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CPY Document December 7, 2005 Antonio R. Villaraigosa, Mayor City of Los Angeles Honorable Members of the Board of Harbor Commissioners City Council of the City of Los Angeles CD No. 15 S. David Freeman President SUBJECT: SECOND AMENDMENT TO AGREEMENT NO. 1989 BElWEEN Jerilyn Lopez Mendoza V1ce President THE CITY OF LOS ANGELES AND PACIFIC HARBOR LINES Kaylynn L. Kim Transmitted herewith, pursuant to Section 606 of the City Charter, is a Douglas P. Krause copy of Order No. 6830, which was adopted by the Board of Harbor Commissioners at its meeting held Wednesday, August 31, 2005. Joseph R. Radisich RECOMMENDATION: Bruce E. Seaton The City Council approve Board of Harbor Commissioners Order No. 6830, Interim Executive Director approving and authorizing the Second Amendment to Agreement No. 1989 (assigned Harbor Department Agreement No. 1989-B), between the City of Los Angeles and Pacific Harbor Lines, and return to the Board of Harbor Commissioners for further processing. ENVIRONMENTAL REVIEW: The Director of Environmental Management has determined that the proposed action is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with Article II, Section 425 S. Palos Verdes Street 2(f) of the Los Angeles City CEQA Guidelines. Financial Impact: Posl Office Box 151 A transfer from the Unappropriated Balance to Account 59965, Center San Pedro, CA 90733-0151 0330, Program 636 (Air Quality), Work Order 79236 for Fiscal Year Budget 2005/2006 will be required in the amount of $4,961,875 to cover the TelffDD 310 SEA-PORT 2005/2006 expenses for the Locomotive Fleet Modernization Program. Time Limit: www.portoflosangeles.org After receipt, the City Council has 30 days to act; otherwise the matter will be deemed approved. Respectfully submitted, ~~ Commission Secretary cc: Commerce, Energy & Natural Resources Committee Councilman Cardenas, encs. Councilwoman Hahn, encs. Councilman Rosendahl, encs. /Himiki Nishiyama, encs. An Affirmative Action/ Equal Opportunity Employer Recycled and Recyclable ,.._-{ 6S :\\ WJ ..... REf'flMMENDATION APPROVED; ORDER NO. 6830 AD(ln~ED; RE~ . JTION NO. 6377 ADOPTED; AND AGREEMENT N •89-B Al- • ttOVED BY THE BOARD OF HARBOR COMMISSIOt'iteRS Executive Director's Report to the · Board of Harbor Commissioners DATE: August 31, 2005 SUBJECT: SECOND AMENDMENT TO AGREEMENT NO. 1989 BETWEEN THE CITY OF LOS ANGELES AND PACIFIC HARBOR LINES SUMMARY: Staff recommends executing the Second Amendment to Agreement No .. 1989 between the City of Los Angeles and Pacific Harbor Line, Inc. (PHL) in order to achieve emission reductions, to extend the term of the Operating Agreement an additional ten. (1 0) years, and to make other revisions to the Operating Agreement. Emission reductions would be achieved by implementing an Environmental Management Plan (EMP) and by upgrading the existing fleet of switching locomotives operating in the Ports of Los Angeles andLong Beach to Tier 2 diesel-powered locomotives. The cost to upgrade the fleet would be shared by the Ports and PHL. The Port of Los Angeles' share would be funded in accordance with the Near Term Air Quality Measures approved by the Board December 15, 2004. For Fiscal Year 2005/2006, up to $5,080,000 is budgeted for the Locomotive Fleet Modernization Program, of which $4,961,857 would be used for the purchase of Tier 2 diesel-powered locomotives. Replacing older locomotives with newer. models with cleaner burning engines would result in substantial emission reductions of Nitrogen Oxides, hydrocarbons, carbon monoxide, and Particulate Matter. RECOMMENDATIONS: It is recommended that the Board of Harbor Commissioners: 1. Adopt the Order approving and authorizing the execution of the proposed Second Amendment to Agreement No. 1989 with PJ-IT., (Transmittal!); 2. Authorize the Board Secretary to transmit the proposed Second Amendment to Agreement No. 1989 to the Los Angeles City Council for approval pursuant to Charter Section 606; 3. Authorize the Executive Director and Board Secretary to execute the proposed Second Amendment to Agreement 1989 upon approval by the City Council; 4. Appropriate $4,961,875 from the Unappropriated Balance to Account 59965, Center 0330, Program 636 (Air Quality), Work Order 79236, for Fiscal Year 2005/2006; and DATE August 31, 2005 Page 2 of6 SUBJECT: SECOND AMENDMENT TO AGREEMENT NO. 1989 BETWEEN THE CITY OF LOS ANGELES AND PACIFIC HARBOR LINES 5. For Fiscal Year 2005/2006, authorize payment to PHL of up to $4,961,875 for apportioned purchase of Tier 2 diesel-powered switch engine locomotives, upon approval of this amendment, from the Account 59965, Center 0330, Program 636 (Air Quality), Work Order 79236. PREVIOUS BOARD ACTIONS: On December 1, 1997, the Board made and entered into the San Pedro Bay Harbor Rail Operating Permit (Agreement No. 1989) with PHL, which granted PHL a license to operate on the Port Rail Facilities and the Additiqnal Port Rail Facilities. On June 26, 2002, the Board executed the First Amendment to Agreement No. 1989 that allows the Port of Los Angeles or its designee to use tracks and facilities that are part of the Red Car Line, in connection with Streetcar Oper;ation .. On December 15, 2004, the Board approved and adopted the Near-Term Air Quality Measures, approved a total amount o_f $4,160,000 towards the Locomotive Fleet Modernization Program through Fiscal Year 200712008, ·and all-ocated $4,040,000 in Fiscal Year 2004/2005. However no money was actu~ly spent in Fiscal.Year 2004/2005. · DISCUSSION: 1. Project Background: Agreement 1989_ will automatically terminate on February 15, 2008. Under the provisions of the amendment, the agreement would be extended an additional ten (10) years and would automatically terminate on February 15, 2018 provided that within 90 days prior or subsequent to the execution of this. amendtiient, the City of Long Beach extends the term of its Operating Agreement with PHL to on· or about July 31, 2018, otherwise this amendment shall be null and void. 2. Services to be Performed: Extending . the agreement would achieve more immediate improvements in air quality than would otherwise be required by the locomotive emissions standards of the United States Environmental Protection Agency (EPA) by upgrading the existing fleet of switching locomotives operating in the Ports of Los Angeles and Long Beach. Up to sixteen (16) Tier 2 diesel"'powered locomotives, which are environmentally cleaner and exceed current EPA standards for locomotives, would be purchased to replace the existing fleet. · ---------------------·-··-·----- ..... -- ------------···--- ------ .. ..., DATE August 31,2005 Page 3 of6 SUBJECT: SECOND AMENDMENT TO AGREEMENT NO. 1989 BETWEEN TII:E CITY OF LOS ANGELES AND PACIFIC HARBOR LINES The Ports of Los Angeles and Long Beach and PHL will jointly fund the purchase of sixteen (16) rebuilt switching locomotives to replace the existing operating fleet in the Ports (Section 16.6). The cost of these locomotives, including spare parts, change orders, delivery charges, applicable taxes, program inspection and oversight costs, manufacturer­ furnished product support, all manuals/documents, etc. and training of engine crew and locomotive maintenance contractor personnel), is estimated to be approximately $20,000,000. The cost of the new locomotives shall be shared as follows: fifty percent (50%) shall be paid by PHL and twenty-five percent (25%) with a not to exceed amount of $4,961,875 shall be paid by each the Ports of Los Angels and Long Beach. Funding includes the use of $3,200,000 in "Moyer Funds" which would be allocated in the same proportions above. PHL would also be required to lease or acquire one (1) liquid natural gas (LNG)-powered locomotive and one (1) diesel-electric hybrid locomotive for use in the Ports. The LNG and diesel-electric hybrid locomotives shall operate in ·a one-year service demonstration program. On December 15, 2004, the Board adopted seven near-term air quality incentive measures . to be implemented over the next several years at a cost of $52,890,000, and allocated $10,960,000 to implement the seven measures for Fiscal Year 2004/2005. The seven near­ term air quality incentive measures include: a. Yard Tractor Modernization and Cleaner Fuels Program. b. Cargo Handling Equipmeilt(CHE) Ultra-Low Sulfur Diesel (ULSD) Fuel Improvement Program c. Ocean-Going Vessel (OGV) Auxiliary Engine Fuel hnprovement Program. d. Marine ULSD Fuel hnprovement Program. e. Expanded Gateway Cities Truck Modernization Program. f. Diesel Particulate Filter (DPF) Installations (on model year 1994+). g. Pacific Harbor Lines (PHL) Switch Engine Modernization and ULSD Fuel hnprovement Programs. Because of uncertainties on several of the near-term measures raised during the NNl process, only the Gateway Cities Truck Modernization Program was a~tually funded during FY 2004/2005 (and was funded at a higher level than originally anticipated). The funding for all other measures was deferred until FY 2005/2006. Gateway Cities funding for 2005/2006 will be decreased accordingly. Tables 1 and 2 show the original and revised funding estimates for the near-term measures. The Locomotive Switch engine Modernization Program is shaded gray. ,· ·' DATE August 31, 2005 Page 4 of6 SUBJECT: SECOND AMENDMENT TO AGREEMENT NO. 1989 BETWEEN THE CITY OF LOS ANGELES AND PACIFIC HARBOR LINES TABLE 1: Original estimates to implement four near-term measures. Fiscal Year Costs (millions) Measure 04/05 05106 06/07 07/08 Total 1. Yard Tractor Modernization and Clean Fuels $3.07 $5.99 $5.25 $4.28 $18.59 2. CHE ULSD Fuel Improvement $0.16 $0.33 $0.06 $0.00 $0.55 3. OGV Auxiliary Engine Fuel Improvement $0.49 $0.99 $1.49 $1.98 $4.95 4. Marine (Harbor Craft) ULSD Fuel Improvement $0.09 $0.13 $0.18 $0.22 $0.62 5. Gateway Cities Truck Fleet Modernization $1.68 $3.36 $3.36 $3.36 $11.76 6. Diesel Particulate Filters $0.00 $0.00 $2.30 $3.06 $5.36 Subtotal $9.53 $10.84 $12.68 $12.94 $45.99 Admin $1.43 $1.63 $1.90 $1.94 $6.90 Total $10.96 $12.47 $14.58 $14.88 $52.89 TABLE 2: Revised estimates to implement four near-term measures.
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