The Los Angeles City Council agreed Wednesday to pay $27.7 million to settle a lawsuit that accused the city of improperly blocking expansion and changes in the site of a now-defunct petroleum coke operation at the port.
In addition, the council agreed to waive $46 million in rent it said was overdue from two firms that had sued the city in a dispute over the site on Terminal Island.
Oxbow Carbon & Mineral Inc. and Los Angeles Export Terminal Inc. had filed $400 million in legal claims against the city, alleging city officials, led by Councilwoman Janice Hahn, had unfairly blocked proposals for alternative uses of the site when the market for coal exports soured.
As part of the settlement, the operator agreed to relinquish a permit and lease that had given it control of the 117-acre, city-owned site until 2032.
The settlement is one of several controversial deals the council has approved in recent months, but is by no means the largest.
Councilman Tony Cardenas said the deal will allow the city to put the site to a profitable use, eventually recovering the settlement cost.
"On the surface it sounds like it's a bad deal, but when you think about it -- for that particular piece of land we could be getting $20 million per year or more," Cardenas said.
Harbor-area activists were disappointed that so much public money was being spent to get the city out of what was a controversial and troubled deal from the beginning.
"The port has proven that it consistently gets in these kinds of messes and takes actions that are not very bright," said Janet Schaaf-Gunter, treasurer of the San Pedro Peninsula Homeowners Coalition. "I just hate to see our money being spent like this."
The Port of Los Angeles has had a 13% interest in Los Angeles Export Terminal Inc., which was created in 1993 by the Harbor Department and 36 U.S. and Japanese coal, energy and shipping companies to establish a coal and petroleum-coke export operation.
When the market for coal soured, the other shareholders sought permission to use part of the property to import crude oil, liquid natural gas and other energy products, but alleged that the city refused to consider the proposals.
Gerald Swan, president and chief executive of Los Angeles Export Terminals Inc., said the firm had invested in developing the site and had a legitimate claim. He noted that the costly dispute had dragged out in court for more than a year.
"We are satisfied with the settlement," said Swan, who, Hahn noted, is a former assistant city attorney who helped negotiate creation of the partnership.
In voting 10 to 0 to approve the settlement, without public debate, council members said the money would come from Harbor Department funds provided by fees and leases.
The claims filed against the city alleged that Hahn led efforts to close the terminal and block alternative proposals while receiving $8,000 in political contributions from executives and advisors of a firm that operated a competing terminal.
The terminal operator also suggested that former Councilman Rudy Svorinich Jr. had violated city ethics laws by lobbying the city for the competing terminal after voting a dozen times on Los Angeles Export Terminal matters.
The Ethics Commission has not filed complaints against Hahn or Svorinich in the two years since the allegations were made, and neither side in the lawsuit admitted wrongdoing.
Hahn, who represents the harbor area, called the assertions that she was influenced by political contributions "ridiculous," adding that she had been intent from before she took office to get rid of the operation, which she deemed a nuisance.
"This is good for the city because it gets rid of a polluting business and returns 117 acres to the port so it can turn it into better use," Hahn said.
As part of the settlement, the terminal firm agreed to provide "limited environmental remediation" of the site, which has significant potential contamination because of its use for coal storage.
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The $27.7-million payment approved by the Los Angeles City Council on Wednesday to settle a lawsuit with Los Angeles Export Terminal Inc. is not the largest for the city. Other sizable settlements include:
* 1999: $39 million to settle with police officers who accused the city of not properly compensating them for overtime work.
* 2000: $19 million to Carol Adkins, a Florida woman severely disabled in a traffic accident involving a city truck driver.
* 2000: $15 million to Javier Francisco Ovando in connection with police misconduct during the Los Angeles Police Department's Rampart Division scandal.
* 2003: $60 million to mitigate air pollution at the Port of Los Angeles, an agreement reached with environmental and community groups.
Source: City of Los Angeles