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co nne ct in g op en sp ac e,
gr ee nw ays and pe op le

San Diego Unified Port District 2009 Annual Report

Annual Report 2009
Table of Contents:

Chairmans Message. . . . . . . . . . . . . . . . . . . . 2

Presidents Report . . . . . . . . . . . . . . . . . . . . . 3

Capital Development Program

& Major Maintenance Program . . . . . . . . . . . 4

Community . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Cruise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Environmental. . . . . . . . . . . . . . . . . . . . . . . 12

Maritime . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Public Art. . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Public Safety & Homeland Security. . . . . . . 18

Real Estate. . . . . . . . . . . . . . . . . . . . . . . . . . 20

Parks History. . . . . . . . . . . . . . . . . . . . . . . . 22

Financials . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Board of Port Commissioners. . . . . . . . . . . . 55

Gr een way s tr ul y cap tu re

th e im ag in at io n an d bo ld ne ss
of the Am er ic an spi ri t
Chairmans Message Presidents Report
Trust and teamwork are two words new public park), the Draft Environmental Impact Report When I came to the Port in January upcoming North Embarcadero Visionary Plan, which will
that describe my year as Chairman for the demolition of the former Teledyne Ryan site near 2009, I was fortunate to join an beautify the waterfront of the Embarcadero area. Other
of the Board of Port Commissioners. Lindbergh Field was completed, and the new Pier 32 Marina organization that had a solid projects will enhance public access, promote maritime,
Trust defines the way the Port of San in National City opened. Additionally, an appealable Coastal foundation and a reputation based recreation and fisheries, improve the environment, and
Diego operates clear and transparent Development Permit was issued for the North Embarcadero on good governance. Since the Ports improve security along the San Diego bayfront.
governing of the tidelands of San Visionary Plans first phase, and the Port was awarded a $3.5 inception, it has thrived on sound
Diego Bay. Teamwork is how we get million grant from the Ruocco Fund to build a new waterfront financial and business practices The Port leadership team looks forward to guiding this
things done at the Port. The Chair park at the former Harbor Seafood Mart site near Seaport elements that have helped us through vibrant world class organization through these difficult times,
of the Board of Port Commissioners Village. a tough 2009. but Im optimistic that the clouds will clear. I am confident in
sets the agenda, but it is a team of seven commissioners this: the Ports future is bright.
working with the staff at the Port, who see that projects get In the environmental arena, funding was approved for shore The staff at the Port, the Port tenants, business customers
off the ground and that the Port is accomplishing its mission. power for cruise ships, a program to take old diesel trucks and the community have demonstrated they are all great I encourage you to take a look at the map inside this
off the road got underway and several environmental fund partners. There were, and still are, many challenges for Port annual report. On that map, youll be able to see the miles
Protecting the working waterfront continued to be at the projects were completed. Additionally, the Port received a leaders during this financial downturn, but all of us in the of walkways and paths that are part of the tidelands. All
forefront this year after a failed ballot initiative threatened $1 million grant from the U.S. Environmental Protection Port community have tackled these challenges with eagerness. of the Ports 17 parks are indicated on the map, along with
the future of the Port of San Diegos Tenth Avenue Marine Agency to restore about 160 acres of coastal wetlands in south the public boat launch ramps, fishing piers and many other
Terminal. The November 2008 initiative, which sought to San Diego Bay. The Ports revenues in maritime and real estate were down recreational amenities provided to the public by the Port of
change land use designations for the area so that more visitor slightly from last years numbers, but toward the end of the San Diego. We hope you will have many opportunities for
serving industries could be built, would have been detrimental The Port also created a partnership with San Diego Gas year we were beginning to see hopeful and positive signs. New recreation on the tidelands.
to the Ports marine operations and industrial tenants. & Electric. The energy roadmap created by SDG&E will maritime contracts were signed that will bring in additional
help guide us on conservation efforts. Some of these include automobile imports and other cargoes. People were coming I am grateful for the warm welcome I received when I joined
This fight will never be over as long as there are people installing solar panels onto the Ports Administration building, to San Diego for conventions and staying in tenant hotels the Port team. I look forward to serving you in 2010.
who envision a stadium or other type of use for the marine which we accomplished this year, and well be installing them and we were able to move forward with some of our major
terminal. Your Board of Port Commissioners is working hard on the new cruise ship terminal building opening in late 2010. projects.
to protect the valuable jobs and industries that make up the
working waterfront. At the same time, we continue to promote These programs and projects helped the Port balance its The Ports operating revenues for fiscal year 2009 totaled
Tenth Avenue Marine Terminal as a viable alternative to Los responsibilities that were set forth in the Port Act, which was $134.5 million, compared to $144.1 million in fiscal year
Angeles and Long Beach. Weve got the experience, the lay ratified by the State Legislature in 1962. According to the Act, 2008. Although we were down by about seven percent, the Charles D. Wurster
down area and the customer service. the Port is not only expected to build, maintain and operate Port fared better than many other ports around the nation. President & CEO
maritime shipping facilities and promote commerce and Port of San Diego revenues are public funds and are used Port of San Diego
In addition to promoting maritime activity and acquiring navigation, but it is entrusted with managing and regulating for public infrastructure improvements. Examples are the
new trade contracts, we were busy this year promoting Port the waters and tidelands of San Diego Bay for fishing and
real estate tenants. The tidelands werent immune from the recreation.
stifling economy. Our hotels, restaurants and shops felt the
pain. Some tenants experienced such low sales that they were Ive had the great pleasure of serving as your Port Chair twice
having difficulty paying the rent. To help out these tenants, during my 12 years on the Board of Port Commissioners.
the Port established a temporary financial relief program that During this time, Ive worked with many elected officials,
allows tenants to defer portions of their lease-required rental union leaders, community representatives and the public
payments. to try and do whats best for the region as a member of this
Board. I thank each and every one of you for this opportunity.
Another program to help Port tenants was a new marketing
campaign. The campaign offered special offers at Port
restaurants, hotels, shops and attractions in an effort to attract

Despite the economic downturn, the Port of San Diego was Stephen P. Cushman
successful on several fronts this year: construction began on Chairman, Board of Port Commissioners
the Broadway Pier Cruise Ship Terminal, the new Hilton
San Diego Bayfront hotel opened (and along with it, a

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The Port of San Diego has two programs to help ensure that This past year, the Port began refurbishing 30 of the public Work on the Pepper Park public boat launch ramp in National Other major projects include the demolition of the former
infrastructure around the tidelands is improved and maintained. restrooms in Port parks and other public areas. Many of City was completed. The original concrete launch ramp was Teledyne Ryan building near San Diego International Airport.
The programs include projects that benefit public access, the the restrooms were built in the 1960s and were in need of demolished and replaced with an eight-lane boat launching ramp The $15 million project will involve demolishing 58 vacant
environment, the economy and recreation in the Ports five modifications. The nearly $2 million project was completed and two, 10-foot wide boarding floats. This was a $1.1 million industrial buildings. The project also includes removal and
member cities. in late summer. Work included replacing plumbing fixtures, project that was co-sponsored by the Port and the California disposal of hazardous construction materials.
electrical components, piping and mechanical equipment. Department of Boating and Waterways. State grant funding was
The Capital Development Program includes projects that are also used to help pay for it. The Port will soon begin a project to An environmental remediation project is also scheduled in
new improvements on the tidelands. Examples include the new A $4 million project that transformed the end of Palm Avenue in remove the public restroom at Pepper Park. It will be replaced Chula Vista. The project will clean up a drainage ditch that used
cruise ship terminal on Broadway Pier, and a new restroom in Imperial Beach was also completed. A park-like plaza was created with a modern facility that is compliant with the Americans with to be part of the former BF Goodrich South Campus. The area
Pepper Park in National City. and the installation of a landmark public artwork, the Spirit of Disabilities Act. is scheduled to be redeveloped in the future as part of the Chula
Imperial Beach was installed. The project included a new storm Vista Bayfront Master Plan.
Major maintenance initiatives include projects that are the complete water pump station with a built-in pollution diversion system. Projects for 2010 include the installation of shore power
refurbishment, or reconstruction, of prior Capital Development Emergency ramps that provide direct access to the beach were equipment at the new Broadway Pier Cruise Ship Terminal and The Port will also begin several major maintenance projects.
projects. Examples include pavement reconstruction projects also installed. the B Street Cruise Ship Terminal. The equipment will allow These include continued maintenance on the Imperial Beach
and pier deck and pile replacement. Maintenance of existing cruise ships to plug into clean power while berthed, so that they Pier, repaving parts of Shelter Island and repaving the National
infrastructure is becoming increasingly important, requiring dont have to idle their diesel engines. City and Tenth Avenue Marine Terminals.
significant investments, as the Districts infrastructure ages.

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As the administrator of the San Diego Bay tidelands, the Port is environment or maritime along the tidelands. Past recipients
tasked with promoting recreation along its shorelines. This means include the Pacific Life Holiday Bowl, for its annual Big Bay
providing open space and sufficient access to the waterfront of Balloon Parade. The parade and its associated Holiday Bowl
San Diego Bay and the oceanfront of Imperial Beach. To heed football game bring thousands of visitors to San Diego and
that call, the Port established 17 public parks along the waterfront. to the waterfront. These visitors support Port businesses and
Many of these parks have recreational amenities such as basketball attractions. Past recipients have included the Alpha Project for
courts, softball fields, childrens playgrounds and fitness courses. the Homeless, the Gator by the Bay music festival and the
Coronado Chamber Golf Classic. Marketing Fee for Service
In addition to the parks, there is the Bayshore Bikeway that nearly recipients have included the San Diego Sportfishing Council,
encircles the entire bayfront, from Point Loma to Imperial Beach. the San Diego Film Commission, the San Diego Maritime
There are five public fishing piers, four public boat launching ramps Museum and the San Diego Regional Economic Development
and 26 marinas and yacht clubs with about 7,000 boat slips. Corporation. These organizations help promote business on the
tidelands and draw thousands of visitors to the waterfront.
This year, a one-acre park opened next door to the new Hilton
San Diego Bayfront Hotel. Called the San Diego Bayfront Park, The Port continued to reach out to the public by offering free boat
it is open to the public for events, picnics and gatherings. Next and bus tours of the tidelands. As part of its campaign to educate
year, the Port will begin work on Ruocco Park, a new park that the community about the importance of the working waterfront,
will be located north of Seaport Village at the former Harbor the tours gave an up close and personal look into the intricate
Seafood Mart site. operations of several industrial tenants. General Dynamics/
NASSCO, Continental Maritime and even the United States
In addition to providing parks and open space, the Port is a Navy participated in the program. The bus and boat tours are a
community service provider. Programs such as the Financial way the Port lets county residents learn about the many businesses
Assistance Program and Marketing and Fee for Service that rely on the Ports maritime industry to survive. Along with
contribute funds and/or Port services to groups or programs learning about the Ports business side, the boat tours provided
that might need a hand getting started. To qualify for assistance, information on the Ports environmental initiatives.
the group or program must support recreation, fisheries, the

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CRUISE Th e co nn ec ti on
be tw ee n pe op le + la nd

The Ports cruise business continues to be an economic force Construction for a new cruise facility on Broadway Pier got The Port will be installing equipment at the new terminal to Cruise ship calls
for the region. In fiscal year 2009, 224 ships called on the Port underway. The new building will serve the public as a space for allow cruise ships to plug into shore power. Providing electrical Five-year trend comparison (actual numbers)
of San Diego, bringing nearly 814,000 passengers here. Each events and gatherings, while providing the functional space to power to the ships reduces air pollution caused by idling diesel 2005 203
home-ported ship that stops here has an economic impact of $2 accommodate cruise line operations. The bright, modern, steel engines.
2006 219
million on the region. Right now the Port has four seasonally and glass design will include a signature artwork by New York
2007 181
home-ported lines Holland America, Celebrity, Carnival and artist Leni Schwendinger. The first 400 feet of the pier will serve This year, Holland America Lines and the Port partnered with
Royal Caribbean which offer cruise itineraries to the Mexican as a public special event area. Adjacent to the building, there will the Alpha Project, a local nonprofit human services organization 2008 297
Riviera, Panama Canal, Hawaii and other destinations. be a pedestrian walkway leading to the west side special event that provides assistance to more than 2,000 local men, women 2009 224
and viewing area. Inside, both levels of the building will include and children each day. The Ship to Shelter program donates
Although this years total number of ships was lower than last more special event space. The public facility/cruise terminal is reusable goods from Holland America cruise ships to local Cruise Passenger Totals
year, it was still the Ports second-best year in the history of its expected to be ready for business in December 2010, and will shelters to help the homeless. Goods include toiletries, cookware, Five-year trend comparison (actual numbers)
cruise business. In April, about a dozen ships were rerouted to be the Ports first green building. It is being designed to obtain dishes, silverware and even televisions. 2005 567,622
the Port because of the threat of the H1N1 flu virus in Mexico. a silver-level Leadership in Energy and Environmental Design
2006 621,434
This brought the Port, its tenants and area attractions some (LEED) certification, which means it will use less energy and
2007 555,071
unexpected but welcome business. produce less waste.
2008 991,559
2009 813,822

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The Employee Recognition Program is another way the Port
fosters continuous growth and demonstrates how the Port values Port employees not only look out for their own well being, but
its employees. Each quarter, an employee is selected from a slate they participate in programs to help the community and the
of nominees submitted by all District divisions. The nominees are environment. Each year, a large percentage of employees participate
viewed by their peers as individuals who exemplify the Ports core in the United Way campaign. Employees hold bake sales, book
values of courage, diversity, fairness, fun, integrity and teamwork. sales and craft fairs to help raise money for the annual giving
At the end of the year, an employee of the year is selected for a campaign. The San Diego Harbor Police Department sponsors
recognition award. blood drives and participates in the local law enforcement Teddy
Bear drive during the holidays. This program provides toys and
To promote health and wellness, the Ports Health Benefits stuffed animals to patients at Childrens Hospital.
A world-class organization is characterized by strong leadership. ensure this, the Port established the Port Learning Center in 2008. Committee has initiated a series of healthy living seminars which
The Port of San Diego prides itself as a top-tier organization. Strong The Learning Center focuses on improving employee performance focus on nutrition and fitness. There is an on-site Weight Watchers Port employees are also active in environmental projects. A group
leadership and talented, skilled employees keep it running smoothly. and effectiveness. Classes are open to all employees and subjects group and a program that allows employees to purchase organic of employees began a composting program at the Port, which
range from supervisory training to specialized computer courses. produce from a local farm as part of a community-supported has diverted tons of food waste from the local landfill. They also
Among the 600-plus employees that work at the Port are Harbor Employees have the opportunity to update their skills and learn agriculture program. Additionally, the committee has mapped out participate in bi-annual recyclable electronics events.
Police officers, engineers, architects, trade representatives, electricians, management skills to help advance their careers. local walking routes for employees.
carpenters, mechanics and many others. These employees are
encouraged to keep learning and improving at their jobs. To help

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The Port of San Diegos environmental department is responsible The Voluntary Vessel Speed Reduction Program is another effort
for several initiatives to improve the air and water around the designed to improve the air quality around the tidelands. In the
tidelands. These include mitigation for construction projects, program, the Port requests cruise and cargo vessel operators
as well as stormwater monitoring programs, natural resource to reduce their speed when entering or leaving San Diego Bay.
management and several others. A new addition to these initiatives Studies show that when vessel speeds are reduced, there is a
is an energy partnership with San Diego Gas & Electric, which significant reduction in air emissions. Vessel speeds are tracked
will assist the Port with conserving energy. by using data that all vessels transmit to automatic identification
receivers. The program began in April 2009 and by the end of the
The Port entered the second year of the Green Port Program, quarter, 78 percent of the cruise ships and 58 percent of the cargo
which was approved by the Board of Port Commissioners in ships visiting the Port had demonstrated compliance.
December 2007. The program focuses on six areaswater,
energy, air, waste management, sustainable development and The Port received a $1 million grant from the U.S. Environmental
sustainable business practicesand spells out how the Port can Protection Agency, which will help restore and enhance about
minimize its carbon footprint. 70 acres of coastal wetlands in south San Diego Bay. The work
includes excavating about 50,000 cubic yards of material at the
Great strides were made to improve the air quality around the Chula Vista Wildlife Reserve to add tidal channels to increase the
tidelands. A program to replace or retrofit older model trucks water flow into the salt marsh. Another area, Emory Cove, will
using the Ports marine terminals got underway and was embraced have invasive plants removed and native plants added to restore
by one of the Ports largest tenants. Pasha Automotive Services, the shoreline.
which processes more than 260,000 automobile imports at the
National City Marine Terminal, replaced seven car-carrying A project to install artificial reef structures off the shoreline of
trucks with assistance from Port funds. Five new trucks for Bayside Park in Chula Vista was completed this year. This project
APEX, another terminal trucking customer, were funded with received financial help from the Ports environmental fund, which
the first of the state grant funds available for port trucks and was established in 2006 to finance environmental projects that
matching Port funds. go beyond state and federal compliance. The reef structures
provide additional habitat for fish and other sea life in the bay to
The Board of Port Commissioners approved funding its shore protect them from predators, resulting in increased populations
power projects at the B Street Cruise Ship Terminal and the of marine species.
new Broadway Pier Cruise Ship Terminal, currently under
construction. The projects will provide infrastructure so that Additionally, solar panels were installed on the Ports
cruise ships can plug into grid-based power while docked, Administration Building. These panels are providing clean power
eliminating the need to run diesel engines. The shore power for more than two percent of the administration buildings energy
system will be installed by December 2010. use. This percentage will increase as the building becomes more
energy efficient. In 2010, the Port will install solar panels on its
General Services building.

B r in gi ng gr ee n
to th e pe op le
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MARITIME Maritime Revenue
Five-year trend comparison (revenue in millions)

Types of cargo
Total tonnage received during fiscal year 2008-2009 (in metric tons)

Dry bulk: 1,264,619

(includes cement, sand and fertilizer)
Vehicles: 394,569
Liquid bulk: 153,589
(includes jet, bunker and diesel fuel)
Containers: 604,841
Breakbulk: 401,853
Without a doubt, 2009 was a strenuous year for most of the a result of the overseas trips, the Port may be gaining additional Maritime Cargo Tonnage (includes bagged cement, bagged fertilizer,
Port of San Diegos importers and shippers. Automobiles and project cargo such as steel and windmill components, and Five-year trend comparison (metric tons in millions) lumber, palletized fruit, bagged sand and
building products seemed to bear most of the weight of the perishables such as mangoes and avocados. miscellaneous steel and wind turbine products.)
weak economy, while shipments of containerized fruit and 2005: 3.3 Vehicle units: 264,710
project cargo such as transformers, generators and wind turbine This year, the Port began its first Mediterranean mooring 2006: 3.6 Container units (TEUS): 96,817
products declined slightly. operation for mega yachts. A lease was granted to San Diego 2007: 3.3
Mooring Company to conduct a two-year trial for the vessels, 2008: 3.3
For the past three years, wind turbines were a dominant import which are generally more than 100 feet long. Mediterranean 2009: 2.8
cargo at the Ports Tenth Avenue Marine Terminal. In addition mooring is defined as a vessel docking end-on, as opposed to
to the regularly scheduled shipments, six ships arrived with alongside a pier and is commonly used in European harbors in
components used to build windmill towers. The towers were the Mediterranean Sea. The first mega-yacht to take advantage
trucked to a wind farm in Palm Springs, California. of the new mooring system was the Princess Mariana. The 252-
foot vessel drew admiring glances from the public with its six
As the year closed, prospects began improving for auto imports. decks, helicopter and tender craft that can turn into a swimming
Pasha Automotive Services, the Ports auto processing tenant at pool with underwater lighting.
the National City Marine Terminal, signed a three-year contract
with Glovis America to import 50,000 new Hyundai and Kia The Port of San Diego became the first West Coast port to
automobiles through the Port. The new imports are a promising implement a program geared toward protecting marine terminals
sign that the global economy is beginning to recover. from trespassers. The congressionally mandated Transportation
Worker Identification Credential (TWIC) evolved from the
Port commissioners and trade development staff traveled to parts Maritime Transportation Security Act and the Department of
of Europe and Michoacn, Mexico, to seek new cargo business. Homeland Securitys efforts to strengthen port security after the
In addition, they attended the 2009 Asia Breakbulk Cargo terrorist attacks of September 11, 2001. The program prohibits
Conference. These trips are important because they build lasting anyone without a TWIC identity card from entering a marine
partnerships with current customers, attract new customers and terminal without an escort. TWIC card carriers must undergo
keep the Port apprised of current trends in cargo movement. As an extensive background check to be approved for the card.

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This year, the Ports Public Art Program underwent an extensive An artistic lighting project for the San Diego-Coronado Bay
review to see what was needed to ensure its sustainability over Bridge moved forward with the receipt of proposals from
the next several years and to strengthen the foundation on which three artist teams. The project, sponsored by the Port and the
it was built. Changes included a reconfiguration of the Public California Department of Transportation, envisions an artistic
Art Committees membership to provide a balance of input from design that would illuminate the bridge. The project will include
member cities, the Board of Port Commissioners, Port tenants energy-conserving elements and sustainable materials.
and the public. In addition, the Board approved a fixed annual
amount to be set aside for the programs operation and expenses, Celebrated artist Bernar Venet, whose sculptures are influenced
maintenance of the current art collection and acquisition of by math and theoretical science, loaned the Port of San Diego
future works of art. eight large-scale steel sculptures, which were installed around San
Diego Bay. The Port partnered with Scott White Contemporary
In Imperial Beach, a monumental sculpture by the late A. Wasil Art to bring the renowned exhibit to the waterfront. Venets
was dedicated at the foot of Palm Avenue and Seacoast Drive. sculptures have been exhibited in major cities in the United
The Spirit of Imperial Beach is an 18-foot tall artwork of a States, Asia, Europe, the Middle East and South America. The
surfer and his long board. It epitomizes the surf culture of the Port displayed the Venet exhibit for a year.
Ports only oceanfront city and also pays homage to the popular
Sandcastle Days event that draws thousands of visitors each July. A major goal of the Ports Public Art Program continued to be
incorporating public art into development projects. This year,
Family members of the late entertainer Bob Hope traveled to the Port commissioned New York artist Leni Schwendinger
the Port this summer to help dedicate a sculpture celebrating the to create the public art component for the new Broadway Pier
beloved entertainer. The sculpture of Bob Hope was placed in Cruise Ship Terminal. Schwendingers concept consists of an
the center of the military tribute artwork, A Salute to Bob Hope art wall with special lighting that will reflect the motion of the
and the Military. The artwork includes 15 life-sized bronze bay onto the faade of the terminal and on the walkway near the
figures representing servicemen and women from the Army, terminal. For the North Embarcadero Visionary Plan, a project
Navy, Air Force, Marines and Coast Guard. A group of World that will redevelop a one and a half mile stretch of Harbor Drive
War II veterans raised the $1.5 million for the artwork and the along the Embarcadero, the Port commissioned artist Pae White
Port dedicated the site at the G Street Mole, which is near other to incorporate public art into a restroom, a shade structure and a
military-themed artworks. ticket kiosk. Those public buildings may include artistic lettering
on the rooftops, along with unique cut-outs that would cast
interesting shapes and patterns onto the Embarcaderos sidewalk.

Th e Po rt Ti de la nd s
A r i bb on of gr ee n
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This year, the Harbor Police Department continued project is a state-of-the-art surveillance system that monitors A new ordinance regulating the parking of oversize vehicles Six Harbor Police officers were honored for saving lives in three
implementing security measures to safeguard San Diego Bay and all maritime facilities. The system is linked to the Joint Harbor took effect this year. The purpose of the ordinance is to prevent separate incidents this year. In August 2008, Officers Pedro
the harbor from the threat of terrorism. A $3.5 million grant Operations Center, a communications center shared by the Port, overnight camping in the Shelter Island Shoreline Park and Arce, Eric Mitchell and Raul Munoz pulled an unconscious
from the Department of Homeland Security was allocated to Coast Guard, Customs & Border Protection and the U.S. Navy. along Shelter Island Drive. Business owners and visitors to man from San Diego Bay and performed cardiopulmonary
the Port of San Diego and maritime entities serving its areas. The system is managed around the clock. the area complained of inadequate parking on Shelter Island resuscitation (CPR). Three months later, Sergeant Salvador
The grant will enable several bay-wide security projects to move because so many of the oversized vehicles were lined up. The Colin, along with two U.S. Navy personnel, pulled a man from
forward, including ones that will develop a fiber optic network to The Harbor Police not only monitor San Diego Bay and the Harbor Police conducted numerous community outreach a burning vehicle on Harbor Drive. In May 2009, Harbor
ultimately encircle the entire bay, provide security enhancements tidelands, but are under contract with the San Diego County sessions and handed out flyers to alert vehicle owners of the Police Officers Timothy Terry and Eugene Wheeldon, used an
for the new cruise ship terminal at Broadway Pier, and replace Regional Airport Authority to provide police services to the changes. Oversized vehicles are still allowed on Shelter Island, automated external defibrillator on a citizen in cardiac arrest
the older Harbor Police patrol and firefighting vessels. airport. There, the officers work closely with the Transportation but have designated parking with specific hours. while on his vessel on San Diego Bay. All of the officers were
Security Administration (TSA). The Harbor Police K-9 unit publicly honored with life-saving commendations and life-
Over the past seven years, the Port has been the recipient of includes TSA-certified explosives detection dogs. The unit is saving shirt bars to wear on their uniforms.
about $30 million in law enforcement and security grants. often called to assist other regional police agencies with detecting
That money has helped make the Port safer and more secure explosives and narcotics.
than before the terrorist attacks of September 11, 2001. One

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On Shelter Island, the developers of the Point Loma Marina Real Estate Revenue Sources
commercial site completed the first phase of a project that will Total revenue for fiscal year 2008-2009: $78,536,468
include three buildings, a 50-slip marina, a 16,000 square foot
park and a new shoreline promenade. Also in the area, three Concessions: $48,157,380
(includes hotel rooms, marina slips,
sportfishing businessesFishermans Landing, H&M Landing
food & beverage, retail)
and Point Loma Sportfishingmoved ahead with plans to
redevelop their sportfishing landings. The redevelopment Fixed rent: $21,408,987
(includes ground rent,
includes improvements to the existing buildings, an enlarged including boatyards and shipyards)
public plaza, and improved access. Completion is scheduled for
May 2010. The three companies are also working with the Port Parking: $7,770,734
to find a solution to the parking issue in the area. A possible Parking meters: $923,517
The Port of San Diego has jurisdiction over some of the most held public outreach meetings on the design of the park, which is remedy is building a parking structure at the former Westys Grants: $278,131
beautiful real estate in California. Waterfront parks, gleaming expected to begin construction in 2010. lumber site on North Harbor Drive. Miscellaneous: $2,281
high-rise hotels, pier-side restaurants and marinas with million-
dollar yachts are just a small sample. As close to perfection as Other positive news included the opening of the Hilton San In the South Bay, the new, 250-slip Pier 32 Marina opened on
they may seem, these venues were not immune to the economic Diego Bayfront Hotel in January 2009. The 1,200-room property the National City waterfront. The Port is reconfiguring some Real Estate Revenue Trend
of the land around the National City Marina to add even more Five-year trend comparison (revenue in millions)
downturn experienced this past year. is located next to the San Diego Convention Center and boasts a
modern design, public art and a one-acre public waterfront park. visitor-serving uses. Possibilities include a hotel, public park and 2005 $80.9
San Diego Bay, usually one of the top areas for conventions and More good news was the completion of a $10 million expansion a commercial site near the new marina. 2006 $82.4
vacations, was impacted with vacant hotel rooms, fewer diners in and remodel of the Best Western Island Palms Hotel on Shelter 2007 $83.6
Port tenant restaurants and fewer visitors to Port attractions. Island. New rooms were added, giving the hotel a total of 174 In Chula Vista, the Port continues to work with the city on 2008 $87.1
guest rooms. a master plan for its bayfront. The 550-acre development 2009 $78.5
To help alleviate some of the financial strain on its tenants, the Port incorporates a land exchange with a private developer, which
established a temporary financial relief program. The program An appealable coastal development permit was approved by the will add more than 90 acres of natural protected habitat to the
enabled the tenants most severely impacted by the recession Board of Port Commissioners for the first phase of the North bayfront. Also, the decommissioning of the South Bay Power
to defer a portion of their lease-required rental payments. In Embarcadero Visionary Plan. The project will cover about a Plan got underway. The process of decommissioning and
addition, the Port created a vigorous marketing campaign to mile and a half of waterfront on Harbor Drive in San Diego dismantling the plant will take approximately five years, but will
drive visitors to the waterfront. The plan concentrated on driving and includes widened sidewalks, landscaping, public art and result in additional opportunities for the area.
consumers to Port tenants through advertising, promotions and gathering spaces. The first phase proposes to include the area on
public relations. Harbor Drive from the former Navy Pier to the B Street Pier and
a portion of West Broadway from the railroad tracks, just past
There was good news on the real estate front. The Port was Pacific Highway to the intersection of Harbor Drive. The project
awarded a $3.5 million donation by the Lloyd and Ilse Ruocco is a collaboration between the Port, Centre City Development
Foundation to create a 3.3-acre waterfront park at the former Corporation and the City of San Diego.
Harbor Seafood Mart, just north of Seaport Village. The Port

3 21
Port Parks
From Sea to Shining Sea

Parks History
The Port of San Diego has 17 public parks and several other public areas with access to the
waterfront. Since 1950, thousands of people have enjoyed these spots for picnics, weddings,
family reunions and other celebrations, such as birthdays and holiday parties. In addition
to the parks and play areas, there are miles of walkways and a bicycle path that encircles
nearly the entire tidelands. Port parks include Shelter Island Shoreline Park, Harbor Island
Park, Spanish Landing Park, Tuna Harbor Park, Embarcadero Marina Parks North and
South, Point Loma Promenade, San Diego Bayfront Park, Cesar E. Chavez Park, Coronado
Tidelands Park, Coronado Landing Park , Pepper Park, Chula Vista Bayside Park, Chula
Vista Bayfront Park, Chula Vista Marina View Park, Portwood Pier Plaza, and Dunes Park in
Imperial Beach. There are also smaller open areas such as Kellogg Beach, Parque del Sol,
and Grand Caribe Shoreline Park, all where the public is welcome.

From the Ports first park on Shelter Island, which dates to 1950, to the most recent addition,
the San Diego Bayfront Park, there are plenty of places to enjoy.

California Coastal Trail Route

In 2008, the first California Coastal Trail insignia in San Diego County was unveiled
at Spanish Landing Park. The Port is proud to be included in the 1,200-mile trail
that extends along the west coast from Oregon to Mexico.

CA Coastal Trail Route

22 23
Financial Statements
Managements Discussion and Analysis
and Basic Financial Statements
June 30, 2009
(With Independent Auditors Report Thereon)

Table of Contents

Independent Auditors Report . . . . . . . . . . . 26

Managements Discussion and Analysis. . . . 27

Basic Financial Statements:

Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . 33

Statement of Revenues, Expenses,

and Changes in District Equity . . . . . . . . . . 34

Statement of Cash Flows . . . . . . . . . . . . . . . 35

Notes to Basic Financial Statements. . . . . . 36

24 25
Mayer Hoffman McCann P.C.
2301 Dupont Drive, Suite 200
Irvine, California 92612 Managements Discussion and Analysis
June 30, 2009
The Board of Port Commissioners The financial management of the San Diego Unified Port District (the District) offers readers of these basic financial statements
San Diego Unified Port District this narrative overview and analysis of the financial activities of the District as of and for the year ended June 30, 2009. This
Independent Auditors Report discussion and analysis is designed to assist the reader in focusing on the significant financial issues and activities, and to identify
any significant changes in financial position. We encourage readers to consider the information presented here in conjunction with
the accompanying basic financial statements and the accompanying notes to those basic financial statements.
We have audited the accompanying balance sheet of the San Diego Unified Port District (the District) as of June
30, 2009, and the related statements of revenues, expenses, and changes in district equity, and cash flows for the year Financial Highlights
then ended. These financial statements are the responsibility of the Districts management. Our responsibility is to As of June 30, 2009, the assets of the District exceeded liabilities by $547.1 million.
express opinions on these financial statements based on our audit. The prior year partial comparative information Operating revenues for the District were $134.5 million for fiscal year 2009 compared to $144.1 million for fiscal year 2008.
has been derived from the financial statements of the District for the year ended June 30, 2008, and in our report
Operating expenses, including depreciation and amortization, for the District were $138.7 million for fiscal year 2009 compared
dated October 31, 2008, we expressed an unqualified opinion on those financial statements.
to $130.0 million for fiscal year 2008.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America Revenues from capital grants and contributions totaled $5.3 million for fiscal year 2009 compared to $5.4 million for fiscal year 2008.
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the The Districts total equity decreased by $3.9 million during fiscal year 2009 compared to a $23.7 million increase in fiscal year 2008.
Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes Overview of the Basic Financial Statements
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
This discussion and analysis is intended to serve as an introduction to the Districts basic financial statements, which are comprised
also includes assessing the accounting principles used and significant estimates made by management, as well as
of the basic financial statements and the notes to the basic financial statements. The statements are organized so the reader can
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our understand the District as a whole and then proceed to provide an increasingly detailed look at specific financial activities. These
opinions. components are described below.

As discussed in note 14 to the basic financial statements, the District is subject to various contingent liabilities arising Basic Financial Statements
from legal and environmental matters. The ultimate outcome of these matters cannot presently be determined. Since the District is comprised of a single enterprise fund, no fund level financial statements are shown. The basic financial
Accordingly, no provision for any loss that may result from the resolution of these matters has been made in the statements provide a broad view of the Districts operations in a manner similar to a private sector business. The statements
accompanying financial statements. provide both short-term and long-term information about the Districts financial position, which assist in assessing the Districts
economic condition at the end of the fiscal year. The basic financial statements are prepared using the flow of economic resources
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position measurement focus and the full accrual basis of accounting, which basically means they follow methods similar to those used by
of the District as of June 30, 2009, and the changes in its financial position and its cash flows for the year then ended most private sector companies. The basic financial statements take into account all revenues and expenses connected with the fiscal
in conformity with accounting principles generally accepted in the United States of America. year even if the cash involved has not been received or paid.

As described further in Note 9 to the financial statements, the District changed its method of accounting for post- The Balance Sheet presents all of the Districts assets and liabilities with the difference between the two reported as equity.
employment benefits other than pensions for fiscal years ending on or after June 30, 2009. Increases or decreases in the Districts equity may serve as a useful indicator as to whether the financial position of the District is
improving or deteriorating over time.
The information identified in the accompanying table of contents as managements discussion and analysis is not a The Statement of Revenues, Expenses, and Changes in District Equity presents information showing how the Districts equity changed
required part of the basic financial statements, but is supplementary information required by accounting principles during the two most recent fiscal years. All changes in equity are reported as soon as the underlying event giving rise to the change
generally accepted in the United States of America. We have applied certain limited procedures, which consisted occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items
principally of inquiries of management regarding the methods of measurement and presentation of the required that will not result in cash flows until future fiscal periods (e.g., invoices for goods or services received but for which payment has
supplementary information. However, we did not audit the information and express no opinion on it. not yet been made).

In accordance with Government Auditing Standards, we have also issued a report dated October 30, 2009 on The final required financial statement is the Statement of Cash Flows. The statement reports cash receipts, cash payments, and net
our consideration of the Districts internal control over financial reporting and our tests of its compliance with changes in cash resulting from operating, investing, and financing activities. It also provides answers to such questions as, Where
certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report did cash come from?, What was cash used for?, and, What was the change in the cash balance during the reporting period?
is to describe the scope of our testing of internal control over financial reporting and compliance and the results of
that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That The basic financial statements can be found immediately following this discussion and analysis.
report is an integral part of an audit performed in accordance with Government Auditing Standards and should be
Notes to the Basic Financial Statements
considered in assessing the results of our audit.
The notes provide additional information and more detail that is essential to a full understanding of the data provided in the basic
financial statements. The notes to the basic financial statements can be found immediately following the basic financial statements.

Financial Analysis
Irvine, California One of the most important questions asked about the Districts finances is, Is the District as a whole better or worse off as a
October 30, 2009 result of this years activities? Equity, which is the difference between assets and liabilities, is one way to measure financial health
or financial position. Increases or decreases in equity are one indicator of whether the Districts financial health is improving or
deteriorating over time. The Balance Sheet and the Statement of Revenues, Expenses, and Changes in District Equity report
information about the Districts activities in a way that will help answer this question. These two statements report the Districts
equity and changes in the Districts equity.

26 27
Managements Discussion and Analysis Managements Discussion and Analysis
June 30, 2009 June 30, 2009
Balance Sheet Land increased $1.0 million in fiscal year 2009. This was primarily due to capitalizing the costs for land improvements at the
South Campus of the former BF Goodrich site in Chula Vista.
To begin our analysis, a summary of the Districts Balance Sheet is presented below. The Districts equity totaled $547.1 million at
the end of fiscal year 2009, compared to $550.9 million at the end of fiscal year 2008. The largest portion of the Districts equity,
The District invested a total of $22.9 million in Construction-in-progress during fiscal year 2009. Some of these projects were
75.7%, is its investment in capital assets net of related debt. The District uses these capital assets to generate regional economic
completed and capitalized during the fiscal year.
growth and to provide services and recreational opportunities to citizens; consequently, these assets are not available for future
Following are amounts expended during fiscal year 2009 for some of the major capital projects:
The Districts financial position at June 30, 2009 and June 30, 2008 is summarized as follows:
$3.8 million, Port Security Grant Projects
Assets, Liabilities, and District Equity $3.4 million, Palm Avenue Street End Improvements Imperial Beach
(Expressed in thousands) $2.4 million, Teledyne Ryan Building Demolition & Abatement
$ Change $1.5 million, Cruise Ship Terminal Improvements
2009 2008 (decrease) % Change $1.4 million, Pepper Park Boat Launching Facility Improvements California State Grant Project
Current assets $ 153,079 173,325 (20,246) (11.7) %
Other noncurrent assets 87,922 68,122 19,800 29.1 % $1.4 million, Voice, Data, and Data Storage Network System
Capital assets 457,595 452,141 5,454 1.2 % $1.1 million, North Embarcadero Visionary Plan Phase I Design
Total assets $ 698,596 693,588 5,008 0.7 %
Current liabilities $ 31,205 26,673 4,532 17.0 % $0.9 million, Harbor Police Administration Building Facility Improvements
Noncurrent liabilities 120,330 115,968 4,362 3.8 % $7.0 million, Miscellaneous All Others
Total liabilities 151,535 142,641 8,894 6.2 %
Invested in capital assets (net of related debt) 413,928 405,708 8,220 2.0 %
Restricted 29,163 29,861 (698) (2.3) % The $16.7 million decrease in Construction-in-progress was primarily due to projects that were completed and capitalized to the
Unrestricted 103,970 115,378 (11,408) (9.9) % appropriate asset categories during fiscal year 2009.
Total District equity 547,061 550,947 (3,886) (0.7) %
Total liabilities and Building and structures had additions totaling $6.7 million for fiscal year 2009. The major additions include $2.3 million for street
District equity $ 698,596 693,588 5,008 0.7 % end improvements at Palm Avenue in Imperial Beach; $1.7 million in improvements to the boat launching facility at Pepper Park;
$0.9 million for the replacement of the boilers & chillers at the Districts main administration building; $0.8 million for the public
art project a Cannery Workers Tribute; $0.3 million for replacement of the viewing platform located at Embarcadero Marina
Current and noncurrent assets Park North; and, the remaining $0.7 million was for other small projects.
Current assets decreased by $20.2 million compared to prior year while noncurrent assets increased $19.8 million.
Machinery and equipment increased $7.3 million in fiscal year 2009. The major increases can be attributed to the purchase and
Capital Assets installation of security equipment at cargo and cruise terminals for $5.1 million; $0.8 million for upgrading the R/3 integrated
business applications module in SAP; $0.5 million for the purchase of a Harbor Police fast response vessel/rigid hull inflatable
The Districts investment in capital assets as of June 30, 2009 totaled $835.0 million, with accumulated depreciation of
boat; $0.3 million for the purchase of motive equipment; $0.2 million for the purchase of hand-held and vessel mounted sonar
$377.4 million, resulting in a net book value of $457.6 million.
equipment; $0.2 million for the purchase of four lifeguard towers; and, the remaining $0.2 million increase for other small
equipment purchases. Machinery and equipment decreased $0.7 million during the fiscal year due to assets declared as surplus,
Capital Assets
which were subsequently retired.
(Expressed in thousands)

Balance at Balance at Roads and parking lots increased $2.4 million in fiscal year 2009. This was primarily due to street improvements at the west end
Description June 30, 2008 Increases Decreases June 30, 2009 of Palm Avenue located in Imperial Beach.
Nondepreciable assets:
Land $ 196,266 1,001 - 197,268 Accumulated depreciation increased $18.0 million mainly due to the depreciation expense recorded for the fiscal year. The $0.7
Construction-in-progress 18,150 22,867 (16,705) 24,312 million decrease in accumulated depreciation is the result of capital assets that were retired during the fiscal year.
Depreciable assets: -
Land improvements 7,650 - - 7,650
Buildings and structures 459,904 6,711 - 466,615 Revenues, Expenses, and Changes in District Equity
Machinery and equipment 46,118 7,252 (701) 52,669
While the Balance Sheet shows the change in the Districts financial position, the Statement of Revenues, Expenses, and Changes
Roads and parking lots 84,162 2,353 - 86,515
in District Equity provides insights as to the nature and source of the change in financial position. The Districts summarized
Total assets 812,251 40,184 (17,406) 835,029
Accumulated depreciation (360,110) (18,024) 700 (377,434) results of operations for the fiscal year ended June 30, 2009 are presented on the next page:
Capital assets, net $ 452,141 22,160 (16,706) 457,595

28 29
Managements Discussion and Analysis Managements Discussion and Analysis
June 30, 2009 June 30, 2009
Revenues, Expenses, and Changes in District Equity revenue of $1.3 million due to the transfer of maritime-related leaseholds from the Real Estate Department, and fixed rental
(Expressed in thousands) revenue of $0.9 million due to retroactive rent adjustments for two large tenants. The remaining $0.1 million decrease was from
all other revenue sources.
$ Change
increase Harbor Police operating revenue of $12.5 million dollars increased approximately $0.2 million from $12.3 million in the prior
2009 2008 (decrease) % Change fiscal year due primarily for police services provided to the San Diego County Regional Airport Authority (SDCRAA) for
Operating revenues:
Real Estate operations $ 78,536 87,181 (8,645) (9.9) % increased canine patrol services for explosives detection and additional hours of mandatory airport police training.
Maritime operations 40,694 42,520 (1,826) (4.3) % Other operating revenue increased approximately $0.7 million due to the cost sharing reimbursements and receipt of additional
Harbor Police operations 12,464 12,289 175 1.4 %
grant revenues.
Other 2,816 2,140 676 31.6 %
Total operating revenues 134,510 144,130 (9,620) (6.7) %

Operating expenses: Operating Expenses:
Direct expenses
Real Estate operations 21,191 21,897 (706) (3.2) % Real Estate operating expenses of $21.2 million, before depreciation and general and administrative expense (G&A expense)
Maritime operations 23,243 23,328 (85) (0.4) % allocation, decreased by $0.7 million primarily due to the reclassification of $1.4 million prior year expenses for the Teledyne
Harbor Police 32,974 31,049 1,925 6.2 % Ryan building demolition and abatement to a capital project. This decrease was partly offset by a $0.5 million increase in
Other operating expenses 11,732 8,442 3,290 39.0 % personnel expense mostly due to the recording of the Annual Required Contribution (ARC) for Other Post Employment
Depreciation and amortization 18,117 17,412 705 4.0 %
General and administrative expenses 31,428 27,867 3,561 12.8 % Benefits (OPEB) (see Note 9).
Total operating expenses 138,685 129,995 8,690 6.7 % Maritime operating expenses of $23.2 million, before depreciation and G&A expense allocation, decreased approximately $0.1
Income (loss) from operations (4,175) 14,135 (18,310) (129.5) % million from $23.3 million in the prior fiscal year. Pasha automotive terminal operator fees of $2.4 million decreased by $0.7
Nonoperating revenues 11,172 14,794 (3,622) (24.5) % million due to a lower volume of automotive imports. Personnel expenses had a net increase of approximately $0.7 million
Nonoperating expenses 16,228 10,692 5,536 51.8 % mostly due to the recording of the ARC for OPEB and the filling of previously vacant positions. The remaining variances were
Nonoperating income (loss) (5,056) 4,102 (9,158) (223.3) % spread across various expense categories.
Capital contributions 5,347 5,425 (78) (1.4) %
Change in District equity (3,884) 23,662 (27,546) (116.4) % Harbor Police operating expenses of $33.0 million, before depreciation and G&A expense allocation, increased approximately
Beginning District equity 550,948 527,286 23,662 4.5 % $2.0 million from $31.0 million in the prior fiscal year. Personnel expense had a net increase of approximately $1.5 million
Ending District equity $ 547,064 550,948 (3,884) (0.7) % mainly due to recording of the ARC for OPEB, negotiated salary increases, increases in retirement costs and health insurance
premiums. Motive expense increased by approximately $0.3 million primarily due to extensive repairs and maintenance
performed on Harbor Police fire and emergency vessels. Fire, police, emergency and medical services agreements with member
Total operating revenues of $134.5 million decreased $9.6 million from the prior fiscal year of $144.1 million. Operating expenses cities also increased approximately $0.2 million.
of $138.7 million increased $8.7 million from the prior fiscal year of $130.0 million.
Other operating expenses of $11.7 million, before depreciation and G&A expense allocation, increased approximately $3.3
million from $8.4 million in the prior fiscal year. Other operating expenses include the Environmental Services and Miscellaneous
Approximately 58% of the Districts total operating revenue was attributable to Real Estate operations, which includes land and
cost centers. An increase of $3.0 million from the prior fiscal year was mainly due to an increase in major maintenance expenses
building leases, concession fees, and parking fees. Maritime operations, which includes wharfage, land and building leases, cruise
of approximately $1.7 million for repairs to refurbish comfort stations at tideland parks, various pavement repairs, and repairs
ship passenger fees, dockage fees, and storage space rental, accounted for approximately 30% of the Districts total revenue. Harbor
to the Chula Vista Bayside Park Fishing Pier. Expenses for the Regional Harbor Monitoring Program and Environmental
Police accounted for approximately 9% of total operating revenues, which consists of services provided to the San Diego County
Fund projects increased approximately $0.9 million from the prior fiscal year. Personnel expense also had a net increase of $0.4
Regional Airport Authority (SDCRAA), citations issued for vehicle code violations, revenue from piers and floats, and operating
million mainly due to the recording of the ARC for OPEB, negotiated salary increases, increases in retirement costs and health
grant revenue. Other operating revenue accounted for approximately 3% of the Districts total operating revenue and includes park
insurance premiums. Miscellaneous operating expenses increased approximately $0.3 million primarily to due to Port Security
usage fees and others.
Grant Round 8 expenditures.
Non-operating revenue includes legal settlements, interest income, reimbursed legal fees, terminal special facility fees, and General and Administrative expenses of $31.4 million increased approximately $3.5 million from $27.9 million in the prior
miscellaneous other revenue. The largest non-operating revenues are interest income of $5.5 million and terminal special facility fiscal year primarily due to the recording of the ARC for OPEB of $1.6 million, increases in salaries, retirement costs and group
fees of $2.9 million. health insurance of approximately $1.4 million, and increases in marketing costs of $0.4 million for advertising.
The overall increase in costs resulting from recording the ARC for OPEB was $4.5 million, which were already referenced in the
Following are the major factors that influenced the fiscal year 2009 operating revenues and expenses in comparison to fiscal year 2008: above analysis.

Operating Revenues: Total depreciation expense of $18.1 million increased approximately $0.7 million from $17.4 million in the prior fiscal year.

Real Estate operating revenue of $78.5 million decreased approximately $8.7 million from $87.2 million in the prior fiscal year.
Concession and Parking revenues decreased approximately $7.0 million due to the unfavorable economic environment and the Non-operating Revenues and Expenses:
transfer of maritime-related leaseholds for harbor excursions to Maritime Operations. Other rental revenue decreased $1.3 The Districts non-operating revenues of $11.2 million decreased approximately $3.6 million from $14.8 million in the prior
million due to the completion of Lane Field option payments for fiscal year 2009. Fixed Rent revenue decreased $0.3 million fiscal year. Interest on investments decreased approximately $2.7 million from the prior fiscal year and legal fee reimbursement
primarily due to a negotiated rent adjustment which occurred in the prior fiscal year. The remaining $0.1 million decrease was decreased approximately $2.3 million. Partially offsetting these decreases were increases in unrealized gain/loss on investments
from various other revenue sources. (GASB 31) of $1.1 million and legal settlements of $1.1 million.
Maritime operating revenue of $40.7 million decreased $1.8 million from $42.5 million in the prior fiscal year. Wharfage fees Capital contributions of $5.3 million decreased approximately $0.1 million from $5.4 million in the prior fiscal year.
were lower by approximately $3.9 million primarily due to a decrease in cargo import activities such as autos, sand, lumber and
Total non-operating expenses of $16.3 million increased by $5.5 million from total non-operating expenses of $10.8 million in
other imported goods. Cruise ship passenger fees and cruise ship security charges decreased $1.3 million due to lower cruise
the prior fiscal year primarily due to a payment to SANDAG of $5.3 million for the freeway access improvement project.
ship calls and fewer passengers embarking and disembarking. Dockage revenue decreased $0.5 million as a result of lower vessel
calls compared to prior fiscal year. These decreases were partially offset by increases in storage space rentals of $1.8 million
primarily due to an increase in the number of vehicle imports being stored at the National City Marine Terminal, concession The following charts show the total District revenues and expenses by major categories for fiscal year 2009:

30 31
Managements Discussion and Analysis Basic Financial Statements
June 30, 2009
FY 2009 Revenues FY 2009 Expenses Balance Sheet
Convention Center Expansion 3% June 30, 2009
Marine Operations 27% Direct Expenses 57%
Miscellaneous/Other 2% Financial Assistance 4%
Nonoperating Revenue 7% Other 1%
Capital Grants 4% Interest Expense 3%
June 30, 2009 June 30, 2008
Harbor Police 8% Current assets:
Cash and cash equivalents $ 32,280,309 37,381,750
Investments 95,490,470 116,995,162
Real Estate Accounts receivable, net of allowance 14,530,493 15,412,006
Operations Note receivable 1,000,000 1,000,000
52% General and Other current assets 9,778,193 2,535,774
20% Total current assets 153,079,465 173,324,692

Noncurrent assets:
Depreciation 12% Cash & investments designated for specific capital projects & commitments 22,029,384 8,166,968

Restricted assets:
Restricted cash and investments:
Debt Administration Convention Center expense rate stabilization 5,500,000 5,500,000
TDY site demolition, and building abatement 22,961,559 23,599,529
The authority of the District to incur debt is described in Section 29 of the San Diego Unified Port District Act. The District is Carnival loan 5,349,774
authorized, by its enabling legislation, to levy property taxes along with its five member cities (San Diego, National City, Chula Deposits and other miscellaneous 2,479,412 2,586,255
Vista, Imperial Beach, and Coronado). From 1963 to 1970, the District required a small tax levy to pay debts incurred for Escrow accounts
improvements accomplished before the formation of the District. Since then, revenues from the principal operational areas have So. Bay Power Plant remediation and other miscellaneous 21,132,743 20,029,708
Lease / Purchase Acquisition 1,356,519
been sufficient to support District operations, service bonded indebtedness, and allow for capital improvements. As a result, no Workers comp collateral 2,117,531 2,116,473
taxes have been levied since 1970. Series 2004 bonds
Debt service reserve funds held by trustee 3,517,210 3,543,461
As part of the airport transfer on January 1, 2003, as described in Note 1(a), the District issued a $50.0 million promissory note Deferred costs 850,741 944,190
to the SDCRAA and a $2.4 million note for the Pond 20 real estate. On January 1, 2003, the District began repayment of the Total restricted assets 65,265,489 58,319,616

Pond 20 note to the SDCRAA based upon a preliminary appraisal of the fair market value of $2.4 million. The appraised value Note receivable, less current portion 500,000 1,500,000
of Pond 20 was one of a number of items under dispute between the District and the SDCRAA. On May 20, 2004, a settlement Other noncurrent assets 126,777 135,965
agreement, with an effective date of June 1, 2004, was reached between the two entities. With regard to Pond 20, the parties agreed Total other noncurrent assets 87,921,650 68,122,549
that the value of Pond 20 would be the average of the Districts appraisal of $2.4 million and the SDCRAAs appraisal of $4.3
million. Accordingly, the note for Pond 20 was increased to $3.3 million. Under the Airport Transfer Agreement, the $50.0 million Capital assets:
promissory note was unsubordinated and fully negotiable, had an interest rate of the prime rate plus 1%, with monthly payments of Nondepreciable assets:
Land 197,267,503 196,266,470
interest only for seven years, with the principal due and payable on December 31, 2009. Under the settlement agreement, the note Construction-in-progress 24,311,783 18,149,922
is now being amortized over a period of 25 years, which commenced January 1, 2006, with a fixed interest rate of 5.5% per annum Depreciable assets:
and is subordinate to all other bonded indebtedness of the District. Land improvements 7,650,334 7,650,334
Buildings and structures 466,614,635 459,903,511
Machinery and equipment 52,669,442 46,118,439
On October 28, 2004, the District issued $49.5 million aggregate principal amounts of revenue bonds. The issuance consisted of Roads and parking lots 86,515,099 84,162,008
$23.0 million and $26.5 million principal amounts for the 2004 Series A Bonds and 2004 Series B Bonds, respectively. The bonds
were sold at a premium of $2.5 million, which netted issuance proceeds of $52.0 million. The bonds are due serially over 25 years Total capital assets 835,028,796 812,250,684
and bear interest rates ranging from 2.00% to 5.25%. The bonds will be repaid using the Pledged Revenues of the District, as Less accumulated depreciation (377,433,871) (360,109,702)
defined in Article 1, Section 1.02 of the indenture related to these bonds. Capital assets, net 457,594,925 452,140,982
Total noncurrent assets 545,516,575 520,263,531
Following is a summary of the Districts outstanding bonds and notes payable: Total assets $ 698,596,040 693,588,223
See accompanying notes to basic financial statements.
Balance at Balance at Amounts due
June 30, 2008 Increases Decreases June 30, 2009 within one year
Notes to SDCRAA:
$50.0 Million promissory note $ 47,483,210 (1,100,014) 46,383,196 1,162,063
Pond 20 note 1,714,515 (346,864) 1,367,651 365,519
Revenue bonds:
Series A and B 2004 bonds payable 46,020,000 (1,255,000) 44,765,000 1,305,000
Series A and B 2004 bonds premium 1,828,214 (161,896) 1,666,319
Total bonds and notes $ 97,045,940 (2,863,773) 94,182,166 2,832,582

Requests for Information

This financial report is designed to provide a general overview of the Districts finances for all California citizens, taxpayers, and
stakeholders, and the Districts investors and creditors. This financial report seeks to demonstrate the Districts accountability for
the money it receives. Questions concerning any of the information provided in this report or requests for additional information
should be addressed to the San Diego Unified Port District, Office of the District Clerk, P.O. Box 120488, San Diego, California
92112 0488. Or, you may contact the District by phone (619) 686-6203 or by email at

32 33
Basic Financial Statements Basic Financial Statements
Balance Sheet Statement of Cash Flows
June 30, 2009 Year ended June 30, 2009
Liabilities and Equity
June 30, 2009 June 30, 2008
Current liabilities: June 30, 2009 June 30, 2008
Accounts payable $ 10,810,281 12,734,104 Cash flows from operating activities:
Accrued liabilities 4,937,538 4,423,758 Payments from customers $ 135,479,545 146,434,208
Current portion of accrued leave 4,100,000 3,165,000 Payments to suppliers (48,269,253) (43,487,686)
Deposits and other short-term liabilities 2,593,350 2,505,576 Payments to employees (74,235,153) (65,545,350)
Accrued interest payable, series 2004 bonds 730,696 740,934 Other receipts 879,021 2,436,115
Notes payable, current portion 2,075,685 1,446,878
Net cash provided/(used) from operating activities 13,854,160 39,837,287
Carnival loan 4,652,181 401,539
Bonds payable, current portion 1,305,000 1,255,000
Cash flows from noncapital financing activities:
Total current liabilities 31,204,732 26,672,789 Maintenance Fund-Salute to Bob Hope 97,408
Convention Center expansion (4,500,000) (4,500,000)
Noncurrent liabilities: Financial assistance to other governments (652,973) (967,924)
Liabilities payable from restricted assets: SANDAG Payment - Freeway access Improvement Project (5,330,000)
South Bay Power Plant remediation 20,735,871 19,632,836 Note payments (350,672) (1,363,475)
Other long-term liabilities: Net cash provided/(used) in noncapital financing activities (10,736,237) (6,831,399)
Notes payable to SDCRAA 46,223,264 47,750,847
Bonds payable 45,126,318 46,593,213 Cash flows from capital and related financing activities:
Accrued leave, net of current portion 1,471,389 1,991,739 Capital expenditures (24,527,293) (31,155,809)
Deferred Income Other 97,408 Proceeds on sale of capital assets 67,248 16,898
Master Tax-Exempt Lease/Purchase Agreement 2,150,298 Federal/state grants received 5,330,200 4,102,534
Net OPEB Obligation 4,525,339 Donations for Capital Assets/Public Art 17,050
Total other long term liabilities 99,594,016 96,335,799 Terminal Special Facility Fee 2,975,552 3,447,272
Total noncurrent liabilities 120,329,887 115,968,635 Master Tax Lease Purchase (548,103)
Total liabilities 151,534,619 142,641,424 Payment of bond principal (1,255,000) (1,215,000)
Interest paid (4,807,902) (4,966,331)
Carnival Loan 4,250,642 (108,218)
Invested in capital assets, net of related debt 413,928,591 405,707,681
Restricted for other projects and grants 29,163,155 29,860,785 Net cash provided/(used) in capital and related financing activities (18,497,606) (29,878,654)
Unrestricted 103,969,674 115,378,333
Cash flows from investing activities:
Total equity 547,061,420 550,946,799
Purchase of short-term investments (168,120,712) (196,125,980)
Total liabilities and equity $ 698,596,040 693,588,223 Maturity of short-term investments 171,158,031 182,003,579
Payment received on note receivable 1,000,000 1,000,000
Statement of Revenues, Expenses, and Changes in District Equity Interest received from investment securities 6,240,927 8,497,266
Year ended June 30, 2009 Net cash provided/(used) by investing activities 10,278,246 (4,625,135)
June 30, 2009 June 30, 2008 Net increase/(decrease) in cash and cash equivalents (5,101,437) (1,497,901)
Operating revenues: Cash and cash equivalents, beginning of year 37,381,748 38,879,649
Real Estate operations $ 78,536,468 87,180,527 Cash and cash equivalents, end of year $ 32,280,311 37,381,748
Maritime operations 40,694,314 42,520,189
Harbor Police 12,463,742 12,288,513 Reconciliation of operating income to net cash provided by operating activities:
Other operating revenues 2,815,735 2,139,694 Net income/(loss) from operations $ (4,176,346) 14,134,059
Total operating revenues 134,510,258 144,128,923 Adjustments to reconcile income from operations to net
cash provided by operating activities:
Operating expenses: Depreciation and amortization expense 18,117,495 17,412,168
Direct expenses: Bad debt expense 80,489 (1,380)
Real Estate operation 21,191,259 21,896,833 Gain/(loss) on disposal of assets (1,122) (231,015)
Maritime operations 23,243,014 23,327,762 Settlement income 1,165,548 35,762
Harbor Police 32,974,100 31,049,096 Other nonoperating activities (284,347) 2,655,320
Other operating expenses 11,732,433 8,441,561 Changes in assets and liabilities:
Depreciation and amortization 18,117,495 17,412,168 Accounts receivable/notes receivable-tenant 801,023 3,171,951
General and administrative expenses 31,428,303 27,867,445 Other current assets (7,242,419) (326,826)
Accounts payable (935,587) 1,709,264
Total operating expenses 138,686,604 129,994,865
Accrued liabilities 1,443,940 2,111,263
Income/(loss) from operations (4,176,346) 14,134,059 Other restricted assets (1,357,578) (23,951)
Nonoperating revenue (expense): Other long-term liabilities 6,155,289 55,958
Interest income 5,517,998 8,319,291 Deposits 87,774 (865,286)
Settlement income 1,165,548 35,762 Net cash provided/(used) from operating activities $ 13,854,160 39,837,287
Unrealized gain/(loss) on investments 1,117,440 (18,526)
Interest expense (4,701,676) (4,834,213)
Financial assistance (5,982,973) (967,924) See accompanying notes to basic financial statements.
Convention Center expansion expense (4,500,000) (4,500,000)
Other nonoperating income 2,327,381 6,067,778
Nonoperating revenue (expense), net (5,056,283) 4,102,168

Capital grants and contributions 5,347,250 5,424,533
Change in District equity (3,885,379) 23,660,759
District equity, beginning of year 550,946,799 527,286,040
District equity, end of year $ 547,061,420 550,946,799
See accompanying notes to basic financial statements.

34 35
Notes to Basic Financial Statements Notes to Basic Financial Statements
June 30, 2009 June 30, 2009
1. Summary of Significant Accounting Policies (c) Accounts Receivable
An allowance for uncollectible accounts receivable has been provided in the amount of $78,871 as of June 30, 2009; the
(a) Organization
amount is based upon managements estimate of accounts that will not be collected. Accounts receivable are carried
The San Diego Unified Port District (the District), an autonomous public agency, was established on December
at original invoice amount for fixed rent tenants and at estimated invoice amount for concession (i.e., variable) rent
18, 1962 in accordance with laws of the State of California for the acquisition, construction, operation, maintenance,
tenants, less an estimate made for doubtful receivables for both fixed rent and concession tenants based on a review of
development, management, and regulation of harbor works and improvements, including rail, water, and air terminal
all outstanding amounts. Management determines the allowance for doubtful accounts by evaluating individual tenant
facilities, and tidelands and submerged lands of the Harbor of San Diego and San Diego Bay, and for the promotion of
receivables and considering a tenants financial condition, credit history, and current economic conditions.
commerce, navigation, fisheries, and recreation. The District is governed by a seven member Board of Port Commissioners
appointed by the Districts five member cities (Chula Vista, Coronado, Imperial Beach, National City, and San Diego).
(d) Cash Equivalents
For the purpose of the statement of cash flows, cash equivalents consist of short term, highly liquid investments with
In 2001, the California legislature established the San Diego County Regional Airport Authority (the SDCRAA)
original maturities of three months or less.
by enacting the San Diego County Regional Airport Authority Act (the Airport Authority Act), California Public
Utilities Code Section 170000 et seq. The Airport Authority Act was amended in 2002 and proposed a phased transfer
(e) Investments
of all airport operations of the District to SDCRAA. Effective January 1, 2003, pursuant to the Airport Authority Act
Investments are stated at fair value. Valuations are obtained by using quotations obtained from independent published sources.
and the Memorandum of Understanding (MOU) dated as of December 31, 2002, the District transferred all airport
operations and certain related assets and liabilities to the SDCRAA.
(f ) Restricted Assets
Funds are set aside as restricted assets and are not available for current expenditures, when constraints placed on their
(b) Basis of Accounting
use are legally enforceable due to either:
The accounting policies of the District conform to accounting principles generally accepted in the United States of
1. Externally imposed requirements by creditors (such as through debt covenants), grantors, contributors, or laws or
America applicable to state and local government agencies and, as such, the District is accounted for as a proprietary
regulations of other governments, or,
fund. The accompanying basic financial statements have been prepared using the economic resources measurement
2. Constitutional provisions or enabling legislation.
focus and full accrual basis of accounting. Under the accrual basis of accounting, revenues are generally recognized when
earned and expenses are recognized when incurred.
The District classifies assets as restricted when the resources that were received or earned contain an explicit understanding
between the resource provider and the District that the funds would be used for a specific purpose.
In accordance with the provisions of Governmental Accounting Standards Board (GASB) Statement No. 20, Accounting
and Financial Reporting for Proprietary Funds and Other Entities that Use Proprietary Fund Accounting, the District has
(g) Designated Assets
applied all applicable GASB pronouncements. The District has applied Financial Accounting Standards Board (FASB)
The Districts management may designate funds, which they do not consider to be available for general operations. At
pronouncements and interpretations, Accounting Principles Board (APB) opinions, and Accounting Research Bulletins
June 30, 2009, management had designated funds for specific approved capital projects and other commitments totaling
issued on or before November 30, 1989 that do not conflict with or contradict GASB pronouncements. The District has
approximately $22.0 million.
elected not to apply FASB pronouncements and interpretations issued after November 30, 1989.
(h) Capital Assets
Implementation of New Accounting Pronouncements:
Capital assets are carried at cost (except for property contributed by third parties, which is recorded at fair market
GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than
value at the date of contribution) less an allowance for accumulated depreciation. Recurring normal maintenance and
Pensions. This Statement, issued in 2004, establishes standards for the measurement, recognition and display of
repair costs are charged to operations, whereas major repairs, improvements, and replacements that extend useful life are
other post employment benefits expenses and related liabilities or assets, note disclosures and, if applicable, required
capitalized. The capitalization threshold is $5,000 and depreciation is computed by use of the straight line method over
supplementary information in the financial reports. The requirements of this Statement were effective for the District
the following estimated useful lives:
beginning with its fiscal year ending June 30, 2009.
Land improvements 30 to 40 years
GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations. This Statement
Roads and parking lots 10 to 30 years
addresses accounting and financial reporting standards for pollution (including contamination) remediation obligations,
Buildings, water borne structures, and other terminals 10 to 50 years
which are obligations to address the current or potential detrimental effects of existing pollution by participating in
Automotive and field equipment, furniture, and fixtures 3 to 15 years
pollution remediation activities, such as site assessments and cleanups. This standard requires the District to estimate
the components of expected pollution remediation outlays and determine whether the outlays for those components
(i) Compensated Absences
should be accrued as a liability or, if appropriate, capitalized when goods and services are acquired.
Employees of the District hired before October 1, 1979 may be paid upon termination or retirement a portion of their
accrued unused sick leave benefits. Such benefits are paid based upon the current rates of compensation. Employees
Pronouncements issued, not yet effective:
hired on or after October 1, 1979 are not entitled to any reimbursement of earned unused sick leave upon termination
GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets. This Statement, issued July 2007,
or retirement. All employees of the District earn annual leave that is paid upon termination or retirement. Annual leave
will be effective for the District with its year ending June 30, 2010. This Statement provides guidance regarding how
is accrued and paid at current rates of compensation.
to identify, account for and report intangible assets. The new standard characterizes an intangible asset as an asset that
lacks physical substance, is nonfinancial in nature and has an initial useful life extending beyond a single reporting period.
(j) District Equity
Invested in capital assets net of related debt consists of capital assets, which are net of accumulated depreciation and
GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. This Statement, issued June
further reduced by the outstanding balances of any borrowings used for the acquisition, construction, or improvement
2008, will be effective for the District with its year-ending June 30, 2010. This Statement addresses the recognition,
of those assets.
measurement and disclosure of information regarding derivative instruments entered into by state and local governments.
The objectives, terms and risks of hedging derivative instruments are required disclosures. Disclosures also include a
Restricted equity represents amounts that are appropriated or are legally segregated for a specific purpose. District
summary of derivative instrument activity that provides an indication of the location of fair value amounts reported on
equity is reported as restricted when there are limitations imposed on its use, either through the enabling legislation
the financial statements.
adopted by the District or through external restrictions imposed by creditors, grantors, laws or regulations of other

36 37
Notes to Basic Financial Statements Notes to Basic Financial Statements
June 30, 2009 June 30, 2009
(k) Revenue Classifications 2. Cash and Investments
The District classifies revenue as operating revenue or nonoperating revenue, based on the following criteria:
Cash and investments as of June 30, 2009 are classified in the accompanying financial statements, as follows:
Operating revenues are derived from the revenue sources that constitute the principal ongoing activities of the Districts Summary of cash and investments: 2009 2008
operations. The major components of the operating revenue sources are provided as follows: Cash and cash equivalents $ 32,280,311 37,381,750
Investments 95,490,468 116,995,164

Real Estate operating revenue is generally derived from flat-fee ground rentals, rental fees based on a fixed percentage Restricted cash and investments:
of tenant revenues subject to certain minimum monthly fees for industrial, commercial, and recreational facilities, and Convention Center expense rate stabilization 5,500,000 5,500,000
parking fees. TDY site demolition, and building abatement 22,961,559 23,599,529
Refundable security deposits 2,176,737 2,303,132
Maritime operating revenue includes charges for wharfage, dockage, storage, passenger fees, cruise ship security charges, Carnival loan advance 5,349,774
Various grants - 16,183
fixed rents, and other marine services subject to District tariffs filed with the Federal Maritime Commission. Wharfage Other 302,675 266,940
revenue is the charge assessed to both inbound and outbound cargo when crossing over District property. Dockage fees Total restricted cash and investments 36,290,745 31,685,784
are the charges assessed against a vessel for the right to berth at a wharf or pier of the District.
Designated cash and investments:
Harbor Police operating revenue includes police services provided to the SDCRAA (including overhead and G&A Designated for capital project commitments 22,029,384 8,166,968
Total designated cash and investments 22,029,384 8,166,968
allocation), citation revenue, and expense reimbursements, which include both grants and cost recovery for service
provided. Environmental Services park usage fees are also included in other operating revenue. Total cash and investments $ 186,090,908 194,229,666

Non-operating revenues are from sources related to financing activities and other activities that do not constitute the Cash and investments as of June 30, 2009 consist of the following:
principal ongoing activities of the Districts operations. The major components of the non-operating revenue sources Cash on hand, current $ 6,375
Deposits with financial institutions 1,806,586
are interest income from cash and investments, reimbursed legal fees/litigation costs, legal settlements, Terminal Special Investments 184,277,947
Facility Fees, grant reimbursements for capital projects and donations. $ 186,090,908

(l) Expense Classifications

The District classifies expenses as operating or non-operating based on the following criteria:
Investments Authorized by California Government Code and the District Investment Policy
Operating expenses are from expense sources that constitute the principal ongoing activities of the Districts operations. California Government Code 53600 et seq. and the Board of Port Commissioners Policy 115 (BPC 115), Guidelines for
The major components of the Districts operating expense consist of salaries and benefits, contractual services, Prudent Investments, regulate the investment of the Ports temporarily idle cash. The table below identifies only those investments
maintenance, administration, and materials and supplies. that are authorized by both California Government Code and BPC 115. The table also identifies restrictions as to investment
terms to maturity and maximum allowable investment percentages; the more restrictive policy requirements are identified. Note
Non-operating expenses are from expense sources that are related to financing, investing and other activities that do not that while the maximum allowable term to maturity for various investment classes may be five years, BPC 115 limits the portfolios
constitute the principal ongoing activities of the Districts operations. The major components of non-operating expense weighted average days to maturity to three years. At no time during FY 2009 did the portfolios weighted average days to maturity
are financial assistance and interest expense. exceed three years.

(m) Capital Grants and Contributions Maximum Allowable Investment

When a capital grant agreement is approved and all eligibility requirements have been met, the expenditures are recorded Term to Total Any One Issuer
Investment Types Authorized by California Government Code and BPC 115 Maturity (% of Portfolio) (% of Portfolio)
as grants receivable and capital grant revenue. When a capital asset is donated, the contributed capital asset and donated
revenue is recorded at fair market value in the period it was received. U.S. Treasury Bills, Notes, Bonds 5 Years No Restriction No Restriction
U.S. Government Agency Obligations 5 Years No Restriction No Restriction
(n) Deferred Bond Costs Bankers Acceptances 180 Days 40% FMV 10% FMV
The 2004 revenue bond issuance costs are deferred and amortized over the term of the bonds using the straight-line
Certificates of Deposit - Account Registry Service (CDARS) 5 Years 30% FMV FDIC Limit
method, which approximates the effective interest method. In addition, the bonds were issued at a premium and the
premium is amortized over the term of the bond using the straight-line method. Commercial Paper 270 Days 15% FMV 10% FMV
Commercial Paper 31 Days 30% FMV 10% FMV
(o) Estimates Negotiable Certificates of Deposit 1 Year 30% FMV No Restriction
The preparation of basic financial statements in conformity with accounting principles generally accepted in the United
Medium-term notes - A rating 2 Years 30% FMV 5% FMV
States of America requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities; disclose contingent assets and liabilities at the date of the basic financial statements; and, disclose reported Medium-term notes - AA rating 3 Years 30% FMV 5% FMV
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Repurchase Agreements 1 Year No Restriction No Restriction
Reverse Repurchase Agreements 60 Days 10% FMV No Restriction
(p) Reclassifications
Local Agency Investment Fund (LAIF) Not Applicable No Restriction Not Applicable
Certain reclassifications have been made to the 2008 financial information to conform to the 2009 presentation. These
reclassifications had no impact on net income or District assets or liabilities. Shares of Beneficial Interest Issued by Management Companies Not Applicable 20% FMV 10% FMV
Shares of Beneficial Interest Issued by Joint Powers Authorities ( JPA) 2 Years 30% FMV Not Applicable

38 39
Notes to Basic Financial Statements Notes to Basic Financial Statements
June 30, 2009 June 30, 2009
Disclosures Relating to Interest Rate Risk The information presented below identifies the minimum credit rating required by California Government Code, the Districts
investment policy and the actual rating as of June 30, 2009 for each investment type. Funds held in trustee and fiscal agent accounts
Interest rate risk is the risk that fluctuations in market interest rates will adversely affect the fair value of an investment. In general,
as of June 30, 2009 met California Government Code minimum credit rating requirements.
an investment with a longer term to maturity has a greater sensitivity to changes in market interest rates than does an investment
Credit Rating at Year End
with a shorter term to maturity.
Fair Value at Minimum Exempt from
Investment Type June 30, 2009 Rating Disclosure AAA AA+ to A+ AAAm AAf / S1 Not Rated
One of the ways the District manages its exposure to interest rate risk is by purchasing a combination of shorter-term and longer- U.S. Treasury Securities 6,996,252 N/A 6,996,252 - - - - -
term investments and by structuring the maturities to coincide with expected capital investment cash outflows. Investment Federal agencies (coupon) 90,014,776 N/A - 90,014,776 - - - -
purchases are further structured so as to mature at fairly regular intervals in order to provide liquidity sufficient for operations. Federal agencies (discount) 36,484,692 N/A - 36,484,692 - - - -
Medium Term Notes 14,214,881 N/A - 12,203,813 2,011,068 - - -
Certificates of Deposit - CDARS 5,000,000 N/A - - - - - 5,000,000
The District uses remaining days to maturity, weighted average days to maturity, and duration as methods by which to analyze
Money Market Fund 21,501,513 N/A - - - 21,501,513 - -
the portfolios overall sensitivity to interest rate risk. The District intends to hold callable securities until maturity, however, for Shares of Beneficial Interest-JPA 10,065,833 N/A - - - - 10,065,833 -
disclosure purposes, the District used the call date as equivalent to maturity date. Information pertaining to the portfolios overall Totals: $184,277,947 N/A $6,996,252 $138,703,281 $2,011,068 $21,501,513 $10,065,833 $5,000,000
sensitivity to interest rate risk at June 30, 2009 is provided in the following tables:

Concentration of Credit Risk

Port Investments Remaining Days to Maturity The Districts investment policy is consistent with the California Government Code with respect to the categorical limitations
Investment Type Fair Value at June 30, 2009 120 Days or Less 121 to 360 361 to 720 721 to 1,080
placed on the amount that may be invested in any one issuer. The Districts investment holdings at June 30, 2009, grouped by
U.S. Treasury Securities 6,996,252 3,000,000 3,996,252 - - issuer, are identified in the table below.
Federal agencies (coupon) 90,014,776 19,937,832 44,368,927 20,656,452 5,051,565
Federal agencies (discount) 36,484,692 23,495,288 12,989,404 - - Issuer Investment Type Fair Value at June 30, 2009 % of Portfolio
Medium Term Notes 14,214,881 2,011,068 - - 12,203,813 United States of America U.S. Treasury Securities 6,996,252 3.80%
Certificates of Deposit - CDARS 5,000,000 1,000,000 4,000,000 - - Federal Home Loan Bank Federal agencies securities 63,489,712 34.45%
Money Market Fund 21,501,513 21,501,513 - - - Federal Home Loan Mortgage Corporation Federal agencies securities 17,107,360 9.28%
Shares of Beneficial Interest - JPA 10,065,833 10,065,833 - - - Federal National Mortgage Association Federal agencies securities 31,480,519 17.08%
Totals: $184,277,947 $81,011,534 $65,354,583 $20,656,452 $17,255,378 Federal Farm Credit Bank Federal agencies securities 14,421,877 7.83%
General Electric Capital Corp Medium Term Notes 5,026,437 2.73%

The Districts investment portfolio is conservatively managed. Although the District is authorized by Board policy to invest in Goldman Sachs Group Medium Term Notes 4,021,744 2.18%
securities whose fair value would be considered highly sensitive to interest rate risk, the District did not own any specific securities Wells Fargo & Company Medium Term Notes 5,166,700 2.80%
considered highly sensitive. Various FDIC-Member Banks Certificates of Deposit CDARS 5,000,000 2.71%
CalTRUST Short-Term Fund Shares of Beneficial Interest JPA 10,065,833 5.46%
Investment Type Weighted Avg. DTM Duration (Years)
Wells Fargo Advantage Fund Government Money Market Fund 21,501,513 11.67%
U.S. Treasury Securities 3 0.008
Totals: 184,277,947 100.00%
Federal agencies (coupon) 284 0.294
Federal agencies (discount) 26 0.072
Custodial Credit Risk
Medium Term Notes 59 0.126
Custodial credit risk is the risk that investments held by the transaction counterparty may not be recoverable in the event of the
Certificates of Deposit - CDARS 7 0.019
failure of the counterparty firm. The Districts adopted investment policy states that, To protect against potential losses by the
Money Market Fund 1 0.003 collapse of individual securities dealers, all securities owned by the District shall be held in safekeeping by a third party bank trust
Shares of Beneficial Interest - JPA 1 0.003 department acting as agent for the District under the terms of a custody agreement executed by the bank and the District. All
Total Weighted Avg. DTM 381 securities will be received and delivered using standard delivery-versus-payment procedures. The District uses a custodial bank
for the receipt and safekeeping of its securities and all securities purchased in fiscal year 2009 were received using delivery-versus-
Portfolio Duration 0.525
payment procedures.
Funds invested in the money market fund consist of U.S. Government obligations and repurchase agreements collateralized by
U.S. Government obligations. California Government Code requires that financial institutions secure local government agency deposits by pledging securities in
an undivided collateral pool; the depository holds the collateral. The market value of the securities held in the collateral pool must
Funds invested in Shares of Beneficial Interest issued by joint powers authority include 51% U.S. Government Agencies, 18% be greater than or equal to 110% of the total amount deposited by the public agencies. A financial institution may, in accordance
Corporate Notes, 15% Commercial Paper, 11% Money Market, 3% Mortgage-Backed Securities/Asset-Backed Securities, and 2% with California Government Code, secure the local public agency deposits using first trust deed mortgages; however, the market
Certificates of Deposit as of June 30, 2009. The risk of investing through this program includes movements in interest rates, which value of the first trust deed mortgages collateral must be at least 150% of total amount deposited.
could adversely affect the market value, yield and return of the Shares program. If interest rates rise, the values of debt securities
generally fall. In general, bond prices vary inversely with interest rates. With the exception of inactive time deposits, all securities as of June 30, 2009 were held by a third party bank trust department
acting as agent for the District under the terms of a custody agreement.
Disclosures Relating to Credit Risk
Investment in CalTRUST Investment Pool
Credit risk is the risk that the issuer of an investment will not repay its obligation as promised. Credit quality is measured using a
rating assigned by a nationally recognized statistical rating organization (NRSO). The District is a voluntary participant in the Investment Trust of California (doing business as CalTRUST), a Shares of Beneficial
Interest program. The Shares program is a Joint Powers of Authority ( JPA) authorized by California Government Code sections
53601 and 53635 created for the purpose of pooling local agency assets for investing. The District participates in the programs

40 41
Notes to Basic Financial Statements Notes to Basic Financial Statements
June 30, 2009 June 30, 2009
short-term account which has a target duration of 0 to 2 years. Authorized securities under this account typically include treasuries, As of June 30, 2009, the total cash received by the District from Carnival as a loan was $12.0 million. Carnival also consented
agencies, CMOs, MBS, ABS, bankers acceptances, commercial paper, certificates of deposit, repurchase agreements backed by to the District to assess and collect from all cruise line users of the District cruise ship facilities a Terminal Special Facility Fee
102% government agencies and treasuries, medium term notes and rated money market funds. equal to a $4.00 per embarking home port cruise passenger and a $4.00 per disembarking home-port passenger. The Terminal
Special Facility Fee serves as a revenue source for the District to repay the loan.
The Shares Programs investment objectives seek to attain a high level of current income consistent with the preservation of capital.
The program is subject to interest rate and credit risk. This is primarily due to interest rate movements and to the potential of In exchange, the District agreed, with other miscellaneous provisions, to allow Carnival preferential berthing of its ships at two
Share value decline in response to events affecting the issuer of any securities or its credit rating. The Shares program, CalTRUST, of the Districts four berths through April 2015 or until the loan is paid in full, whichever takes longer. Effective April 1, 2006,
is not registered as an investment company under the Investment Company Act of 1940 and, accordingly, is not subject to the the District assessed against and collected the Terminal Special Facility Fee from all cruise line users of the District cruise ship
provisions of that Act and the rules thereunder, including the protective rules relating to registered money market funds and other facilities. The Terminal Special Facility Fee shall remain in effect until the loan is repaid in full to Carnival, including any and
types of mutual funds. all interest, late fees and other charges. However, Carnival announced in September 2009 that the Elation, the homeport ship,
would discontinue service from San Diego. The effect on the Terminal Special Facility Fee is not known at this time.
Investments in Medium Term Notes and the FDICs Temporary Liquidity Guarantee Program From April 1, 2006 to June 30, 2009, approximately $7.5 million was collected for the Terminal Special Facility Fee and was
The Districts Medium Term Notes listed in the tables above include $12,203,813 of notes guaranteed by the Federal Deposit used to repay a portion of the loan. The outstanding balance of the loan, including interest, was $4.7 million as of June 30,
Insurance Corporation (FDIC) under the newly created U.S. Governments Temporary Liquidity Guarantee Program (TLGP) 2009; a total $7.2 million has been spent on improvements from inception through June 30, 2009 leaving an available cash
adopted on November 21, 2008. Under the TLGP, the Debt Guarantee Program component allows participating entities to balance of $5.3 million shown as a restricted asset.
have certain newly-issued senior unsecured debt guaranteed by the FDIC with the full faith and credit of the United States. The
guarantee expires the earlier of the maturity date of the debt or June 30, 2012.
5. Long-Term Debt
Investments in Certificates of Deposit Account Registry Service (CDARS)
(a) Summary of Long-Term Liabilities
The District participates in the CDARS program through Neighborhood National Bank, certified as a Community Development Below is a summary of long-term liabilities and their activity for the fiscal year ended June 30, 2009:
Financial Institution by the U.S. Treasury. Deposits through this program are authorized by California Code Sections 53601.8
Balance at Balance at Amounts due
and 53635.8, and are 100% FDIC insured. June 30, 2008 Increases Decreases June 30, 2009 within one year
$50.0 Million promissory note - SDCRAA $ 47,483,210 (1,100,015) 46,383,195 1,162,063
3. Capital Assets Pond 20 note - SDCRAA 1,714,515 (346,864) 1,367,651 365,519
Master Tax-Exempt Lease/Purchase Agreement 2,698,401 2,698,401 548,103
Following is a summary of the capital assets activity for fiscal year ended June 30, 2009: Revenue bonds:
Series A and B 2004 bonds payable 46,020,000 (1,255,000) 44,765,000 1,305,000
Capital Assets Series A and B 2004 bonds premium 1,828,214 (161,896) 1,666,318
(Expressed in thousands) Total bonds and notes 97,045,939 2,698,401 (2,863,775) 96,880,565 3,380,685
Other noncurrent liabilities:
Balance at Balance at Deferred Income - Bob Hope Memorial 97,408 97,408
Description June 30, 2008 Increases Decreases June 30, 2009 OPEB Obligation 6,681,339 (2,156,000) 4,525,339
Nondepreciable assets: Accrued leave 5,156,738 414,652 5,571,389 4,100,000
Land $ 196,266 1,001 - 197,268 South Bay Power Plant remediation 19,632,836 1,103,035 20,735,871
Construction-in-progress 18,150 22,867 (16,705) 24,312
Total other noncurrent liabilities 24,789,573 8,296,434 (2,156,000) 30,930,007 4,100,000
Depreciable assets:
Land improvements 7,650 - - 7,650 Total long-term liabilities $ 121,835,512 10,994,835 (5,019,775) 127,810,573 7,480,685
Buildings and structures 459,904 6,711 - 466,615
Machinery and equipment 46,118 7,252 (701) 52,669
Roads and parking lots 84,162 2,353 - 86,515 The Districts required debt service payments for the bonds and notes for fiscal years ending June 30 are as follows:
Total assets 812,251 40,184 (17,406) 835,029
Accumulated depreciation (360,110) (18,024) 700 (377,434) Principal Interest Total Debt Service
Capital assets, net $ 452,141 22,160 (16,706) 457,595 2010 3,380,685 4,789,678 8,170,364
2011 3,512,998 4,657,431 8,170,429
4. Carnival Loan 2012
On October 11, 2005, the District entered into a terminal financing and berthing agreement with Carnival Corporation 2014 3,580,695 4,164,065 7,744,760
(Carnival). Carnival owns and/or operates a number of cruise ship lines, which include Carnival Cruise Lines, Princess 2015-2019 17,578,006 18,173,432 35,751,438
2020-2024 22,379,395 12,970,243 35,349,638
Cruises, P&O Cruises, Holland America Line, Cunard Line, Seabourn Cruise Line, and Costa Crociere. Carnival utilizes 2025-2029 28,971,696 6,273,076 35,244,773
cruise ship terminals in ports around the world including the Districts cruise ship terminal for embarking and disembarking 2030-2031 8,577,671 315,165 8,892,836
passengers, shore tours, and provisioning their vessels. The Districts main cruise ship facility, known as the B Street Pier, is Total $ 95,214,248 60,238,172 155,452,419
located at the foot of B Street on Harbor Drive. The Districts Broadway Pier, located at the foot of Broadway on Harbor
Drive, is used as an auxiliary pier. Both piers were built in the 1920s and have significant infrastructure needs that affect the
cruise lines ability to move passengers from ship to shore efficiently. (b) Notes Payable
As part of the transfer of airport operations and the San Diego International Airport (SDIA) to the SDCRAA on
To maintain and grow its established cruise business, the District and Carnival identified improvements needed for the B Street January 1, 2003 and pursuant to the MOU, the District issued a $50.0 million promissory note to the SDCRAA. The
Pier (fenders, additional tents, gangway platform, and early arrival area). In October 2005, Carnival agreed to loan the District note was unsubordinated and fully negotiable, with an interest rate of the prime rate plus 1%. Monthly payments of
$8.0 million to fund the improvements at a fixed rate of 4.5% per annum. In May 2007, the loan was increased to $12.0 million interest were required for seven years with the principal due and payable on December 31, 2009. The note was amended
so that improvements totaling $26 million could be completed on the Broadway Pier (pier deck strengthening, improved as a result of a settlement agreement, effective June 1, 2004, between the District and the SDCRAA. The note is now
vehicle circulation, Customs and Border Protection facilities, passenger facilities, and baggage lay down area). Ultimately being amortized over a period of 25 years, which commenced January 1, 2006, with a fixed rate of 5.5% per annum; the
the Broadway Pier is planned to continue functioning as the Districts auxiliary pier when the B Street Pier construction is note remains subordinated to all other bonded indebtedness of the District.
completed. However, that construction may not begin until 2016 or later given the cost of the project.

42 43
Notes to Basic Financial Statements Notes to Basic Financial Statements
June 30, 2009 June 30, 2009
The Airport Authority Act specified that Pond 20 real estate in the South Bay would remain District property. Pond merger, which was consented to by the BPC at the November 2006 Board meeting, included a transfer of control of the
20 is a portion of the land acquired as part of the Western Salt Company, Naval Training Center (NTC) acquisition in equity interests in the Plants operating entity, LSP South Bay, along with a number of other power generation assets,
1999, which was intended to provide for mitigation for future expansion of the airport. As part of the transfer of the from LS Power to Dynegy. The post-transaction Dynegy is comprised of the combined assets of LS Power (and other
airport to the SDCRAA on January 1, 2003, the District began repayment to the SDCRAA for the fair market value LS Power assets) and Dynegy (the new entity retained the name Dynegy Inc.). The Duke Guarantees have remained
of the property based upon an appraisal of $2.4 million. The payment schedule was a fixed, ten year payment plan with in effect since the Dynegy transaction.
interest based upon the prime rate plus 1% on January 1, 2003. The appraised value of Pond 20 was one of a number of
items under dispute between the District and the SDCRAA. As a result of the June 1, 2004 settlement agreement, the Also in fiscal year 1999, the California State Legislature appropriated $15.0 million to assist the District in mitigating
parties agreed the value of Pond 20 would be the average value of the Districts $2.4 million appraisal and the SDCRAA environmental and community issues associated with the Plant. The District deposited $15.0 million into the Property
appraisal of $4.3 million. Accordingly, the note payable to SDCRAA was increased to $3.3 million. The fixed, ten-year Escrow Account, which was initially established by the District and Duke South Bay. The escrowed funds together
payment plan remained unchanged but the interest rate was set to a fixed rate of 5.25% per annum, effective retroactively with their earnings are to be retained in the Property Escrow Account until such time as the funds are needed to
to January 1, 2003. Because the initial payments made by the District to the SDCRAA were less than the recalculated decommission or dismantle the Plant or for the environmental remediation of the Plant site. At June 30, 2009, the
amortization schedule, in June 2004 the District made a lump-sum payment of principal and interest of $0.2 million to balance in the property escrow account after drawdowns and income on investments is $20.7 million. This amount
the SDCRAA to ensure repayment of the revised note amount during the agreed upon ten-year amortization period. is reported in the balance sheet as a restricted asset and also reported as a noncurrent liability payable from restricted
assets. All such costs in excess of amounts available in the escrow account are the responsibility of Dynegy, so long as the
The District entered into a Master Tax-Exempt Lease/Purchase Agreement, with Key Government Finance, Inc. to lease approval to decommission and dismantle the plant is obtained and a replacement generating plant is constructed during
phone and network equipment. The lease term is for five years and the annual principal and interest payment each year the term of the lease, or of future operators in the event that the lease with Dynegy expires or is terminated. SDG&E
is $592,767.50 for a total amount of $2,963,837.50. remains responsible for the cost and performance of the environmental remediation of the Plant. The lease terminates
three months from the termination by the ISO of the must run obligation imposed on the Plant. At the termination
(c) Revenue Bonds and Pledge of Revenues of the Lease Agreement, Dynegy is required to decommission, dismantle, and remove the Plant and return the Plant site
On October 21, 2004, the District sold $49.5 million (par value) of Series 2004 Revenue Bonds (Bonds), which are free and clear of all structures and improvements.
secured by a pledge and lien on net pledged revenues. As of June 30, 2009, the Bonds remaining principal and interest
requirement totals $71.8 million. The District intends to use the site for the highest and best use for the public benefit after it is returned by Dynegy at
the termination of the Lease Agreement.
The Bonds were issued for a term of 25 years, with the last debt service payment due September 1, 2029. The proceeds
from the sale of the Bonds were used to reimburse the District for certain previous capital expenditures, fund the Bonds 6. San Diego Convention Center
reserve requirement, and finance the costs of issuance. In 1985, the District entered into an agreement, which was subsequently amended four times, (collectively, the Original
Agreement) with the City of San Diego (the City) for the management of the San Diego Convention Center (the Convention
Pledged revenues for the period ending June 30, 2009, totaled $140.8 million, which represents approximately 93.2% of Center). The Original Agreement provides that the City will manage, operate, maintain, and promote the Convention Center,
total District revenues and 196.1% of the Bonds remaining principal and interest requirements. Net pledged revenues and the District will manage, operate, and maintain the parking facility of the Convention Center.
for the period ending June 30, 2009 totaled $14.0 million, which represents 404.9% of the Bonds annual principal and
interest requirements. In consideration of the Districts investment in constructing the Convention Center and managing, operating, and maintaining
the parking facility, the City paid the District $20 ($1 per year). The City operates and maintains the Convention Center and
(d) Accrued Leave receives all income from, and bears all expenses of, the Convention Center. The District receives all income from, and bears all
District employees earn annual leave, which is recorded by the District at current rates of compensation when earned. expenses of, the operations and maintenance of the parking facility.

(e) South Bay Power Plant Site Remediation During fiscal year 1994, the District entered into a Memorandum of Understanding (MOU) with the City regarding a
Pursuant to the Asset Sales Agreement between the District and the San Diego Gas & Electric Company (SDG&E), proposed expansion of the Convention Center (the Expansion Project). The MOU provides that the District will assist the
the District acquired the South Bay Power Plant (the Plant) in April 1999. The District recognized that it would be City in the annual payment of any debt obligation created to finance the Expansion Project by contributing up to $4.5 million
in the baywide regions best interest to acquire the Plant as the means to accelerate the closure, decommissioning, and/or per year for 20 years, not to exceed total payments of $90.0 million, and will reimburse the City for the costs of the program
relocation of the Plant. The California Independent System Operator (ISO) has designated the Plant as a must run manager and other consultants and contractors associated with the planning, design, and construction of the Expansion
facility, which means that the Plant must remain in operation until a replacement plant is constructed or ISO removes Project, not to exceed $4.5 million per year as part of the annual obligation.
the must-run designation. The Plant was leased to Duke Energy South Bay, LLC (Duke South Bay) in April 1999. During fiscal year 1997, the District incurred expenses of $9.3 million, including a payment to the City of $9.0 million toward
the planning and design costs for the Expansion Project and $0.3 million of District costs for the Expansion Project. The
In fiscal year 1999, pursuant to the Real Property Contribution Agreement that was entered into between the District MOU provides that the $9.0 million payment to the City would be applied toward the 19th and the 20th annual payments.
and SDG&E, SDG&E donated approximately 165 acres of land located beneath and adjacent to the Plant with a fair
market value of $24.9 million. The land transaction was recorded as contributed capital and is included in capital assets During August 1998, the District entered into a series of additional agreements with the City. These agreements include
in the basic financial statements. a Support Agreement that supersedes the 1994 MOU, a 1998 Convention Center Management Agreement (the 1998
Agreement) that supersedes the Original Agreement, and, a Purchase Option and Lease Agreement.
In early 2006, Duke Energy Americas, LLC, the parent company of Duke South Bay, requested the Districts approval
of its sale of the equity interest in Duke South Bay to LS Power Generation, LLC (LS Power). In May 2006, the BPC The Support Agreement provides for a payment of $9.0 million to the City, in lieu of the 17th and 18th annual payments
adopted a resolution granting consent to transfer ownership of Duke South Bay to LS Power Generation LLC subject required under the MOU upon the sale of bonds to finance the construction of the Expansion Project and an annual payment
to conditions expressed in the resolution. One of the conditions required Duke Capital, LLC, the guarantor of Duke of $4.5 million for 16 years beginning on June 30, 1999. On September 17, 1998, the lease revenue bonds were issued to
South Bay obligations to the District, to acknowledge and agree that the Duke Guarantees (the Lease Guaranty dated finance the construction of the Expansion Project. The debt obligation for the bonds was structured as the Citys sole legal
April 1, 1999; the Environmental Remediation Guaranty dated April 22, 1999; and, the Guaranty of Contract and responsibility. On September 21, 1998, $9.0 million, less the costs incurred by the District for the Expansion Project in the
Permit Rights Assignment and Property Escrow Agreement dated April 22, 1999, each made by Duke Capital, LLC in amount of $0.3 million, totaling $8.7 million, was paid to the City in accordance with the terms of the Support Agreement. On
favor of the District) shall remain in effect until such time as the District grants its consent for the release of said Duke June 30, 1999, the District accrued $4.5 million representing the first annual payment, which was subsequently paid on July 1,
Guarantees. Upon completion of the sale to LS Power, the name of the Plant operator entity changed to LSP South 1999. Each year thereafter, beginning with fiscal year 2000, an annual payment of $4.5 million has been made by the District
Bay, LLC (LSP South Bay). in accordance with the terms of the Support Agreement. As of June 30, 2009, $67.5 million has been paid to the City of San
Diego under this agreement. The annual payments will be completed by June 2014.
In October 2006, LS Power requested the Districts approval of LS Powers merger with Dynegy Inc (Dynegy). The

44 45
Notes to Basic Financial Statements Notes to Basic Financial Statements
June 30, 2009 June 30, 2009
The 1998 Agreement contains modifications that take into account the debt financing on the Expansion Project as well as the The contribution requirements of plan members and the District are established by and may be amended by the Board.
authorization for the City to operate the expanded Convention Center. Other terms contained in the Original Agreement
remain unchanged in the 1998 Agreement. (c) Annual Pension Cost
For fiscal years ended June 30, 2009 and June 30, 2008, the District recorded a total annual pension cost of $10.6 million
Under the Purchase Option and Lease Agreement, beginning on the closing of the bond issuance for the Expansion Project and $9.9 million, respectively, for the SDCERS pension plan. These amounts represent the payment in full of the
and extending through July 30, 2012, the District is required to maintain reserves in the amount of $5.5 million, which may be Districts annual required contribution (ARC) and the offset. Effective June 30, 2007, the annual required contribution
drawn upon by the City if the Transient Occupancy Tax (TOT) fails to increase for two consecutive years. If the TOT fails was determined as part of an actuarial valuation using the Entry Age Normal funding method. The District previously
to increase for two consecutive years, the City may request the District to advance monies from the reserves in exchange for a used the Projected Unit Credit funding method. The actuarial assumptions include a 7.75% investment rate of return;
property, which is acceptable to the District with an appraised value of at least $5.5 million. As of June 30, 2009, the District projected salary increases of 5%; and, the assumption that benefits for certain members will increase after retirement.
had restricted cash and restricted equity of $5.5 million for the Expansion Project. To date we have not been notified that the Both the investment rate of return and the projected salary increases include an inflation factor of 4%. Additionally, the
City will be drawing upon this money. actuarial valuation of assets will be determined using the Expected Value of Assets, which uses techniques that average
or smooth year-to-year market value returns for the purpose of reducing the volatility of annual contributions.
7. South Bay Cities
Schedule of funding progress for SDCERS
In June 1995, the Board of Port Commissioners approved a Memorandum of Understanding for each of the Districts South Bay (Expressed in thousands) - (Unaudited)
cities of Coronado, Chula Vista, National City, and Imperial Beach (collectively the South Bay MOU). The South Bay MOU
provides that the District shall annually set aside as restricted reserves of $9.0 million for each of the seven years beginning July 1, Actuarial UAAL as a
Actuarial Actuarial value accrued liability Unfunded AAL Covered percentage of
1994 to be expended for certain District projects, as shown in the Tidelands Capital Development Program (the CDP) adopted valuation date of assets (AAL) (UAAL) Funded ratio payroll covered payroll
by the Board of Port Commissioners on April 26, 1994. The total unawarded contract cost is periodically adjusted for inflation June 30, 2006 $203,286 $226,154 ($22,868) 89.9% $33,927 67.4%
using the Building Cost Index (BCI). As of June 30, 2009, the District had set aside, expended, or committed to expend a total June 30, 2007 $230,585 $246,538 ($15,953) 93.5% $37,160 42.9%
amount of $95.7 million under the MOU. This includes the initial set aside of $63.3 million, BCI escalation of $13.3 million and June 30, 2008 $245,580 $267,037 ($21,457) 92.0% $38,635 55.5%
$19.1 million of additional funding from the CDP. As of June 30, 2009, $9.7 million remains unexpended.

Entry Age Normal (EAN) method used.

8. Defined Benefit Plan The funded ratio for the actuarial valuation date of June 30, 2008 decreased to 92% using the Expected Value of Assets
(a) Plan Description method. The UAL for FY 2010 is to be amortized over several different periods. The amortization of the UAL due to
The Districts defined benefit pension plan, administered by the City of San Diegos City Employees Retirement System assumption changes was over 30 years, the fiscal year ending June 30, 2008 experienced loss was amortized over 15 years,
(SDCERS), provides retirement and disability benefits, annual cost of living adjustments, and death benefits to plan and the outstanding balance of the June 30, 2007 UAL was amortized over 13 years. Finally, there is an additional UAL
members and beneficiaries. SDCERS is an agent multiple-employer public employee retirement system that acts cost component to ensure that there is no negative amortization in any year.
as a common investment and administrative agent for the City of San Diego, the District, and the SDCRAA and is
administered by the Retirement Board of Administration (Board). San Diego City Charter, Section 144 and San Three-year Annual Pension Cost (APC) trend information for SDCERS is presented below.
Diego Municipal Code Sections 24.0100 et seq. assigns to the Board the authority to establish and amend the benefit
provisions of the plans that participate in SDCERS. The plan is integrated with the Federal Social Security Program. Annual Percentage
The Board issues a publicly available financial report that includes financial statements and required supplementary Pension Cost of APC Net pension
(APC) contributed obligation
information for SDCERS. The financial report may be obtained by writing to the San Diego City Employees Retirement
Fiscal year ended:
System, 401 West A Street, Suite 400, San Diego, California 92101, or by calling (619) 525-3600. 2007 $12,267,961 100%
2008 $9,949,888 100%
(b) Funding Policy 2009 $10,629,779 100%
The Citys Municipal Code requires member contributions to be actuarially determined to provide a specific level of
benefit. Member contribution rates, as a percentage of compensation, vary according to age at entry, benefit tier level, and
certain negotiated contracts that require the District to pay a portion of the employees contributions, which is referred
9. Other Post Employment Benefits (OPEB)
to as the offset. The weighted average member contribution rates for fiscal year 2009, expressed as a percentage of In addition to pension benefits as described in Note 8, the District provides medical, dental, and life insurance coverage, and
compensation, were 9.7% for general members and 12.49% for safety members. an employee assistance program, to all eligible current and retired employees. Employees hired prior to October 1, 2006 are
eligible for these benefits as retirees if they retire from active employment with at least 5 years of service. Employees hired on
All or part of the member contribution rate is subject to potential offset. For employees hired prior to October 1, or after October 1, 2006 are eligible for these benefits as retirees if they retire from active employment with at least 10 years of
2006, the offset rates, expressed as a percentage of compensation, are 8.8% for Safety employees, 8.5% for management service. The accompanying financial statements reflect the implementation of GASB No.45 which requires local governments
employees, and 7.0% for all other employees. For non-safety employees hired on or after October 1, 2006, the offset to start accruing the cost of OPEB incurred for employee service rendered to the District.
rates are 6.5% for management employees and 5.0% for all others. Employees hired after January 1, 2009, other than
Funding policy:
Safety, are not eligible to participate in a new defined benefit plan until the completion of 5 years of service. However,
they are able to contribute to a 457 Deferred Compensation plan, where the District will match up to 4% of salary in a As of June 30, 2009, the District continues on a pay as you go basis and elected not to pre-fund its OPEB pending the
401(a) plan. outcome of the federal legislation relating to healthcare.

The District contributes at an actuarially determined rate. The rates for fiscal years 2008, 2009 and 2010, expressed as To determine the Unfunded Actuarial Accrued Liability (UAAL) and the Annual Required Contribution of the employer
a percentage of covered payroll, are as follows: (ARC), the District retained Sunlin Consulting, LLP, to prepare the actuarial valuation on the basis of GASB 45. The UAAL
as of July 1, 2008 was $67,828,688 and the ARC for fiscal year ending June 30, 2009 was $6,681,339 which the District fully
Actuarial Contribution Rates recognized as OPEB expense. Of this amount, $2,156,000 was paid toward the retiree premium and $4,525,339 remains as
(Actuarial valuation approved by SDCERS) Net OPEB liability as of June 30, 2009. The required annual contribution and unfunded liability was determined as part of
FY 08 FY 09 FY 10
an actuarial valuation that assumes: (a) 4.45 percent investment rate of return, and (b) Annual cost increase ranging from an
General Members 18.10% 17.26% 16.95% initial rate of 10 % to an ultimate rate of 5 % from over a ten year period. The valuation was performed using the projected
Safety Member 21.74% 21.31% 19.23% unit credit and the UAAL is being amortized over 30 years on a level dollar basis.
Weighted total 19.08% 18.37% 17.57%

46 47
Notes to Basic Financial Statements Notes to Basic Financial Statements
June 30, 2009 June 30, 2009
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the Since July 1, 2004, the District has participated in a loss-sensitive workers compensation program and is responsible for the
employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical first $500,000 of any workers compensation claim. The District is required to fund an escrow account totaling $2.0 million,
pattern of sharing of benefit costs between employer and plan members to that point. The actuarial methods and assumptions which is held as security in the unlikely event the District fails to meet its required obligations. The escrow account is not
used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the drawn upon for the deductible payments.
actuarial assets, consistent with a long-term perspective of the calculations.
In fiscal year 2009, the District accrued $927,633 for workers compensation claims liabilities, which include anticipated future
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the expenses on open compensation claims based on estimates provided by the Districts workers compensation carrier. Changes
probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and in the Districts claims liabilities for the year ended June 30, 2009 were as follows:
the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions
Claims Liability Claims Incurred
of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are at Beginning During the Period, and Claim Claims Liability
made about the future. The schedule of funding progress below presents information about whether the actuarial value of plan Fiscal Year of Period Changes in Estimates Payments at End of Period
assets is increasing or decreasing over time relative to the actuarial accrued liabilities for the benefits. FY 2008 $ 87,790 1,835,501 (576,992) 1,346,298
FY 2009 $ 1,346,298 981,915 (1,205,041) 1,123,172
Development of Annual Required Contribution (ARC) and Annual net OPEB Liability Cost
Actuarial Unfunded UAAL as a % Amortization Annual Imputed

12. Lease Revenues

Valuation Actuarial Covered of Covered Normal of Accrued Required Retiree Health NET OPEB
Date Accrued Liab Payroll Payroll Cost Liab Discount Contribution Ins Payment Liability
7/1/08 67,828,688 43,202,534 157% 2,408,833 3,984,792 287,714 6,681,339 2,156,000 4,525,339
A substantial portion of the Districts land and water and some of its facilities, including marine terminal facilities and office
and commercial space, are leased to tenants. The Port Act prohibits transfer of land ownership to the lessee and the leases are
10. Employees Deferred Compensation Plan accounted for as operating leases. The majority of lease agreements are not cancelable and permit the District to periodically
adjust rents. In addition, many of these leases are secured by letters of credit, which totaled approximately $2.3 million at June
The District offers its employees a deferred compensation plan created in accordance with Internal Revenue Code (IRC)
30, 2009. In the normal course of operations, it is expected that all significant expiring leases will be renewed or replaced by
Section 457. The plan, available to District employees who are eligible for benefits, permits them to defer a portion of their
similar agreements.
salary until future years. The District, at its discretion, can make employer contributions to the Plan.
The District leases its land and facilities on both a fixed (i.e., flat) and variable (i.e., percentage) basis. Percentage rentals
The deferred compensation is not available to employees until termination, retirement, total disability, death, or unforeseeable
are received on the basis of percentages of sales and are protected by stipulated minimums. Such percentage rentals totaled
emergency. Employees may borrow from their account but must repay the borrowed amount with interest.
approximately $49.7 million in 2009 and $53.9 million in 2008. Both numbers exclude the minimum annual guarantees for
The Plan is administered by the District and contracted to an unrelated financial institution. Under the terms of an IRC the marine terminal facilities. Rentals received under flat rate leases, including marine terminal facilities, totaled approximately
Section 457 deferred compensation plan, all deferred compensation and income attributable to the investment of the deferred $35.8 million in 2009 and $35.2 million in 2008.
compensation amounts held by the financial institution, until paid or made available to the employees or beneficiaries, are held
Stipulated minimum rents under non-cancelable operating leases having initial or remaining terms of more than one year are
in trust for employees.
as follows:
As such, employee assets held in IRC Section 457 plans are not the property of the District and are not subject to the claims of Year ending June 30:
the Districts general creditors. In accordance with Governmental Accounting Standards Board Statement No. 32, Accounting 2010 $ 60,669,648
and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, which the District has 2011 59,981,427
implemented effective July 1, 1998, employee assets are not reflected in the Districts basic financial statements. 2012 59,608,744
2013 59,354,060
2014 58,458,279
Thereafter 1,815,993,925
11. Risk Management Total $2,114,066,083
The District maintains a comprehensive Risk Management Program, which includes risk transfer, loss prevention, loss control, Future rents were determined based on minimum rents stipulated under the leases up to the lease expiration date assuming
and claims administration. The District purchases excess liability, police professional liability, public officials liability, workers that options to extend, for some Marine Terminal tenants, will be exercised. However, these rents may increase or decrease
compensation liability, employment practices liability, property insurance, fiduciary liability, crime/public employee dishonesty, based on the periodic lease rental reviews, at which time new rents may be established.
marine protection and indemnity, and automobile liability, as well as other miscellaneous insurance coverages. The Districts
coverages include a variety of self-insured retentions or deductibles. The Districts self-insured retentions or deductibles as of The amounts in the above table are net of the rent credits for One Park Boulevard (OPB) dba Hilton San Diego Bayfront
June 30, 2009, were as follows: Hotel. The 66-year lease commenced January 1, 2006; OPB is obligated to pay the District the greater of minimum rents
versus percentage rents on a monthly basis. The District granted OPB rent credits of up to 60% of rent after construction and
Self-Insured Retentions/Deductibles 100% of rent during 34 months of construction. Rent credits during construction totaled $8.3 million. The minimum annual
(as of June 30, 2009) rent to the District after the hotels second lease year is $4.5 million before rent credits. The District will retain 40% of the
total rent paid until OPB receives rent credits totaling $46.5 million or when the rent credit expires on December 31, 2016.
Coverage Self-insured retention/deductible The District will receive an increase in percentage rental rates if hotel revenues exceed the projected lease revenues. OPB also
Excess liability $1,000,000 leased 894 parking spaces in the adjacent District-owned Convention Center Hotel Public Parking facility.
Police professional liability 500,000
Public officials liability 500,000
Workers compensation 500,000
Employment practices liability 250,000 13. Lease Commitments
Property insurance 100,000
Fiduciary liability 25,000 (a) Administration Building Parking Lot
Crime/public employee dishonesty 10,000 The District leases the northeast portion of the property the District uses for its administration building parking lot from
Marine protection and indemnity 5,000
Automobile Liability n/a CalTrans, the property owner since 1984. The most recent lease expired on August 31, 2006. Until a new agreement
is reached, the District is following the terms of the prior lease and making monthly payments of $1,347 which totals
The District does not purchase earthquake insurance. A reserve account was established July 1, 2008, and $300,000 is set aside $16,164 annually.
each fiscal year for the exclusive purpose of covering losses that may occur as the result of an earthquake. The District also
plans to rely on federal and state resources to pay for earthquake related losses.

48 49
Notes to Basic Financial Statements Notes to Basic Financial Statements
June 30, 2009 June 30, 2009
(b) San Diego County Regional Airport Authority Employee Parking and Visitor Lot operations. These enforcement efforts frequently include discussions with the District and consideration of adding
The SDCRAA is sub-leasing a portion of the former General Dynamics (GD) leasehold to the District for use as an the District to the permits, as a responsible party, regulating the operations and cleanup obligations.
employee and visitor parking lot. The lease is for 66 years commencing January 1, 2003. The rent is based on the same
square foot rental rate determined for the entire former GD property leased from the District to the SDCRAA. Rental In addition, the Districts leases and operating agreements with these tenants typically include provisions requiring
increases are determined by appraisal, review and negotiation. The District and SDCRAA agreed that the monthly rent the tenant/operators to indemnify the District for any damage to property or losses to the District as a result of
would be $12,074 plus a $381 cost recovery for electricity for a total monthly rent of $12,455 or $149,460 annually. the tenants operations. Also, the leases and operating agreements typically require the District to be named as an
additional insured under certain insurance policies of the tenant/operators. According to the Districts legal counsel,
(c) Hybrid Vehicles when these types of claims are asserted against the District, the District not only vigorously opposes them but also
In fiscal year 2008, the District entered into a lease agreement with Enterprise Fleet Management to lease 10 hybrid vigorously seeks contribution and/or indemnity from all tenant/operators or other responsible parties involved,
vehicles for use by District staff. The lease term is for five years and the annual amount to be paid each year is $59,233 including the tenant/operators and any applicable insurers. The Districts legal counsel can neither predict the net
for a total of $296,165 over five years. exposure to the District with respect to these matters nor the probability or remoteness of any outcome. However, the
District believes that the recoveries discussed above will be sufficient to reduce the Districts financial responsibility
Future rent payments under the above operating lease agreements as of June 30, 2009 are as follows: for any pollution remediation known as of the date of the financial statements to amounts not considered to be
material to the financial statements of the District. Therefore, no liability has been recorded in the Districts basic
Year Ending June 30: financial statements as of and for the year ended June 30, 2009, for any of these claims.
2010 $ 224,857
2011 224,857 (a) Contamination at NASSCO and Southwest Marine leasehold vicinity: On February 19, 2004, the California
2012 224,857 Regional Water Quality Control Board, San Diego Region (RWQCB), issued two Investigation Orders (Orders)
2013 165,624 both naming the District, among others, as a party required to submit a technical report showing cause why it
2014 165,624
should not be named as a discharger in a Cleanup and Abatement Order (CAO) for the cleanup of contaminated
Thereafter 678,798
Total $ 1,684,617 sediments that allegedly exist in the vicinity of the NASSCO and Southwest Marine leaseholds (the Site). The
Orders state that the District is named in the Orders because the District is the owner of the lands occupied by
(d) Phone and Network Equipment and Integration Services facilities, including NASSCO and Southwest Marine, which allegedly discharged or are suspected of discharging
In fiscal year 2009, the District entered into the Master Tax-Exempt Lease/Purchase Agreement, with Key Government waste to San Diego Bay. The Orders further allege that the District controls decisions regarding the sites and types
Finance, Inc. to lease phone and network equipment and integration services. The network equipment installation is of facilities, which occupy lands adjacent to San Diego Bay through leases for the use of these lands and that the
expected to be completed and placed in service by March 2010. In accordance with Statement of Financial Accounting District has the ability under its lease agreement with facility operators to impose controls, which could prevent or
Standard No. 13 (FAS 13), this lease met the criteria for a capital lease. The lease term is for five years and the annual reduce waste discharges to San Diego Bay. For these reasons, the RWQCB required the District to show cause why
amount to be paid each year is $592,767.50 for a total of $2,963,837.50, including principal and interest. it should not be named in the CAOs that will likely be issued for the cleanup of the contaminated sediments. The
Districts report to the RWQCB was filed with the RWQCB on July 15, 2004. A tentative CAO was issued in 2005.
In April 2008, a revised tentative CAO and Technical Report to support the CAO were issued by the RWQCB.
14. Commitments and Contingencies According to the tentative CAO, the Site, which exists on state tidelands over which the District is the statutorily-
mandated trustee, has been contaminated with a variety of pollutants over many years by shipbuilding operations, a
(a) Commitments power plant, City storm drains and Navy shipyard operations. The cleanup of the sediments was estimated by the
As of June 30, 2009, the District had significant commitments for capital expenditures and other matters as described below: RWQCB to exceed $120 million, although the named dischargers dispute the RWQCBs findings as to the nature,
i. Capital Development Program (CDP): Beginning in fiscal year 1992, the Board of Port Commissioners approved a extent, and sources of the contamination as well as the scope of the appropriate remedy. The District was not named
five year CDP for the development of certain capital outlay projects located either on the San Diego Bay and Imperial as a discharger in the tentative CAO. However, the District was named as a secondarily liable party in the event
Beach tidelands or on the uplands adjacent to these tidelands. Each project in the plan is reviewed and authorized by the dischargers fail to comply with the finally-adopted CAO. In mid-October 2009, the City of San Diego filed a
the Board of Port Commissioners. The CDP is updated as conditions and circumstances warrant but no less than lawsuit in federal court against the named dischargers and the District seeking contribution for cleanup costs.
annually. The Fiscal Year 2009-2013 CDP was amended and approved by the Board of Port Commissioners on July
7, 2009. As of June 30, 2009, the remaining cost to complete all approved CDP projects was approximately $100.7 The District denies liability and intends to vigorously contest any alleged liability or claims. Because the final CAO
million. has not yet been issued and cleanup levels have not been established for the remediation of these sediments and
based on presently available facts, the District is unable at this time to estimate the likelihood of an unfavorable
In conjunction with the funding requirements for the CDP and for the costs of certain other projects, funds have outcome or the range of potential costs.
been designated for the unpaid contractual portion of capital projects that are currently in progress, as well as for the
contractual costs of upgrading certain major equipment and facilities. These commitments totaled $22.0 million on (b) Former Campbell Shipyard: This matter involves industrial contamination from shipyard activities, which impacted
June 30, 2009 and are classified in the accompanying balance sheet as Cash and Investments Designated for Specific the land, groundwater and sediments at the site. In 1995, the RWQCB issued a Cleanup and Abatement Order
Capital Projects and Commitments. (CAO 95-21) that named Campbell Industries, a former District tenant, and its parent, Marine Construction and
Design Company (MARCO). The cleanup has been completed and the District is now implementing the long-term
ii. Fire, Police, Emergency Medical and Lifeguard Services: The District enters into contracts with the five member Monitoring and Reporting Program at an estimated cost of approximately $495,000. This amount is based on bids
cities for annual fire, police, emergency medical, and lifeguard services that are provided by the cities for the benefit received from outside consultants to perform the monitoring obligations, and includes both fiscal years 2009/2010
of the District. The combined cost for these services was $5.4 million for fiscal year 2009. In addition, the District and 2010/2011. Costs for future fiscal years are not yet estimated.
has a contract with the City of Imperial Beach for Tidelands Maintenance Services at a cost of $0.8 million for fiscal
year 2009. (c) Shelter Island Yacht Basin (SIYB): In 1996, the Shelter Island Yacht Basin (SIYB) portion of San Diego Bay was
placed on the Clean Water Act section 303(d) list of impaired waters due to elevated levels of dissolved copper in
(b) Contingencies the water column. A Total Maximum Daily Load (TMDL) Study was conducted for the site and found that the
As of June 30, 2009, the District was subject to contingencies arising from legal and environmental matters as described below: majority of the copper was attributed to boat hull paint. The TMDL requires a 76% overall reduction of residual
i. Environmental Matters: The District owns, in public trust, tidelands and submerged lands adjacent to San Diego copper loading to SIYB over a 17-year staged compliance schedule period. The TMDL identified the District, the
Bay. Most of that land is leased to operators of facilities located on the properties. The operations of many of those SIYB marina owners/operators, persons owning boats moored in SIYB, and SIYB underwater hull cleaners as
facilities have generated waste discharges either on the land adjacent to San Diego Bay or into the waters of the bay, accountable for the discharges of copper from boat hull antifouling paints to the waters of the SIYB.
which threaten the bay environment. Administrative agencies such as the San Diego County Department of Health
Services and the California Regional Water Quality Control Board are increasing enforcement efforts directed at The District has been actively involved in the search for alternative hull coatings, since this level of reduction can
these operations to regulate ongoing activities and to clean up alleged environmental damage from past facility most likely be achieved only by using alternative paints. To this end, the USEPA has funded the District to conduct

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Notes to Basic Financial Statements Notes to Basic Financial Statements
June 30, 2009 June 30, 2009
a project to identify these alternative paints. In 2008, the District funded a second study, through the San Diego interest earnings from January 25, 2006 to June 30, 2009 totaled $1.7 million for a total cumulative balance of
State University, to identify other possible sources of alternative paints. The District also funded a third project in $13.3 million. Should this amount be insufficient for demolition and abatement, the District and SDCRAA
2009 to test alternative paints not evaluated in the USEPA funded project. At the same time, the District and the agree to share the net remaining demolition and abatement costs equally. As of June 30, 2009, the Port has
tenants of the SIYB have been cooperatively developing the SIYB Dissolved Copper TMDL Implementation Plan restricted $23.0 million in cash assets for the TDY site demolition, which exceeds the amount of the initial award
approach to obtain TMDL compliance and describing the Best Management Practices that may be implemented in plus accrued interest. In accordance with GASB 49, the District capitalizes the demolition and abatement costs
order to achieve a reduction. At this time, the District is unable to estimate the likely outcome of these actions or as these costs are incurred.
the range of potential costs.

(d) Lockheed Tow Basin: Tenant operations on this site in the 1950s and 1960s included the testing of hull designs and ii. The District has been named as a defendant in a lawsuit filed by property owner SLPR, LLC in February 2006. The
the hydrodynamic testing of aerospace prototypes for underwater performance in a large concrete pool, known as the complaint alleges that dredging in the San Diego Bay performed by the District and the Army Corps of Engineers
tow basin. The tow basin pool and the former building on the site that housed the tow basin were coated with paint compromised the integrity of the rip-rap barrier and pool wall located on the plaintiff s Coronado bay front
that contained Polycholorinated Biphenyls (PCBs). Regulatory oversight agencies believe that over the decades of property. Two neighboring property owners joined the lawsuit in late 2007, making similar claims. Each property
the tow basins existence, PCBs from the paint washed into the storm drains, which drained into the San Diego Bay, owner is claiming damages of $60,000 to $1.0 million, depending on costs to repair alleged damage to their property.
causing potential sediment contamination. This potential contamination requires investigation, assessment, and The District denies liability and intends to vigorously contest any liability or claims. A trial date has been set in June
remedial action. The District filed a cost recovery lawsuit on May 11, 2005, against the former operators at the site, 2010. Based on presently available facts at this stage in the litigation, the District is unable at this time to estimate
General Dynamics Corporation and Lockheed Martin Corporation, for the investigation and ultimate remediation the likelihood of an unfavorable outcome or the range of potential loss.
at the site. The District may bear liability only on the basis of its landowner status. An interim litigation cost-
sharing agreement has been executed among the District, General Dynamics and Lockheed Martin to each share iii. On July 19, 2008, the Harbor Police Department was involved in a shooting incident that resulted in the death of a
one-third of the current environmental investigation costs. The Districts insurers are currently responsible for swimmer during a confrontation with officers. A lawsuit was filed by the decedents parents demanding $20 million
the Districts entire portion of these costs and any other future investigation costs for which the District may be dollars and named as defendants the District and the Harbor Police officer who shot the decedent. Several months
responsible. Site investigation and analysis are continuing. The current cost estimate of approximately $1,200,000 ago, the plaintiff parents filed a motion to add the other Harbor Police officer involved in the shooting as a defendant
includes investigation, assessment, removal of contaminated sediment and possible post-remedial monitoring. These as well as additional claims against all defendants. There has been no ruling on this motion. The parties have
costs should be directly borne by the Districts insurance carriers. Therefore, no liability has been recorded in the commenced discovery which includes document production, depositions, and the designation of expert witnesses.
Districts basic financial statements as of and for the year ended June 30, 2009. At this time it remains difficult to ascertain whether a resolution of this action will have a material effect on the basic
financial position of the District.

(e) L Ditch Project Chula Vista: This site is an 8-acre regulatory wetland in the midst of a proposed residential iv. On July 12, 2005, Traylor Brothers, Inc. was awarded a contract to construct an engineered cap for the purpose
commercial development area. Regulatory oversight agencies have required the removal of chromium and other of complying with Regional Water Quality Control Board Clean up and Abatement Order No. 95-21 (Order)
metal contamination in the unlined, tidally influenced drainage ditch known as the L Ditch. The contamination as mentioned in Note 15 i (b) above. The Order requires the Port to mitigate specific constituents of concern in
drained into the ditch from the adjacent District leasehold, which was relinquished to the District by a former the sediments of the 9.2-acre former Campbell waterside leasehold. The scope of work for the project includes
tenant in 2001. The ditch is considered a wetland area which will be destroyed as a part of the remedial action. The demolition and removal of debris and shipways, repair and reconstruction of a portion of an existing seawall,
wetland loss will be mitigated elsewhere as a part of the Chula Vista Bayfront development. The District has entered dredging near the Tenth Avenue Marine Terminal to maintain navigation water depth, construction of a 7.7 acre
into an agreement with the former tenant of the adjacent property which drains into the ditch to pay for half of the engineered cap, construction of 1.5 acres of eelgrass habitat cap, construction of a rock berm around the habitat
cost to remediate the ditch, and the entire cost of the wetlands mitigation and new drainage requirements for the cap, construction of rock revetment behind the seawall for seismic upgrade of the seawall, and retrofitting of the
upgradient District property. The estimated cost for fiscal year 2009 is $4,072,110.81. Costs for future years are not existing mole pier. Traylor Brothers bid of approximately $16.0 million, which also included some dredging at the
yet estimated. In accordance with GASB 49, the District capitalizes the costs as these costs are incurred. National City Marine Terminal, was the low bid for this public works project. Approved change orders to date total
approximately $2.0 million bringing the revised contract amount to approximately $18.0 million.
(f ) Teledyne Ryan Industries (TDY) Project: On November 18, 2003, the SDCRAA filed suit in San Diego Superior
Court against the District. The lawsuit challenged the adequacy of the Districts environmental review under the Traylor Brothers performed the dredging and capping operation and completed all contract work as of November
California Environmental Quality Act (CEQA) for the proposed public parking project on the former Teledyne 30, 2007. However, on or about June 10, 2008, Traylor Brothers filed and served its lawsuit against the District for
Ryan (TDY Industries) property. The litigation grew to encompass other issues around the separation of the San additional work performed on the project. Traylor Brothers claims that engineering specifications for the design
Diego International Airport (SDIA) from the District. A settlement agreement, which became effective June 1, and building of the remediation cap were vague and incorrect. The firm contends that bid documents were also
2004, resolved all of the issues raised in the litigation. The following major terms of the settlement agreement are not clear and that the work could not be performed within the engineered specifications presented. The District
still ongoing: has filed initial responses. In the meantime, a series of mediation sessions were conducted in an effort to resolve the
matter without extensive litigation. The District intends to vigorously defend this matter. Traylor Brothers total
TDY Property Lease Agreement: The District will lease the TDY Industries site to SDCRAA for $3.0 million claim to date exceeds $13 Million, plus possible accrued interest. The District may have some exposure, but the
per year commencing January 1, 2005 and ending December 31, 2068. amount is unpredictable since expert analysis is preliminary. The Districts defense has recently been accepted by an
insurance carrier on an additional insured endorsement. The insurer (USF&G) has filed an action for declaratory
TDY Property Environmental Clean-up Costs: On March 23, 2007, the District settled federal litigation seeking relief contending that it has no obligations to defend and indemnify the District in this matter. The District has
to recover clean-up costs and environmental damages from TDY Industries. Pursuant to the settlement, TDY filed a cross complaint against the insurer for bad faith and the matter is currently scheduled for conferences in the
Industries must pay all costs of environmental clean-up and remediation of the site. United States District Court.
TDY Property Demolition and Building Abatement Costs: The District received a judgment on special verdict v. The District has certified claims against it and is named as a defendant in certain other legal actions arising from
and entry of judgment on March 29, 2004 in Superior Court in the amount of $21.3 million (verdict). Of this transactions conducted in the ordinary course of business. The Districts legal counsel has indicated that it is not
amount, $9.8 million represents an award of damages to the District for demolition of the existing improvements currently possible to estimate the amount or range of potential loss to the District related to these cases. However,
and abatement costs on the TDY Industries site. The District agreed to contribute this sum, plus accrued interest, the District does not believe that the resolution of these actions will have a material effect on the basic financial
for the demolition and abatement of the improvements. The accrued interest on $9.8 million from the date of position of the District. Therefore, no liability has been recorded in the Districts basic financial statements as of and
the special verdict through January 25, 2006, which was the date the funds were received, was $1.8 million. This for the year ended June 30, 2009 for these claims.
accrued interest amount was included in the verdict and was received from TDY Industries. Since then, the
District has continued to calculate and accrue interest earnings on the funds. Interest earnings are calculated
using the Districts yield to maturity on its investment portfolio and are compounded monthly. The additional

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Stephen P. Robert Dukie Scott Peters Michael B. Bixler Lee Burdick Mike Najera Robert Rocky
Cushman Valderrama Spane

Commissioners Principal John Helmer Vilma Sevilla,

Administrators Director, Land Use Director, Audit, Risk
Stephen P. Cushman Planning Management & Safety
Chair Charles D. Wurster
San Diego President/CEO Steve Kirkpatrick Brian Stup
Chief Engineer Director, Engineering/
Robert Dukie Duane E. Bennett Construction
Valderrama Port Attorney Mary Ann Liner
Vice Chair District Clerk Dave Thompson
National City Ellen Cory Born Director, Procurement
Executive Vice President Irene McCormack Services
Scott Peters Assistant Vice President,
Secretary Wayne Darbeau Government Relations & Rita A. Vandergaw
San Diego Vice President, Communications Director, Marketing
Michael B. Bixler E. David Merk Karen Weymann
Imperial Beach Dirk Mathiasen Director, Environmental Director, Real Estate
Vice President, Services
Lee Burdick Operations Yvonne Wise
San Diego James R. Popham Director, Public Art
Jeffrey McEntee Assistant Vice President,
Mike Najera Chief Financial Officer/ Industry & Trade Relations
Chula Vista Treasurer Member Cities
Karen G. Porteous
Robert Rocky Spane Brandy Christian Assistant Vice President, Cheryl Cox
Coronado Director, Strategic Administrative Services Mayor of Chula Vista
Management Services
Ronald Powell Casey Tanaka
Randa Coniglio Director, Communications Mayor of Coronado
Assistant Vice President, & Community Services
Operations Jim Janney
Jeanette Sales Mayor of Imperial Beach
Pedro Cruz Director, Financial Services
Director, General Services Ron Morrison
Kirk Sanfilippo Mayor of National City
Leonard Fabor Chief of Harbor Police
Director, Maritime Jerry Sanders
Operations Robert Schuck Mayor of San Diego
Director, Human Resources
Paul Fanfera
Assistant Vice President, Adolfo Segura
Business & Technology Director, Information

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