Alvarez bill seeks big changes in Port of San Diego governance

Assemblymember David Alvarez has proposed legislation that would bring sweeping changes to governance of the powerful Port of San Diego, including instituting term limits and residency requirements for the city’s commissioners. 

The legislation, filed Feb. 15, comes after a tumultuous year for the Port District staff and its seven-member governing board of commissioners. 

Two top executives left for reasons that have not been publicly disclosed, one commissioner got an unprecedented censure, and another abruptly resigned. That’s meant potentially hundreds of thousands of dollars in unexpected spending on private law firms that officials have largely left unexplained, according to records that inewsource obtained.

The port was also the subject of a critical June report by the San Diego County Grand Jury that criticized the agency’s governance structure and transparency, and made eight separate recommendations for change.

In a formal response, port officials rejected seven of those recommendations, saying they are “not warranted” or “not reasonable.” One other recommendation regarding the posting of port agendas is already being done, the response said.  

Yet, one of the grand jury’s recommendations — a term limit for commissioners — made it into Alvarez’s bill.

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. 

Among the changes that Alvarez is proposing:

• Requiring at least one of the three commissioners appointed by San Diego to live in one of the city neighborhoods affected by port activity: Barrio Logan, Logan Heights, Shelltown, Sherman Heights or Southcrest. 
• Limiting commissioners to three, four-year terms, and rotating the roles of commission chair, vice chair and secretary annually. 
• Adopting a code of ethics for commissioners, and establishing an independent ethics board to hear ethics complaints. 
• Establishing a two-year cooling off period banning commissioners from lobbying, contracting or working for the port after they leave. In an interview Alvarez said extending that ban to senior administrators is also a possibility.
• Setting up two funds to address longstanding concerns of residents in the area. 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. 

As a San Diego city council member from 2010 to 2018 representing the city’s portside neighborhoods, Alvarez said the events of the past year called for reform over how the port — established by state law in 1962 — conducts its business. 

“I think it’s time, 60-plus years since its inception, to reform it into a way that is more accountable,” he said. “And that means (to) our high expectations of what a public agency should be doing.”

‘Unintended consequences’

The Port District pushed back hard on Alvarez’s legislation. In a statement, spokesperson Brianne Mundy Page said the port opposed the bill because of “the unintended consequences and many negative impacts it would have on the people and businesses of our region.”

She said the term limits and ethics requirements “can easily be handled at the local level,” and any state legislation would violate the terms of the 1962 Port Act, which created the district. 

“Other provisions, like the ones diverting Port funds and converting maritime/industrial areas to open space, threaten good local jobs on the waterfront and essential maritime and industrial uses that are critical to the regional economy,” she said.

For this fiscal year the port is projecting revenues of $310 million, nearly half or $130 million from its lucrative real estate activities that include money from tenant leases. Maritime business accounts for another $47 million. 

The district is entirely self-funded and gets no direct taxpayer dollars.

Legal fees mounting

The port has been rocked by a succession of events that started when Robert DeAngelis, the chief financial officer for the agency, abruptly left in May.  

About two months later Joe Stuyvesant, who had served as the president and CEO since early 2021, was suddenly put on administrative leave while an internal investigation was launched. The reason for the investigation has never been publicly revealed. 

Then, in October, the commissioners levied an extraordinary censure of Commissioner Sandy Naranjo, the representative for National City. The censure said Naranjo had retaliated against the port’s top lawyer and chief ethics officer 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. 

Officials with National City were angered by the censure, which they said disenfranchised city residents. At the meeting where the censure was levied, Naranjo supporters said the move was politically motivated and aimed at sidelining her from positions of power in the agency. 

Then, in January, the port announced Stuyvesant was resigning — still without disclosing why he was placed on leave and investigated. A settlement agreement gave Stuyvesant one year’s salary plus three weeks of pay — or $371,000. It also included paying out $40,000 in legal fees to his lawyer.

Just three days later, Commissioner Rafael Castellanos, who had just completed a term as chairman, abruptly announced he was resigning, effective immediately. He said he wanted to focus on his full time job as a lawyer and family issues.

However, Castellanos late last year sought an opinion from the state Fair Political Practices Commission as to whether he could be hired as port CEO. The agency said he could but he had to resign his position first. 

When he did, Castellanos told the San Diego Union-Tribune he was not going to seek the CEO position.

For Alvarez, the year of tumult has shown the Port District needs change. 

“I truly believe that this would be impactful, and really change the culture of the board, the accountability to the public, and the transparency, specifically to the most impacted communities that have been disproportionately impacted by decisions the port has made historically,” he said.

The turmoil has been costly. Records show the Port District hired a series of outside law firms to conduct investigations, authorizing at least $500,000 in fees related to the Stuyvesant and Naranjo matters.

Alvarez said that he consulted with port staff and representatives for the appointing cities in drafting the legislation. He said there was support from the member cities for the port being more responsive to the public, which was an issue that the grand jury also highlighted. 

But there has not been much support from the port itself. “I assume the concerns are from the port wanting to continue to have that very insular type of existence that they’ve enjoyed for 60 years,” he said. “A lot of power, with very little oversight, is very comfortable.”

Even so, Alvarez said he is hopeful to be able to work with the port and the cities as the legislation moves forward.