Port: major lease, strategy change


By Steve Marschke
News-Ledger Editor

The Port of West Sacramento is set to make a fundamental change in its operating model today, as its governing board considers a proposal to lease its North Terminal maritime facilities to a private company on May 16.  The proposed lease to SSA Pacific, Inc., would be a major step towards making the government-run facility into a “landlord” port.

With years of years of annual deficits and diminishing options to cover the port’s losses (averaging 33-43 percent of gross during recent years), the port commission in March voted to adopt the “landlord” strategy. The switch is meant to replace the vagaries of shipping income with a steady rent check from a private master leaser.

Annual rent in the proposed five-year deal is set at $650,000, increasing at a one percent annually. After five years, SSA would have the option to extend the deal another five years, and after that, the lease could be extended still further for up to 10 years if both parties agree.

The deal also would forgive $850,000 in port debt to SSA, which is already a marine operator at the port. The proposed lease promises additional revenue for the port if certain shipping income targets are hit.

The lease would allow the Port of West Sacramento to cut overhead such as administrative costs.

The Port of West Sacramento has had trouble both diversifying its cargo – rice remains a mainstay – and pursuing successful real estate projects.

“We’re at a point where if we don’t have an option that will work for sure, we are facing the option of closing,” said West Sacramento Mayor Christopher Cabaldon, a member of the port commission, at the commission’s March 13 meeting.

That was the meeting at which the commission opted to make a number of dramatic changes and move towards becoming a landlord operation.

On Monday, the News-Ledger asked him if the new master lease achieves what the port hoped for when the port solicited interested firms for the job.

“Yes,” he said. “At the minimum, we will have a viable entity for the near term,” answered Cabaldon.

The lease will “get the port out of the red,”  he added.

  EDITOR’S NOTE: you can find an earlier article explaining the port’s decision to change its business model here.


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