For Immediate Release
October 25, 2001

State Audit Demonstrates the Port of Oakland's Effective Management and Benefit to California
State audit says the Port's Capital Improvement Program will keep the Port of Oakland financially competitive and benefit the public.

The Port of Oakland effectively managed its assets over the last 10 fiscal years (1990-91 through 1999-2000) and its $1.7 billion capital improvement program should benefit the public and allow the Port to remain financially competitive in the future. That is the finding of a recently completed audit by the California State Auditor.

The audit report concluded that over the past decade, the Port has been effective in the administration of its properties and has realized an increase of its overall operating income of $4.4 million in fiscal-year 1990-91 to $47 million in fiscal year 1999-2000, more than a ten-fold increase. It also noted that Port of Oakland's past capital improvement projects have proven financially beneficial.

The Bureau of State Audits conducted its review as the result of a formal request by State Senator Don Perata. His request, in a letter dated March 2, 2001 stated, "The Port of Oakland is an extremely important regional asset. My purpose (with this audit request) is to generate information to measure the efficiency of the Port's operations and evaluate how capital projects made and planned by the Port demonstrate a public return on investment."

Senator Perata called for the audit to provide evidence in support of his request that the State begin funding some of the capital improvements required to maintain an asset like the Port of Oakland. Perata informed the committee of legislation he had introduced earlier seeking up to $62 million over the next five years for the Port's maritime expansion.

The audit looked at all three lines of the Port's revenue-generating divisions - aviation, maritime and commercial real estate. According to the audit, the Port of Oakland has effectively managed its assets over the past decade, with maritime and aviation performing well, while commercial real estate had shown some losses. It was found that the Port's Commercial Real Estate Division had not enjoyed the same financial growth as the other two divisions. However, this was due in part to operating costs and the port's decision to rent to public and non-profit entities certain real estate division holdings at below-market rates. The Commercial Real Estate Division is already in the process of aggressively executing a restructure and development plan to address some of these issues.

The State Auditor also acknowledged that the Port is in the middle of planning and implementing large capital expansion plans for both its maritime and aviation divisions. A review of the Port's feasibility study and projection of maritime and aviation future revenues and expenses was conducted. It was found that the projections were reasonable and that the Port's respective expansion plans would provide a number of public benefits.

It was noted, however, that several recent events could significantly affect the aviation division's plans for improving the airport. A recent appellate court decision requiring the Port to develop a supplemental environmental impact report and costly airport security improvements following the terrorist attacks of September 11th were both mentioned as having potential financial impact. However, Oakland International Airport is already rebounding quickly with passenger volume at 90% and 10% more flights than a year ago.

"The Port of Oakland plays a critical role in not just the San Francisco/Oakland Bay Area economy, but also that of our entire State," said Port of Oakland's Board Commission President Phil Tagami. "As such, it is important to substantiate the Port's significant contribution to our region and California. The California State Audit now provides the empirical evidence of the Port of Oakland's financial success over the last ten years and its value as an economic engine of opportunity."

"It is gratifying that the California State Auditor has recognized the local and regional benefits derived from the Port of Oakland," said Port of Oakland Executive Director Tay Yoshitani. He added, "The Port's value is easy to understand when you consider that the Port's business activities generate nearly $7 billion in annual economic activity and provide 43,700 direct and indirect jobs for the Oakland/San Francisco Bay Area."

In response to the audit report Chief Financial Officer Fred Rickert concurred that the Port's operating revenues over the ten-year period increased from $98 million to more than $172 million. "Our total assets grew from $676 million to just under $1.7 billion," stated Rickert." We maintained an excellent debt service coverage ratio for our investors over all those years. Essentially we had sufficient resources to cover our port-wide debt service and to continue with our capital intensive expansion plans. We are in a strong position to go forward with our projects."

"We believe this audit demonstrates conclusively that the Port has been managed in a fiscally prudent and efficient way and is truly providing benefits to our community and the State of California," stated Port Executive Director Tay Yoshitani.

The Port of Oakland, like all other ports in the state, is the trustee of State-owned assets and all of its assets and income are subject to the provisions of the State Tidelands Trust governed by the State Lands Commission. The Port of Oakland, established in 1927, is an independent department of the City of Oakland employing some 600 people. The Port extends approximately 19 miles along the east side of the Oakland Estuary from the border of the City of Emeryville immediately north of the San Francisco-Oakland Bay Bridge, to the south to the border of the City of San Leandro. Port facilities include four major marine terminal areas covering almost 1,000 acres, and Oakland international Airport which covers an area of over 2,500 acres; 1,100 acres of commercial, industrial, recreational and other land; 950 acres of underdeveloped land; and about 9,800 surface acres of water area.

Contact:
Harold Jones
Director of Communications
(510) 627-1564
hjones@portoakland.com

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