offering additional flights with its merger with continental. we see virgin america expanding their services and you have carriers doing short-haul flights and smaller planes taking up the same landing time as a larger plane potentially would. what is the airport doing to encourage those airlines to have larger planes? is there an incentive we can offer? how much of a state we have? >> it is a real problem. for los angeles, which is the biggest market in the world -- one airline is operating 1150 to 70 seat aircraft a day. there are operating 737s, they would need fewer planes. the same -- may be twice as many flights. we have seen a real growth in

small planes using our airport. the faa recently introduced what is called level to slot control which means considering asking the airlines for voluntary changes in the schedules to reduce delays. we have asked the faa to focus on small planes and requesting airlines fly larger aircraft in heavily traveled markets. the faa has not responded to that. senator feinstein has also requested the faa to focus on that. today, the airport has no power to tell the airlines what kind of aircraft to fly. in the past, the faa has never stepped in and told airlines what type of aircraft to fly. we are asking to break new ground here. our pricing, we charge on a weight-based sea, so it is per thousand and we don't have the

ability to charge more than that. we have a right to charge a minimum landing fee, but only a landing fee based on actual cost. even though we have a $200 minimum fee, that is not enough to drive the airlines to fly larger aircraft. it's a nationwide problem, it is going on at newark, laguardia, kennedy, washington national as well. the faa may move us to a full- fledged control which means everything would be frozen and no new flights. this would be terrible from a competitive point of view. traffic growth we have seen is driven by competition. every market that virgin america starts, we see fares drop 20%. that brings more people into our hotels and to our city. i view it as essential that we keep our airport open and don't stop this competition and limit

our hometown airline, virgin america, from being able to grow. it's going to be a hot policy topic for the next year. supervisor chu: one of the pieces mentioned in the budget analyst report is that the department expects there will be landing fee revenue increases coming forward. but you mentioned we are very competitive compared to local area airports. could you speak to where we are? >> if you look at our average cost for passenger, we are a fair amount over oakland and a fair amount over san jose, but that's not meaningful because we charge a much higher rate per passenger for international traffic and oakland and san jose have very little international traffic. international traffic is much more expensive because of customs and security.

they pay about $6.50 in oakland and probably $9.50 at san jose and we're very competitive among the low-cost carriers. international may pay around $25 but they have very large first class clubs that add significantly to their cause structure. supervisor kim: you mentioned there was a parking tax on the ballot in san mateo. could you talk about how that impacts are fees? does that mean you are raising parking fees to absorb the tax is or is this something the airport is absorbing? >> the county has placed on the ballot a measure to tax both the parking in the unincorporated areas of san mateo county in the airport is in an unincorporated area.

the rental car tax would be collected as an add-on to the contract. it would not impact the airports revenues. because our parking revenue control system is set up on a whole dollar basis, all passengers pay in dollar increments and we don't have change in the cash drawers. we would effectively take it out of our total take from parking operations so this 8% would come out of the revenue of the airport. we have recently raised our parking rates significantly because demand is booming and few parking operators shut down. we had to raise our rates to shift more traffic to transit and try to make sure we don't fill up when we have a problem and there's no parking available. we have added 2500 spaces in the

last two years and we are adding another 800 spaces before thanksgiving, but we cannot seem to keep up with demand. supervisor chu: thank you. with regards to the language component, you talked about the volunteers to currently held out with providing information to passengers at the airport and you talked about an effort to get folks away from the desk and roaming around to help. i think i have been to the airport a number of times over the last year. are they wearing something that draws attention for people to know they are out there? do they have a uniform? >> they have a bright blue jacket and wearing a volunteer badge. one of the areas in your most likely to see them is going to the main checkpoint just beyond

security. you will often see them there. sometimes right before security , people coming down the elevators -- there is often someone standing there. we have a number of summer intern, maybe 10 or 15 internes this summer who will be performing this function standing on platforms in different areas of the airport right outside the bart station. we also have the jacket and identifying badge. supervisor chu: thank you. did you speak to the summer work force? >> we will have 120 workforce development placements and we will be increasing that to 135 next year.

a very large intern program and we're very proud of this program. we serve both at risk use as well as kids in high school. this has been an important source of permanent hiring. hire kids from high school and be able to bring them out to participate in the architecture. we started in the last year-and- a-half a custodial effort that has worked very well and we targeted specifically san francisco residents to identify young people training at the airport. >> thank you. -- supervisor chu: how do people figure out where these jobs are available? >> we have a place near the station and we work to list all the jobs at the airport.

specifically to the internships, we work to spread the word about internships that are available and are couple of high schools we have close relationships with. supervisor kim: i did not know about this program and i am glad to hear about the program. who do you work with to reach out to san francisco residence? i'm also wondering -- >> we have a pretty well developed program. we work a lot with downtown and we have a lot of focus on the disadvantaged population for these programs. i can rattle off a few. there is a long list and we can share with you if you are interested.

>> i am very interested in the list of organizations. i'm glad to hear what neighborhoods you are targeting. do you work with sfusd and the academy programs? >> i don't know about the academy programs but we do keep count and can tell you where we have a successful relationship. >> how many intern's are you able to take on and how many individuals are you able to hire permanently? >> i would need to track that down. the goal of the career connect for at rescues, a lot of kids, of being homeless and we have a very high success record of getting them into jobs at the airport. i will get the specific numbers to you.

supervisor cohen: i want to acknowledge your commitment to the use and to reassure supervisor kim that the program is successful. if we were not in such an ugly budget cycle, i would like to see it expanded. i forget the name of the gentleman who runs the program -- he is an outstanding role model for many of the young people in the program. i believe you are hitting the market given the limited resources you have available. >> thank you. supervisor avalos: thank you for your presentation. i just want to thank the staff. we have worked with your office and with your department

looking at employment opportunities for youth in the south sector of san francisco. i know there are many that came from there. we have an ongoing program -- is that how we can categorize the work? >> it is an ongoing program. particularly focused on the southeast part of the city. >> -- supervisor avalos: do we expect we will be seeing more employment opportunities for people in that airport? >> i hope so. i'm receiving a figure from my staff that 85 folks have been hired just in the first five months of the year.

the concession tenants are working with us and a lot of jobs at the airport are entry level or just above entry level. it is a great opportunity for at risk youth and it is of benefit to san franciscans. >>supervisor chu: with regards o the budget recommendations, do you want to speak to that? >> we are in agreement with that. supervisor chu: i believe mr. rose has listed a revised set of recommendations for the airport. >> that is correct. we issued that report this morning after having reached agreement with that airport on a recommended reduction and on page 3 of our report, our recommended reductions for the proposed budget -- these are on

pages four through eight. a total 1 million -- these reductions still allowing increase of $78.9 million. $25.7 million, or 3.1% of the 13-14 budget. we would be happy to go over these and respond to any questions the committee may have. >>supervisor chu: we have a numr of these before us and we are taking them tomorrow. we would like to hear public, before we take the cuts, correct? >> yes. supervisor chu: if we don't have

any other questions for the airport, like to think our airport director. after we hear public comment, we will likely be accepting the recommendations and we may not need you to come back next week. with that, if we have no other questions, why don't we move on to the next department? >> good morning, supervisors. i'm from the port of san francisco. i would like to start by acknowledging the work of our colleagues at the budget analyst office and the mayor's office as well as the city comptroller. it is obviously a group effort every year. we are 100% in agreement with

the budget recommendations. i prepared a presentation which i believe you have a hard copy in front of you to address the five areas you laid out. if you don't mind, i will run through that quickly. there are more slides than talking points. first and foremost, i think it is important to note that the poor will celebrate its 150th anniversary as an organization. we were established in 1863 during the era of president abraham lincoln. it goes back a very long way. we were established 74 years before there was a golden gate bridge and our primary purpose was to move food and other goods up and down the seas.

this included automobiles when the time came. our primary facilities were built in the late 1800's. that on the eastern side of the property and it was the testimony to the great men who built it back in the 1800's. we are 7.5 miles from fisherman's wharf down to the primary areas. our challenge is to maintain that infrastructure, most critically the sea wall. in terms of the goals and challenges, of course maintaining a balanced operating budget is entirely critical. we are a self supporting enterprise. addressing aging infrastructure is incredibly important. we pride ourselves on the employment we have been bringing to the city for almost 150 years and we continue to do

so. we have almost 550 tenants at the port of san francisco, 90% are small businesses, unique businesses, many of which are multi family businesses, meaning they are being operated by the third or fourth generation and their families. this includes the fishermen in fisherman's wharf. we are dedicated to bringing the america's cup event to successful fruition along the properties. a new thing for us is beginning on july 1, with your approval, the harbour facility will return with the redevelopment agency which built and funded it. that will be returning to the port of san francisco, so there are changes in the budget to recount that.

historically, we continue to seep modest growth in operating revenues. we see anecdotally from our tenants, that there is an uptick in the us economy. it is moving all will slowly but it is happily moving up. at the same time, operating expenditures are moving up just as quickly. that is a real challenge for us. the vast majority of our department is from operating surplus. that has historically ranged from a low of $6 million a year to a high of $14 million a year. over 20 million square feet, that's a very small number. that is something we continue to focus on. operating trends -- most of it has remained very steady and

small growth, primarily in the commercial area i just mentioned. we have seen some growth in our maritime revenues, primarily from a ship repair, which i will talk about. that follows the restaurant retail and we have seen a modest amount of growth there. expenses continue to be driven by the same factors as always -- were quarters to other departments, and that service will be growing to pay for the new capital products we are financing on behalf of the cruise ship terminal and america's cup. i have included more details in the packet but unless you have specific questions, was not going to go through the different line items. i have highlighted where we see the major trends already. >> in terms of your increase, it

looks like a large chunk is $80 million increase. that is primarily for the cruise ship terminal and america's cup which we have decided to self- financed? >> yes. we have the certificates of participation in the amount of $34 million, $24 million as for the terminal project and the balance is for the obligations of the port with respect to the america's cup improvement projects which are at multiple peers. we asked and you agreed if we could utilize the debt vehicle or bond a vehicle because it is a cheaper one than the bonds, but it is payable from operating expenses and that is what you are seeing here. >> that looks like it's coming from your -- supervisor chu: you have taken

under your wings the rehabilitation regarding the marina project? >> that's right. there are nine positions transferring over to operate the marina. there are approximately 777 berths there as well as other services that to a tremendous job and we have work to do they're going forward. >>supervisor chu: the last thini notice is the investments your making your capital expenditures. you are diverting some of which would use for normal maintenance work for your one and then you begin to put some of it back? >> that is the plan. we adopted a new policy which would look to have greater

effort put into finding surplus revenues to fund a minimum level of capital that is reinvested in the port, the minimum level being 20% of operating revenues for the coming years and growing thereafter. we have a $2.2 billion capital need and we have only identified a little over 0.5 billion in investment and another $300 million in development dollars for investment. this continues to be a concern because in that time i have been at the port, we have put numerous facilities into red tag status or yellow tag status which affects our revenues and abilities to generate the products we have going forward as well -- the projects we have going for it as well as keeping them for a number of small businesses that would be priced out of san francisco. that is something the port commission has been of great

importance. we could find ourselves either trying to raise revenues or lower expenses in other categories. in this fiscal year, because of the america's cup, improvements that were being made, we are not going to be in compliance with operating policy but we hope to be so going forward. we hoped to set aside that the surplus would be realized at the end of the fiscal year and expand in the following fiscal year. that gives us more certainty and this is something that has been of great importance to our ratings agencies. they do something called surveillance and do it on a regular basis and continue to do something about the large unfunded capital plan. >> i just want to mention that

the port came back to the city in 1969. we have already lost 36 players. we do not show pure 38 here but we certainly have some investment to make before it can be in a useful status. this is of great concern if we were to move forward, there would not be much left. we're constantly looking for resources to help with that. most of the $2.2 billion capital plan is for the needs of substructure and superstructure. these are investments that would keep the doors open in their current state. it would not beautify the pier or at public access to the pierce the way we have been doing on the development projects we have done to date. 20% of the overall number -- we

have to separate developers we're working with to address that. right now, i am very pleased to say we have about $160 million we of realized over a number of years that are being redeployed. you can see they come from a variety of sources, about seven different sources, including where the water mark condos are as well as the revenue bonds in 2010. through the generosity of the san francisco voters, we were eligible for general obligation bonds for the first time ever in 2008. a number of those projects are underway and we have some money for the army corps of engineers,

which we are grateful to nancy pelosi for her leadership on that. these are being invested into a number of projects, notably the cruise ship terminal in the brandon street wharf and that greenway that runs from mission bay. we are excited about that. here is a picture of the cruise ship terminal sites. all of the facilities have been removed. this is what it will look like on completion. we are looking to finish in time for the america's cup event and we will go back in and outfitted as a cruise ship terminal. that means adding gang ways and border protection areas specific

to cruise terminals. as part of the cruise ship terminal project, we are building something called the northeast whorf plaza which is a sizable public space at the front-end of the pier joining the embarcadero. as a result, that means we are building another public space at the back end of the pier. it is going to be a really changed environment there. we believe if we stay on schedule, it will be going up in two weeks' time. this is deal that has been fabricated in the united states. we are very happy about that. this is the demolition project that was boarded up almost seven years ago. it has been slated for demolition for well over 10 years. it includes a very important repair of the sea wall. under this expanse here, we have

discovered that there had been a crack in the sea wall that had been repaired and that is of critical importance to us. this is what the new wharf will look like when it goes in. this will align the embarcadero. it will create another great place for people to come and create and interact with the day. it's funded from numerous sources, including gl bonds. this is another seawall project up in fisherman's wharf. that project is underway, funded by g l bonds. this is what it will look like when completed. all told, we have public finance projects going on