Port of San Diego hits back at ethics, reform proposals in Alvarez bill

San Diego Port District commissioners dug in harder against a bill pending in the state Legislature that would require ethics and governance changes to the agency, saying they would support it so long as large sections were cut and several amendments included.

At a special meeting Monday afternoon the commissioners voted 6-1 to oppose AB 2783, a bill from San Diego Assemblymember David Alvarez, unless changes covering funding, ethics reform and governance of the board were adopted.

The move is the latest in a faceoff between Alvarez’s attempt to reform the powerful agency and the port’s resistance. When he introduced the legislation in February, the port said it was concerned that the bill would have “many negative impacts” and hurt businesses.

The port controls activity on tidelands in five cities: San Diego, Coronado, National City, Imperial Beach and Chula Vista. While each city appoints a representative — San Diego as the largest city appoints three — the port operates as an independent special district established under state law, and its decisions are not subject to ratification by elected officials or residents of the member cities. 

The port’s preferred version of the bill would cut out large sections dealing with term limits, lobbying and disclosure of any evidence relating to the censure of any commissioner for unethical conduct. 

It would also disregard two new proposed funding set-asides intended to mitigate harmful effects from maritime businesses, and replace them with a current funding scheme that the port has used since 2010.

The commissioners also rejected some of the ethics provisions Alvarez proposed, which include adopting an ethics code and appointing an outside, independent ethics board to investigate allegations against commissioners and staff.

The commissioners noted the agency already has an ethics code, which is in the process of being updated. 

And while agreeing to an ethics board, the agency wants language limiting the amount of information that could be publicly disclosed to what is already allowed under other state laws. Under the port’s proposal, its current top lawyer, Thomas Russell, would be the chief ethics officer.

Alvarez said in an interview Tuesday that he welcomed the port’s input and was open to changing portions of the bill, such as the funding proposal. But he said he was disappointed with the ethics reform proposals, including keeping the general counsel as the top ethics officer.

“It’s good that they’re engaging publicly,” Alvarez said. “I think my biggest takeaway though is the lack of seriousness being taken on the independent ethics and transparency measures — good government measures that are part of the bill, which were completely stricken out.”

The port also wants to eliminate provisions that would ban commissioners from lobbying the port for one year beginning Jan.1 of the year after a commissioner has left — a longer cooling-off period than required by current state law — and limit a commissioner to three terms.

A staff report on the bill said that these and other provisions were either contrary to state law that established the port in 1962, or imposing new conditions that no other ports in the state have to deal with. 

For example, Alvarez’s bill sought to establish two new funds with port revenues. The Community Impact Fund would take 1% of nontax gross revenues for projects to address the impacts of maritime industrial projects. The Future Public Access Fund would take 1% of revenue from port tenant leases to create open space projects in disadvantaged neighborhoods. 

The staff report said such funds could be “problematic,” because it would not comply with legislative requirements directing how revenues generated by maritime activities can be spent.

The district currently has a fund designating 2% of gross maritime industrial revenue to mitigate impacts from maritime activities. The port said it would agree to enshrine that policy into Alvarez’s bill — so long as the other two funds are eliminated. 

Even with the changes, nearly all the commissioners voiced various levels of displeasure with the existence of the bill, especially its governance and ethics pieces. 

“I have no problem strengthening our code of ethics,” Commissioner Dan Malcolm said. “But I can also tell you sitting here 14 years, that if you follow the ethics, we have a very strong code of ethics.” 

He said the bill was “a solution looking for a problem” and defended the port’s work over the years. “As long as you adhere to what we have here, our code, I think that this organization is run very well,” he said. “And I don’t think we’ve had a lot of ethical issues.”

The lone vote against the proposed changes came from Naranjo. She said she was open to some changes proposed by the staff, but that overall the bill was “a step in the right direction” for the agency. 

The bill “is not the first time the port has been asked questions about what we’re doing, who we are, and how we operate,” she said. “And we shouldn’t attack those that ask those questions. We should just answer the questions directly.”

Alvarez said he wrote the bill as a result of a San Diego County Grand Jury report last year that called for more oversight and transparency from the powerful agency, and after a year of controversies for the port district. 

The chief financial executive left in May without explanation, and the former president and CEO was put on administrative leave when an internal investigation was launched. The reason for the investigation has never been revealed, even after the executive reached a separation agreement in January that paid out $371,000 in severance. 

Also in October the board took the unprecedented step of censuring Commissioner Sandy Naranjo, who represents National City. The censure said Naranjo had retaliated against Russell and tried to get him fired after he raised questions about possible conflicts of interest she had stemming from outside business dealings. 

The move stripped Naranjo — a self-described environmental justice advocate who has worked to address air quality issues caused by maritime activities — of her role as vice chair, a position that put her in line to be the chair of the commission this year, and barred her from committee assignments. 

The controversies have been costly. The Port District, which is funded by revenues from maritime businesses and not tax dollars, spent at least $900,000 in legal fees on the censure and investigation, records show.

Alvarez’s bill passed the Local Government Committee in the Assembly two weeks ago and has now advanced to the Appropriations Committee. 

Alvarez said he expected to incorporate some of the changes the port wants in a new version of the bill, probably by the end of the week.