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Funds generated are expected to raise $1.4 billion for rail, road improvement projects

LOS ANGELES – 01/15/08 – The harbor commissions of both the Port of Los Angeles and the Port of Long Beach have jointly approved a new “infrastructure cargo fee” (ICF) aimed at generating $1.4 billion for a host of transportation projects “to improve traffic flow and air quality in the harbor area.”

Beginning January 1, 2009, the new fee will be assessed on every loaded 20-foot equivalent (TEU) cargo container entering or leaving any terminal at either port by truck or train. 

The amount of the fee “will fluctuate based on the current funding needs of approved projects.”

According to the original fee proposal, the ports “have explored all available federal, state and local sources of funding for infrastructure projects. Although such funds are available and the ports have been successful in obtaining funding from all these sources for these infrastructure projects, these funds are insufficient.

Federal and state sources, it said, “typically require local matching funds and public-private partnerships,” which “neccessitates the ICF to supplement other sources of funds and to serve as the local match for these funds.”

It is anticipated “that the charge would be $15 per loaded TEU for seven years, but could vary depending on how quickly the ports move forward with their projects,” the ports said.

The new ICF is being levied on loaded containers only “because empty container moves are ancillary to loaded container moves: repositioning containers for the next load.”

In addition, “it is extremely difficult to attribute empty container moves to cargo owners and consumers, the ultimate beneficiaries of cargo movement,” the ports said.

The fee will be collected against the cargo in an amount appropriate for the primary move and all related use of the infrastructure projects, and will only be imposed once on each loaded container.

Some containers, the ports said, “move between terminals within the ports because the first terminal does not have on-dock rail or because each terminal does not have enough cargo to make up a train for a particular destination without supplementation from other terminals.

Under the ICF, the first terminal to handle such a container will assess the fee and the movement of the container to another terminal will be exempt from the fee.

Funds produced by the new fee, which applies to the entire San Pedro Bay region, will also be used to match Proposition 1B funds, which California voters approved in 2006 to help pay for major transportation and air quality improvement projects.

Combined, the cargo fee and Proposition 1B funds will finance about $3 billion in improvements at both ports and only be used for approved local projects, while spending will be limited to specific projects after project approval by the applicable lead agency and fee collection would stop when those projects are completed.

All of the proposed improvement projects are included in the statewide California Goods Movement Action Plan.

As proposed, cargo fee revenue and Proposition 1B funds will fund both rail and highway projects including improvement of the ports’ rail network and local highway improvements including the replacement of the aging Gerald Desmond Bridge, which links Long Beach and Terminal Island, and the construction of an interchange to allow the removal of a traffic light at Navy Way and Seaside Avenue.

The ICF will also fund projects to improve access from the Harbor Freeway to the Port of Los Angeles and upgrade the Terminal Island Freeway by replacing the Schuyler Heim drawbridge and constructing a four-lane, elevated expressway between Ocean Boulevard and Alameda Street at Pacific Coast Highway.

The decision to impose the new ICF follows on the heels of a cargo fee of $35 per loaded TEU enacted last month to help generate $1.6 billion to help fund the ports’ Clean Trucks Program aimed at replacing and retrofitting older, diesel-powered trucks.

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