Construction Sector Offers Hope for Port of Sacramento

By Robyn Rominger

While longshoremen load a shipment of rice at the Port of Sacramento, officials ponder the troubled port´s future. Struggling to stay afloat financially, the Port of Sacramento is selling off land in an attempt to buoy the bottom line.

In addition to selling 65 acres of land, the port is also conducting a study to determine its options for the future. There is hope that California´s construction boom may provide it with increased business opportunities.

Agricultural imports and exports have provided the primary business for the port since the first ship departed from its docks in 1963, loaded with rice from Farmers´ Rice Cooperative and logs destined for Japan. While some agricultural business has declined in recent years, such as fertilizer imports and exports of wheat, safflower and alfalfa products, the need for building materials in Northern California, such as cement, lumber and aggregate, appears to be a growth opportunity.

In addition, potential real estate development opportunities exist on about 500 acres of the roughly 4,000 acres owned by the port, which is situated along the deep water channel in West Sacramento.

Andy Belknap, the port´s interim chief executive officer, offers this snapshot.

“The port was created with agriculture in mind–certainly not exclusively, but largely to serve the need to export agricultural products and to import fertilizers. Rice is the first crop that they shipped from the port and is a very important part of the business. Like all agriculture, it is cyclical and that is one of the challenges that the port faces–to diversify its revenue stream and diversify its cargoes so it´s better insulated from the ups and downs of the agricultural business.”

The Port of Sacramento finds itself at a critical juncture in its 42 years of operation. Cargo volumes and cash flows are down, the Port of Stockton has benefited from the acquisition of Rough & Ready Island from the Navy in 2003, deepening of the Sacramento Deep Water Ship Channel to 35 feet has been on hold, and many West Sacramento citizens would prefer to see non-port or non-industrial development along the water on the south side of the ship channel, leading to the port docks. These circumstances have prompted the Port of Sacramento Commission–the port´s governing body–to closely examine the port´s future.

The Port of Sacramento Commission and City of West Sacramento, City of Sacramento, Yolo County and Sacramento County have hired a consulting firm to conduct a maritime demand and land-use study. The commission wants to see if it is in its own best interest to privatize some of its operations, which could include selling or leasing some of its property and/or facilities.

Noting that the port is the single largest landowner in West Sacramento, Belknap said, “One of the things we need to do is develop our real estate assets.”

Last month, the port put two parcels of land up for sale: 64.7 acres south of the port channel. This land–located near downtown Sacramento–has been identified as that with the most sales potential.

In addition, a development option being considered is a proposal by A&A Ready Mixed Concrete, Inc., of Newport Beach.

“A&A Ready Mixed is the proponent of a new $8 million to $10 million bulk cement import facility,” said John Sulpizio, port director at the Port of Sacramento. “A&A represents one of the greatest opportunities the port has had in a long time for private investment, and an increase in tonnage and revenues. That is made possible by the fact that we have available land and infrastructure to accommodate that project.”

The port proposes to lease a currently undeveloped and vacant 3.5-acre parcel and provide bond financing to A&A, for the purpose of constructing and operating a new cement import and distribution facility at the port. The new facility would consist of a 70,000-ton capacity, dry bulk cement storage warehouse and container truck-loading facility. The cement would be loaded into bulk carrier trucks for delivery to batch plants within Northern California.

The proposed project would replace A&A´s existing cement import and distribution operation which consists of unloading bagged cement at the port, transporting the bagged cement to a warehouse on Richards Boulevard in Sacramento and then distributing it to batch plants in Northern California.

Chris Pisano, executive vice president of A&A, said, “Our business would benefit the port in that we´re year-round. Unlike some of the other businesses that are seasonal, we´re going to provide revenue for the port on a year-round basis.”

The cement import company would also provide additional, permanent jobs, such as employing longshoremen to unload the vessels and warehousemen to operate the warehouse.

Pisano said the company is nearing the end of the environmental impact review process that began about two years ago. Once the EIR is approved, he estimates it would take about eight months to construct the new cement receiving and distribution facility.

Throughout the process, A&A has been meeting with agricultural interests at the port.

“We´re working on how we can be compatible with the rice industry and the port,” Pisano said. “We worked out the logistics so that we both can do our exporting and importing with a minimal amount of conflicts with the facilities at the port.”

“We feel that, with the ag people, we´re a team,” he added. “We all need the port and we want to work together to make everybody´s businesses profitable and the port healthy.”

Farmers´ Rice Cooperative, based in Sacramento, is a major rice exporter that plans to continue using the Port of Sacramento to ship rice to Japan, Korea and other international destinations.

Bill Huffman, vice president of communications for Farmers´ Rice Cooperative, said, “What´s exciting about the land-use and maritime study being conducted by Parsons Brinckerhoff for the commission and City of West Sacramento is it will give the port a better view of how it can redefine itself and become economically successful, and meet the needs of Northern California shippers and importers in the future.

“Farmers´ Rice Cooperative has been involved in all of the public sessions as the Parsons Brinckerhoff study has evolved, and will continue to be involved as the port commission and the city move forward with their land-use plan and maritime operating plan for the future of the Port of Sacramento,” Huffman said.

“There is now a state agency that is looking at all ports and how all of these ports can complement each other,” he continued. “It´s going to become imperative that the smaller, inland ports be economically viable and be able to supplement and work with the larger ports, such as Oakland, in order to serve the shipping needs, both export and import, of Northern California business.”

Huffman added, “The port needs to look at the potential for container transfer through the Port of Sacramento to Oakland, either by barge or through intermodal rail transport. The amount of freight coming into and leaving Sacramento is only going to increase as the region grows economically.”

Several alternative land-use plans are now being evaluated. At meetings scheduled in March, Parsons Brinckerhoff and port staff will present the recommended preferred land-use plan to the Port of Sacramento Commission, West Sacramento City Council, Sacramento City Council, Yolo County Board of Supervisors and Sacramento County Board of Supervisors for consideration.

(Robyn Rominger is a reporter for Ag Alert. She may be contacted at rrominger@cfbf.com.)

Article reprinted with permission from the California Farm Bureau Federation