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Port of Sacramento in decline, closure mooted

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  • 7/31 Sacramento Bee
    Published Saturday, July 31, 2004, in the Sacramento Bee Port s fiscal woes go on Management shake-up, closure may loom By Mike Lee The Port of Sacramento has
    Message 1 of 1 , Jul 31, 2004
      Published Saturday, July 31, 2004, in the Sacramento Bee

      Port's fiscal woes go on
      Management shake-up, closure may loom

      By Mike Lee

      The Port of Sacramento has posted the second worst financial
      performance in its 41-year history, another slip in a three-year slide
      that could lead to a management shake-up and, ultimately, to the
      port's closure.

      On Friday, the port released unaudited numbers that show the 2004
      fiscal year ended with two big money-losing months in May and June.
      That pushed its annual loss to $1.69 million -- higher than the $1.4
      million loss in fiscal 2003 -- even as a new study shows that many
      port users are "indifferent" about the facility.

      Financial troubles spurred a reorganization of the port's governing
      board in January. The board meets Monday and for the second
      consecutive meeting the agenda calls for evaluating the performance of
      Port Director John Sulpizio in closed session.

      On Friday, Sulpizio declined to comment and port commission Chairman
      Mike McGowan declined to detail the board's actions. "Having these
      three years of losses in a row, you would certainly expect the port's
      governing body to evaluate its management and, in fact, that is what
      you are seeing," he said.

      Port leaders aim to chart a solvent future over the next several
      months. Possibilities include abandoning the port's shipping focus
      and building homes and parks instead or encouraging the construction
      of warehouses in Southport to entice more light industry.

      "There are a lot of options, but there is not a regional community
      consensus," McGowan said.

      Over the last three years, the port has lost approximately $4 million,
      eroding its reserves and credit rating. Operating losses next year
      are expected to top $1.4 million. They will be partly offset on the
      bottom line by a just-completed $750,000 sewer easement sale.

      Compared to 2003, the tonnage of rice, wood chips and fertilizer all
      dropped in 2004. The port attracted only 52 vessels in 2004, down
      about one-third from the year before and far below budget.

      The only worse year on record was 1992, when the port lost just over
      $2 million due to bond retirement losses.

      On Thursday night, consultants hired by the port and member
      governments issued a preliminary assessment of shipping trends shaping
      the port.

      The policy-makers are trying to determine what kind of cargoes the
      port can attract. Next up: figuring how much money would need to be
      invested to make the port profitable and deciding whether that is the
      best use of the region's resources.

      "It's important to understand where you stand," said Donald Grigg,
      vice president of the consulting firm PB Ports & Marine Inc. of
      Portland, Ore. "Then the policy discussion can begin."

      PB Ports and BST Associates of Bothell, Wash., made no recommendations
      about how to turn around the port's prospects and did not predict how
      many jobs would be lost if the port closed. Instead, they highlighted
      years of declining port business in important commodities such as
      rice, wheat, wood chips and fertilizer.

      The consultants said that without major subsidies, there is no
      apparent and immediate way for the Sacramento port to feed shipping
      containers to the Port of Oakland. Some Sacramento port leaders have
      offered that idea as a way to increase business and relieve congestion
      on Interstate 80 by moving cargo on barges.

      Import commodities on the upswing are lumber and cement, which support
      the busy Northern California housing industry and provide some of the
      best opportunities for port business expansion, according to the
      consultants' analysis.

      Other sectors with good business potential: bulk import fertilizer and
      bagged export rice.

      Consultants found that 12 percent of the state's nitrogen fertilizer
      is shipped through the port; wood chip exports support 500 production
      jobs in two foothill counties; and the region's molding mill industry
      relies on the port for imported wood.

      At almost every turn, however, looms Stockton, a port 45 miles south
      that can handle larger ships and can subsidize its maritime business
      with substantial revenue made by leasing land. "Stockton is a fierce
      competitor," BST principal Paul Sorensen said.

      The consultants interviewed 65 port users from several industries and
      determined that a few large agriculture shippers see the port as
      vital. However, many shippers are "indifferent" about the port and its
      existence doesn't affect their location or expansion decisions.

      "They were telling us they did have alternatives and they had thought
      a bit about them," Sorensen said.

      But the port clearly does matter to many of the people who turned out
      Thursday to hear the report and discuss the port's future. Port
      officials say the facility provides the equivalent of about 115
      full-time jobs.

      "It's my survival," said Galt resident Diane Carr, 54, who handles
      cargo as part of the port's union crew. "I hope that the port finds
      the niche that is going to take it back up."

      Large contingents of port workers and leaders from related industries,
      including cement and rice, set the tone for the crowd of about 100 in
      West Sacramento.

      "It can be successful," Matt Murphy, general manager of A&A Concrete
      Supply Inc., told the audience. "The port equals opportunity."

      A&A's proposal to build a new cement import and distribution facility
      at the port has been a target of community opposition because some
      residents fear it will increase air pollution and truck traffic at a
      port that's edged on the south by homes.

      The project -- still under environmental review -- symbolizes the
      port's identity crisis. "(Cement) scores high on business and market
      attractiveness, but also on neighborhood resistance," said West
      Sacramento Mayor Christopher Cabaldon.

      The Port of Sacramento, which opened in 1963, posted profits through
      most of the 1990s before a combination of a weakening economy and
      competition undercut its business.

      The Bee's Mike Lee can be reached at (916)321-1102 or mflee@...

      Graphic: Port shipping slides

      Fiscal year 2004 numbers show several core cargo categories declined
      at the Port of Sacramento along with the overall tonnage handled by
      the facility

      FY2003 FY2004
      Rice 260.3 226.1 thousand US tons
      Woodchips 148.2 109.3
      Fertilizer 160.5 129.2
      Bagged Cement 80.8 69.7
      Sand/Aggregate 53.2 115.3
      Other 151.7 86.5
      Total 854.7 736.1
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