Published Sunday, November 30, 2003, in the Sacramento Bee

Opinion

The folly of deep-sixing our port for developers
Why guarantee you can't get there from here?

By Jock O'Connell

Judging from recent reports in this newspaper, public officials in
Sacramento and Yolo counties are now more inclined than ever to write
off the Port of Sacramento as a port and treat it instead as a
strategically located parcel of real estate ripe for mixed-use
development by a fast-growing City of West Sacramento.

One key proposal now under consideration would transfer a greater say
over the port's future to authorities in Yolo County. In the words of
a report that has been the catalyst for the current review of the
port's fate: "There is a disconnect between the geographic region
served by the port and the port's governance structure (in particular,
the City and County of Sacramento should have a reduced role, and the
City of West Sacramento should have a greater role)."

Considering how assiduously West Sacramento community leaders have
been coveting the port's real estate holdings, residential and
commercial development would almost certainly ensue on property that
has long served as a peacekeeping buffer between the port and its
closest neighbors. Yet, such development would inevitably breed the
sort of vocal constituency that could in time be counted upon to
hector local politicians into restricting maritime operations or
closing the port entirely.

Alluring as it may be, mixed-use development on property bordering the
port would likely have the same impact on regional transportation
planning as constructing even more subdivisions, schools and playing
fields under the flight-path of Mather Field air freighters.

Whether a future generation will come to regard the port's scuppering
in the face of development pressure as a monumental blunder is, of
course, impossible to know. But what is equally unfathomable is how a
public debate over the future of a key transportation asset can be
conducted -- as this one is -- in the absence of any concrete
appreciation of the Sacramento region's long-term transportation
needs.

Driving this latest round of civic wrestling with the port's fate is a
report submitted in August by an advisory panel convened by the port's
commissioners and chaired by McGeorge School of Law Professor Clark
Kelso. Over the years, Kelso has earned a reputation as all-purpose
fixer of conspicuous failures in public administration, having been
pressed into service as the state's acting insurance commissioner and
as its chief information officer.

In the fall of 2002, the Port Commission asked this bureaucratic
version of a Swiss Army knife to form a committee to advise on what
"steps the port could take better to fulfill its mission within the
context of the changing face of the City of West Sacramento and the
changing nature of the port's immediate neighborhood."

The Kelso committee reported back in late August with a document that
lays out what appears to be a compelling case for summary action. As
with several previous analyses of the port's plight, this one features
a muted but unmistakable rebuke of the port's management, which is
indicted for its failure to broaden the port's client base beyond its
traditional customers in agriculture and forestry.

Not surprisingly, the report emphasizes the port's precarious
financial condition, observing that its 2.6 percent average net profit
margin over the past decade is "a much lower figure than would
ordinarily be tolerated in a private business environment." It further
warns that the port's customers are in danger of being wooed away by
the Port of Stockton, a terminus that is able to offer more attractive
shipping schedules and rates -- and the ability to accommodate
deeper-draft vessels.

(While at least implicitly critical of the port's management, the
Kelso report fails to observe that its chief competitor , the Port of
Stockton , might not be much better off had it not been the site of a
major U.S. Navy logistics center for most of the last 60 years.)

Turning the port's fortunes around will require much more than
completing dredging of the deep water channel linking the port to the
Sacramento River. Although that would permit bigger vessels to call at
the port, the port must find ways of expanding its customer base while
developing added sources of revenue. Unspecifically, the Kelso report
urges the port to "reinvent" itself or at least adopt a "broader
vision" of its future.

In marked contrast to its thoroughly lugubrious portrayal of the
port's prospects, the report's rendering of the surrounding city is
downright salubrious. In language regrettably reminiscent of treatises
on mice and their misplaced cheese, the report describes West
Sacramento as a municipality "engaged in a process of re-discovery and
re-invention, where its self-identity is undergoing a substantial
transformation." More to the point, it's also one of the
fastest-growing communities in the region.

Obviously, new houses, schools, parks, stores, places of employment
and a host of other civic amenities must be constructed over the next
few years to accommodate the needs of a surging population, not to
mention the grand vision harbored by West Sacramento's leaders to
build an elegant cityscape on the West Bank of the Sacramento River.

So with the port being both literally and figuratively in medias res,
it would seem logical to conclude that the interests of an evidently
moribund maritime facility should give way to the higher and better
needs of a resurgent city.

To that end, the Kelso report recommends a shift in the membership of
the port's governing commission to reflect both the port's location in
Yolo County and the fact that it's the City of West Sacramento that
has to live with the hubbub of a working port that is all but
invisible to outsiders. (Of the seven members of the Port Commission,
five are from the Sacramento side of the river while just two hail
from Yolo County.)

Why should anyone seriously object to a reconstituted Port Commission,
especially if, as the Kelso report alleges, the port "produces no
significant direct economic benefits to the City or County of
Sacramento"? The current distribution of seats on the commission is
merely an artifact of the port's original bonding scheme.

But since those bonds have been long since retired, why not now
graciously cede effective control of the port to the Yoloites? Both
The Bee and the Sacramento Business Journal have lately editorialized
in favor of just such a move.

The logic of the Kelso report is impeccable, as far as it goes. The
problem is that the report does not go far enough. Because its authors
were evidently intent on regarding the port primarily in the context
of West Sacramento's development priorities, their report wholly
overlooks the fact that the port is a potentially vital transportation
asset, one that Caltrans has identified in a 2002 study as one of the
state's "top priority global gateways."

Unfortunately, discussions of the region's transportation needs seldom
move beyond the issue of how best to move people between points in
this ever-sprawling conurbation. Apart from periodic flashes of debate
about whether disgruntled neighbors will permit Mather Airport to
flourish as a regional air freight hub, the efficient and economical
movement of goods receives scant attention from the region's political
leadership.

But as the region's economy continues to expand, so too will the need
to attend more systematically to the question of how products are
transported from farms to groceries stores, from warehouses to
consumers and from factories here to markets abroad.

The mix of businesses and industries that will characterize the
Sacramento region in the next 20 years will probably bear a strong
resemblance to the current blend of industries in the East Bay. There
will be a substantial presence of manufacturing, warehousing and
distribution centers along with a generous ladling of service
companies together with firms in a steadily widening range of
high-technology sectors. To thrive, an economy so constituted requires
an efficient system for moving goods as well as people into, around
and out of the region.

The unpleasant reality is that development of the region's freight
transportation infrastructure has not kept pace with population
growth, economic expansion or steadily increasing volumes of foreign
trade. Nor has this infrastructure kept up with the exceedingly
intricate ways in which modern corporations integrate the flow of
goods from initial sourcing all the way through to delivery to the end
user.

The rise of global supply chains, just-in-time delivery schedules and
the increasingly widespread practice of managing inventory not in
warehouses but in transit all serve to place an unparalleled burden on
the nation's transportation systems. So, too, does the steady rise in
e-commerce with its extensive reliance on overnight mail and package
delivery services. Just ask your FedEx delivery driver.

The U.S. Department of Transportation estimates that the value of
cargo hauled across the nation's transportation system will more than
triple by 2020. The strain will be particularly acute in California,
where road and rail systems handle not only the cargoes generated by
the world's fifth largest economy but also the vast majority of the
two-way trade the rest of the nation conducts with the Pacific Rim.

Failure to address the consequences of the spiraling volume of goods
moving over the Sacramento region's transportation network will
assuredly undermine the region's ability to remain economically
competitive. It will also severely hamper its ability to create new
jobs and retain existing businesses.

Conversely, insuring the Sacramento region's continued competitiveness
-- especially in the context of a global economy -- requires that the
area's civic leaders grasp the importance of a diversified
transportation system that maximizes the options available for moving
people and shipping goods into, around and out of the region.

That means gaining a firmer awareness of the vital role that key
transportation assets such as Sacramento International Airport, Mather
Field and the Port of Sacramento are apt to play in the region's
economic future.

A modern economy, for example, moves increasingly by air. Indeed, most
of California's merchandise export trade already goes by plane. Yet
that commercial reality is seldom recognized by public officials
deluged by citizens' complaints about rush-hour gridlock. Nor is there
much appreciation of the potential role a maritime terminus like the
Port of Sacramento could play in alleviating a sizeable share of the
growing burden on the I-80 transportation corridor.

In recent years, more and more communities throughout the country have
been exploring waterborne alternatives to highways and surface
streets. In the Bay Area, frequently exasperating traffic conditions
have prompted transportation officials to increase the use of ferries
to move people and barges to transfer freight.

There is a certain irony in this, of course, because it represents a
return to a mode of transportation that once dominated the bay. There
is also a lesson here: As pitiable as the Port of Sacramento may
appear today, replacing it would likely be a financial and political
impossibility.

Like the region's airports, the Port of Sacramento is fundamentally
not a local business whose balance sheet should be evaluated as though
it were a hardware store or an automobile dealership. It is instead a
transportation asset that serves an entire region. It's potential for
playing an even more vital role should not, therefore, be left to the
whims of any single municipality.

Far from ceding majority control of the Port Commission to the
Yoloites, the commission's membership might usefully be expanded to
include representatives of other counties in the region. Its
membership should also include people who appreciate the importance of
nurturing the region's transportation assets, not regarding them
merely as sites for future development.

It is axiomatic that the Sacramento region's surging population
together with a swelling volume of freight will severely strain its
existing transportation network. Before sealing the fate of the Port
of Sacramento, policymakers need much more hard information about the
movement of goods as well as people.

As public consideration of the port's future continues, the region's
political leaders should bear in mind that sensible, long-term policy
choices do not always require inspired vision. In many cases, the mere
absence of shortsightedness would do.


Jock O'Connell is an international trade consultant and a longtime
contributor to Forum.