Spending by Port Exceeds Others

The Port of Los Angeles, which earlier this week awarded its former executive director a $540,000 marketing contract, spends significantly more on marketing and public affairs than several other major U.S. ports.

The port, the nation’s largest, has a marketing budget more than three times that of the Port of Long Beach, which is the next-largest port and handles about 70% as many containers.

Some Los Angeles City Council members sharply questioned those costs Thursday, a day after many of them said they wanted to scrutinize a unanimous port commission decision to award a three-year consulting contract to former port Executive Director Larry Keller.

Keller, who resigned amid criticism last month, has been called to testify before a federal grand jury investigating city contracting, and some City Council members suggested that it was inappropriate to pay him half a million dollars given his status as a witness.

“It’s clear that port officials have a lot of explaining to do about why their marketing costs are just so out of step with the nation’s other leading ports, especially on the heels of revelations about a golden parachute” for Keller, said Councilman Antonio Villaraigosa, who is running for mayor.

The port’s spokesman, Arley Baker, said the port spent much more on marketing and public affairs than Long Beach because that port “operates somewhat of a different business model, so you’re not comparing apples to apples.”

“In the days ahead,” Baker added, “we will endeavor to explain our port operation in terms of size and scope so our city legislators have a clear understanding of the asset they have in the Port of Los Angeles.”

Keller’s contract appears to be standard practice for former Los Angeles port directors. Port officials on Thursday released documents showing that the last two executive directors received lucrative contracts when they left.

Even before the port commission decided to pay Keller $180,000 a year, the port’s marketing and public relations costs were much higher than at other major U.S. ports, according to statistics supplied by those ports.

The Los Angeles port has a public affairs department with an annual budget of $7.4 million and a staff of 18. The marketing department has a $6-million budget, an in-house staff of 15 and 11 marketing representatives around the world, port officials said.

The marketing budget includes the salaries for a crew of three for the Angelina II, a boat used for tours with clients and other visitors.

The Port of Long Beach, which is next door, spends $1.8 million on marketing and $2.5 million on communications.

The Port Authority of New York and New Jersey, which runs the nation’s third-largest container port, also operates three airports and transit lines, so it cannot be compared to Los Angeles.

Among other ports that could be contacted Thursday were Oakland, the nation’s seventh largest port, and Houston, eighth in container cargo but second in tonnage.

The Port of Oakland’s communications division has a $2.9-million budget for the port, airport and real estate holdings, while the seaport marketing division has a budget of $1.25 million.

Houston’s port has a public affairs budget of less than $5 million, while the division responsible for marketing has a budget of less than $2.5 million.

Councilman Dennis Zine said he was flabbergasted at how much Los Angeles spent, saying the amounts were “not just frivolous, but border on the line of insanity.”

“What are they going to market?” he asked. “As I understand it, there is a constant flow of ships waiting to dock.”

Several City Council members reiterated Thursday their determination to revisit the commission’s decision to award Keller a contract. The council needs support from 10 of its 15 members to assert jurisdiction over the port commission’s vote. The council can then send the decision back to the commission for further review.

The controversial deal gives Keller the power to renew or terminate the document after the first or second year. The port can terminate the contract only if Keller violates specific contract guidelines.

Giving a consultant the sole ability to end a contract is not common practice at the port, Baker said Thursday.

When Keller’s predecessor, Ezunial Burts, left the Port of Los Angeles in December 1996 to head the Los Angeles Chamber of Commerce, he continued working for the port as a management consultant. The port agreed to pay Burts $6,111 a month for nine months, with the total amount not exceeding $100,000.

Either Burts or the port could terminate the contract.

The man who preceded Burts as executive director, Ernest Perry, resigned in November 1984 and also became a port consultant.

Perry was paid $80 an hour for a total not to exceed $96,000. The contract was later extended by two months and the total increased to $131,000. The contract could be canceled by either party.

Keller’s contract, unlike the earlier two, includes a specific scope of work and a list of duties, Baker said.

He defended the port’s decision to hire Keller at a time when it is already spending millions in marketing.

“We don’t have someone of Keller’s senior-level marketing stature on our staff,” Baker said. “He offers the Port of L.A. more than 30 years of steamship experience. As an industry insider, he is especially valuable in Asia, where company presidents and chairmen only meet with the elder statesmen of the industry.”

Mayor James K. Hahn, who appoints the commissioners, said Thursday that he had no problem with the council reviewing the decision.

He expressed confidence that the council would agree it was beneficial to have Keller marketing the port.

Some council members did not appear convinced.

“Given these facts, how can the Hahn administration justify this half-million-dollar giveaway?” asked Councilman Jack Weiss. “The more the facts come out, the more this starts to smell.”