What's A Port Worth Anyway?

CAVANAUGH: Our top story on Midday Edition is San Diego's 10th avenue marine terminal and irreplaceable economic engine or prime real estate being underutilized? That is being debated by powerful interests in our city, and a lot of that debate is taking place behind closed doors. Prime builders behind the stadium complex on the waterfront are looking to shore up support with local politicians. Lori Hearn, welcome to the program. HEARN: Thank you for having me. CAVANAUGH: And multimedia investigative reporter Brad Racino. RACINO: Thanks. CAVANAUGH: I want to begin with the part of your investigation that's making news today. You uncovered an e-mail from UT CEO John Lynch which says he's made significant progress in getting one of the mayoral candidates to support the plan to replace the terminal with a stadium complex. HEARN: Well, we acquired some e-mails between John Lynch and Scott Peters, the port commissioner, talking about this particular plan, and it was just a few days before the Dole lease was signed, the lease the port signed with Dole for 24.5 years more on the 9th avenue terminal. It was an e-mail in which John Lynch asked Scott Peters if he intended to vote for the lease, then he made mention he had made significant progress with many players who might weigh in on this, the county, the Navy, and also complied that he made significant progress with a mayoral candidate. CAVANAUGH: Unnamed? HEARN: Unnamed. CAVANAUGH: So today Bob Filner wants his opponent, Carl DeMaio to disclose his correspondence and meetings regarding the 10th avenue marine terminal; is that right? HEARN: Yes. As our report said, Carl DeMaio denied that he is the one referred to in this particular e-mail. And Bob Filner also has said that it is not he. And yesterday, Bob Filner had a news conference calling for Carl DeMaio, John Lynch, and Doug Manchester to release any correspondence or e-mails that might indicate some conversation about this particular plan. CAVANAUGH: Newssource asked both candidates in a taped interview. JOANNE FARYON: So, it's either you or Bob Filner or John Lynch isn't being completely upfront. CARL DEMAIO: I think you could probably ask Mr. Filner. BOB FILNER: I don't think it's me. CAVANAUGH: That was Carl DeMaio first, Bob Filner second, both saying no. There's a new wrinkle in that tale today. This e-mail chain from John Lynch to Scott Peters was altered. HEARN: Yes, that's the e-mail chain I was just referring to. This is the one that occurred in August, August 9th and 10th. And in it Scott Peter, using his private e-mail, I should note, wrote back to -- I'm sorry Nan e-mail from John Lynch to Scott Peters, asking him if he intended to vote for the Dole lease, Mr. Peters acknowledged that he removed a couple of sentences from that e-mail. The sentence that he deleted said "otherwise this will become a major issue in the campaigns, and the UT will be forced to lead a campaign to disband the port." CAVANAUGH: And just to be clear, what the substance of that particular e-mail is John Lynch asking Scott Peters if he plans to vote for the Dole deal, and the sentence deleted said "otherwise the UT is going to have to make this a campaign to disband the port." HEARN: Right. He was suggesting that there should be a provision if they approve the lease that would allow operations to be moved to national city if the board were to be disbanded. CAVANAUGH: Did Scott Peters tell you why he deleted that? HEARN: We asked him that this morning, he essentially said he deleted it because he was trying to avoid making this battle any bigger. He was trying to avoid creating a bigger fight than he felt the port was already involved in. CAVANAUGH: Let me step back for a moment. Last January, on the front page of UF San Diego, owner Doug Manchester and CEO of the UT John Lynch outlined their vision for the waterfront. What was that vision? HEARN: Well, that vision was to essentially eliminate the terminal, which sits on 96 acres, right below the Coronado Bridge, and replace it with an entertainment center, essentially. A sports complex, an arena, a football stadium, some Parkland. Quite a large entertainment area. CAVANAUGH: And what was the reaction to that editorial? HEARN: Well, this proposal to user the terminal for something else has been debated for a long, long time. And the reaction was a big buzz downtown. Lots of people talking about it, ultimately the port commission took it up on its regular agenda and essentially reaffirmed its prior stance that that terminal should remain a terminal. CAVANAUGH: Despite the powerful negatives that came about in the wake of this proposal, your investigation shows that John Lynch seems undeterred by this. What did you uncover? HEARN: It does appear he's undeterred, for sure. He has spoken to groups since that vote by the port commission. And even since the Dole lease was signed, which many people thought meant the end to this vision because it's a 24 year lease, Scott Peters told John Lynch in the e-mail exchange that that lease could be undone. But since then, John listen has spoken as recently as a couple weeks ago to a business group suggesting that they're having meetings with people in the right places and they're making progress on this vision. CAVANAUGH: We have a clip from John Lynch's address at that business club meeting about the Dole deal. JOHN LYNCH: What great scandals of our time, the port tried to do this which I kitta banana caper, and a million dollars a year of net lease coming in to tie up that port site. Two hotels, two hotels, 1,000 room hotels generate $51 million a year for the city, for the port. CAVANAUGH: Okay. So that's what your side, Brad, of this investigation comes in. The which I kitta banana caper that he refers to, what's he talking about? RACINO: It's, like, our favorite quote of the week. It's the Dole lease, the lease that secures that property for the next 24.5 year, essentially halting any other talks of development on the terminal for whatever other reasons, for a stadium or park. CAVANAUGH: Before we get into the political flap that seemed to develop over the first part of the investigation, the e-mails going back and forth, and continuing now the investigation also focuses on who the 10th avenue marine terminal is an asset to the city or whether that space might be better used in another capacity. So this argument as Lori indicated has been going on for a long time. And there is the suggestion that the terminal doesn't generate a lot of momoney for the city. RACINO: Well, some of that argument is true. It does not generate money for the city directly. They only make about $7 million a year. Indirectly, they generate a lot of job, a lot of revenue, for the city, for the county, for the state. But you have to look beyond the leases. CAVANAUGH: So are the critics right? RACINO: Well, I don't know if we could say that definitely. But what the critics don't seem to be taking into play are these secondary industries. When they bring up this argument, they talk a lot about square footage, how much a lease brings in per square foot. You heard John Lynch saying a hotel could bring in X amount of dollars more per area foot. He's absolutely right. But experts say it's not the port's agenda to squeeze every dollar out of every square foot. If it was, there would be no public access for the citizens of San Diego. CAVANAUGH: We just heard both Carl DeMaio and Bob Filner say they don't support putting a stadium on the waterfront. But where do they stand on the future of the 10th avenue marine terminal? RACINO: Well, they both agree that there could be more being done there. Both of them speak a lot about infrastructure, improving the infrastructure there, getting more business from overseas. Carl DeMaio speaks more about auditing the port, about holding them accountable, more of a strong stance toward it, whereas Bob Filner's plan is not as concrete. He talks a lot about floating shipments from here to LA, taking trucks off the road, those kind of things Burk he hasn't been as specific as DeMaio has. CAVANAUGH: But the port was if I recall a major part of what Bob Filner thinks is going to regenerate jobs in San Diego; is that right? RACINO: Yes, he says it's the single most underutilized property in San Diego, and underutilized source of jobs in the city. CAVANAUGH: So both of the candidates see a vision for the future of the 10th avenue terminal that does not include it being torn down and changed into a football stadium complex? RACINO: Right. CAVANAUGH: Okay. Did you find out that it was possible to expand commerce at the terminal? RACINO: Well, in terms of the footprint, you can expand. That land is going to be that land. You can't make it any bigger. There's always room for improve in terms of getting more companies to come and do their dealings through the port. There's a lot of open space there. So you do have the leased space, which is taken up for X amount of years, but then half of that space is open where they have a lot of shipments come through and sit on the dock, and warehouse space. So I think if they were to improve that space, it would have to be done through the open areas and getting more companies to come through. CAVANAUGH: And you put together an interactive app where people can learn more about what goes on there. RACINO: They can find that at KPBS.org/port. CAVANAUGH: I want to turn back to another aspect of the Inews source investigation into the port and the UT planned to put a stadium complex there, replace the terminal with a football stadium, basically. And I want to go to a caller that we have. Scott Peters who we mentioned earlier in our conversation is on the line right now, he is of course port commissioner and a congressional candidate. Welcome to the program. SCOTT PETERS: Thanks. And I just want -- I appreciate your reporting on this, I think it's an important topic. I just wanted to call in with a response to the notion that I had altered or deleted an e-mail chain, which is just not the case. Just for clarity, when I got this e-mail, I forwarded part of it on as a question to the port so that we could make sure that we understood the effect of the Dole lease on our future years. That's all the port had to turn over when they -- when they responded to your request. And then someone asked me yesterday if there was more, and I was happy to provide it. It hasn't been deleted or altered. You have today the entire correspondence about that, and I just didn't want to leave the impression that I had not -- that I tried not to do that. CAVANAUGH: And we're very appreciative of that, Mr. Peters. I'm also wondering, didn't you tell us that one of the reasons that that sentence was left off was so it wouldn't further enflame the issue? SCOTT PETERS: Well, when I sent it to the port, it was the day before the vote. So I only sent the part of the e-mail that had to do with that question. So the idea that I had altered it or deleted it is just not correct. CAVANAUGH: Okay. We have the whole thing now. SCOTT PETERS: Yes. I'm happy to provide it, and I think it's fair to note that you got it from me. So it was not deleted or altered. You have the whole thing. And I appreciate the reporting you've done on it. And I just spoke to Amita in my office about 20 minuting --. CAVANAUGH: Okay, all right. Well, I appreciate your calling in, and thank you very much. That was Scott Peters, congressional candidate, and port commissioner. And reaction to Mr. Peters and his assertion that this was not an altered document that you received? HEARN: Well, are the way I understand it, and one of our reporters talked to Mr. Peters this morning before the show, he sent that e-mail to the port with a question, according to what he just said, and when we put in our public records acts request, what was returned to us was that truncated e-mail. So he was not eliminating those sentences so they wouldn't become public. But they were not part of the public record when we requested it. CAVANAUGH: Okay, all right. Let me request back -- HEARN: And he did tell our reporter that he had taken those sentences out because he didn't want to create a bigger fight than they already had on their hands. CAVANAUGH: Let me go back to the news of the day that came out after your investigation. In requesting e-mails and correspondence and minutes of meetings between Carl DeMaio and John Lynch and Doug Manchester, Bob Filner seems to be implying that there's a relationship that exists between DeMaio and the UT owners that does not exist between them and Filner. HEARN: That is clearly true. Carl DeMaio admits that he's known Doug Manchester since shortly before he came to San Diego. He call him up in 2003 and had a conversation with him about things they felt similarly about. They were both involved in a political action committee in 2004 that John Lynch and Manchester and Carl DeMaio were the primary donors to. And Carl has said that he has had conversations, at least one conversation, with them about this. CAVANAUGH: And there's also another very intriguing aspect of this story. It's a multifaceted investigation piece that you did that we will be talking more about on Midday Edition Roundtable tomorrow. And that is the part that your investigation discovered about the possible, possible financial benefit Doug Manchester might see from a redeveloped waterfront. Tell us about that. HEARN: Yes, this was not readily apparent. The Union Tribune when it ran its editorial in January in promoting and proposing this big project ran an editor's note saying that the new owner of the Union Tribune had sold the hotels he developed down in in area and didn't have an interest in the other components that went with this proposal. What we found through digging through SEC and other documents was when Mr. Manchester sold his hotels to host hotels and resort, he sold them not entirely for cash but in trade for stock, some shareholder interest, and at the day he acquired that, it was worth more than $200 million. So the logic here is he doesn't directly still own the hotel, but he does have an interest in a hotel company. If that hotel company benefited from development at the terminal, the share holders would as well.