November 7, 2023
Economic Development
DATE: November 7, 2023
TO: Mayor Martinez and Members of the City Council
FROM:
Nannette Beacham, Director of Economic Development
Lizeht Zepeda, Senior Business Assistance Officer
Robert Stevens, Engineering Consultant
SUBJECT:
Report on the Port of Richmond Operations
FINANCIAL IMPACT: There is no financial impact related to this item.
PREVIOUS COUNCIL
ACTION:
11/01/2022, 11/15/2022
STATEMENT OF THE
ISSUE:
On November 1, 2022, the City Council directed staff to seek audit services for the Port of Richmond. The
Finance Department issued a Request for Proposals
(RFP) for auditing services and a contract with GPP
Analytics, Inc. (GPP Analytics) was approved by the City Council on June 6, 2023, to conduct a comprehensive
audit. The Port audit is currently in process with reporting to be presented in December 2023. City staff, along with Robert Stevens of CSW|ST2 and Bill Lee of Land Econ
Group, have completed an economic report to provide an
update to the City Council and the community. On
November 15, 2022, the City Council directed Port staff to report on noises coming from the Port industries at
night. The noise issue is addressed in the Environmental Information exhibit.
RECOMMENDED ACTION:
RECEIVE a written report on the Port of Richmond’s
operations, facilities, and economic opportunities –
Economic Development (Nannette Beacham/Lizeht
Zepeda 510-620-6653).
AGENDA
REPORT
November 7, 2023
DISCUSSION:
On November 1, 2022, the City Council directed City staff to conduct a comprehensive audit of the Port of Richmond (Port). The request suggested the audit report include information regarding leases, subleases, approved uses for terminals, businesses’ economic activities, Request for Proposals (RFP’s) released by the City, financial data, environmental and health-oriented policies, and compliance with internal procedures.
Subsequently, on November 15, 2022, the City Council directed City staff to report on the noise issues coming from Port industries.
To fully answer the request for financial data, Finance staff released an RFP for a Port audit on January 31, 2023, since the last Port audit was performed in 2011. The 2011 Port Audit was an internal audit of Port activities, and it reviewed financial operations, efficiency, effectiveness, and organizational structure. RFP submittals were due on February 27, 2023, GPP Analytics, Inc. was the only responder to the RFP, and Port and Finance staff reviewed the proposal to assess the firm’s qualifications. On April 18, 2023, the City Council approved the proposal and directed City staff to contract with the firm. On June 6, 2023, the City Council approved a contract with GPP Analytics, Inc. to provide auditing services for the Port of Richmond, with a budget contract of $81,750.
Phase one of the audit is in process, this includes interviews, document and data gathering, and a risk assessment.
In addition to releasing the RFP for the Port audit, City staff, along with Robert Stevens of CSW|ST2, and Bill Lee of Land Econ Group, have completed a report to assess the economic viability of the Port (Attachment 1). The report outlines the Port’s facilities, history, opportunities, and 2022 audited finances through June 30, 2022, from the City’s Annual Comprehensive Financial Report (ACFR). The June 30, 2023, financials are included as well, although these are not audited and not completed for the year.
The report addresses the City Council’s request for information regarding leases, subleases, RFPs released by the City, and compliance with internal procedures in Exhibit 1 (Attachment 2). A tenant map and key information, a list of subtenants, a comprehensive list on RFPs released and responses, a sample rent roll, and information regarding compliance with internal procedures can all be found in Exhibit 1.
Environmental information, provided by the Community Development Department – Planning Division, that reviews and compares the California Environmental Quality Act (CEQA) applications with the City’s policies, including port noise, for consistency, is included in Exhibit 2 (Attachment 3). Exhibit 2 also summarizes CEQA reviews within the Port area over the last twenty (20) years and provides links to various studies that describe nearby commercial and industrial uses monitored for noise sources in 2021. At the City Council’s goal setting meetings, the port was identified to develop a port strategic plan, which will include environmental strategies that will continue to protect the health and well-being of neighboring communities and reduce the port’s carbon footprint.
An analysis of the Port’s financial condition and outlook produced by Land Econ Group is included in the report under Exhibit 3 using financial information from fiscal year
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2021-22 up to June 30, 2022, and Exhibit 4 using financial information from fiscal year 2022-23 (Attachments 4 and 5). The analysis provides a detailed look at the Port’s revenue and expenditures, trends, and recommendations.
An overview of the Port report is listed below.
Port Report Overview
Located on the City’s southern waterfront, the Port encompasses five (5) City-owned and nine (9) privately-owned terminals that operate dry bulk, break-bulk, and automobile processing facilities. Figure 1 depicts the Port collectively. The City-owned Port property includes the Point Potrero Marine Terminal (PPMT), as well as Terminals 2, 3, and 4. A brief description of each terminal area is below.
Point Potrero Marine Terminal –130
acres of land, a main wharf, five (5)
graving basins, two (2) finger piers,
and two (2) warehouses totaling
170,000 square feet and various
smaller buildings.
Terminal 2 – eight (8) leased acres
of land and two (2) warehouses
totaling 140,000 square feet.
Terminal 3 – 20 acres of land and a
warehouse of 80,000 square feet.
Terminal 4 – 37 acres of land and a
warehouse of 12,000 square feet.
The Port’s land use is regulated by the
City’s General Plan and Zoning Code in
association with the Metropolitan
Transportation Commission (MTC) and the
Bay Area Conservation and Development
Commission (BCDC) policies. On April 18,
1996, MTC and BCDC collaboratively
established the San Francisco Bay Area
Seaport Plan (Seaport Plan) to ensure that
the Bay Area ports continue to contribute
economically to the San Francisco Bay region. The Seaport Plan reserves the Port areas for port-priority use. Port-priority use areas have excellent access to deep, navigable water, and connectivity to rail and highway, which contribute to the economic vitality of the San Francisco Bay region. As for the Port of Richmond, PPMT, Terminal 2, and Terminal 3 are included in the Seaport Plan as port-priority areas. Terminals 1 and 4 are not included in the Seaport Plan.
November 7, 2023
Capital Improvement Projects
Most of the Port’s infrastructure was constructed over eighty (80) years ago to support the World War II effort. Since 2010, the Port has secured grant funding and collaborated with public private partnership to renovate its facilities The Honda Port of Entry project which funded the reconstruction of PPMT, was a major accomplishment because the project transformed the former Shipyard Number 3 into a state-of-the-art roll on/off automobile processing facility. The Port has secured, Federal and State grants totaling $20 million dollars for infrastructure investments below:
A 12-mile fiber optic network operating at 10 Gb/s serving the City of Richmond, in 2012 invested $5 million dollars.
A high-mast lighting project improving security at PPMT, as well as rehabilitating much of the electrical infrastructure, in 2014 invested $4 million dollars. An extension of the San Francisco Bay Trail into PPMT, including two overlooks and a hillside pathway, in 2011 invested $2 million dollars. Renovation of the Riggers Loft into the Port Administration and Operations Office and Security Center, as well as space for lease to the Riggers Loft Wine Company for event space and wine production, in 2014 invested $5 million dollars. Removal and disposal of electrical equipment containing polychlorinated biphenyls, improving the quality of water in the SF Bay, in 2015 invested $1.5 million dollars.
Electrification of the Terminal 3 berth, in 2016 invested $100k dollars. Removal of outdated container cranes at Terminal 3, in 2019 invested $500k dollars.
Rehabilitation of the former gear storage warehouse at Terminal 3, in 2018 invested $1.5 million dollars.
Debris removal and repairs to the Graving Basins, in 2015 invested $100k dollars. Maintenance dredging of Terminals 2, berths 7, 8, and the Marina Bay Entrance Channel, in 2019 invested $100k dollars.
Disposal of ships abandoned at the Graving Basins, in 2013 invested $500k dollars.
Current infrastructure projects with grant funding are the Wharf Removal Project at Terminal 4 with a total funding of over six million dollars and berth electrification for berths seven and eight at PPMT with grant funding of one million dollars. On April 28, 2023, City staff worked to submit a grant application for electrification of additional berths at the Port. The grant application, if awarded, is valued at $3 million dollars with the opportunity to apply for more.
In addition, a notable accomplishment is all the leasable areas within the Port have long-term tenants, except for the Cafeteria Building, the General Warehouse, and Basin
1.
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Facilities
PPMT is the former Historic Shipyard Number 3 developed to construct Liberty and Victory Ships during World War II. The graving basins, wharf, and several buildings are historical and part of the Rosie the Riveter World War II Home Front National Historical Park.
The majority of the Port’s tenants are located at PPMT. There are thirteen (13) leased areas including the Port administration building. Currently, there are three (3) vacant locations, which are Basin #1, the General Warehouse, and the Cafeteria Building. Foss Maritime recently decided to not exercise their extension option at Basin #1, ending their lease on February 28, 2023. City staff is working to draft and finalize a Request for Proposals (RFP) to release for the leasing of this area. The Cafeteria Building has been vacant for many years. An RFP has been released twice (2018 and 2019) with no deal coming to fruition.
Terminal 2 has been leased to AAK Oils (formerly California Oils) since the 1990s. The key infrastructure is the berth that allows vessels to discharge liquid bulk cargo. AAK’s bulk is vegetable oil, and they discharge their liquid bulk cargo about once per month.
Terminal 3 has been leased to Terminal 3 Partners since 2020. Terminal 3 Partners have assumed responsibility of the facilities, and management of the lay berthing. In 2023 the master lease was assigned to IV1 1411 Harbour Way S Owner LLC. The new LLC includes Brookfield as an equity partner and CA Ventures as the developer and project manager for constructing a 200,000 square foot advance green manufacturing building for Moxion Power, a subtenant and energy innovation firm that designs and builds clean energy electric generators in Richmond.
Terminal 4 has been leased to Nematode Holdings since 2020. Nematode Holdings subleases areas of Terminal 4 for the storage of boats, vehicles, equipment, and other uses.
Offshore Wind
Offshore wind is a critical component to achieving California’s goal of ninety percent (90%) clean energy by 2035. The U.S. Department of the Interior, Bureau of Ocean Energy Management (BOEM), has authorized a study of California ports to support offshore wind development. BOEM contracted Moffatt & Nichol, marine engineer and consulting firm to produce the California Floating Offshore Wind Regional Ports Assessment. Richmond has participated in this study. This study addresses the near- term needs and requirements of California ports to support floating offshore wind. It will also serve to support the California Assembly Bill (AB) 525 Strategic Plan (Chiu 2021).
AB 525 Strategic Plan shall identify available port space and the necessary infrastructure investments to improve waterfront facilities for the floating offshore wind industry. The Port expects to support future opportunities and further studies related to
November 7, 2023
sustainable energy generation from such sources as offshore wind and tidal electricity generation. BOEM website
Operations
PPMT and Terminals 2 and 3 can handle large vessels, and are commercially viable for modern, marine operations including:
Liquid bulk – liquid that is held within the ship such as vegetable oil imported at Terminal 2.
Dry bulk – bulk products such as iron ore that is exported at Levin-Richmond, a private terminal.
Break-bulk – material contained in bags, drums, or boxes. Neo-bulk cargo – material that is pre-packaged such as bundles of lumber, paper rolls, steel, and vehicles.
Connecting the Richmond Green-Blue New Deal with the Port
The Richmond City Council adopted Resolution 88-21 to support the process of developing a Richmond Green-Blue New Deal (R-GBND) with the intention to support Just Transition to 21st Century jobs. The goal is to ensure that Richmond Communities are provided workforce opportunities that are environmentally sustainable on land (green economy) and sea (blue economy) while transitioning away from jobs dependent on fossil fuels. The City retained Appraccel, LLC to provide professional services to assist in the development and implementation of a community-driven workforce development plan using a R-GBND and Just Transition Framework. The Port can play a pivotal role incorporating key sectors of the blue economy as all-electric efforts become industry standard nationwide. Renewable energy generation and electrification have the potential to provide career opportunities with high paying salaries and benefits.
Appracel, LLC, led by Justine Burt, has completed extensive community outreach including workgroups and presentations to local community organizations.
Presentations were conducted for the following governing groups:
Economic Development Commission
Workforce Development Board
Richmond Neighborhood Coordinating Council
Richmond Bicycle and Pedestrian Commission
To ensure that the community is actively engaged and informed, City staff tabled at community events and hosted three (3) Green-Blue Champions meetings, two (2) community workshops, and three (3) workshops at Safe Return. A community survey was released to solicit feedback from the community and over 400 survey responses were submitted.
The consultant is currently in the process of drafting the gap analysis which will inform the draft Green-Blue New Deal Workforce Development Plan and Implementation
November 7, 2023
Strategy. For more information on the Green-Blue New Deal Workforce Development Plan visit, https://www.ci.richmond.ca.us/4138/Green-Blue-New-Deal-and-Just- Transition.
Staffing
The Port’s organizational chart, as of June 30, 2023, is shown in Figure 2. The Director of Economic Development position (filled) provides oversight of the Port’s operations. In addition, there is an Operations/Marketing Manager (filled), Senior Business Assistance Officer (filled), and Executive Secretary I/II (filled). Staff manage leases, inquiries, coordinate maintenance, inspect properties, revise annual tariffs, and communicate with tenants on any related Port matters. In addition, the Port is supported by one (1) part- time consultant, Robert Stevens of CSW|ST2, who provides engineering and technical support.
Figure 2: Port Organization Chart
The Director of Economic Development position was introduced at the end of 2022 and currently oversees six divisions including the Port. Executive Secretary I/II position has been filled as of April 2023. Senior Business Assistance Officer position has been filled as of February 2022. The Human Resources Department carried out a recruitment process for a Port Director. Expected start date in October 2023.
Port Engineering services are contracted by consultant Robert Stevens of CSW|ST2.
Conclusion
Over the last twenty (20) years, the Port has transformed itself from an aging World War II era shipyard to commercially viable terminals. While the Port may not have the economic might and size of other Bay Area ports, it plays an important role in meeting California’s maritime needs. Furthermore, there are opportunities in partnerships, federal and state legislation, infrastructure grants, and environmental mandates for the well-being of the Richmond community. The Port will incorporate key City Council Port Director* Economic Development
Director
Operations/Marketing
Manager
Senior Business
Assistance Officer Executive Secretary I/II
November 7, 2023
initiatives such as the Green-Blue New Deal with the blue marine business industry that will contribute to the future workforce success and innovating the Port as well as the state’s offshore wind initiatives.
DOCUMENTS ATTACHED:
Attachment 1 – Port of Richmond Report
Attachment 2 – Exhibit 1: Port Tenant Information
Attachment 3 – Exhibit 2: Environmental Information
Attachment 4 – Exhibit 3: LEG Memo March 7, 2023
Attachment 5 – Exhibit 4: LEG Memo September 1, 2023