Monday, April 11, 2011

Janice Hahn and Gambol Industries: A Love Story

Janice Hahn says she's all about jobs.

Jobs are the first thing you read about on her website, (" I'm running for Congress to create new jobs.") It's in nearly every campaign press release, ("I will be a fighter for workers!") And it's the first thing she talks about on the campaign trail, “If the subject is jobs, I don’t know anybody who has a track record as I do of creating good jobs.", Hahn told a gathering of moms in Mar Vista.

Yet in January - two days after attending President Obama's State of the Union speech as Jane Harman's guest - Hahn abruptly withdrew her support for a shipyard at the Port of Los Angeles that only 20 months before she'd touted would deliver a thousand "well-paying clean energy jobs, renewed economic activity, and a new standard for environmental stewardship."

Public records available online and news reports published at the time tells us what happened in those intervening 20 months. It's a complicated tale, featuring an ambitious termed-out LA City councilwoman, conflicting agendas between the Port of Los Angeles and the shipbuilder, Gambol Industries, intramural union warfare, maxed-out, suspiciously-timed campaign donations, accusations of influence peddling, and nearly two years worth of squandered goodwill.

At  the end of April, 2009, thousands of party faithful gathered in Sacramento for the annual California Democratic Party convention. The mood was high after coming off an historic November win, Brown and Newsom were still duking it out for Governor, and no Democratic candidate had yet thrown their hat in the ring to go up against Republican Abe Maldonado for Lt. Governor.

In a Sacramento hotel bar, Los Angeles City Councilwoman Janice Hahn openly contemplated being that candidate. Only a month before she'd won a landslide victory for her third and final term on the LA City Council, but she was already thinking about the future.

That weekend, according to a delegate present during the conversation, she apparently decided running for Lt. Governor was her best option.

A month later, Hahn wades into an ongoing dispute between two competing interests in her district -  yacht builder Gambol Industries and the Port of Los Angeles.

At issue was a $50 million shipbuilding facility Gambol hoped to build at the port. The problem? They wanted to build the facility precisely where the Port of Los Angeles planned to dump 3 million cubic yards of contaminated soil for their long-planned Main Channel Deepening Project (MCDP).

The project, which appeared dead just days ago, was tossed a lifeline by Los Angeles City Council members who ordered port officials to reconsider their April 29 rejection of the bid by Long Beach-based Gambol Industries.

(Port of Los Angeles) staff had argued the planned facility was unlikely to succeed financially and would cause unreasonable delays in a long-planned channel deepening project.

In the weeks since, supporters led by San Pedro-area Councilwoman Janice Hahn had urged the port to strive for a compromise with Gambol.

"Before we simply give up on this shipyard and the potential for good jobs and a steady revenue source, we need to make sure we've really studied the options," Hahn said.

The intervention was risky for Hahn - accommodating Gambol was hardly a high priority for the Port of Los Angeles. Even though a shipbuilding facility would diversify the area's economy - something Hahn's constituents were very much in favor of - harbor officials contested whether Gambol's project was even economically viable, or could deliver on the thousand jobs it promised.

According to the Port of LA's executive director, there were also considerable concerns Gambol's plans would throw a monkey-wrench in the entire Main Channel Deepening Project.

Port officials fear that allowing Gambol Industries to rebuild the shipyard would put years of complicated negotiations in jeopardy....

After reviewing 13 potential sites to dump the sediment, port officials chose the Southwest Marine terminal site, which was already contaminated from its use as a shipyard. They decided that the boat slips were the best place to "entomb" the toxic material....

"This is a huge undertaking because we try to match our dredging and land filling operations," said Geraldine Knatz, executive director of the Port of Los Angeles. "There are a lot of interrelationships among the various projects. I think a lot of people really didn't understand that."

Construction on the $370 million MCDP had already ground to a halt once while the Port negotiated a location for the contaminated soil. Trying to find yet another place for all that toxic waste could have jeopardized thousands of short-term jobs, derailment cost hundreds more long term jobs.

But if the risks for Hahn were enormous, so were the rewards. If she could somehow broker an agreement with both parties, she could bring a thousand new jobs to the port and lay claim to revitalizing a flagging shipbuilding industry. It would be a tremendous public relations coup as she launched her run for Lt. Governor.

That summer, under pressure from Hahn and threat of a lawsuit from Gambol, the Port of Los Angeles agreed to a Memorandum of Understanding" (or MOU for short) brokered by the councilwoman.

The Port entered into exclusive negotiations with the shipbuilder. As part of the agreement, if both parties were unable to come to an understanding within the next few months, Hahn herself would act as an impartial mediator.

That's when things got interesting.

All in, Gambol Industries and it's lawyers made a total of $12,000 in contributions to Janice Hahn after the MOU was signed.

By February of 2010, however, things were going nowhere with Gambol and the Port of Los Angeles. So on February 4th, both parties announced they would enter into mediation. The mediator, as specified in the MOU, would be Janice Hahn.

The ongoing dispute over whether to allow a ship-building business to open at a pair of unused slips at the Port of Los Angeles is expected to move into mediation this month, officials said Thursday....
Long Beach-based Gambol Industries has tried for several months to open a $50 million shipyard at old Southwest Marine site, but the company's latest proposal does not appear to pass muster with port officials.

As a result, the matter will now be mediated by Los Angeles City Councilwoman Janice Hahn, who has been a proponent for Gambol. Additionally, the city's administrative office will examine Gambol's proposal to determine if the business would fit in with the port.

There was only one problem. A week later, the media found out Hahn had a conflict.  $12,000 worth of conflict.

"I don't think it's a conflict," Hahn said initially when reached by telephone Wednesday.

"I've been asked to not talk to the press about this," she said. "The city attorney advised me to not discuss anything about this."

Now, stop and think about this for a minute. If you or I were a candidate that had received $12,000 from a company and were then asked to mediate a dispute involving that company, we would probably feel obligated to disclose the fact, if not recuse ourselves completely.

Janice Hahn apparently felt no such obligation, not even after LA City Attorney Carmen Trutanich warned Hahn the donations raised a red flag. In fact, it wasn't until the media blew the lid off the arraignment that Hahn suddenly got an attack of common sense.

Several hours after she was contacted by the Daily Breeze, Hahn called a reporter to say she had decided to recuse herself from the mediation, adding that since a committee she chairs oversees the matter it would give a perception of bias.

"I'd been thinking about it since last week when the city attorney instructed me before I went into a committee meeting that he had concerns," she said late Wednesday.

After talking to the newspaper, she said, "I thought about it again -- and thought it was best if I stepped down as mediator."

Hahn said she does not plan to return the campaign contributions.

"I think I could have been neutral," she said, "but I wouldn't want to jeopardize both sides being able to reach a compromise, so I'm stepping down."

While the situation would not have been illegal, it did raise questions about Hahn's ability to serve as a neutral mediator between Gambol and the Port of Los Angeles, according to Bob Stern, president of the Center for Governmental Studies in West Los Angeles.

"If the people at Gambol never previously gave her contributions, then the question is why are they giving her money now?" Stern said. "They aren't going to be wasting money on somebody who isn't helping them."

After the revelation and Hahn's recusal, negotiations between Gambol and The Port of LA began to unravel. The International Longshore and Warehouse union jumped on the news, claiming Hahn was jeopardizing the Main Channel dredging project and "acting on behalf of her campaign contributor Gambol Industries."

Meanwhile, the June primary for Lt. Governor came and went. Rival Gavin Newsom, who joined the race that winter, beat Hahn 55% to 33%.

In August, Gambol Industries filed conflict of interest charges against the LA Board of Harbor Commissioners, the deciding body in the dispute.

As its options are just about to run out, a company wanting to build a $50 million shipyard at the Port of Los Angeles has leveled conflict-of-interest allegations, officials said Tuesday.

Executives with Long Beach-based Gambol Industries claim the Los Angeles Board of Harbor Commissioners should not be allowed to decide the shipyard's fate due to alleged conflicts by two board members and the fact that the commission president's term has expired.

The move comes just as the harbor commission was expected on Thursday to decide whether to cut off exclusive negotiations with Gambol Industries based on findings that the company's proposed shipyard is not commercially viable and would likely delay the port's Main Channel deepening project.....

Stein alleged that Harbor Commissioner Joseph Radisich, a former international vice president for the International Longshore and Warehouse Union, may be prejudiced against the shipyard.

The union representing the port's dockworkers has expressed concerns that Gambol's shipyard could delay the Main Channel deepening project, which will eventually make room for larger cargo ships visiting port terminals.
Ironically (or not, depending on your level of cynicism) Gambol's attorneys demanded the dispute be sent to the Board of Referred Powers, a panel of five LA City Council members, including - you guessed it - Janice Hahn.

 This irony was not lost on the media.

Hahn declined to comment on the conflict-of-interest allegations raised by Gambol.

Additionally, Hahn did not return a phone call and a series of e-mail messages inquiring whether she would recuse herself from the Board of Referred Powers and what role, if any, she has played in the port's ongoing negotiations with Gambol Industries.

Stein abruptly hung up on a reporter when asked about any potential conflicts with Hahn, who has publicly advocated in favor of Gambol's proposed shipyard.

As expected, the Harbor Commission finally sunk Gambol's shipbuilding project in December, terminating the exclusive agreement brokered by Hahn, and allowing the Port of LA to proceed unhindered with the Main Channel Dredging Project.

In early January of this year, backed by the Orange County/Los Angeles Building and Construction Trades Councils, Hahn brought Gambol's project to the LA City Council in a last ditch effort to save it.

But then a funny thing happened on the way to the council vote. On January 25th, Hahn attended President Obama's State of the Union speech in Washington D.C. as Jane Harman's guest.
Hahn told Roll Call during an interview at a local sushi restaurant that Harman had asked her that week about her future political plans and whether she would ever be interested in running for Harman’s 36th district seat.
“I said, ‘Of course it would be wonderful to be in Congress, but you’re not going anywhere.’ And so she just nodded,” Hahn said between sips of hot tea.

Two days later, Hahn withdrew support for the project she'd championed for almost two years. 

The Gambol project, unpopular with the rest of the City Council, tainted by accusations of conflicts of interest, and opposed by powerful unions she'd need in a potential run for Congress, suddenly became a risk Janice Hahn was no longer willing to take.

Hahn's about-face came after myriad warnings that the port's Main Channel dredging project would be delayed up to three years if Long Beach-based Gambol Industries were allowed to build a $50 million shipyard at the shuttered Southwest Marine site on Terminal Island.

Hahn acted alone in her recommendation after a lengthy council committee hearing. Councilmen Bill Rosendahl and Tom LaBonge, who also sit on the three-member Trade, Commerce and Tourism Committee, were absent......

Gambol has paid $780,771 to lobbyists, according to the most recent records posted on the Los Angeles City Ethics Commission's online database.....

The issue had divided opinions between groups that normally cooperate with each other.

The Los Angeles Area Chamber of Commerce this week urged Hahn to give up on Gambol's proposal, while the San Pedro Chamber of Commerce supported the shipyard.

The Los Angeles/Orange County Building and Construction Trades said Gambol's plan would lead to construction and shipbuilding jobs.

At the same time, the International Longshore and Warehouse Union warned that delays to the dredging project would negatively affect dockworker jobs.

The deal with Gambol Industries was dead. The LA Weekly summed it up this way.

If Hahn could have pulled it off, it would indeed have been good for her constituents and good for her. (In addition to all the economic benefits, a successful shipyard would have been a source of campaign cash for years to come.) But when the Port of L.A. indicated it couldn't be done without threatening the dredging project, Hahn didn't back off. At that point it became a contest of wills between Hahn and the port.

Hahn brought the issue to the council not so much to win on the substance -- even if the council had agreed with her, the port could have deliberated the proposal to death -- but to make a point. Ultimately, the rest of the council opted to side with the port and bring the whole thing to an end.

"This is a sad day," said Ben Reznik, Gambol's chief lobbyist. "You had two years to make this work, and you've blown it. You blew it... Who is really running this show?"

At today's meeting, speakers who have fought against Hahn on the shipyard plan lined up to praise her commitment to the Harbor area and to jobs. Rudy Svorinich, a former councilman, laid it on the thickest, saying that Hahn had "moved from councilwoman to stateswoman."

At that point, a longshoreman leaned over and whispered, "From chicken to turkey."
Twelve days later, on February 7th, Congresswoman Jane Harman announced she was resigning her seat for California's 36th Congressional District. Within hours, Janice Hahn announced she would run to replace her. Her website was up by noon, a team of political consultants in place by the end of the day.

Within weeks, the LA/OC Building & Construction Trades Council, ILWU, and the San Pedro Chamber of Commerce - groups previously at odds over the Gambol project - all endorsed Janice Hahn for Congress.

In the end, no laws were broken, no shipyard was built, and none of the promised jobs were created. The Main Channel Dredging Project went on as planned, termed-out LA City Councilwoman Janice Hahn did not become Lt. Governor of California, Gambol Industries received nothing but unwanted media attention for their $12,000 investment in her, and many of Hahn's constituents were left wondering about their councilwoman's judgement.

Janice Hahn says she's all about jobs. In this case, she was.

Her own.

(full dislosure: I have endorsed Debra Bowen for Congress)

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