Natural. Resource. Protecting the Region s Greatest S A N D I E G O B A Y

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1 Natural S A N D I E G O B A Y Protecting the Region s Greatest Resource A n n u a l R e p o r t 2006 S A N D I E G O U N I F I E D P O R T D i s t r i c t

2 W o r k i n g W a t e r f r o n t steel strong

3 T A B L E o f contents Chairman s Message... 2 President s Report... 3 Maritime... 4 Cruise... 6 Real Estate... 8 Environmental Public Art Community Employees Public Safety and Homeland Security Infrastructure Maintenance/ Development Financial Statements Financials Principal Administrators * All plants featured on the pages of the annual report are native to the tidelands of San Diego Bay.

4 C h a i r m a n s M e s s a g e San Diego Bay is a treasure that has been around for thousands of years. Residents and visitors see it as a beautiful recreational haven and a place where cruise ships stop. Others see it as it was in its earlier days, a place where people made their livelihood fishing or trading goods along its shoreline. Many still earn their living along the waterfront. The fishing boats are still here, but new industry has been added. Large shipbuilding and ship repair companies like General Dynamics/NASSCO and Continental Maritime are located on the shoreline. Other bayfront businesses are lumber companies, yacht brokers and automotive services. It is the homeport for approximately 60 Navy ships and homebase to 50 Naval commands. One of the Port of San Diego s many responsibilities is to promote maritime trade and business on San Diego Bay. We are also obligated to protect San Diego Bay and its resources. These two roles may seem contradictory, but the Port has been successful at both for several years. We have made great headway in our environmental efforts this year. I am particularly proud that the Port established an environmental fund for projects that will help improve the health and condition of San Diego Bay and its tidelands. The fund will be financed by an annual contribution of one half of one percent of the Port s projected gross revenues. Another environmental first for the Port is the creation of an Environmental Committee, which also occurred this fiscal year. The Environmental Committee includes a balance of resource and regulatory representatives from academia, environmental advocacy groups, government agencies and Port tenants. The committee will assist the Port with evaluating, prioritizing and implementing programs to ensure environmental protection and improvement of the Bay and tidelands. Also this year, the Port embarked on an intensive plan to clean up a challenging anchorage area. The area, called A-8, is located just south of the Sweetwater Channel. It had become a site where sunken and abandoned vessels and other debris posed serious navigational and environmental hazards. The Port spent approximately $500,000 retrieving and towing the dilapidated vessels from the area. We will continue refining the A-8 cleanup plan within the next several months. The Port of San Diego is strengthening its role as an environmental steward. The new environmental fund and Environmental Committee are two key elements that will help us protect San Diego Bay so that its natural beauty and resources will thrive and continue to be enjoyed by residents and visitors for years to come. Robert Rocky Spane Chairman, Board of Port Commissioners

5 P r e s i d e n t s R e p o r t Building upon our strong relationships with our five member cities, area agencies, community organizations and our tenants is key to the Port of San Diego s continuing growth as we continue on our mission to become a world-class port. Through collaborative efforts, built upon these relationships, plans for several highprofile projects and initiatives took shape or continued on the path to fruition. All of these initiatives require coordination, communication and planning with our member cities and our stakeholders. Last fall, Chula Vista Mayor Steve Padilla and Port Commissioner Bill Hall climbed into land excavators and ceremoniously knocked down the walls of a former BF Goodrich building to mark the beginning of the Chula Vista bay front redevelopment. Throughout the year, the partnership with Chula Vista strengthened as we forged the details of the Chula Vista Bayfront Master Plan. In San Diego, ground broke on the Hilton San Diego Convention Center Hotel and the final Environmental Impact Report for the Old Police Headquarters and Park Project received the go-ahead from the Board of Port Commissioners. A Request for Proposals was sent out for the Lane Field hotel project and some very exciting plans began to take shape. The North Embarcadero Visionary Plan, which will create a 100-foot wide esplanade along downtown San Diego s waterfront, also moved forward with the creation of a new Joint Powers Agreement. The Port has also coordinated with the City of National City in determining appropriate land uses for tidelands property in the area. In Imperial Beach, the Port finished a $1.8 million improvement project on the Imperial Beach Pier and we continue to work with the City of Coronado on infrastructure improvements to tideland areas along its bayfront. The Port witnessed another successful year in maritime trade. Revenue increased more than $11 million, from last year s $23.7 million to this year s $35.2 million. Part of that increase included a transfer of real estate assets to maritime, but it is also due to an increase in breakbulk cargo and imports of vehicles. Real Estate revenue, the bulk of the Port s income, totaled $82. 4 million, up from last year s total of $80.9 million. The COMPASS Strategic Plan for fiscal years was approved this year. This plan provides the Port with a framework for achieving its goals and conducting its day-to-day operations. The Port s first strategic plan was implemented in 2002, and has provided the Port with greater organizational focus, discipline and execution. Another highlight of fiscal year was the adoption of the Capital Development Program for fiscal years The program is a flexible planning tool that the Port uses for projects on the tidelands. The Capital Development Program will assist us with implementing the projects and is structured to reflect estimated, available capital funding over the five-year planning period. This annual report will summarize the accomplishments of the past fiscal year. I hope it is informative and leaves you with a clearer understanding of the Port s vital mission. Bruce B. Hollingsworth President and Chief Executive Officer Maritime Ceanothus Ceanothus Maritimus

6 M a r i t i m e A trend in alternative energy projects is sweeping over the western United States. Windmill farms are blossoming in California, New Mexico and Iowa and the parts to construct them are shipped to the Port of San Diego s Tenth Avenue Marine Terminal. This past fiscal year, the Port received 11 shipments of rotors and engines for windmills from Nagasaki, Japan. Other windmill parts arrived from Bilbao, Spain and were delivered to the Campo Indian Reservation in San Diego County to create one of the largest-capacity wind turbines in the nation. A new import for the Port is steel cable reel. The shipments arrived from France and will be used by San Diego Gas & Electric Company in a $210 million utility undergrounding project that calls for 52 miles of steel cable. The increase in vehicle imports bumped tonnage up 16%. The Port also received shipments of steel and concrete pipes that are used in local construction projects. Additional steel imports arrived from Asia and were used by General Dynamics NASSCO in the construction of Navy vessels. These new cargoes helped boost Port maritime revenue to $35.2 million, more than a million dollars over the Port s budgeted goal. Maritime Services Revenue Five-year trend comparison (revenue in millions) Cargo Tonnage Five-year trend comparison (metric tons in millions) Cleveland Sage Salvia Clevelandii

7 Weekly melon shipments from Guatemala between December 2005 and May 2006 helped increase tonnage to 20 percent over the amount received last fiscal year. Major leases secured with CP Kelco, San Diego Cold Storage and Pla-Art International also bumped up revenue and tonnage. The increase in vehicle imports bumped tonnage up 16%. This was due to new truck and sports utility vehicle business from General Motors in Mexico and an increase in imports from Japan. A new lease with Mazda will mean even further increases next fiscal year. Type of Cargo Total tonnage received during fiscal year : 3,535,073 (in metric tons) Containers: 860,031 (includes produce and other perishables) Vehicles: 463,610 Break bulk: 262,005 (includes bagged cement, bagged fertilizer, lumber, pallet fruit, newsprint, bagged sand and miscellaneous steel products): Liquid bulk: 137,979 (includes jet, bunker and diesel fuel) Dry bulk: 1.8 million (includes cement, fertilizer, soda ash and sand) Parts to construct these windmills were shipped to the Port of San Diego s Tenth Avenue Marine Terminal from Bilbao, Spain. This photo was taken at the Campo Indian Reservation in San Diego County. The reservation has one of the largest-capacity wind turbines in the nation.

8 C r u i s e The popularity of cruise vacations is growing and the Port of San Diego s cruise ship terminal is proof. On any given day from September through May, one or two of these picturesque ships are docked at San Diego s downtown cruise terminal. On occasion, three or even four ships are in port on the same day. This past fiscal year, the Port received 219 cruise ship calls carrying 619,199 passengers. Each time a cruise ship comes to San Diego, it brings an economic impact of $2 million to the region on an annual basis that translated to almost $300 million in economic benefits. Each passenger is estimated to spend about $200 while visiting. The jobs created from the cruise lines, companies servicing the vessels, food suppliers and related entertainment and attractions account for approximately $76.2 million in wage income. Currently the Port of San Diego has four seasonally homeported cruise lines Celebrity Cruises, Holland America Line, Royal Caribbean and Carnival. In 2007, Carnival will begin the Port s first ever, year-round cruise service with four-and five-day cruises on the 2,052-passenger vessel Elation. The four-day cruise will call in Cabo San Lucas, Mexico and the five-day cruise will feature stops in Cabo San Lucas and Ensenada, Mexico. To keep up with the growth of this dynamic industry, the Port plans to improve cruise passenger facilities at the Cruise Ship Terminal and at the nearby Broadway Pier. Ultimately, the Port will build a new passenger cruise terminal, facilities, parking and an improved ground transportation area for its expanding cruise line business and passengers. 250 Cruise Ship Calls Five-year trend comparison (actual numbers) Passenger Totals Five-year trend comparison (in thousands) Atriplex Lentiformis Quail Bush

9 T h e r e s n o p l a c e l i k e t h i s ON earth

10 R e a l E s t a t e Beach Evening Primrose Oenothera Cheiranthifolia The Port of San Diego s Real Estate division had more than a handful of high-profile projects on the slate this fiscal year, but that list was dominated by these four: the Old Police Headquarters and Park Project, the Chula Vista Bayfront Master Plan, the Lane Field Project and the Hilton San Diego Convention Center Hotel. A developer was selected to build a 1,500-room hotel and 400,000-square foot-convention center that will be the keystone for phase one of the Chula Vista Bayfront Master Plan. In February 2006, the Environmental Impact Report for the Old Police Headquarters and Park Project was certified by the Board of Port Commissioners. It was approved by the Coastal Commission in August. The historic Old Police Headquarters, built in 1939, will be restored and redeveloped to include entertainment venues, specialty retail, restaurants, museum space and other ancillary support uses. Construction is expected to begin by the end of next fiscal year. Both the Port and the City of Chula Vista were hard at work on this ambitious project that will develop about 550 acres of waterfront in Chula Vista considered the largest development project on the West Coast. A developer was selected to build a 1,500-room hotel and 400,000-square-foot convention center that will be the keystone for phase one of the Chula Vista Bayfront Master Plan. The project will occur in three phases over a 25-year period and include a mix of parkland, open space, environmental buffers, civic and cultural uses, retail, hotel, entertainment and recreational areas. The Lane Field project, located directly across the street from the harbor in the North Embarcadero area of San Diego made great strides as the Port entered into an option agreement with the selected developer. A 550-room hotel is proposed for the south side and a 250-room hotel will be located on the north side. The project also includes 35,000 square feet of retail space Real Estate Revenues Five-year trend comparison (revenue millions)

11 In January, the Port celebrated the groundbreaking of the 32- story, 1,200-room Hilton San Diego Convention Center Hotel. Located adjacent to the San Diego Convention Center, the hotel will include retail space, banquet and meeting facilities, a health club, a park and many other amenities. The approximately $348 million project will be completed in Real Estate Revenue Sources Total real estate revenue during fiscal year : $82,426,358 Other Charges: $1,201,142 Car Rental Transaction Fees: $4,170,436 Parking Revenue: $8,447,325 Ground Rental: $68,607,455 The San Diego Marriott Hotel & Marina and the Manchester Grand Hyatt as viewed from Embarcadero Marina Park South in San Diego.

12 E n v i r o n m e n t a l Coreopsis Maritima Sea Dahlia This year, the Port of San Diego took its commitment of environmental stewardship one step further by creating an environmental policy that was approved by the Board of Port Commissioners in June With it came the development of an environmental fund to help the Port go beyond mitigation and beyond compliance to implement environmental projects. The new fund will be financed by an annual contribution of one half of one percent of the Port s projected gross revenues. For fiscal year 2006/2007, that amount is estimated to be $600,000. The Committee will assist the Port in evaluating and prioritizing the types of environmental projects that receive funding. Board Chairman Robert Rocky Spane formed an Environmental Committee, made up of representatives from various academic, resource, regulatory and advocacy groups. The Committee will assist the Port in evaluating and prioritizing the types of environmental projects that receive funding. Several projects are under consideration, in the categories of research, education, conservation and natural resources. The group meets monthly and all meetings are open to the public. Educational outreach is another important responsibility of the Port s environmental department. For example, staff members attend area business meetings to teach employees about pollution prevention. Other educational endeavors are geared toward students. This year, the Port worked with the Maritime Museum of San Diego to provide environmental tours of San Diego Bay for both students and the general public. Other activities included working with the group Pro Peninsula to help protect the Eastern Pacific green sea turtle, a species that resides in south San Diego Bay. Pro Peninsula provides a unique educational experience for area sixth graders to help monitor the turtles. 10

13 T h e b a y i s a l i v i n g t h i n g a n d c h a n g e s w i t h t i m e 11

14 P u b l i c A r t Lemonade Berry Rhus Integrifolia The tenth anniversary of the Port s Public Art Program was commemorated with a campaign that included monthly art events, public art dedications and special exhibits. Each project tied into the Port s roles of serving as an environmental steward of San Diego Bay and the tidelands, an economic engine for the region and a provider of community services. The Port s Public Art Program is responsible for over 100 artworks along San Diego Bay, the Imperial Beach oceanfront and at San Diego International Airport. Since 1996, the Port s Public Art Program was responsible for over 100 artworks along San Diego Bay, the Imperial Beach oceanfront and at San Diego International Airport. Other successes are the transformation of the Imperial Beach waterfront with the iconic surf-themed artwork by Malcolm Jones, the placement of the 37- foot tall sculpture, Coming Together by the late Niki de Saint Phalle at the San Diego Convention Center and the exhibition of a sculpture by Mark di Suvero, a recipient of the prestigious Heinze Award for Arts and Humanities. A Greatest Generation military art walk was created on Tuna Harbor, adjacent to the USS Midway, with five inspirational artworks that speak to the triumphs and sacrifices of the World War II generation. This year, the Port s Public Art Program held the first of its annual destination waterfront events the Port of San Diego Sculpture Show. A goal of the Public Art Program is to make the sculpture show an annual destination event for the San Diego bay front. The Port s public art collection has received international recognition for its creative projects and with several upcoming installations, the collection will continue to provide the tidelands with stimulating works of art. 12

15 C e l e b r a t i n g P u b l i c A R t 13

16 C o m m u n i t y Volunteers at the 16th Annual Operation Clean Sweep event display debris collected from the shoreline of Pepper Park in National City. The Port of San Diego reaches out to the community through tours, public open house events, public art dedications, special events and community outreach meetings. In addition, the San Diego Port Tenants Association funds the Port With No Borders Scholarship Program, where college scholarships are awarded to eligible children of Port employees or Port tenants. The Financial Assistance Program provides funding assistance to groups for events or programs that benefit the community by promoting commerce, navigation, fisheries and recreation in one or more of the Port s five member cities. The Port also has a Marketing Sponsorship and Fee for Service Program that assists organizations financially and in return these organizations help promote the Port. This year, important partnerships with the Working Waterfront Group and the Marine Terminal Community Committee made progress on several issues that affect communities and businesses neighboring the Port s marine terminals. This year, important partnerships with the Working Waterfront Group and the Marine Terminal Community Committee made progress on several issues that affect communities and businesses neighboring the Port s marine terminals. The Working Waterfront Group is a coalition of maritime dependent businesses, labor and environmental organizations administered by the Port and the San Diego Port Tenants Association. The Marine Terminal Community Committee helped the Port devise a new truck route that will reduce the amount of truck traffic traveling through the Barrio Logan neighborhood of San Diego. The Committee s influence also assisted the Port with securing $3.9 million in transportation grants for freeway access programs for the Tenth Avenue and National City marine terminals. 14

17 E m p l o y e e s The Port of San Diego strives to provide the best services possible to all of its customers. Customers include Port tenants, member cities, other public agencies, and every resident of and visitor to San Diego Bay and the tidelands. To provide the best services, the Port relies heavily on its workforce of over 600 employees. The goal of every world-class organization is to ensure that its staff is up-todate on the latest business and training techniques. The Port achieves this by providing workshops and educational opportunities through the Port Institute for Performance Excellence, an in-house department created to meet both the Port s business needs and the individual professional training and development required for employees. The goal of every world-class organization is to ensure that its staff is up-to-date on the latest business and training techniques. The Port began a multi-year initiative in 2004 to measure and manage organizational performance by using a balanced scorecard method coupled with the Malcolm Baldrige Criteria for Performance Excellence. This system continues today and provides a framework for the Port in strategic planning, priority setting, budgeting and performance measurement. Focusing on all levels of the organization, the balanced scorecard will allow the Port to measure its progress toward achievement of its vision of fostering a world-class port through excellence in public service. Environmental Services employees Damon La Casella and Phillip Gibbons collect water samples of San Diego Bay near Tuna Harbor in San Diego. 15

18 Public safety and Homeland Security Protecting San Diego harbor is one of the Port of San Diego s most integral and challenging roles. With two marine cargo terminals and a busy cruise ship terminal, the Port s Harbor Police Department is actively engaged in homeland security efforts. Since the Program s inception in 2001, the Port of San Diego has received over $16 million in security grants. The San Diego Harbor Police Dive Team perform a search and recovery exercise off the coast of Point Loma in San Diego Bay. The Dive Team is an integral component of the Port s Homeland Security effort. The Harbor Police work together with the U.S. Navy, the U.S. Coast Guard and the Transportation Security Administration, as well as other federal, state and local law enforcement agencies to provide coordinated security. The Harbor Police also provide policing for San Diego International Airport. In September 2005, the Port received $6.5 million in security grant funding from the Department of Homeland Security s Port Security Grant Program; the largest award received by the Port since the program began. Since the Program s inception in 2001, the Port has received over $16 million in security grants. The money has been used to implement 25 critical security measures, including the Port s partnership in a nationally recognized multi-agency command center, the Joint Harbor Operations Center ( JHOC). This hightech facility gives the Port, the US Coast Guard and the US Navy the ability to share information and secure interoperable communications. Other completed security projects and projects in process include perimeter intrusion monitoring systems and enhanced physical security barriers at both marine terminals and the cruise ship terminal, membership in the Regional Communications System and the purchase of two high-speed port security vessels and a Dive Team support vessel to assist the Harbor Police. In fiscal year 2006, the Port hired a Homeland Security Program Manager to oversee the homeland security projects. The Port continues to pursue additional grant funding. 16

19 Infrastructure Maintenance and Development At the Port of San Diego, scenic waterfront parks allow space for visitors to enjoy endless views. Boaters, fishermen and joggers can take advantage of the public walkways, fishing piers and launch ramps. Other areas of the tidelands are essential to Port operations marine terminals, roads, railways and buildings where goods are housed or transported. This past fiscal year, the Board of Port Commissioners adopted a five-year, fiscal year Capital Development Program in the amount of $111,856,000. These are all part of the Port s infrastructure and like anything, start to display wear and tear with age. To help keep everything in top shape and in good working order, the Port has capital development and major maintenance programs with budgets for specific projects. This past fiscal year, the Board of Port Commissioners adopted a five-year, fiscal year Capital Development Program in the amount of $111,856,000. Projects range from large construction or redevelopment jobs such as the demolition of old industrial buildings in the Chula Vista Bayfront redevelopment area to smaller projects like installing more efficient lighting at Port buildings. Other major capital projects include improvements at the Cruise Ship Terminal, site improvements for the new Hilton San Diego Convention Center Hotel and deepening of the freighter berths at the Port s Tenth Avenue Marine Terminal. Large projects in the Major Maintenance Program included the Kellogg Beach sand replacement project and the refurbishment of the Imperial Beach pier. Building 449 was one of 19 structures razed in the Port s South Campus Demolition Project. The project will not only improve views of San Diego Bay, but will free up valuable land needed for the Chula Vista Bayfront Master Plan project. 17

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