Port Hueneme on a path to sue Port of Hueneme for $8 million
City files petition for arbitration regarding back payments; district says no dice
By Chris O'Neal 09/12/2013
The city of Port Hueneme has officially filed a petition to compel arbitration against the Port of Hueneme, Oxnard Harbor District, claiming up to $8 million in back payments owed.
In the documents filed on Aug. 22, the city claims that an agreement reached in 1995 incorporating the need for arbitration over any perceived disputes should also include agreements dating back to 1987 and 1983, agreements that detail payments to be made to the city for use of the surrounding land, roads and services. The problem being that neither the ’83 nor ’87 agreement includes a clause for arbitration.
According to the city, the Oxnard Harbor District hasn’t calculated payments correctly since the 1983 agreement, but with Port Hueneme holding several closed-door sessions before filing the documents — a practice that has put it under scrutiny for possible violations of the Brown Act — there is no way to know how the city came up with the numbers.
Mary Anne Rooney, vice president of the Port of Hueneme, Oxnard Harbor District, said she believes the suit is unfounded.
“Over the last 29 years, we have had six separate auditing firms that have looked at the calculations of the revenue for the port and the city,” said Rooney. “There have been no findings that we have calculated the revenue sharing incorrectly. In fact, over the last three years the port has received awards of financial excellence from the American Association of Port Authorities, of which we’re a part.”
The three agreements detail the minutiae of everyday operations for the port and its dealings with the city that encompasses it. The 1983 agreement established that the city would provide maintenance to the roads used by the port as long as the port compensated the city with a percentage of its annual gross income monthly, while the 1987 agreement added a charge-per-vehicle that crossed through the city.
The issue comes from calculating what is included in the gross annual income numbers and whether certain aspects of the agreements were being calculated correctly.
“The city’s position is that the city has been collecting revenues not based on the gross operating revenues until relatively recently,” said City Attorney Mark Hensley. “The ’95 agreement had an arbitration clause in it and the issues are identical to the ’83 and ’87 agreements. We don’t want to have the exact same issue decided in two separate forums.”
Kristin Decas, executive director at the Port of Hueneme, believes that the claims are unsubstantiated. When Decas became executive director in 2012, she had an independent study of the port’s payments and nothing noteworthy was found.
“We’ve been paying these revenues for well over 20 years. They’ve been reviewed by several different auditors; it is the auditor’s calculation of gross revenue what we pay the city, and up until this time it has not been challenged,” said Decas.
The city of Port Hueneme has come under fire recently for its fluctuating budget shortfall. At one point in February, Financial Director Robert Bravo increased the number from close to $300,000 to $1.65 million due to the loss of a wastewater contract with the Navy, forcing the city to tap into reserve funds. Bravo expects this year to be different.
“It’s going to be much better than 2012,” said Bravo. “A lot of things hit at the same time in 2012.”
Bravo also served as an accountant for the Oxnard Harbor District for several years prior to joining the city in 2004. Bravo had no comment in regard to how the numbers have been calculated.
“The district and the city have had a calculation that has dated back 30 years, and the city decided one day that they didn’t agree with that,” said Christopher Pisano, special counsel to the Harbor District. “They feel that the way the gross operating figure as calculated isn’t fair to them, isn’t enough or all that it could be.”
If the two sides cannot reach an agreement, the city could possibly bring the district to court in a lawsuit.
“It would be our hope that they would not file such a lawsuit and would look back at the way it has always been done in terms of how the gross operating revenue has been calculated, and they would see that 30 years of a practice of doing it one way is strong evidence that that’s the way the parties intended it,” said Pisano.
“We stand strong by our posture that we’re not in the wrong,” said Decas.