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Ports & Terminals

After COVID losses, Port of San Francisco’s Forbes hopeful about rebound and state aid

Elaine Forbes - executive director, Port of San Francisco

In an interview with AJOT, Elaine Forbes, executive director, Port of San Francisco said the Port could be facing up to an $80 million deficit by the end of 2021. She is hopeful about an economic rebound in 2022 and that $250 million designated by the State of California for ports’ recovery might be partially utilized to reduce Port losses suffered during the pandemic.

Earlier this month, Forbes told the San Francisco Board of Supervisors: “The Port is in a crisis. We have cut our capital budget to below life support. We’ve used our savings and we will be facing layoffs of essential employees without support and tools to right our ship. Our revenues have fallen nearly 50% for a total loss of $60 million and a projected $80 million over the next two years.”

Since then, Forbes said that California Governor Gavin Newsom has decided to allocate $250 million for California ports recovery. The funds come from the $26 billion California received as part of the American Rescue Plan Act.

Forbes noted that the funding for ports must first be approved by the California Legislature and then meet the approval of the Governor’s Office of Business and Economic Development (GO-Biz). The office will decide on final allocations: “The Port of San Diego is facing similar problems that we are. Other ports may also seek assistance,” she said.

As a result, “we are looking at the end of the year before we can get relief. In the meantime, we might be able to obtain a $20 million loan from the City of San Francisco to tide us over and avoid having to make draconian cuts in staff and Port operations.”

Forbes said that the loss of cruise ship revenue hurt the Port’s revenues during the pandemic. Rent payments have also plummeted from the Port’s tenants. The Port forgave about $14 million in rent for 225 tenants during the ‘shelter in place’ mandates that included restaurants and other businesses shutting down during the COVID crisis. The Port has also deferred collecting tens of millions of dollars in rent from others. Parking revenue has also declined.

Andre Coleman, maritime director, Port of San Francisco told AJOT that the cruise ship business is projected to bounce back in 2022 with 118 cruise ship calls including one ship, the Carnival Miracle, will call at San Francisco 22 times. Coleman said stringent requirements for cruise ship passengers and crews to be vaccinated against the COVID virus will help ensure safety.

The revival of the cruise ship business in 2022 would also help revive tourism in San Francisco, Forbes said.

Public transportation also experienced a decline during the pandemic. For example, Forbes reports that the level of Bay Area ferry passengers arriving into San Francisco declined by 93% in 2020. Recent surveys show a slight improvement in 2021.

She said that the decline in ferry and other public transportation mirrors a more fundamental problem as to whether office workers will return to San Francisco and other cities in the same numbers as before the pandemic. This, in turn, will determine whether there is a return of sufficient municipal sales tax generation. This will also determine whether restaurants, bars, hotels and other venues in the City will see a return to normalcy.

Nonetheless there is some positive news:

Northern Waterfront

The Port is going ahead with plans to develop and rehabilitate its piers on the Northern Waterfront. Forbes says Requests for Proposals (RFP) are going out to potential developers to rebuild Piers 19-31.

San Francisco Seawall

Plans for rebuilding the San Francisco Seawall, which protects downtown San Francisco from flooding and sea level rise, have garnered an additional $425 million in investment. The seawall supports the city’s historic piers, wharves, maritime uses and sites such as the Ferry Building, and it underpins utility networks including BART (subway), Muni (buses), ferries, the sewer and water systems, and communications infrastructure. According to the City of San Francisco the seawall protects more than $100 billion of assets and economic activity. The Port obtained $425 million from a bond issue as the down payment on the $4 billion budget it needs for reconstruction. The Port recently secured the $425 million for a second 10% of the reconstruction budget. Developers are proposing the $425 million to renovate Piers 30-32 and Piers 38-40 “which are some of the most low-lying and most vulnerable to flooding and sea level rise.” Part of the $4 billion budget will go for reenforcing downtown land that was filled in near the San Francisco Bay. This land might sink during an earthquake. This process is called liquefaction. The goal is to reenforce the foundations of downtown buildings, streets and infrastructure. The Port is also working with the U.S. Army Corps of Engineers to update the Corp’s sea level rise projection data. This is needed to reflect updated data showing an accelerated rise of sea levels impacting U.S. coastal and inland cities, ports and communities.

Car business at Pier 80

Andre Coleman reported that after a decline in car shipments when Tesla had to temporarily shut down operations in 2020, there has been an upswing in shipments in Fiscal Year 20/21 that has practically returned the terminal to pre-pandemic levels. In Fiscal Year 2019/2020, shipments totaled approximately 118,500 units. In Fiscal Year 2020/2021 auto shipments are approximately 115,000 units. The Pier 80 terminal is operated by the Pasha Group and 98% of the vehicles transiting the terminal are transported by auto carriers for export. These are mostly Tesla autos being transported to Asia and Europe, he said.

Economics is never an exact science, Forbes says, “on the one hand the economists say the pandemic was an abnormal event, not linked to economic fundamentals, so that everything will go back to normal. On the other hand, other economists say the patterns developed during the pandemic will change work patterns, commuting patterns and patterns of consumption…We’ll soon find out.”

Stas Margaronis
Stas Margaronis

WEST COAST CORRESPONDENT

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