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STOCKTON — The Port of Stockton Commission in June approved a budget of $52.9 million. The port says it’s “conservative” with less money for capital improvement, but the port still has infrastructure plan.
“A conservative budget covers those expenditures for the year that need the most attention,” said port Director Richard Aschieris. “In the shipping industry there are many ups and downs, and we’ve interviewed the port’s users as part of our plan to see how things play out and to be careful this year with our expenditures.”
The new budget projects a net income of $13.5 million. That’s up from the previous year’s net income of $13.2 million on $51.4 million in revenues.
The port expects to spend $17.4 million on capital improvement projects for 2016-2017, about $7 million less than the previous fiscal year.
Upcoming projects include widening Navy Drive, which is associated with the Crosstown Freeway extension, along with a new Navy Drive Bridge. There are also port dredging operations, utility improvements and security upgrades planned.
Most of the port’s revenue growth is expected to come from lease payments in 2016-2017 of $26.1 million on port warehousing, compared to $25 million in 2015.
“Some of our current tenants are planning expansion,” Aschieris said. “And there will be opportunities to bring in additional tenants as well.”
Aschieris said the port is seeing an increased demand for land for warehousing and manufacturing, so it is working to establish basic infrastructure to ensure future tenants will have smooth transportation in and out of the port.
The port has 47 warehouses and a total of 5 million square feet of space, but 97 percent of that space is leased.
“We’re very close to having all of our warehouse space leased,” Aschieris said. “But we have about 500 acres of open land that can be developed, most of it on Rough and Ready Island. Many ports have things exclusive to them and ours is Rough and Ready.”
The port acquired the former naval base in 2000 and much of the infrastructure work will bring Rough and Ready Island up to date from its World War II origins.
A company that wants to locate on Rough and Ready acreage can lease the land and build whatever type of facility it needs. Some infrastructure is already in place on some plots, which makes the process easier.
According to Aschieris, an environmental impact report has been done for the special port zone which gives the port and potential businesses more flexibility when considering what to build on that 500 acres.
“We conduct an analysis of what type of business wants to locate here, determine if it is a good fit,” Aschieris explained. “We must plan ahead, anticipating growth because some projects take several years, depending on their individual requirements.”
Aschieris added that the real estate background of the port commission’s new chairman, R. Jay Allen, is very helpful to the port and that the entire board is balanced with various areas of expertise.
“We continue to market and promote the port and are looking forward to continuing to welcome tenants,” Aschieris said. “After all, the port is 50/50 maritime and real estate, and we take this under consideration when planning for the future.”
The commissioners also gave port administrators approval to borrow $8.2 million from Western Alliance Bank at about 5 percent interest to pay for a major project — the newly completed rail expansion project.
“The agency had initially sought funding from the Federal Railroad Administration but after negotiations it was determined the commercial bank loan would better suit the port’s needs,” said port Finance Director Diane Baker.
According to Aschieris, loans from the Railroad Administration are tailored to private business and the port is a local government agency.
“We negotiated with them. We certainly tried, but it didn’t work out,” he said. “We’re hopeful the administration will develop a loan template for local government agencies in the future.”
INSIDE THE NUMBERS
Projected net income
Revenue from warehouse leases
Planned capital improvements
Private sector investment in past five years
Annual salaries & benefits
For the near future the port expects to increase its cash accounts by $4.4 million to a total of $22.5 million by the end of the current fiscal year.