By Telefax 925-674-0983
Congressman George Miller
1333 Willow Pass Road, Suite 203
Concord, CA 94520
Dear Congressman Miller:
July 26, 2007
As per my conversation with your Vallejo representative, Kathy Hoffman,
I am requesting a meeting with you to facilitate negotiations between
the Lennar Corporation, the City of Vallejo and Santa Maria Shipowning
and Trading regarding the lease of drydocks 3 & 4 at Mare
Island for the purpose of building US flagged vessels.
Santa Maria is also willing to develop preparatory actions
at drydock 2 to establish an
emergency impoundment in the event of a possible catastrophic flooding
situation in one or more vessels from the MARAD reserve fleet at Suisun
Bay (see news story). Mare Island is a vital national security resource
that needs saving and modernization. We need your help to lease the
drydock facilities and seek an authorization for the Army Corps of Engineers
to re- dredge a channel between the drydocks and the ship channel.
Yesterday, I made a presentation to
the staff of Los Angeles Mayor Anotonio Villagairosa supporting the
construction of a 10 ship fleet to relieve truck congestion and pollution
at the ports of Los Angeles and Long Beach by moving ocean containers
to the Ports of San Diego and Port Hueneme. Next week, I am speaking
to the Southern California Association of Governments on the same subject.
Last February, I testified before the House Transportation Committee
on how to develop a national system for short sea shipping to relieve
truck congestion along coastal corridors. I have made a similar
proposal for a 3 ship fleet to relieve Oakland port congestion by transporting
containers to Stockton by water. Both vessel services can be competitive
because ships consume 50% less fuel than trucks thus saving shippers
money. Best of all, no taxpayer support is needed.
Santa Maria Shipowning & Trading
is a California start-up company that has been attempting
to build and operate US flagged vessels and has been thwarted from leasing
facilities at Mare Island since 2003. The principals are myself and
my cousin I.P. Margaronis, a retired London-based shipowner. Both of
us are descended from Greek shipowning families. Santa Maria's shipbuilding
team is supported by the Central Industry Group from the Netherlands
and by an international team of shipbuilding consultants and suppliers.
Just as a personal reference, I worked for Don Bradley and George Moscone
during the 1970's as well as Mary O'Shea, Don's assistant.
Background
When the US Navy base at Mare Island shut down over ten years ago, the
shipyard property and other coastal lands were placed under the jurisdiction
of the State of California to be used for maritime and other public
uses including parks. The Lennar Corporation was given temporary title
to the coastal public trust lands until the environmental cleanup of
these parcels was certified by the California Department of Toxic Substances
Control (DTSC). DTSC said that certification was obtainable in 2006.
The Mare Island properties then revert to State ownership with the City
of Vallejo acting as the landlord representative. The City was planning
on transferring the land over to Lennar control, but public trust uses
are still mandated by California law. In addition, the City of Vallejo
donated over 600 acres of Mare Island property to Lennar in exchange
for promises of property upgrades. In a case study of privatization
gone bad, Vallejo lost millions of dollars from the Mare Island donation
and may have lost millions more by Lennar's refusal to lease public
trust lands for maritime and other mandated uses. Lennar also spent
several million dollars defeating Vallejo’s use of a dredge repository,
costing the city millions in revenue. With Santa Maria, Lennar insisted
on noise and visual restrictions at the drydock sites suggesting it
seeks commercial and residential development of the public trust lands.
Residential development and commercial offices are both prohibited by
State law. Throughout Lennar's management of the public trust properties,
the City of Vallejo has been a steadfast supporter. The unfortunate
result of this loyalty has been that the worsening housing slump has
brought Mare Island home building to a standstill so that both Lennar
and Vallejo now face financial crisis. Lennar has reported successive
historic quarterly losses.
Santa Maria's proposed shipbuilding use of drydocks 3 and 4 at Mare
Island would employ 200 people directly, create 400 indirect jobs and
generate $12M in new direct household income. Mare Island would
become a shipbuilding center again and generate suppliers for steel,
paint, joinery, electrical, piping and marine propulsion and a welder
education school in cooperation with Solano Community College. The benefits
to Solano County and to California could be sizeable. Proposed container
shipbuilding for short sea applications is designed to reduce trucking
emanating from ports nationwide including Oakland, Los Angeles and Long
Beach.
The Philadelphia Story
The case of the Philadelphia Naval Shipyard, a sister yard to Mare Island
that was shut down at about
the same time, is instructive. Under a joint city and state collaboration,
a world-class shipbuilder was attracted to Philadelphia and is currently
building tankers for the US trade and has ship orders until 2011. Six
thousand people now work at the reconstituted Philadelphia shipyard
site. Industrial uses were supported and home building restricted so
as to maximize economic development. The site has attracted shipbuilding,
ship repair, steel fabrication and welder training. The US Navy maintains
a research and development center there. Retailer, Urban Outfitters,
established it's headquarters there and a new hotel complex is being
built to house the growing business workforce servicing the complex.
The Philadelphia example is cited as a model of base reuse. The
economic stagnation at Mare Island
under Lennar's stewardship is, unfortunately, a vivid contrast.
Santa Maria Efforts To Establish Shipbuilding At Mare Island
Santa Maria has made two unsuccessful attempts to lease drydock space
at Mare Island. It seeks a third opportunity to rescue this vital shipbuilding
facility for the benefit of the people of
Vallejo, California and the United States. Reportedly, other companies
have had similar problems to those described below:
* In March, 2003, Lennar refused to sign a non-disclosure agreement
necessary for Santa Maria to transmit proprietary financial information
to demonstrate its shipyard viability for leasing drydock 4. The action
killed the proposed deal. Lennar insisted the problem was Santa Maria
finances.
* In March, 2005 Santa Maria offered a more lucrative deal to Lennar.
It sought to lease drydocks 3 and 4 for five years with multi-year options.
Lennar refused to negotiate a lease and instead stretched out negotiations
for a letter of intent for the next fourteen months. In April, 2005
Santa Maria provided Lennar with requested financial information even
though Lennar still refused to sign a non-disclosure agreement. To this
day, Lennar insists that Santa Maria did not provide necessary financial
information, has no money and no market prospects. In September, 2005,
Lennar admitted losing Santa Maria financial information. Santa Maria
provided a new copy of the information plus a letter of inquiry for
building four ships from a European company. Lennar ignored the
new information. In May, 2006, after Santa Maria took its complaints
to the Vallejo Times Herald, Lennar insisted that a new provision be
added to the letter of intent prohibiting Santa Maria speaking to the
media and the public about the shipyard negotiations, which relates
to a property under California State jurisdiction. Lennar and Vallejo
City official Craig Whittom threatened to end negotiations over the
gag order. When Santa Maria refused to be slienced, Lennar
and Vallejo declared lease negotiations dead.
Vallejo voters, meanwhile, want shipbuilding back. A 2006 poll, commissioned
by Santa Maria that surveyed Vallejo voters, found that 65% of voters
supported re-establishing shipbuilding at Mare Island.
Santa Maria respectfully requests that
Congressman Miller facilitate a meeting with Lennar, the City of Vallejo
and Santa Maria for purposes of sanctioning lease negotiations for drydocks
3 and 4. Santa Maria is willing to develop a
concurrent plan for the use of drydock 2 as an emergency impound so
as to forestall hull disintegration of MARAD reserve vessels currently
anchored at Suisun Bay, which will soon be towed to Texas. Santa Maria
has staff expertise specific to Mare Island dry-dock usage and preparatory
elements. This plan to be developed in coordination with the California
Department of Toxic Substances Control (DTSC),
Regional Water Quality Control Board (RWQCB), and the Maritime
Administration (MARAD). Note: Lennar leases have prohibited
shipbreaking.
Sincerely,
A.P. (Stas) Margaronis
Santa Maria Shipowning & Trading Inc
Ccs: Stan Golovich
Marilyn Nickles
Grace Kato, California Public Lands Commission
Local options slim as dismantling
ships in Texas more cost-effective
By Thomas Peele/MediaNews Group
Article Launched: 07/15/2007
08:23:59 AM PDT
Officials continue to grapple with how to best dismantle the ships polluting the Bay. With the Bay Area's abundant maritime traditions, major port facilities and former Navy bases - including Mare Island - one might think that nearby disposal of obsolete government ships anchored in Suisun Bay would be easy:
Haul them someplace safe in
Northern California. Cover them. Cut them into pieces. Recycle the steel,
copper and other metals. Bury the asbestos, PCBs and other toxic waste
in landfills. Move on to the next decrepit vessel.
So why has the U.S. Maritime
Administration towed ships thousands of miles to Texas to dismantle
them? There are several reasons:
• There are no active ship-scrapping
yards from Seattle to San Diego. Oregon recently beat back attempts
to start one there by passing a law requiring the work be done in dry
docks.
• California is seen as too
costly because of steep labor costs and strict environmental regulations.
• Building a new dry dock
facility to dismantle ships is prohibitively expensive.
• Texas, meanwhile, welcomes
the work. Companies there outbid competitors, even when 6,000 miles
of ocean towing is built into the price.
So as the Maritime Administration
and California regulators grapple with how to best dispose of 53 of
the 74 Suisun Fleet ships that have outlived their usefulness, there
seem to be no local options. Environmentalists, ship scrappers
and regulators all agree that the vessels, which are shedding toxic
paints into the water, must be removed and destroyed.
But the U.S. Coast Guard insists
that before more Maritime Administration ships are hauled to Texas,
their hulls must be cleaned of marine growth that could be spread to
areas where it is not native. In turn, state water regulators are requiring
protective steps to ensure the hull cleaning doesn't pollute the region's
waters with toxic metals.
If the ships were scrapped
in the Bay Area, their hulls wouldn't need to be cleaned. It would also
eliminate the need to tow the aging vessels - that carry thousands of
tons of old fuel, asbestos and cancer-causing PCB's - across thousands
of miles where more paint could fall into the water.
There would be added environmental
safeguards because California would require that the work be done in
dry docks, like those still at Mare Island, where scrap metals and toxics
like asbestos and lead paint could be contained.
There are now two proposals
to do the ship scrapping in the Bay Area, but both appear to be long
shots.
Retired naval officer Gary
Whitney wants to use the dry docks at the former Mare Island Naval Shipyard
that he says could easily be made operational. More recently, Richmond
Councilman Tom Butt proposed renovating long-abandoned dry docks on
that city's waterfront.
But, as Whitney knows, there's
a reason no major ship scrapping has occurred in the Bay Area since
four Navy frigates were cut up eight years ago at the former Hunters
Point Naval Shipyard in San Francisco.
"It's always going to
be more expensive to do it here," Whitney said last week. "It's
tremendously less costly to do it in Texas."
Whenever Whitney, who owns
the only certified ship dismantling company on the West Coast, bids
on a scrapping contract he loses out to competitors in Brownsville,
Texas.
Even with nearly 6,000 miles
of towing costs factored in, those Gulf Coast companies underbid Whitney
because of a roughly $40 per worker-hour cost difference.
To use Mare Island, Whitney
would need a contract with Lennar Corp., Vallejo's master redeveloper. A company spokesman expressed caution
about doing ship-breaking near where it wants to build homes and less
environmentally threatening businesses.
The Mare Island Strait would
have to be dredged to get the ships to the work site, adding another
major, expensive hurdle.
Richmond is an even less attractive
alternative because the dry docks are in serious ill-repair, said John
Gibbons, a consultant to scrapping companies.
Without those dry docks, the
next option might be building new ones elsewhere. But, there would not
be enough business to recoup start-up costs that could exceed $100 million
and take years to complete, Lovett said.
Congress is watching the situation
closely. "We would want to take a close look" at any proposal
to scrap the ships in California, said Danny Weiss, a spokesman for
Rep. George Miller,
D-Martinez. "What we don't
want to do is waste any more time."
E-mail J.M. Brown at jmbrown@thnewsnet.com or call 553-6834.