Investigation into the Port of San Diego's Finances
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July 17, 2009 – 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.
Related story: Critics Say SD Port Commissioners Lack Oversight
GLORIA PENNER (Host): This week KPBS released a series of reports about the Port of San Diego's maritime operations. This division oversees the transporting of goods to San Diego. For the past 15 years, marine operations has run at a loss of about $80 million. But as KPBS reporter Amita Sharma discovered, a shift in accounting is showing a profit. Amita's here to explain what's on. So Amita, what is going on? What did you find? AMITA SHARMA (Reporter): Well, I looked at the budgets dating back to 1993, and as you mentioned the port's maritime operations lost $80 million since 1993. The port was very straight-forward about those losses in the 1990s. But starting in 2000, the port starting leaving out certain expenses for maritime operations like general, and administration and depreciation in the budgets it was showing to the public. In fact, in the budgets it was showing to the public it made it appear as if maritime was running at a profit. So where were those bottom-line cash flow figures for maritime operations. Well those figures were contained in internal management reports that the public didn't see. PENNER: You know this sounds like it would be of interest to an accountant. Why is it important to us? SHARMA: It's very important because maritime operations is one of two major sources of revenue for the port of San Diego. So, if you want to know maritime operations is doing, you really need to see all of the losses. But it also is about accountability and transparency. The Port of San Diego controls more than 5,000 acres of tidelands in the region. And those tidelands belong to the people of California. You can make the argument that informed citizens make informed choices and the fact that they're not showing all the losses in maritime to the public raises the question about whether they're trying to control the message the public hears about maritime operations. And I should say that I actually did go back and look at the budgets since 1963 and with very few exceptions, maritime has always lost money. And there are some people who say look, if you're going to fence out the public, wall-off this prime waterfront real estate from the public, do you not have an obligation to make money off of that property. PENNER: And what do they say? I mean you did the investigation, you did the research, you went to the port. What did they have to say about it? SHARMA: Well, I talked to the Port of San Diego and they said yes, we have lost money but you know we started making money, maritime operations started making money as of three years ago. But, as of four years ago the port started transferring several million dollars in real estate from the real estate division into maritime operations. So some people say look that profit would have never even existed if you hadn't transferred the money. But the port says listen, the larger argument is the Port of San Diego's maritime operations is responsible for pumping hundreds of millions of dollars in revenue to the local economy through jobs, tourism. And they say that every big city has relied on maritime operations to build up its economy. PENNER: Just briefly, the port's made up of five cities. What are their concerns about all of this? SHARMA: They have varying concerns. The City of San Diego says look, we bring in the lion's share of money to the Port of San Diego from the lease money that it gets from real estate on the waterfront. And yet we get the least amount of money in return from the port to pay for things like police and fire. The City of National City says you know, we don't have one inch of access to our bayfront because the terminal is there. And they want to see more development that can bring in more revenue to them. And the City of Chula Vista says look we've been waiting for ages to see more development on our waterfront and we haven't seen it. PENNER: Ok, I thank you very much Amita Sharma. SHARMA: Thank you. PENNER: Joining me now to weigh in with their opinions about how the port operates are John Warren Michael, editor and publisher of Voice and Viewpoint, and Michael Smolens, politics editor for the San Diego Union. So Michael, what does this lack of transparency say about the way the port operates? MICHAEL SMOLENS (San Diego Union-Tribune): Well I think a lot of governments try to do that, maybe not in this fashion but they always want to present the best picture. This, as Amita reported, seems to go a little beyond the pale in not giving the true picture of how the books are balanced. I also sort of wonder whether the port had been so focused on the real estate and the hotel revenue that for the longest time the maritime operations have been sort of this second banana with the port and I just wonder whether that doesn't play into the fact that it hasn't been doing that well historically, despite potentially some recent improvements. PENNER: That sounds very kind of Michael doesn't it John? What do you think, do you think that the culture of the port needs some changing to make it more accountable? JOHN WARREN (Voice and Viewpoint): Well, there's no question the port has been a self-contained entity for a very long time with very few people raising questions about it. The very structure there lends itself to that in terms of members being selected from different cities and the cities themselves not feeling that they have any real input. So I think that there's a real question here because no matter how you cut this it amounts to an effort to withhold information from the public that otherwise might influence how people feel and I think that's wrong. PENNER: Why should the public know, I mean what difference does it make if the public knows or doesn't know? WARREN: Well it's not a question of why should they know as much as it is an issue that they have a right to know. If it were the City Council, if it was CCDC or any other entity we would be very upset and concerned in terms of not having all the facts. So why should we not be equally concerned about the port? Even though it says it has allegiance to the state as opposed to the people in cities. PENNER: So here we have seven port commissioners, Michael, who are appointed by the five member cities. Would it be better if they're elected? SMOLENS: Well I don't know but that does create a different dynamic as John had mentioned. They are appointed, they don't seem as accountable, most people don't know really what the port is. But they shouldn't lose sight of the fact that we own that property. The public owns that whole operation and the port for a long time has long acted like a quasi private organization and it's sort of a mystery to a lot of people. And I think because of that and because of the lack of attention it gets you see these kinds of accounting procedures. PENNER: And a lot of people feel as though it's better to conduct negotiations and business behind closed doors not out in public. SMOLENS: Oh and I think even public agencies have that right in certain respects but this is about their budgets and about what kind of revenue taking in, their expenditures, we wouldn't stand for that at the city, at the state level, and I'm sure we don't know all that's going on there. But transparency is key to the public understanding as to how well they're operating and clearly they've been trying to sort of paper over a bit of some of their shortcomings. PENNER: Well finally John, what does this really all mean to the people of San Diego, so what? WARREN: Well most of the people will probably say "so what" at this point because they don't see dollars coming back to any existing programs that need them, they don't see any changes that affect them directly. The port is still a contained entity there, we're still trying to increase the volume of business and most people here do not understand what kind of items come in in terms of commodities or where they come from or the relationship of what we get here compared to San Pedro in the LA area. So people really just need to be educated to what's taking place.