Port Story Maritime: Nostalgia or Future?

At midnight on a high tide, a cruise ship enters the Bay, sliding through the Golden Gate as hundreds of cargo ships have done since the Gold Rush. The passengers who are awake can see the world-famous bridge illuminated above them as they enter the calm waters.

They round the curve by Fisherman’s Wharf and suddenly the peaceful entry is over. The ship sounds the horn and blares its public address system into the still night, as the law requires.

Long into the next morning, phones are ringing.

There’s definitely a sector for whom maritime is nostalgic and lovely, said Port Executive Director Monique Moyer, whom Mayor Gavin Newsom appointed in 2004 to help turn the Port’s finances around. But when those ships come in late at night, We get the phone calls.

For more than 150 years, the San Francisco Bay has offered a calm port of call for ships off the Pacific, whether hauling gold out, goods in or passengers both ways. In fact, the presence of that port is what created a city where San Francisco now stands, replacing the farmlands that once made up the tip of the peninsula.

But life has changed. Most of our region-defining exports – high tech, biotech and services – fly on planes. Our sea-borne imports, for the most part, come by container ship -- to Oakland.

As a result, the Port of San Francisco has wisely turned to its valuable real estate for income, generating 72.5 percent of its $55.6 million revenue from leases for restaurants, retail, the ballpark and offices, and the like. Its recent real estate successes, such as the Ferry Building, have further underscored that advantage.

Meanwhile, maritime, once the Port’s raison d’etre, survives on subsidies. Taking up 32 percent of the Port’s land, maritime generates a mere 10 percent of its income.

And as Moyer points out, maritime isn’t always the nicest neighbor. Money aside, maritime is noisy. It’s bright. If there are fish involved, it’s stinky, too. And it happens whenever the tides are right, not conveniently during office hours when we’re all awake.

So what do we want? Is it, ultimately, time to toss the little fish of Maritime back to sea? Or can we nurture that fingerling and create a world-class presence once more?

Sixty years ago, the Port was maritime -- handling roughly 7.3 million metric tons of cargo per year and bustling with longshoremen. In a 194 7 report by the Work Projects Administration, the port was described in a bubbling frenzy.

Even before the eight o’clock wail of the Ferry Building siren, the Embarcadero comes violently to life. From side streets, great trucks roll through the yawning doors of the piers. The longshoremen, clustering in groups before the pier gates, swarm up ladders and across gang-planks... [C]areening taxis, rumbling underslung vans and drays, and scurrying pedestrians suddenly transform the waterfront into a traffic-thronged artery.

Yet that maritime business was already in decline, according to a 1999 article by SPUR that cited the WPA report. By 1949, cargo had already dropped to 5 million metric tons. By 2001, it stood at 5,000.

Worse yet, the little cargo that did remain was exhausting the Port’s precious revenues. As a trustee for the Public Trust land that the Port owns, it is required to maintain certain priorities, among them maritime use, which now includes cargo, commercial and sport fishing, marinas, ferries and cruise ships. But it pays dearly for that mission.

To accommodate the cargo ships and the cruise ships, we spend $2.5 to $3 million (per year) on dredging, to get almost $5.7 million in revenues, said Port Finance Director Tina Olson. That doesn’t include the other costs of staff to manage and maintain those uses.

Meanwhile, the Port of Oakland has grown into the fourth largest container port in the nation since it was built in 1927, handling 99 percent of the containerized cargo in Northern California and stealing San Francisco’s shipping business. Yet it pays nothing in dredging fees, due to the fact that it serves multiple industries. By law, that classifies it as a federal channel, thus enabling Oakland to enlist the Army Corps of Engineers to perform that dredging for them.

San Francisco also has its unique public to contend with. When the Port tried to increase fees for local fishing companies, it met with such resistance that it was only able to raise them to $1.60 per day, up from $1.

As Moyer put it, You can’t even park a motorcycle in this city for $1.60 per day.

So, like the rest of us in the Bay Area, the Port has to figure out how to either generate money to subsidize that maritime priority – on top of the parks and open space on the waterfront, which generate no income at all – or find a way to make it pay off. Like household planning, that boils down to either cutting the costs or raising the income. Or, perhaps, both.

While Moyer has deeply prioritized San Francisco’s dredging in an effort to reduce costs to must-haves, Olson said the ultimate goal is to hand it over to the Army. The growing ship repair business at Pier 70, which is reportedly becoming a port of preference for cruise ship repairs, could create the multiple industries the Port needs to reclassify the channel.

But there’s also hope on the income side. It’s small, to be sure, but it’s positive growth.

Over the past year, the Port has turned around the revenue stream at its break bulk facility on Pier 80 from a $1.8 million operating loss in 2002-2004, to a profit of $355,000. The change came in part by changing the facility management to Marine Terminals Corp., according to a Feb. 22 memo by Moyer to the Port Commission.

At the same time, it has grown its break-bulk business to 238,000 tons of steel, machinery and newsprint, per year, by marketing its strengths to a field that most ports shun in favor of container ships. That’s still 1/30 the amount it handled in its prime, but it’s 48-times the total of five years ago.

Meanwhile, the number of cruise ship calls has risen to nearly 100 calls each year, with an accompanying five-fold increase in passengers, to 207,500 last year.

Cruise ships are now at capacity at Pier 35, Olson said. Because dredging is a fixed cost, the more cruise ships we could get the better.

That’s further validation for the planned $400 million mixed-use project to develop the James. R. Herman International Cruise Terminal, at piers 30-32, just south of the Bay Bridge. That project, contracted to Lend Lease Communities, has just completed the first phase of its construction.

And in the Bay Area, where the business community routinely counts people as its main asset, that cruise terminal is part of another maritime role for the Port. It’s that source that has the potential to make the Port once again the big fish on the Bay.

In the 1930’s, ferries crossed the Bay the way they cross Puget Sound in Seattle now. By 1935, the Bay Area had 50 ferries in its fleet, with nearly 250,000 passengers passing through the Ferry Building each day, or close to 60 million per year.

Then the Bay Bridge went up, and the Golden Gate. By 1958, scheduled ferries ceased to exist on the Bay. As we reported last month, it wasn’t until the Loma Prieta earthquake 1989 that the region started to reinvest in a ferry fleet.

Today, there are 13 boats carrying between 10,000 and 15,000 people per day. While nowhere close to the 1930s tallies, that number has grown 26 percent since 1993, according to the Port’s last annual report, accounting for nearly 1 million extra rides per year.

That makes the Bay Area the third largest ferry system in the nation.

Yet, until last fall, this region never received the dedicated federal ferry funding that has gone to the Alaska, Seattle and New York/New Jersey ferry systems. That changed in September, when the new federal transportation bill included the San Francisco Bay Area Water Transit Authority for $2.5 million per year in dedicated funding for ferry and terminal construction.

That won’t cover the WTA’s $600 million estimate for its 20-year plan to add 30 new ferries and seven routes across the Bay, but it makes a difference.

It’s not going to build seven new routes, but it’s a recognition that the Bay Area’s ferry system is big and it’s growing, said Steve Castleberry, the WTA’s chief executive officer. Those funds will probably make the difference between delivering a Berkeley ferry 10 years from now, versus three to four years.

Those ferries are part of a grand plan for the Bay Area that includes not only greatly increased ferry service, but also a water transit plan that’s closely integrated into several high-profile development projects planned around the Bay.

Those include the Vallejo downtown marketplace and waterfront; the proposed Oak to Ninth Project in Oakland, which would include 1,000 condominiums adjacent to Jack London Square; Alameda Point Naval Station; and Treasure Island, where the proposed high-rise housing plans include cutting-edge transportation solutions.

Everyone talks about transit oriented development, Castleberry said. The Oak to Ninth development is a perfect example of transit-oriented development for ferries.

While that project is controversial, it proposes building 1,000 condominiums on the Oakland waterfront adjacent to Jack London Square. Those would be ideally suited for ferry commuters into the city.

At its max, the WTA’s plans will only carry 40,000 riders per day. With current growth projections, that will still only represent 0.1 percent of the total Bay Area trips per day in 2025. But Castleberry said those trips represent one-lane-less traffic on the Bay Bridge and a lane-and-a-half on the Golden Gate during peak hours.

Almost everyone works in the same county in which they live. Ferry service won’t solve that, he said. Even the Bay Bridge represents a small number of the total trips, but it’s still the most congested corridor in the Bay Area, with a lot of growth that’s coming.

Even bolder plans, proposed in mid-April by the Bay Area Council Blue Ribbon Task Force, call for a $1.6 billion emergency ferry system on the Bay, including 70 new ferries and 30 permanent and portable docks for use if the Big One hits.

Senate President Pro Tem Don Perata, D-Oakland, who was behind the creation of the WTA, has widely supported a new ferry plan and has been working on the bipartisan state infrastructure bond measure that is expected this June. The goal would be to include the Bay Area Council’s proposal in that measure.

They are grand plans, all of which center on the Port of San Francisco as the hub to one of the world’s most efficient, reliable and environmentally friendly ferry services.

The ferry system, of course, isn’t run by the Port. Ferries pay landing fees, but that’s it. In fact, those fees are artificially low to keep fares down for ferry riders. In fact, all of the recent ferry growth has done little for the Port’s revenues.

They’re really doing this without a lot of financial incentive, Castleberry said of the Port. Ferry service has a lot of tangible benefits. Unfortunately, a financial benefit is not one of those.

It’s safe to say the people cargo will never generate the revenues that real estate does. But with each of those projects, maritime gets a little closer to black ink, not red.