come from the reserve. it's not even a lot of money either. >> yeah, it's not. >> okay, thanks. >> anybody else, any other questions right now, comments? okay, thak thank you for being here. at this time we'll open this item up to public comment. if anyone wishes to comment on item number one. walter, thank you for being here. >> good to be here. [singing]

[singing} >> you call item two please? >> item number two. here to receive and update on the report of san francisco's

budget, 2014 and 15 and 2015, 16. >> thank you. we have from the port, thank you for being with us. if you could indulge me for just a second, i will find -- hopefully find -- good afternoon. monique from the port of san francisco. thank you for the opportunity to talk about the port today. i'm accompanied by the port's staff as well, not the whole gam mutt, but i will rely on them for questions. i really appreciate the opportunity to set the context for the port's budget because i

think the port struggles from an identity crisis. we are best known for our land use debates, but we really do a lot more for the community than to talk about just land use. i think it's important to realize that because that's where our budget comes from and that's where our budget goes. and so having said that, i want to point out that we are a port. we're also a water front. we're much envied for being able to be both. we're not behind fences, as other ports around the world are. one of the things we do for the city that's probably of the most value is our historic sea wall so i'll talk about that in a little bit. just to do a quick refresher, the port's mission is codified in law and we have a couple at

attributes that date back to our founding in 1860s. the first is to promote te merry time and the fourth is to be a self supporting enterprise, which we have been since inception, even when we were a state agency. today the port is a diverse tenant mix of uses. the historical uses are very much still there. we've been able to capital ize not only on the city's tourism industry, but on our great location on san francisco bay and our a jay sen location to the pacific ocean. one of our greatest missions was to based on just 2013 alone i would say that we are fairly reunited with the city. today the water front is teaming with school kids going to explore tore yum, as well as

kids coming out to enjoy the sunshine for lunch and visitors out on the bay. opening day on the bay was this past weekend so we have sailboats out again. we're also still a transportation entity and we see how that has gained importance in the last couple years. we're very much trying to create and receive sustain self sustain our property and not have us isolated behind buffer zones. with respect to the maritime attributes, but we don't do oil, we don't do automobiles and we do very few containers, but we do everything else, including ing support the other five ports in the bay with our harbor fish is a big part of

our operations. 90 percent of all fish in san francisco comes through our port. 40 percent of that comes through our local fisherman and what's coming into the port comes in on an 80/20 percent. the ferry network is extremely important to us. this goes back to the beginning of time with the port. we saw how important it is during the bart strikes and the bay bridge wshg that has been done. nine million passengers are traveling by ferry per year. it's split almost half between the commuter ferries, which are shown on this slide. there are seven lines, six are shown here, and the other half are attractions going out to al ka traz or sailing around the bay, so part of our robust tourism industry. one of the things people don't know is the port has two water tax' i operators.

the first has been in business now almost two years and the second water taxi operator just launched his service and he's featured here in the lower picture and you'll be seeing him through the summer months. you'll be able to hop on, hop off, go from the ballpark, all the way up into aquatic park. >> what are the spots that the water taxi service serves. >> that's a great question, thank you. there are three main spots that are served. first one is pier 1.5, is second is down at pier 40 adjacent to the ballpark and the third is in fisherman's war f. with each of the development projects we look at along the

water front, that remains one of the attributes is water transportation. >> where are we at with the al ka traz? >> they're getting ready to [inaudible] by the end of the calendar year. i think they might be a little off of that schedule. my understanding is that they will show a san francisco port site as their preferred alternative, but they are still studying the fort mason site. >> okay. >> we're watching it carefully, and i will be calling you. >> please do. >> you can see the bump up here in the 12, 13 fiscal year. that had to do directly with the bay bridge. we'll see another bump up in the current fiscal year.

the bulk of the ferry passengers who are commuting are going to marin county with a small portion going over to alameda, which is the orange and darker blue at the bottom and then up to vallejo. a new service has started now going to south san francisco so it goes south san francisco and then next year we'll see the impacts of that service. passenger crews remain a big part of our business, it goes all the way back to the gold rush when the united states built their first ship, it turned into a passenger ship to bring people to san francisco for the gold rush so it was a very long sector for us. we are if perfectly positioned for it within the bay. we are a little by geographically challenged within the pacific ocean and the state of california, but nonetheless, crews calls is growing fairly rapidly just in time for opening up the new

cruise terminal which is in september. ship repair is also a very big piz. it goes back to the gold rush. most everything was made from relics of vessels back in the 1800s, including i ing equipment for the gold rush and of course ship repair and building has been a robust trade, also a big employs people in 22 different trades. they operate at about the same number of ftes as the port and they support all six of the ports and the bay. and then we've been growing pretty rapidly -- >> just a question on -- as baa system, is that own by the port? the actual facilities are port facilities? >> yes, yes, and no. the ba system ship repair is

the current operator. they have a lease from the port. the land they are on is port property and the dry docks they use belongs to the port, but the rest of the equipment is theirs. >> and is there any room for increasing this industry in the port? >> in terms of footprints? >> in terms of footprint, in terms of where you can actually create more facilities for ship repair. ir. >> there's ship repair at pier 7d. they occupy 14 acres. they are in the process of a master plan that will align itself with the rest of our pier 70 master plan. you'll recall we have a development project there. there's not a lot of expansion room that's desired. they have a lot of space they're not fully utilizing, but there's several other

smaller boat works along the port, one adjacent to the ramp restaurant. it's the oldest ship repair operator in the bay. we haven't had anybody really wanting to come and build out a new boat yard. in fact, unfortunately with the move of the warriors to mission bay, i've had several people if i'd like to relocate the boat works, which the answer is no. so interesting question, but i haven't heard of anyone wanting to do that. the most i hear of usually is folks interested in developing new marinas so that's not impossible, but something we'd have to look at really carefully. >> then pier 70 with its dry docks is more or less an a nomaly for the rest of the port? >> with the big dry docks, yes. it's an anomaly for the rest of the state as well. our dry dock is the largest in

all of the west coast of the north americas, which allows the bigger vessels to service the pacific ocean. there isn't anything quite like it until you go up to victoria where they have a bit smaller one, or san diego. >> this seems like an asset that can be built on. i don't know. has the port spent time addressing or researching? >> we partnered a lot with bae over the years and you can see the growth in the slide representing that. when the navy moved away from the bay, ship repair took a nose dive as you can imagine, particularly at the big sites. the sf boat works and then competing smaller boat facilities in alameda. they have a constant because of the smaller vessel traffic in the bay, but the big ship industry has been impacted. we've bandage working a lot

been working a lot with bae so they could compete for the bigger ships that are coming out of the cruise industry and the cargo industry. as you may recall as part of our america's cup project, we invested in shore side power at pier 70, which has also enabled bae to be a stronger contender for bidding and they've won quite a few contracts that way. their volume is going up. there's still plenty of capacity to run the ship repair yard more and create more jobs and that's where we focus the port's attention. >> is there a direct link between the ship repair hang and city build? >> yeah. >> we're building that pineline? pipeline? the age of the workers was pretty high. the age was around 50, 51, and

seems like it'd be a good job to do some turnover. >> yeah, they're partnering with city build directly, not with the port, but directly and something we look at a lot. it is so many different crafts. to your point, it's really good and desirable work and i think it gets bid on a lot at the hiring hall. >> supervisor mar. >> yeah, i know you have a number of slides, but i wanted to is you about the cruise ship industry. i know mr. benson's before with us before with the shore side power implementation management district, but it sounds like with the america's cup delays that shore side power, it's being completed to hopefully increase the number of cruise ship visits and our share of the industry. i'm just wondering if you could talk a little bit about the projections of the increase in

the cruise ship visits to the city. >> yes, thank you. i thought i had a slide on that. maybe not. oh here we go. so as you can see, if you go back to slide -- i think it's nine there -- sorry, eight. we've been seeing tremendous growth in the cruise business over the last five years. that's a number of different reasons. the cruise industry is highly elastic. they bill themselves as movable hotels and go where the demand is. a couple things have happened that have a you throwed our business to grow. first and foremost the bigger ships can be handled on the ocean because of the ship repair and we've seen ships being moved from mexico up the coast in san francisco. that's a great change in the business. we remain a very desirable location. there are some federal laws that impinge upon our ability to be served as well as the

passengers would like, but we also are growing the business in terms of building a new cruise sip terminal ship terminal. the terminal we have right now was built in 1918. it served bumming d bulk so the nerm terminal will help with that. we're seeing a good growth. we're going to have a record year. the cruise industry counts itself by calendar so 2013 was a banner year for us. 2014 is booked even more. i think it's 87 cruise calls already booked for 2015. >> who were the main regional competitors with us? long beach and san diego or what are the main competitors? i'm guessing if we're increasing we're pulling them away from our competitors. >> historically san francisco

served the alaska market in the summer months and the mexican market in the winter months. you'll see in october and may a lot of ships here as they're repositioning from north to south, so seattle, vancouver, victoria remain the biggest competitors mexico is just because of all the problems they've had has not been very desirable so the cruise ship companies have had to create new i itineraries. we've been benefitted those. we've been seeing something called coast wide cruises where cruises are going los angeles, santa barbara, san francisco, back down to ensana da, and then back up into los angeles

and those are seven day cruises and they're very popular. we're hoping as mexico starts to come back that we can hold on to the -- wu but we did cannibalize because san diego has been hit the hardest. in terms of parks, this is what's makes our port really unique. we have 86 acres of open space right now with 28 acres planned. to give you an idea of how much that is, that means one out of every 5.5 acres of port property is open space or parkland. that is a stunning amount of parkland and it's part of the transition of the port. in the next two years we'll be

moving [inaudible] and bay front park as well as the blue-greenway network. and the blue-greenway network is really moving along on the water water front side seems to be the main driver and it seems to give the san francisco me peninsula to have something as cool as new york. the goal is, as you walk along the port's property, every seven minutes of walking you come to a place where you can pause actively depending on the type of park . in august we will be opening up a new 2.5 acre park at pier 27. this is long a waited and we're very excited about that. the other thing we've been able to do is to promote our environmental at [inaudible] head park was a vision that got off the ground probably ten

years ago and it keeps growing. we were able to augment the park with a dog run and more street scape. we've just hired a new operator for the living classroom known as the ecocenter and it's a great collaboration, not just of operators, but also users. more excitement on that front to come. so key priorities for the port -- we are home to about 500 leases, more or less, a multitude of small businesses are at the park, many of them are sole proprietorships, a very important place for them to be able to stay in san francisco, as well as to light and heavy industrial. with the eastern neighborhood plan, more and more of that area is dependent on the port plan. we also obviously have very old infrastructure. i've heard a couple times in mr. kelly's presentation about

how old you see infrastructure is, ours is equally old. many of these -- most everything was built in the late 1800s to the 1900s. it was pretty much all done by the time world war ii was date done. sea level is obviously something we're participating in as a regional program and then it's always a challenge to stay fie nanl nancially stable. we've had the challenge doing that ever since so it's our goal always to make sure that we never need to rely on the general fund. i just want to pause very briefly and talk to you about the seawall. this was designed by a state engineer in the 1860s. it gain being built in the 1880s and has been there ever since. you can see on this, if you look, the white on the outer

edge represents all the areas of the city that have been filled. the very top under the word seawall is of course the marina area and fort mesa and when you come around the bend you can spot aquatic park down to the creek. of note is the cove downtown was filled by the time the port was established and that's when this map was created, but as you probably know, the cove waters go all the way to mont gomery and california street, so there's a lot of property dependent on the seawall. mission bay was rather sizable going all the way to the 280 extension. we have in our money to begin a robust study of the sea wall. our seawall particularly in the downtown area protects a number of very important assets of other city departments as well

as bart and other agencies around the bay so this is a high priority for the port going forward. our capital plan remains probably as big as any departments. what you'd expect for an entity that is 150 years old. we continue to be as creative as we possibly can to find ways to fund improve ments in state of good repair just to keep the port operating and self sufficient. our capital plan for the amount of money we need to stay in our current state of operation is about 1.6 billion and we've identified just under 1 billion in potential funds. about half of that comes from the port itself and half of that comes from external partners which i'll talk about in a moment. in the last five years we've been lucky to survive is recession fairly well. if you look at the blue line you'll see it was flat coming out of 2007 to 2010 and then we

started to have some incremental growth so most of the growth numbers you see here really occurred in the last three years. we worked very hard to curtail spending in 2011 and 2012, so much of our revenues are dependent on percentage rents. it's hard to predict where those will go so we rise and fall quickly with the state of the economy, unlike a tax backed entity where taxes lag. and we've been trying to invest as much about it as we can into capital. we've been able to invest $187 million into capital the last five years, 65 million of that was from the explore tore yum.

itorium. very quickly in ferms of mandates of the board, we are working hard to support the lde and local hire mandates. we've been very well on local hire as well as on lbe. we aufr three types of contracts generally and all of them are performing well above the allowances set by the contract monitoring division so we're prout of that. in terms of our capital plan funding comes, as i mentioned earlier, from port contributions and assets so that's a combination of operations and debt. and the external as we can. and other types of sources, but we still have a fairly sizable

gap in being able to fund our ten year capital needs. of this funding source is spread out over ten years. it's not money necessarily available for today and has a high probability of being available to us, but things change fairly rapidly. we work hard all the time to make sure we're financially stable. our budget proposal meets these policies and again, we are just very mindful of the trade off between or operating expensens and our capital investment and we're doing our best to program those effectively. all of our forecasts show us having to make did fficult decisions in the sense that operating expenses continue to grow faster than operating resources for capital so we're watching that very closely but we've been successful to date. >> do you mind going back a couple pages? >> not at all. >> just briefly the lbe stuff, in every case you've been able

to go over your goals? >> yes. so we do three types of contracts; construction, professional services and then three as needed pools. one is for engineering, one for environment and one for real estate economic. not every contract has exceeded its goals. to be candid we have a hard time with drudging, but we've been exceeding our goals. >> well, great, that's good to see that -- >> we're proud of that. we're not a very big department. this is not a lot of dollars going out the door, but we're working hard to make sure they're fulfilling your policies. i think that concludes my report. >> okay, thank you. any questions right now?

thank you for being with us. >> thank you for having us. >> okay. we will open this up to public comment. does anybody wish to comment on item number 2? please step forward. [singing]

>> thank you walter. >> i' been working on port projects for many years now. i just want to point out that in the discussion of the capital plan and the kind of deficits the port is looking at, the two big potential public private par ner