's state government now appears to be in paralysis. Is California now governable, and how might it return to fiscal health?

A lot needs to be reformed. I empathize with my brethren up in Sacramento, whether the legislators or the governor, who do not have an easy job. During a recent speech I said, "I have tried to govern in the fashion that I would like to be governed." I follow an internal moral compass.

Lacking in contemporary America and California is the desire to solve problems. We have lost a sense of trying to work together. We have been sacrificing long-term benefits for short-term gain. Everybody is focused on the short term. That might be because of term limits-people don't have a long-term horizon.

Everything in California starts with a political calculation. It doesn't start with a consideration of the right thing to do. I understand that you start with the right thing to do and there will be a political overlay in terms of the art of the possible. Too often, people start out with a calculation of what is in their immediate interest: How can I benefit from this? How can I work this issue to my advantage and the disadvantage of the opposition? That is not going to solve things in California.

We are going to need a generation of policy makers to step up and say, "If this means I am a one-term elected official, I am OK with that, because this is really important for the people that come after me. It is important for my children and my grandchildren." Quite frankly, I don't see that occur very often.

There are a lot of reforms. I am in favor of the open primary. That will help bring some moderation to some of the extremes in Sacramento. The reapportionment that passed is long overdue. There are other reforms that would help and need to be made. But the single best thing that could happen is if people said, "I am in office to solve problems. I am in office to protect future generations. I am going to take that seriously. If I lose on that basis, that is fine." I don't know why someone wants to sit in office for eight or ten or 12 years and work between competing interests. That doesn't produce anything. If people governed like they want to be governed, it might change things.