Lease on land now used by AMPORTS, Valero expires in 2031

By Jim Lessenger
Special to The Herald

The wharves of the Port of Benicia are located at Army Point in what was, until 1964, the Department of Defense’s Benicia Arsenal. They are best observed from the parking lot of the Clocktower Fortress on Washington Street. There are two of them, the long wharf and the Valero fuel wharf. The long wharf, used by AMPORTS, one of the largest auto processors in North America, to accept shipments of automobiles and to ship out PETCO —petroleum coke, the byproduct of gasoline production. The Valero wharf is used to off-load crude oil from around the world.

The question of who actually owns the wharves comes up from time to time in discussions around Benicia. It includes the question of who owns the submerged and marsh lands under them. Another associated question is what entity owns the dry land of the Port and former Arsenal.

The answer is complicated and — as is common in Benicia — extends back to the 19th century. What follows are chronological excerpts from documents, newspaper articles, and letters found in museum, city, state and federal archives. Many of the materials were provided by the U.S. government’s General Services Administration and by the California Lands Commission.

The historical record.

7 October 1862: President Abraham Lincoln ascensioned the land within the Arsenal for the U.S. government.

9 March 1897: An act by the California Legislature “relinquish(ed) to the United States of America the title of this State to certain lands.” The state ceded to the U.S. the land in the Arsenal between the high and low water marks. This act provided that the property shall be held by the U.S. government so long as it retains ownership of the upland area adjacent to the tidelands.

15 September 1935: California Legislature passed “An act ceding to the U.S. certain tide and submerged lands of the State of California upon certain trusts and conditions.” The tide and submerged lands of the Arsenal were ceded to the U.S. for as long as the federal government used them. Should the federal government stop using them, the land was to revert to the state of California.

12 June 1941: The Army let a contract for $650,000 to Robert E. McGee of Los Angeles for a 500-foot wharf. The wharf was completed in spring 1942 and subsequently extended.

1 July 1962: Appraisal by Alfred L. Wanger of Vallejo found the wharf to be 2,200 feet long, of which the first 600 feet was of concrete construction and showed no noticeable evidence of deterioration. The balance of the structure was, however, in an advanced state of deterioration. During World War II and the Korean War, the wharf was used day and night to ship and receive goods and sustained a tremendous amount of damage, Wanger found. The poor condition of the wharf lowered its appraised value to around $300,000. A second appraisal, paid for by the GSA, resulted in a similar appraisal.

1 December 1962: In a letter to the Benicia City Council, appraiser Alfred L. Wanger indicated that approximately 180 acres of Arsenal property was former tide and submerged lands that filled in since an 1856 survey. This discrepancy, Wanger said, will have to be resolved.

October 28, 1963: The Benicia Herald reported that a meeting was held in the offices of the California State Lands Commission in Sacramento regarding the tideland boundary of the Arsenal. Representatives of the Lands Commission, the Corps of Engineers, the GSA, and the city of Benicia were present. In addition, state Sen. Luther E. Gibson, publisher of this newspaper, was present. Everyone agreed to reset the tide-line boundary because of the infill from soil washed down from the Sierra Nevada mountains caused by hydraulic mining during the Gold Rush and by installations the Army extended into the submerged lands.

4 December 1963: The State Lands Commission proposed a new boundary agreement. This agreement set the new boundary about 150 yards farther into the Carquinez Strait.

30 March 1964: The Master Lease was approved by the Surplus Property Authority (SPA) and was recorded one year later. The enactment of the lease had to wait for the resolution of a lawsuit against the city and SPA. The suit was decided in the city’s favor in February 1965.

7 April 1964: In a letter to Gov. Edmund G. Brown, Benicia Mayor James Lemos wrote that the city was having a problem purchasing the wharf because the title of the tidelands had reverted to the state. Senate Bill 28, sponsored by Sen. Gibson, would correct the problem, Lemos said. It did.

16 April 1964: California Legislature passed “(a)n act to convey certain tide and submerged lands, situated in Solano County, to the City of Benicia, in furtherance of navigation, commerce, and fisheries upon certain trusts and conditions, and providing for the government, management, use and control thereof.” The act granted to Benicia “all the right, title and interest of the State of California, held by said state …” The land was to be used as an international port and could not be sold.

23 February 1965: SPA signs a “resolution authorizing execution of deed of trust and promissory note, on Benicia Arsenal property with escrow instructions and accepting the quit claim deed.”

25 February 1965: The SPA authorizes the execution of addendum to Master Lease to clean up problems caused by the delays caused by the lawsuit and inconsistencies with the survey.

26 February 1965: Quit claim from the U.S. government to the city of Benicia. The U.S. sells the former Arsenal (minus the water system and certain other properties) to the city for $4,582,000, of which $916,440 is paid at the time of signing and the remainder in nine equal payments. The money is paid by Benicia Industries to the GSA through an escrow account. The wharf was not included in the sale because of questions about the submerged lands. A separate plot of land to be used as the new National Guard Armory was sold to the city for $5,000 with Benicia Industries again paying through an escrow account. The city, in turn, quit claimed the property to the state of California.

26 February 1965: “Lease of Tide and Submerged Lands.” This lease between the city and Benicia Industries specifically states that the city acquired the lands from the state. This lease is for 66 years and includes charges to Benicia Industries of $1,000 to cover legal costs and a new survey. A careful legal description is given.

23 July 1965: California Legislature passes an “Act to convey certain salt marsh, tide and submerged lands to the City of Benicia, in furtherance of navigation, commerce, and fisheries upon certain trusts and conditions, and providing for the government, management, use and control thereof.” The land is to be held in trust by the city for use as an international port. The city cannot sell the land but may lease it.

7 December 1965: A service agreement between the city and the State Lands Commission restates what the Legislature mandated.

19 April 1966: The Benicia City Council approves the “Lease of state granted tide and submerged lands and the lease of City owned tide and submerged lands.”

20 April 1966: The City leases city-owned tide and submerged lands that belong to Benicia in what is now the Port of Benicia to Benicia Industries for 66 years.

The city also leases the tide and submerged lands that are now in the Port of Benicia to Benicia Industries for 66 years, commencing April 26, 1965. This is specifically for lands owned by the state and made available to the city to lease. Benicia Industries pays $5,500 through an escrow fund to cover legal costs. The date of April 26, 1965, becomes the base date for the lease of the submerged properties. It will expire on April 26, 2031.

21 May 1966: A letter to the GSA from Benicia’s city attorney requests a quit claim on the wharf because the State Lands Commission did not consider the wharf as part of the revision of the tide and submerged lands back to the state.

16 August 1966: The SPA accepts a supplementary quit claim deed from the GSA for the wharf. Now that the title to the submerged lands has been settled, the U.S. government has deeded the wharf to the city.

14 September 1966: The City pays the GSA $65,000 for the wharf. According to GSA records, Benicia Industries placed the money into an escrow account from which a check was written to the GSA.

13 October 1966: Quit Claim Deed from the GSA to the city of Benicia: For “… said area being 300 yards wide measured off short from the low water mark, as ceded to the United States of America by the State of California by statutes approved March 9, 1897 and by an act approved July 15th, 1935.” This quit claim was intended to include the wharf and not the actual land.

25 May 1967: A Benicia Herald article reports, “The State Senate Natural Resource Committee gives a ‘do pass’ recommendation to SG 885 by Sen. John F. McCarthy which would provide the City of Benicia with 30 acres of Carquinez Strait Tidelands.” The act was necessary because the city needed more submerged lands on which Humble Oil could build a wharf. The arrangement was that the submerged land would be conveyed to the city, which in turn would include it in the lands leased to Benicia Industries.
In turn, Benicia Industries included a submerged lands lease transfer in the $3.2 million sale price to Humble Oil for 404 acres of former Arsenal lands. Humble Oil later constructed a wharf on the property.

16 June 1967: California Legislature passes an “Act … relating to the conveyance of certain tide and submerged lands of the state to the City of Benicia.” This act allowed Benicia to use the tide and submerged lands of the former Arsenal for “… the establishment, improvement and conduct of a harbor …” Other uses were also authorized. The state reserved fishing and mineral rights and stipulated that if the city didn’t use the property, ownership would revert to the state.

11 August 1967: California Legislature passes an “Act to convey certain salt marsh, tide and submerged lands to the City of Benicia, in furtherance of navigation, commerce and fisheries upon certain trusts and conditions, and providing for the government, management, use and control thereof, and declaring the urgency thereof, to take effect immediately.” There is a long list of activities that the city can use these lands for, including international commerce. However, if the city does nothing after the current lease runs out, the lands revert to state control. This act, and the one enacted prior to it, reserved about 30 acres of tidelands for use by the city for wharves for Humble Oil and Benicia Industries. The city wanted 130 acres but received only 30 from the state after objections were made by anglers that the wharves would harm fisheries.

18 February 1975: After an authorization vote of the people in a referendum, the Benicia City Council authorized a property exchange. Benicia Industries gained full title to the wharf and the remaining 350 acres of Arsenal land that had not yet been sold to other companies, and the city received the land between First and Fifth streets on the waterfront. The city also received the Camel Barns and pump house, Clocktower, Francesca Terrace Park, Magazine No. 5, Commanding Officer’s Quarters, and the land between the Quarters and the Clocktower.

25 February 1975: Title Insurance and Trust includes the wharf in a title policy for Benicia Industries.

28 April 1975: Dale Stringfellow, president of Benicia Industries, wrote to the Benicia city manager: “Initially, title to these improvements will pass to Benicia Industries for use by it during the time that it occupies the tidelands under its tidelands lease with the City. Paragraph 11 of the tidelands lease provides that upon expiration or termination of the lease, tenant will surrender to the City possession of the land and all improvements thereon. We interpret this provision as clearly stating that title to all leasehold improvements will then pass to the City.”

25 April 1975: Charles J. Williams, Benicia city attorney, wrote in a letter to Vice Mayor Warren O’Blennis that there was a conflict between the sublease of the tidelands and the exchange agreement.

2 May 1975: Letter from W. Martin Tellegen of the law firm of Hall, Henry, Oliver and McReavy to City Attorney Charles J. Williams: “To summarize: In my opinion title to Pier 95 can be legally conveyed to Benicia Industries; that conveyance is necessary to fully accomplish the purposes of the exchange agreement; and title to those improvements will pass to the City upon the termination of the tidelands lease.”

3 July 1975: Roy H. Minnick of the State Lands Commission wrote to the Benicia City Manager, referring to the statute of 1964: “The wharf is a fixture on granted lands. The statute provides that the City shall not at any time convey or alienate any part of the lands to any individual, firm or corporation for any purpose other than leasing for limited periods.

“Under the tidelands trust, proceeds from the tidelands cannot be applied to local or private purposes but must be for the benefit of commerce, navigation and fishing in the statewide interest.”

What does all this mean?

AMPORTS owns the long wharf and leases the land under it until 2031. Valero owns the oil off-loading wharf and subleases the land from the city. At the expiration of the lease, the city must use the submerged lands as an international port or a similar use as defined in the 1965 law or it will lose those lands to the state.

For the city, the time for decision is clearly prior to 2031. In making a decision on the future of the lands in question, some of the factors to be considered are:

1. AMPORTS and Valero own all the land around the wharf, so that any company or entity that uses the wharf will have to deal with the owner of the dry land property.

2. Valero appears to have an independent arrangement with the city for use of the tidelands, but it is also subject to the original terms of the lease, which expires 66 years from 1965.

3. If the city does not use the wharf, then ownership will revert to the state and any company wanting to use the wharf will then negotiate with the State Lands Commission, thus shutting Benicia out of any financial arrangement.

4. If the city can organize itself and act in good faith, it may be able to negotiate an agreement with AMPORTS and Valero that would be mutually beneficial and lucrative.

The clock is running. It is doubtful, whatever happens, that Benicia will wait until the last minute to make a new arrangement regarding use of the wharves or the land under them.

Dr. Jim Lessenger is a Benicia resident and the author, most recently, of “Commanding Officer’s Quarters of the Benicia Arsenal.”