SAN FRANCISCO Political bickering among the Sacramento-Yolo Port Districts commission members threatens to tie up projects that could revive the ailing port and protect it from bankruptcy.
Faced with a shrinking market and unable to compete with larger ports nearby, the Port of Sacramento could be forced to declare bankruptcy by next summer unless it can raise badly needed cash by selling off available land and upgrading its facilities.
Its revenue bonds have been at junk status since November 2003, eliminating the ports ability to access credit markets while it struggles to recover; Moodys Investors Service further downgraded the districts $10.9 million of outstanding debt last December, to B2 from Ba3.
Port officials say the Port of Sacramento should be officially transferred to West Sacramento and Yolo County in order to revitalize the struggling harbor but officials with both Sacramento and Sacramento County insist that only a buyout will induce them to give up their controlling interests in the port.
Sacramento and Sacramento County have four of the seven commission seats, while West Sacramento has one and Yolo County has two.
Meanwhile, West Sacramento officials say that any proceeds earned from potentially lucrative real estate deals should go back into the port.
Until the issue of governance is straightened out, the port is caught in between two bull elephants, said the Doug Thompson, the ports director of finance.
The commission met Monday evening, ostensibly to begin transferring the port to West Sacramento, but the talks instead dissolved into arguments over a potential payout. The commission agreed to try again Aug.15.
Incorporated in 1989, West Sacramento lacks policy control over the port even though the harbor sits right in the middle of town, a situation unlike any other port city in California, said Andrew Belknap, the ports interim chief executive officer.
Consequently, the city and the port district have not had a good relationship and that is simply because of the governance misalignments. They dont trust each other, said Belknap, who is also vice president at Management Partners Inc., a consultant agency tapped to overhaul the ports operations.
At the commissions meeting this week, some members accused the city and county of Sacramento of ignoring the ports plight.
You guys havent stepped up to the plate, financially or politically, port commission chairman and Yolo County supervisor Mike McGowan said to Sacramento city and county officials, according to published reports. I think you all need to turn the port over to the city of West Sacramento and make a graceful exit and wish them good luck, said McGowan.
Sacramento city and county residents backed a $3.7 million bond issue in 1947 and $10 million bond issue in 1961 to build the port and the 43-mile shipping channel that links the inland harbor to San Francisco Bay. As a result, the city and county should be compensated if they are to withdraw from the district, say their officials.
After thirty successful years, the ports finances began their downward spiral in the 1990s after markets for its traditional products, such as rice, grain, woodchips and logs disappeared, replaced by cheaper alternatives, especially from Asia.
Additionally, the port saw its competitiveness evaporate in comparison to the nearby Port of Stockton and other Bay Area harbors that have deeper shipping channels and can accommodate larger ships.
To turn things around, the port has crafted a business plan that involves selling its real estate holdings to private developers and leasing out its facilities and day-to-day operations to other companies, in effect, moving away from an operational harbor and adopting a landlord status, said Thompson.
But uncertainty and mistrust among the commissions governing agencies keeps the port from moving forward with its plans, say port officials.
The port is in very serious financial condition and in order for it to be successful it needs to implement a number of business strategies and in order for that to happen, it must have the support of the city of West Sacramento, said Belknap.
