skip to main content

Listen

Read

Watch

Schedules

Programs

Events

Give

Account

Donation Heart Ribbon

Public Doesn’t Get Full Story on Port’s Maritime Losses

Above: The Port of San Diego was created by the state Legislature in 1962 to manage San Diego Bay and surrounding waterfront land.

Audio

Aired 7/13/09

The Port of San Diego is a public agency charged with managing the bayfront. It claims its top goals are strengthening its finances and building public trust. But over the past 15 years, the port has lost tens of millions of dollars in maritime operations. KPBS Reporter Amita Sharma found the port has not clearly documented those losses for the public.

Video
Video unavailable. Read transcript below.

Above: Reporter Amita Sharma talks to host Gloria Penner about how the Port of San Diego is tracking its revenue and expenses and posting its profits.

— The Port of San Diego is a public agency charged with managing the bayfront. It claims its top goals are strengthening its finances and building public trust. But over the past 15 years, the port has lost tens of millions of dollars in maritime operations. KPBS Reporter Amita Sharma found the port has not clearly documented those losses for the public.

Maritime operations are the main reason for a port to exist. The maritime division is the gateway for people and goods to come by sea to San Diego. For most of its history, maritime has lost money. Since 1993, the port’s books show losses totaling $80 million.

“As a matter of fact, the last three years the maritime division has actually shown a profit for the first time in the history of the port,” says Ron Popham, the Port's maritime director.

Contrary to what Popham says, a KPBS examination of the port’s budgets shows there were a few years of profits in the 70s and 80s. But they were a tiny fraction of losses that were recorded in previous years, including a loss of $9 million in 2003. But in recent years, the public hasn’t been told about those losses. (Story continues below)

In 2004, the port began transferring millions of dollars from real estate revenue into marine operations. With real estate money transferred, the port’s maritime division posted a loss of $80 million since 1993. Without those transfers, the loss would have been $106 million.

Above: In 2004, the port began transferring millions of dollars from real estate revenue into marine operations. With real estate money transferred, the port’s maritime division posted a loss of $80 million since 1993. Without those transfers, the loss would have been $106 million.

For example, in 2005 the port budget, posted online, showed marine division income of $24 million and expenditures of nearly $16 million. To the public that looks like a profit of $8 million. But the expenditures don’t include operating costs that are never detailed in the report. The port’s internal numbers show the maritime division actually lost $5 million that year.

“There’s an adage that accountants use that profit is a fiction and cash is a fact.”

Frank Partnoy teaches corporate finance at USD Law School.

“We certainly need to see something more about cash in order to know the health of marine operations. That’s what people actually care about if they’re looking at the health of the port,” says Partnoy.

For decades, the public did get to see the bottom-line cash flow figures for marine operations. But in 2000, the port started to leave out certain expenses in its public budgets. And those expenses were crucial in determining just how well maritime was doing because they totaled millions of dollars.

“Any company that changes its practice that moves from more transparency to less should at a minimum explain the rationale for that change.”

“Our desire when we’re doing budgeting is openness and transparency,” Partnoy explains.

The port’s Chief Financial Officer Jeff McEntee says the agency began omitting certain expenses because . .

“It wasn’t really adding value to have general administrative and depreciation expenses in the budget,” says McEntee.

But they’re expenses nonetheless says business Attorney Mark Mazzarella. And including all costs for the public to see is crucial for transparency.

“The public has the right to assess the performance of its public servants and if a public agency is performing at a significant loss but is trying to make itself look like it’s performing at less than the loss it is performing at. That would be basically deceiving the public into thinking that the agency is doing better than it is,” he says.

In 2004, the port began transferring millions of dollars from real estate revenue into marine operations. With real estate money transferred, the port’s maritime division posted a loss of $80 million since 1993. Without those transfers, the loss would have been $106 million.

The port’s McEntee says the transfers are justified.

“They’re all maritime related, all have to do with shipyards, yacht repair facilities. They’re dependent on the water,” says McEntee.

But San Diego City Councilman Carl DeMaio says the port’s claims and numbers don’t add up.

“It’s Enron-like accounting. It’s doctoring your financials to present a pretty picture when in fact it’s to mask the fact that taxpayers are losing millions of dollars on certain port properties, for example the Tenth Avenue terminal," DeMaio says.

In part 2 of this series, we’ll explore why the Tenth Avenue Marine Terminal has lost millions, and why the port defends its existence.

Comments

Avatar for user 'techsnaps'

techsnaps | July 13, 2009 at 12:48 p.m. ― 5 years ago

I was almost disappointed that I wouldn't hear KPBS run its regularly scheduled ambush piece about the Port of San Diego and thankfully here is the new one, in its fully mountain-out-of-a-molehill glory! I thoroughly enjoy these insightful attack articles that take skillful cheap shots at the Port while ignoring their tenants of environmental stewardship, commitment to public art and community service, and public safety. Way to go! I only wish I knew who was funding these out-of-the-blue straw-man scandal pieces so that I could congratulate them for successfully emulating Fox News editorials! Keep it up KPBS! You're doing a great job providing the public with hammering headline stories to assault the Port of San Diego for no reason! After all, it gets boring going after public agencies that can't keep their finances in line... Good for you by also taking on those that actually have a healthy balance sheet! Why not spice it up by continuing to fabricate disasters where there aren't any? It makes for great news! Accolades to you!

( | suggest removal )

Avatar for user 'psmaps'

psmaps | July 13, 2009 at 1:41 p.m. ― 5 years ago

I tend to agree with the previous posting. The Port doesn't use taxpayer money, so what does Councilmember DeMaio get all up in arms. Beyond that, most of the San Diego Tidelands are in Councilmember Faulconer's district. And beyond that, they are State Tidelands.

As a former Executive Director of the SD Port Tenants Association, I can say with some degree of confidence that the Tenants support the Maritime Industry as a vital part of the Ports' charter. The real estate revenue for Shipyards, Boat Yards, Marinas, Harbor Excursions and the like are, in my view, revenues that are most correctly applied to the maritme department.

No mention was made of the cruise ship industry which may be a break even for the Port (my guess...who knows it might even make $$), but is certainly a money maker for many of the Port Tenants an,d other non-tidelands businesses as well.

Now if you want to talk about Qualcomm....but bashing the Port is always more fun.

( | suggest removal )

Avatar for user 'Factual'

Factual | July 20, 2009 at 9:15 a.m. ― 5 years ago

Lets just see the history here, that the Port of SD has helped the citizens of San Diego with,

1, Complete building of the Convention Center, 1987 to 1990 with a projected cost of 165 Million + an additional 60 Million in cost overruns = 225 Million. This was then leased to the city for 1 buck a year (gifted).

All without Taxpayer money.

2, Terminal 2, Lindbergh Field Expansion 1995 to 1999. Total cost, 1/4 Billion dollars, on time & within budget.

All without Taxpayer money.

3, Monies (gifted) again for a total of 11 Million dollars to help set the footprint for the New Petco Park stadium, circa 1996.

Again without Taxpayer Money.

4, Countless, smaller waterfront improvements, from Pt. Loma, around to Coronado.

Complete Freebies, with no monetary costs to any Taxpayer.

My point is, if the Port of SD does one thing right, it stays in the Black, unlike some "other gov't agencys around here". I clearly could not see the City of San Diego, or any of the other Member City's that are within the Port's Charter, comming up with any revenue to improve anything around tidelands, like the Port of San Diego has.

Bottom Line,
The Port Works, & go find some other "slack newsday reporting" elsewhere.

( | suggest removal )