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					                                                                                                  AGENDA



                              PORT OF OAKLAND
                                                                                       JAMES W. HEAD
OMAR BENJAMIN                                                                                President
Executive Director            BOARD OF PORT COMMISSIONERS                          PAMELA CALLOWAY
                               530 Water Street  Oakland, California 94607          First Vice-President
DAVID L. ALEXANDER                                                                   GILDA GONZALES
Port Attorney                           Telephone: (510) 627-1100                  Second Vice-President
                                        Facsimile: (510) 451-5914                 MARGARET GORDON
                                            TDD/TTY – Dial 711                         Commissioner
ARNEL ATIENZA
Port Auditor                                                                         MICHAEL LIGHTY
                                   E-Mail:board@portoakland.com                         Commissioner
                             Website:   www.portofoakland.com                             VICTOR UNO
JOHN T. BETTERTON
                                                                                          Commissioner
Secretary of the Board
                                                                                          ALAN S. YEE
                                             AGENDA                                       Commissioner




                     Special Meeting of the Board of Port Commissioners
                              Thursday June 30, 2011 – 2:00 p.m.
                                        Board Room – 2nd Floor

ROLL CALL

           1st Vice President Calloway, 2nd Vice-President Gonzales, Commissioner Gordon,
           Commissioner Lighty, Commissioner Uno, Commissioner Yee and
           President Head.

1. CLOSED SESSION (2:00 p.m.)

   1.1     CONFERENCE WITH LEGAL COUNSEL - ANTICIPATED LITIGATION. Significant
           exposure to litigation pursuant to subdivision (b) of Section 54956.9: 6 matter(s)

   1.2     CONFERENCE WITH REAL PROPERTY NEGOTIATOR - As provided under California
           Government Code Section 54956.8:

                         Property:       Former Oakland Army Base and Adjacent Properties
               Negotiating Parties:      Port of Oakland, AMB Properties and California Capital Group
               Agency Negotiator:        Director of Maritime, James Kwon
                Under Negotiation:       Price and Terms of Payment

   1.3    CONFERENCE WITH LABOR NEGOTIATORS - Pursuant to Subdivision (f) of Section
          54957.6.

                         Employee Organizations: International Brotherhood of Electrical Workers
                                                 (IBEW Local 1245), International Federation of
                                                 Professional and Technical Engineers (IFPTE
                                                 Local 21), Service Employees International
                                                 Union (SEIU Local 1021), and Western Council
                                                 of Engineers (WCE)




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  1.4   PUBLIC EMPLOYEE PERFORMANCE EVALUATION

        Title: Executive Director, Port Attorney, Port Auditor, Board Secretary

ROLL CALL/OPEN SESSION (approximately 4:00 p.m.)

        1st Vice President Calloway, 2nd Vice-President Gonzales, Commissioner Gordon,
        Commissioner Lighty, Commissioner Uno, Commissioner Yee and
        President Head.

CLOSED SESSION REPORT

        The Port Attorney or Board Secretary will report on any final actions taken in Closed
        Session.

2. MAJOR PROJECTS

        This segment of the meeting is reserved for action and discussions regarding the status
        of Major Projects and issues of special importance.

  2.1   Authorization to Enter into a Pre-Development Agreement with Prologis, Inc., California
        Capital and Investment Group, California Capital Group, Industrial Railways Company
        and Peter Stone for the long term lease and development of the former Oakland Army
        Base. (Maritime)

  2.2   Authorization for the Executive Director to Enter into a Cost Sharing Agreement with the
        Oakland Redevelopment Agency and the City of Oakland for development of the former
        Oakland Army Base. (Maritime)

3. BUDGET & FINANCE

        This segment of the meeting is reserved for action or discussion regarding the status of
        Budget and Finance issues.

  3.1   Approval of the Annual Operating and Capital Budgets for Fiscal Year
        Ending June 30, 2012

4. STRATEGY & POLICY

        This segment of the meeting is reserved for action or discussion on Strategy and Policy
        Issues.

  4.1   Authorizing the Port of Oakland to Implement a Vesting Schedule for Employees in Unit
        C (Western Council of Engineers); I, K, L (Local 21); H (Senior Management); J
        (Professionals/Attorneys) and M (Labor Relations Staff) hired on or after the effective
        date of the resolution (Administration)




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5. CONSENT ITEMS

        Action by the Board under “Consent Items” means that all matters listed below have
        been summarized and will be adopted by one motion and appropriate vote. Consent
        Items may be removed for further discussion by the Board at the request of any member
        of the Board.

  5.1   Approval of the Minutes of the Regular Meeting of June 16, 2011 (Board Secretary)

6. REMAINING ACTION ITEMS

        Remaining Action Items are items not previously addressed in this Agenda that may
        require staff presentation and/or discussion and information prior to action by the Board.

  6.1   Increase FY 2010-11 Spending Authorization for Bus Fleet Maintenance Services with
        Penske Truck Leasing Company; and Authorize Extension of the Fleet Maintenance
        Service Agreements with Penske Truck Leasing Company., L.P.; and with Kelly’s Truck
        Repair for an additional six months (Aviation)

7. UPDATES/ANNOUNCEMENTS

        The President and/ or Executive Director will report on noteworthy events occurring since
        the last Board Meeting.

8. SCHEDULING

        This segment of the meeting is reserved for scheduling items for future Agendas and/or
        scheduling Special Meetings.

OPEN FORUM

        The Board will receive public comment on non-agenda items during this time. Please fill
        out a speaker card and present it to the Secretary of the Board.

ADJOURNMENT

        The next Regular Meeting of the Board will be held on July 7, 2011 at 2:00 p.m. in the
        Board Room.




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                                        PUBLIC PARTICIPATION

Disability Related Modifications
Any person who requires a disability-related modification or accommodation, including auxiliary aids or
services, in order to participate in the meeting, may submit a written request, electronic request, or telephone
request [via the California Relay Service (telephone) for the hearing impaired at (800) 735-2922], to the
Secretary of the Board no later than five working days prior to the scheduled meeting date.
                                    John Betterton, Secretary of the Board
                                    530 Water Street, Oakland, CA 94607
                                        jbetterton@portoakland.com
                                                (510) 627-1696
Language & Interpretive Services
As a grantee of federal aid grant funds from the US Department of Transportation, the Port is responsible for
ensuring equal access to its programs, services, and benefits. To request bilingual interpreters or materials in
alternate formats, please contact the Director of Social Responsibility no later than five working days prior to
the scheduled meeting date.
                             Diann Castleberry, Director of Social Responsibility
                                   530 Water Street, Oakland, CA 94607
                                      dcastleberry@portoakland.com
                                                (510) 627-1302
Scented Products
Please refrain from wearing scented products to this meeting so attendees who experience chemical sensitivities
may attend.
To Speak on an Agenda Item
You may speak on any item appearing on the Agenda. Please fill out a Speaker’s Card and give it to the Board
Secretary before the start of the meeting or immediately after conclusion of Closed Session. Cards received
after the start of the meeting will be treated as a single request to speak in Open Forum. All speakers will be
allotted a minimum of one minute.
Agenda & Related Materials
Should you have questions or concerns regarding this Agenda, or wish to review any of the Agenda Related
Materials, please contact the Board Secretary, John Betterton, at (510) 627-1696, or visit our web page at
www.portofoakland.com
To receive Port Agendas and Agenda Related Materials by email, please email your request to
jbetterton@portoakland.com




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                                        MAJOR PROJECTS Tab 2



                   MAJOR PROJECTS
This segment of the meeting is reserved for action and
discussions regarding the status of Major Projects and
issues of special importance.




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                                                            MAJOR PROJECTS Tab 2.1


                                              BOARD MTG. DATE: 06/30/2011


                          AGENDA REPORT
TITLE:         Authorization to Enter into a Pre-Development Agreement with
               Prologis, Inc., California Capital and Investment Group, California
               Capital Group, Industrial Railways Company and Peter Stone for
               the long term lease and development of the former Oakland Army
               Base.

AMOUNT:        $940,000

PARTIES INVOLVED:

Corporate Name/Principal                                        Location
Prologis, Inc.
                                                                San Francisco, CA;
(formerly AMB Property Corporation) /
                                                                Denver, CO
Mark Hansen, Dan Letter
California Capital and Investment Group;
California Capital Group /                                      Oakland, CA
Phil Tagami, Mark McClure, Damian Fink, Len Epstein
Industrial Railways Company /
                                                                Pinole, CA
Chris Stotka
Peter Stone                                                     Burlingame, CA

TYPE OF ACTION:                    Resolution

SUBMITTED BY:                      James Kwon, Director of Maritime

APPROVED BY:                       Omar Benjamin, Executive Director

SUMMARY

This agenda report considers negotiating an agreement which would offer long
term operating rights to the Developer in exchange for their capital investment in
the OAB redevelopment project. The project is not yet fully funded and the Port,
Oakland Redevelopment Agency (ORA) and Developer must attract roughly
$200 million in additional funds in order to achieve the development goals.

Authorization of this contract would obligate the Port to negotiate in good faith the
terms and conditions of a long term lease with the development team listed
above. The objective of such negotiations would be to reach agreement on the
form of a lease. Upon successful completion of negotiations, the Port would then
enter into a Lease Disposition and Development Agreement which would set
forth the conditions required to be met prior to the Developer being authorized to
enter into the lease, such as permits, financing, etc.




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                                              BOARD MTG. DATE: 06/30/2011

Also on the June 30 agenda is a report on a Cost Sharing Agreement between
the Port, ORA and the City of Oakland. This is a separate but related item
supporting the OAB development.


FACTUAL BACKGROUND

Since the Oakland Army Base closed in 1999, the Port has worked towards the
redevelopment of the property into seaport supporting uses. The base was split
between the Port and the ORA. The envisioned Port development would take
place on a 168 acre Port parcel, and would consist of:
        an intermodal rail container terminal;
        a grade separation of 7th Street and Maritime Streets;
        improved rail connectivity for Port marine terminals;
        warehousing for Port-oriented cargo services; and
        truck parking for Port truck drivers.

The primary objective of the development is to attract new discretionary
containerized cargo that comes from or goes to locations outside of the Northern
California region by rail. The Port of Oakland has historically been an export
seaport, with trans-pacific vessels leaving Asia, arriving first in Southern
California, then moving north to Oakland and then departing for Asia. The
development is intended to increase commerce by capitalizing on the strong
export opportunities as a “last port of call”, while encouraging new “first port of
call” services for both Northern California importers and inland importers making
a rail connection at the Port.

Two Port development projects (OHIT and the 7th Street Grade Separation
Project) were selected by the California Transportation Commission (CTC) for up
to $242 million from the 2006 Prop 1B Trade Corridor Improvement Fund (TCIF).
The Port must raise $253 million to access these TCIF funds. In Baseline
Agreements executed with CTC for the funds, the Port committed to commence
construction in November 2011. Port staff plans to seek amendments to these
agreements to (i) reflect a later start date, and (ii) acknowledge the City’s role in
the project. The TCIF program requires construction to commence by December
2013.    The TCIF grant will only fund construction phase activity on a
reimbursement basis.

On April 29th, 2011, the Board selected the AMB Property Corporation, California
Capital Group and other parties listed above through a competitive process to
work with the Port on the OAB redevelopment. This private development team
has been in discussions with the Port about this project for three years, including
exclusive negotiations from August 2009 through October 2010.




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                                            BOARD MTG. DATE: 06/30/2011

On June 3, 2011, AMB Property Corporation announced it had completed a
merger with Prologis, Inc., creating the largest industrial real estate company in
the world. The combined company operates in 22 countries and controls 600
million square feet of industrial real estate. In the San Francisco Bay Area, the
company has an estimated 18.7 million square feet of property, which is
approximately 5% of the total industrial real estate in the region. The combined
company now operates as Prologis, Inc.

The Oakland Redevelopment Agency (ORA) seeks a similar warehouse
development on its Central and East Gateways portions of the OAB. ORA is
currently in exclusive negotiations with the Prologis team for its OAB
devleopment. ORA and Port staff are working together on the development
program and hope to execute a cost sharing agreement to further share certain
redevelopment funds and TCIF monies.

ANALYSIS

The proposed Pre-Development Agreement commits the Port to negotiate
exclusively and in good faith with the Prologis team on all transaction documents
necessary for the lease and development of the Port development property.
These documents include a leasehold disposition and development agreement, a
ground lease agreement, and a community benefits agreement. The proposed
Pre-Development Agreement includes a performance schedule, committing both
parties to agree on a development plan by September 30, 2011 a financial plan
by October 30, 2011, and the transaction documents, including a community
benefits agreement by January 6, 2012.

The Pre-Development Agreement is intended to last until January 6, 2012. If the
Port and the Developer reach “substantial agreement” by that date but the Board
has not yet considered the Transaction Documents, then the Pre-Development
Agreement would be extended until the Board could consider the Transaction
Documents. Port staff has diligently pursued the marketplace for potential
development partners, and based on a review of the Port’s outreach efforts, the
Board identified the Prologis team as the best partner to continue working on this
development project. Port staff estimates that 6 months is sufficient to reach
agreement on the Transaction Documents and the milestone schedule will allow
the Board to track the progress throughout the term of this agreement.




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                                                BOARD MTG. DATE: 06/30/2011

STRATEGIC PLAN ALIGNMENT

Entering into this contract is consistent with the following goals and objectives of
the Port’s strategic plan:

STRATEGIC
 PRIORITY                                                           HOW THIS PROJECT
  AREAS               GOAL             OBJECTIVE                      IMPLEMENTS
                 Goal A: Create
Sustainable                                                This contract will help the Port move
                 Sustainable        2. Affirm Port
Economic and                                               forward with its TCIF projects by providing
                 Economic Growth    identity as a public
Business                                                   critical initial funds to advance the design,
                 For the Port and   enterprise
Development                                                planning and environmental work needed.
                 Beyond
                                    4. Pursue strategic
                                                           Partnering with the Prologis team will bring
                                    partnerships at all
                                                           an estimated $200 million in capital to the
                                    levels: local,
                                                           project, and keep this critical Port initiative
                                    regional, national,
                                                           moving forward.
                                    and international

BUDGET & FINANCIAL IMPACT

The negotiation and drafting of the transaction documents requires a significant
legal effort, as well as analytical support to the Port from various technical
advisors. The proposed FY2011-2012 capital needs assessment includes
$940,000 in M7.00912.01 for the Oakland Army Base real estate negotiations.

STAFFING IMPACT

It is not envisioned that this agreement will require significant staff support from
Port staff. The OAB redevelopment, however will take significant manpower,
though much of those resources are anticipated to be done by a private partner.

SUSTAINABILITY

While this contract itself will not have an impact on sustainability, the OAB
redevelopment is anticipated to be designed and built to a high standard of
environmental sensitivity and sustainability.

ENVIRONMENTAL

The proposal to authorize the Executive Director to enter into a pre-development
agreement for the long term lease and development of the former Oakland Army
Base was reviewed in accordance with the requirements of the California
Environmental Quality Act (CEQA), and the Port CEQA Guidelines. The general
rule in Section 15061(b)(3) of the CEQA Guidelines states that CEQA applies
only to activities that have a potential for causing a significant effect on the
environment. It can be seen with certainty that there is no possibility that
authorizing the Executive Director to enter into an agreement will result in a




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                                             BOARD MTG. DATE: 06/30/2011

physical change in the environment, and therefore this action is not a project
under CEQA. Staff will return to the Board with the final transaction documents
that will be negotiated with the selected master developer for the Board's
consideration and approval before they are executed.

The grade separation, rail and other projects envisioned to be part of the long
term lease and development of the OAB were included in the project description
analyzed by the Oakland Army Base Area Redevelopment Plan Final
Environmental Impact Report (“EIR”), which was certified on July 31, 2002, by
the City of Oakland, as the Lead Agency under CEQA. On September 17, 2002
(Resolution No. 02317), the Board, acting as a Responsible Agency under
CEQA, approved the Port’s reuse of the OAB as described in the EIR. The
project described by the EIR includes demolition, site preparation, remediation,
construction and similar activities to build a rail yard, the 7th Street grade
separation and related improvements on the OAB site, and cargo throughput
increases throughout the seaport, among other projects.

As additional information on these projects becomes available, staff will
determine whether further environmental review is required to address potential
changes in the project description, and such project changes may be brought to
the Board for approval of CEQA findings. Planning and feasibility studies,
including detailed design and engineering efforts needed to scope the
development, are statutorily exempt from CEQA under Section 15262 of the
CEQA Guidelines.

No further or additional environmental review or documentation is necessary in
order for the Board to take the action recommended in this Agenda Report.

MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)

This agenda report deals with the negotiation of a long term lease for the
development of the Oakland Army Base, so the Maritime and Aviation Project
Labor Agreement does not apply at this time. The future OAB redevelopment,
which has not yet been fully permitted and approved, is planned to be done in
accordance with the MAPLA.

OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

The negotiation of a contract is not subject to the OCIP.

GENERAL PLAN

This action relates to professional services and does not approve a specific
project. No conformity determination is required.




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                                           BOARD MTG. DATE: 06/30/2011

LIVING WAGE

Living wage requirements, in accordance with the Port’s Rules and Regulations
for the Implementation and Enforcement of the Port of Oakland Living Wage
Requirements (the “Living Wage Regulations”), do not apply because the
requested action is not an agreement, contract, lease, or request to provide
financial assistance within the meaning of the Living Wage Regulations.

OPTIONS

The Board can choose to:

      1. Grant the Executive Director the Authorization to Enter into a Pre-
         Development Agreement with Prologis, Inc., California Capital and
         Investment Group, California Capital Group, Industrial Railways
         Company and Peter Stone for the long term lease and development of
         the former Oakland Army Base;

      2. Not Authorize the Pre-Development Agreement.

RECOMMENDATION

Staff recommends that the Board grant the Executive Director the Authorization
to Enter into a Pre-Development Agreement with Prologis, Inc., California Capital
and Investment Group, California Capital Group, Industrial Railways Company
and Peter Stone for the long term lease and development of the former Oakland
Army Base.




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                                           BOARD MTG. DATE: 06/30/2011


                         AGENDA REPORT
TITLE:           Authorization for the Executive Director to Enter into a Cost
                 Sharing Agreement with the Oakland Redevelopment Agency
                 and the City of Oakland for development of the former
                 Oakland Army Base

AMOUNT:          $62,000,000 ORA TCIF Allocation
                 $32,000,000 ORA Funds towards OAB Project
                 $0 Port Financial Commitment

PARTIES INVOLVED:

              Corporate Name/Principal               Location
              Oakland Redevelopment                  Oakland, CA
              Agency
              City of Oakland                        Oakland, CA

TYPE OF ACTION:                   Resolution

SUBMITTED BY:                     James Kwon, Director of Maritime

APPROVED BY:                      Omar R. Benjamin, Executive Director

SUMMARY

The Oakland Redevelopment Agency (“ORA”) and the Port have been
collaborating on the development of the former Oakland Army Base (“OAB”) into
a new trade and logistics center with a new intermodal rail terminal including
grade separated access to the Joint Intermodal Terminal and the Outer Harbor
marine terminals, warehousing, truck parking and other uses supporting goods
movement through the Port. This agreement would codify this partnership by
committing $32 million in ORA funds for the development, and in return, the Port
would agree to request ORA’s inclusion in the Port’s TCIF projects, dedicating
$62 million of the $242 million TCIF grant allocation for redevelopment of the
City’s East and Central Gateway development areas supporting goods
movement activities at the Port.

On April 29, 2011 the Board passed resolution 11-52, authorizing the Executive
Director to negotiate a cost sharing agreement, and return to the Board for final
approval. Port staff and ORA staff have completed these negotiations and are
simultaneously recommending the Board and City Council agree to enter into this
contract.




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                                                 BOARD MTG. DATE: 06/30/2011

Also on the June 30 agenda is a report on a Pre-Development Agreement
between the Port and Prologis, California Capital Group and their partners. This
is a separate but related item supporting the OAB development.

FACTUAL BACKGROUND

On August 7, 2006, the Oakland Base Reuse Authority, a joint powers authority
created for the purpose of converting the OAB to civilian use, transferred the
former Army property to the Port and the ORA through an economic
development conveyance. In 2004 and 2007, the Port separately acquired (i.e.,
not part of EDC) two additional portions of the OAB, known as the Army
Reserves Parcels.

The ORA has considered a number of different development alternatives for its
portion of the OAB. The ORA is currently in negotiations with AMB Property
Corporation1 and California Capital Group (“AMB/CCG”) for the development of
trade and logistics facilities within its Central and East Gateway development
areas.

On December 10, 2009, the California Transportation Commission (“CTC”)
authorized Baseline Agreements between the Port, Caltrans and CTC for the 7th
Street grade separation and roadway improvement project (the “7th Street
Project”), and the Outer Harbor Intermodal Terminals project (“OHIT”). CTC
agreed to provide up to $242 million in funding for these two projects from its
Trade Corridor Improvements Fund (“TCIF”). Funding is limited to construction
costs, and requires a contribution of $253 million in local matching funds. The
Port has indicated in the Baseline Agreements its plans to use public private
partnerships to secure the match.

The ORA is obligated, under terms of the Economic Development Conveyance,
to spend all revenues earned off the property for the first 7 years following the
conveyance, on economic development of the former OAB. The ORA has
earned rent proceeds and other monies from various activities happening on the
OAB, including the Knight Yard acquisition by the Port in 2006, Caltrans’ use of
Berth 7 under the terms of a Settlement Agreement, and other leasing of property
on the site. Additionally, in 2003 the ORA created a redevelopment project area
around the OAB, including the Port’s marine terminals, which, among other
things, allows the ORA to raise additional funds for the OAB redevelopment
through increases in property taxes (“Tax Increments”) from Port development
activities. These Tax Increments have led to revenues for the ORA which it can
use for the OAB redevelopment.

All parties anticipate that the total cost of developing OHIT, the 7th Street Project,
and related warehouse facilities will exceed $700 million. The Port, ORA and

1
  On June 3, 2011, AMB Property Corporation merged with Prologis Inc. to create the largest
industrial real estate company in the world. The companies have adopted the name, Prologis.




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                                            BOARD MTG. DATE: 06/30/2011

AMB/CCG currently estimate that more than $200 million in additional funding
will be needed for the development program. Nearly $300 million in public
funding has been secured, while the Developer is proposing approximately $200
million in private capital.


ANALYSIS

Under the proposed cost sharing agreement, the ORA would commit to spending
$32 million on the initial design, planning, environmental remediation, CEQA
analysis and other initial project costs on both the Port and ORA property
development. In return the Port would agree to request amendments to the
Baseline Agreements with CTC to specifically identify the ORA’s funds as a
source for the project. The Port would additionally allow the ORA to request
reimbursement for $62 million from the CTC under the Baseline Agreements for
development of their property.

The ORA’s investment includes $5.7 million previously committed under the
ARMOA to environmental remediation activities as necessary through August 7,
2013, and the remaining $26.3 million would go towards project design and
planning costs for both the Port and ORA developments. Of the $26.3 million,
$16.3 million is available today for the project, and $10 million would be provided
over a seven year period. The ORA plans to include its TIGER II planning grant,
in the amount of $1.5 million, as part of its $10 million commitment over 7 years.
The remaining $8.5 million may be provided from tax increment associated with
the Ports America Outer Harbor Terminals, LLC (PAOH) lease and concession
agreement. The PAOH lease and concession agreement has led to an increase
in possessory interest taxes of approximately $2 million per year for the ORA.

The proposed Cost Sharing Agreement will (i) set forth the terms and conditions
by which the Agency will expend up to $32,000,000 towards environmental
remediation, planning and design of the improvements contemplated by the TCIF
Projects, and other development activities to be agreed upon in writing between
the Agency and the Port, (ii) set forth the terms and conditions under which the
Port will, subject to CTC’s prior approval pursuant to the TCIF program, provide
the City and the Agency with the right to use certain state grant funds for the
redevelopment of certain portions of the OAB owned by the Agency ; and (iii)
place conditions upon how such state grant funds will be used and managed.
The ORA will deposit $16,300,000.00 into a Joint Infrastructure Development
Fund (“JIDF”) to be established by the ORA for purposes of developing certain
railroad infrastructure, public utilities, and public streets to be agreed upon
between the Agency and the Port on or adjacent to the OAB, consistent with
such improvements contemplated in the 2002 EIR or any subsequent
environmental documents, and in accordance with the requirements of Agency
Resolution No. 2010-0088 C.M.S., adopted by the Agency Board on July 20,
2010. The Agency will deposit another $10,000,000.00 into the JIDF over a 7-




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                                              BOARD MTG. DATE: 06/30/2011

year period commencing on July 1, 2010 and ending on June 30, 2017. The
Agency has already secured $1,600,000.00 in TIGER II grant funds and will
deposit those funds into the JIDF as part of its $10,000,000 obligation.

The proposed Cost Sharing Agreement also requires the ORA and the Port to
cooperate in good faith with one another and with the developer of each side of
the OAB in applying for and pursuing federal, state, and other sources of public
and private funds to satisfy the TCIF matching requirement. However, such
cooperation shall not require either the Agency or the Port to make any additional
expenditure of funds or resources without the prior written approval of Agency
Board or the Port Board, as the case may be. The Agency and the Port will each
be responsible for maintaining complete and accurate books and records of their
respective expenditures of funds in connection with the development of their
respective portions of the OAB, but the Port will be responsible for managing the
TCIF funds and for notifying the Agency of all TCIF reporting and other grant
administration requirements. The Agency will be responsible for complying with
such TCIF reporting and grant administration requirements as it applies to the
Agency’s portion of the OAB.

After the Baseline Agreements have been amended to recognize the ORA’s role
in the TCIF Projects, the Agency and the Port would jointly select an independent
economic adviser to prepare and update cash flow and TCIF matching fund
contribution requirement models to ensure that (i) there are sufficient matching
funds on record in accordance with the TCIF rules and regulations to access the
TCIF funds when needed to pay for construction costs, and (ii) there are
sufficient cash reserves to support construction costs as required under, and in
accordance with, the requirements of the Baseline Agreements (as the same
may be amended from time to time), the provisions of this Agreement, and for
work to be agreed upon in the future between the Agency and the Port.

In addition to on-going remediation activities, the following activities will be
funded by the moneys that the Agency deposits into the JIDF: (i) environmental
review to determine whether any changes in the 2002 EIR are needed for a
proposed redevelopment project on both; (ii) developing a master infrastructure
development plan for the OAB (the “Master Plan”) which shall serve as the basis
for detailed design and construction activities needed to build out the
improvements contemplated by the TCIF Projects; and (iii) if there remain any
funds in the JIDF after performing environmental review and developing the
Master Plan, then the Agency will commit to applying such funds to pay for the
following construction work: (i) Maritime Street reconstruction; (ii) backbone utility
infrastructure within public streets; and (iii) the 7th Street grade separation.

If the Port and the ORA are unable to fund both TCIF projects in their entirety, or
if the TCIF funds are not available for any reason, the Port will be under no
further obligation to the ORA. The Port and the ORA would then negotiate a
reduced project scope and funding if insufficient funds are available to complete




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both projects as currently envisioned. Such reduced project scope would also
have to be agreed upon by CTC and Caltrans in the form of amendments to the
TCIF Baseline Agreements. The Port and the ORA would agree that Maritime
Street utility and roadway improvements would be one of the first priorities,
should the TCIF project scope have to be reduced.

The state of California, as part of its budget negotiations, is considering
eliminating redevelopment agencies. The City of Oakland has been included in
this agreement as the successor-in-interest, should California eliminate the
Oakland Redevelopment Agency.

STRATEGIC PLAN ALIGNMENT

Entering into this contract is consistent with the following goals and objectives of
the Port’s strategic plan:

STRATEGIC
 PRIORITY                                                  HOW THIS PROJECT
  AREAS            GOAL          OBJECTIVE                   IMPLEMENTS
                Goal A:
                Create                                This contract will help the Port move
Sustainable
                Sustainable    2. Affirm Port         forward with its TCIF projects by
Economic and
                Economic       identity as a public   providing critical initial funds to
Business
                Growth For     enterprise             advance the design, planning and
Development
                the Port and                          environmental work needed.
                Beyond
                               4. Pursue
                               strategic              Partnering with the ORA and the City
                               partnerships at all    of Oakland will strengthen the Port’s
                               levels: local,         ability to attract additional public
                               regional, national,    funding for the OAB redevelopment.
                               and international



BUDGET & FINANCIAL IMPACT

The OAB development project as envisioned by AMB/CCG, the Port and the
ORA requires an additional $200 million in funding. Entering into this agreement
will not obligate the Port to provide such additional funding, nor contribute any
other monies to the City or the project.

The Port’s responsibility is to share state grant funds with the ORA. The Port will
allow the ORA to submit costs to and receive grant funds from the state for up to
$62 million of the $242 million allocated to the Port for the 7th Street project and
the OHIT project combined.

The Port Board will be asked, along with the City Council and Mayor’s office, to
work with AMB/CCG and government officials to increase public funding for the
project.




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STAFFING IMPACT

This agreement will not require significant additional support from Port staff. The
$700 million OAB redevelopment, will take significant manpower, though much of
those resources are anticipated to be performed by AMB/CCG.

SUSTAINABILITY

While this contract itself will not have an impact on sustainability, the OAB
redevelopment is anticipated to be designed and built to a high standard of
environmental sensitivity and will include sustainable design features.

ENVIRONMENTAL

The proposal to authorize the Executive Director to enter into a pre-development
agreement for the long term lease and development of the former Oakland Army
Base was reviewed in accordance with the requirements of the California
Environmental Quality Act (CEQA), and the Port CEQA Guidelines. The general
rule in Section 15061(b)(3) of the CEQA Guidelines states that CEQA applies
only to activities that have a potential for causing a significant effect on the
environment. It can be seen with certainty that there is no possibility that
authorizing the Executive Director to enter into an agreement will result in a
physical change in the environment, and therefore this action is not a project
under CEQA. Staff will return to the Board with the final transaction documents
that will be negotiated with the selected master developer for the Board's
consideration and approval before they are executed.

The grade separation, rail and other projects envisioned to be part of the long
term lease and development of the OAB were included in the project description
analyzed by the Oakland Army Base Area Redevelopment Plan Final
Environmental Impact Report (“EIR”), which was certified on July 31, 2002, by
the City of Oakland, as the Lead Agency under CEQA. On September 17, 2002
(Resolution No. 02317), the Board, acting as a Responsible Agency under
CEQA, approved the Port’s reuse of the OAB as described in the EIR. The
project described by the EIR includes demolition, site preparation, remediation,
construction and similar activities to build a rail yard, the 7th Street grade
separation and related improvements on the OAB site, and cargo throughput
increases throughout the seaport, among other projects.

As additional information on these projects becomes available, staff will
determine whether further environmental review is required to address potential
changes in the project description, and such project changes may be brought to
the Board for approval of CEQA findings. Planning and feasibility studies,
including detailed design and engineering efforts needed to scope the




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development, are statutorily exempt from CEQA under Section 15262 of the
CEQA Guidelines.

No further or additional environmental review or documentation is necessary in
order for the Board to take the action recommended in this Agenda Report.

MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)

This agenda report deals with a funding agreement, so the Maritime and Aviation
Project Labor Agreement does not apply to this contract. The future OAB
redevelopment, which has not yet been fully permitted and approved, is planned
to be done in accordance with the MAPLA.

OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

This is a funding contract and thus the OCIP will not apply.

GENERAL PLAN

This action would approve a process for evaluating projects but does not approve
the construction of any specific project; therefore, it does not require a conformity
determination. Each project that is proposed for approval under this process will
require a General Plan conformity determination.

LIVING WAGE

Living wage requirements, in accordance with the Port’s Rules and Regulations
for the Implementation and Enforcement of the Port of Oakland Living Wage
Requirements, do not apply to this agreement because Oakland Redevelopment
Agency and City of Oakland are governmental agencies.

OPTIONS

1: The Board may choose to authorize the Executive Director to enter into a
Cost Sharing Agreement with the Oakland Redevelopment Agency and the City
of Oakland for development of the former Oakland Army Base, or

2: The Board may choose not to enter into such an agreement.

RECOMMENDATION

It is recommended that the Board pass a resolution to authorize the Executive
Director to enter into a Cost Sharing Agreement with the Oakland
Redevelopment Agency and the City of Oakland for development of the former
Oakland Army Base.




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                                      BUDGET & FINANCE Tab 3



                  BUDGET & FINANCE
This segment of the meeting is reserved for action or
discussion regarding the status of Budget and Finance
issues.




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                                                            BUDGET & FINANCE Tab 3.1


                                                                  BOARD MTG. DATE:
                                                                           06/30/11

                              AGENDA REPORT
TITLE:            Approval of the Annual Operating and Capital Budgets for Fiscal Year
                  Ending June 30, 2012

AMOUNT:           As presented below and in Attachments A-D

PARTIES INVOLVED:

                   Corporate Name/Principal                Location




TYPE OF ACTION:                       Resolution

SUBMITTED BY:                         Sara Lee, Chief Financial Officer

APPROVED BY:                          Omar Benjamin, Executive Director

FACTUAL BACKGROUND

The Charter of the City of Oakland was adopted on November 5, 1968 and was ratified
by the State of California effective January 28, 1969, as amended. Under Article VII
Section 715 of the City Charter, “The Board shall annually, on or before the fourth
Monday of May or not less than one week prior to the submission of the annual
appropriation ordinance by the City Manager, should the Council advance the date
therefore, but not later than the third Monday of July, carefully prepare a budget setting
forth the estimated receipts of the Port, and revenue from other sources, for the ensuing
year, and the sums of money necessarily required for the administration of the Port, and
for maintenance, operation, construction, and development of the Port and its facilities
for the ensuing year, and stating the amount necessary to be raised by tax levy for said
purposes.”

Board Resolution No. 92087 enacted on March 3, 1992 states that the budget submitted
to the City Council shall contain the Port’s 1) operating budget; 2) capital budget; 3)
capital projects for at least the next three years; 4) cash flow projection for at least the
next three years; and 5) funds required for any and all reserves.

Consistent with the afore-mentioned requirements and Port practice, Port staff has
developed the following budget documents:




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   Operating Budget for FY 2012 through FY 2014 (Attachment A);
   Capital Budget for FY 2012 (Attachment B);
   5-Year Capital Needs Assessment for FY 2012 through FY 2016 (Attachment C);
   The Budget Summary, which contains the afore-listed items, as well as other-related
   information such as staffing plan, capital project descriptions, division-specific
   operating budgets and the Statement of Cash Flows (Attachment D).

Only the FY 2012 Operating and Capital Budgets are presented for Board adoption.
Subsequent years of the Operating Budget and the 5-Year Capital Needs Assessment
(CNA) are informational and presented in concept only.

ANALYSIS

The development of the FY 2012 Budget presented challenges similar to those faced by
staff during development of the FY 2011 Budget. While modest economic recovery has
begun, the Port’s major lines of business continue to face pressure from tenants and
customers who remain concerned about decreased consumer demand, oil price
increases, European debt concerns, and Middle East turmoil.

The Port expects to face continuing financial challenges in FY 2012 through FY 2014.
Modest increases in Port revenues are projected, coupled with rising debt service
payments and rising personnel and regulatory costs. The Port’s senior management
and staff will continue to assess projected business activity levels and financial and
operational measures, including additional revenue enhancement and cost-savings
initiatives, which may be available going forward.

FY 2012 Operating Budget Highlights
This section summarizes objectives, operating revenues, and operating expenses for
FY 2012. Additional highlights and assumptions for the FY 2012 Operating Budget are
provided in Attachment A. Staff is requesting the Board’s approval of the FY 2012
Operating Budget.

Objectives:
   Develop a balanced budget in which total revenues exceed total expenditures.
   Develop an operating budget that strives to achieve an Intermediate Debt Service
   Coverage Ratio (DSCR) of at least 1.32x.
   Fund 474 Full-Time Equivalent employees.
   No layoffs and no furloughs.
   Maintain a minimum General Fund cash balance at the end of the fiscal year of
   $85 million.




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Operating Revenues:
  Port-wide Operating Revenues of $296.6 million are $5.0 million or 1.8% higher than
  anticipated FY 2011 actuals. Compared to FY 2011 Budget, Port-wide Operating
  Revenues of $296.6 million are $14.7 million or 5.2% higher.
  Aviation Revenues of $135.7 million are $6.7 million higher compared to FY 2011
  Budget.
  Maritime Revenues of $141.9 million are $1.8 million lower than FY 2011 anticipated
  actuals, as Maritime Revenues are anticipated to be $9.7 million higher in
  comparison to FY 2011 Budget. Compared to FY 2011 Budget, Maritime Revenues
  of $141.9 million are $7.9 million higher.
  CRE Revenues of $11.4 million are $0.5 million higher compared to FY 2011
  Budget.
  Utilities Revenues of $8 million is $0.3 million lower compared to FY 2011 Budget.

Operating Expenses
  FY 2012 Operating Expenses before (i) Depreciation and Amortization and (ii)
  Absorption of Labor and Overhead to Capital Assets are flat compared to FY 2011.
  To offset significant increases in various personnel-related costs, Port staff focused
  on reducing contractual services, supplies and general and administrative costs in
  aggregate by $4.2 million compared to FY 2011 Budget and negotiating $3.3 million
  of labor adjustments.

FY 2013 and FY 2014 Operating Budget Highlights
This section summarizes operating revenues and expenses for FY 2013 and FY 2014.
Additional highlights and assumptions for the FY 2013 and FY 2014 Operating Budgets
are provided in Attachment A. Staff is presenting the Operating Budgets for FY 2013
and 2014 in concept only, and not for adoption.

Operating Revenues
  FY 2013 Port-wide Operating Revenues of $314.3 million is $17.7 million or 6%
  higher compared to FY 2012 Budget.
  FY 2014 Port-wide Operating Revenues of $321.2 million is $6.9 million or 2.2%
  higher compared to FY 2013 Projected.

Operating Expenses
  Operating Expenses before (i) Depreciation and Amortization and (ii) Absorption of
  Labor and Overhead to Capital Assets are projected to increase 2.6% and 4.3% in
  FY 2013 and FY 2014, respectively. Projected Operating Expenses include
  anticipated negotiation of $5.6 million of labor adjustments in each of FY 2013 and
  FY 2014.

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Debt Service and Debt Service Coverage - FY 2012 through FY 2014
The Port has covenanted in its Senior Lien and Intermediate Lien Indentures to maintain
debt service coverage ratios (DSCR) of 1.25x and 1.10x, respectively. The Port has
also covenanted to the banks providing the Letter of Credit supporting the Commercial
Paper Program to maintain an Intermediate Lien DSCR of 1.10x. The Port’s debt
service payments and projected DSCR are summarized below. For more detail, please
see Attachments A and D.

                                                            Budget        Projected        Projected
                                          FY 2011          FY 2012         FY 2013          FY 2014

Existing Bond Debt Service                105,187          113,052          114,007          114,007
Projected New Bond Debt Service                  0                0            2,783            7,648
DBW Loan                                       458              457              457              457
CP Interest                                    867              333              929            1,624

Total Debt Service                        106,513          113,842          118,176          123,736
       Less: Pledged Funds                     n/a              621              n/a               n/a
Total Net Debt Service                    106,513          113,221          118,176          123,736

Senior Lien DSCR                               n/a            1.99x            2.10x            2.29x
                         1
Intermediate Lien DSCR                         n/a            1.32x            1.40x            1.35x
Combined DSCR2                                 n/a            1.31x            1.39x            1.33x


Change in Net Assets - FY 2012 through FY 2014
  The projected Change in Net Assets for FY 2012 is positive $33.5 million, an
  increase of $16.8 million compared to FY 2011 Budget.
  The projected Change in Net Assets for FY 2013 is positive $33 million.
  The projected Change in Net Assets for FY 2014 is positive $46.8 million.

Staffing Plan - FY 2012 through FY 2014
   The FY 2012 Operating Budget reflects 474 funded FTEs. This represents an
   increase of 9 FTEs compared to the FY 2011 budget.
   An additional 6 FTEs are projected by FY 2014.



1
  Intermediate Lien DSCR is Net Revenues (as defined in the Bond Indentures) divided by net debt
service on Senior and Intermediate Lien Bonds and DBW Loan.
2
  Combined DSCR is Net Revenues (as defined in the Indentures) divided by net debt service on Senior
and Intermediate Lien Bonds, DBW Loan, and CP Notes interest.
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5-Year Capital Needs Assessment (CNA) and FY 2012 Capital Budget
The 5-year CNA includes approximately $594.5 million of expenditures, of which
approximately $85.6 million are the FY 2012 Capital Budget and approximately $40.2
million are FY 2012 Pipeline Projects. The balance of expenditures is associated with
FY 2013 through 2016. See Attachment C for more detail:

Following new methods established starting in FY 2011, the FY 2012 Capital Budget is
defined to include only (a) projects for which the Board already has a contractual
obligation, (b) certain pre-development work, and (c) miscellaneous facilities
replacement projects. Port staff is seeking the Board’s approval of only the FY 2012
Capital Budget.

Other capital projects included in the 5-Year CNA (i.e., Pipeline Projects) must be
approved by the Board during the course of the fiscal year on a project-by-project basis,
based on need, financial analysis, cost estimates, alignment with Port’s 5-year Strategic
Plan and available funding sources. Therefore, the Pipeline Project component of
5-Year CNA is presented only in concept and not for Board adoption.

FY 2012 Capital Budget
This section summarizes the FY 2012 Capital Budget, which staff is presenting today for
the Board’s approval. The proposed FY 2012 Capital Budget summary is provided
below. Additional information on the FY 2012 Capital Budget is presented in
Attachment B.

                                                 Amount ($ Thousands)
                               Aviation   Maritime         CRE     Support         Total

Contractual Obligations         50,081       28,275       2,778         2,980    84,114

Pre-Development                    500             0          0            0        500

Misc. Facilities Replacement
Projects (<$100K)                  500           500          0            0       1,000


Total                           51,081       28,775       2,778         2,980    85,614




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                                                       BOARD MTG. DATE: 06/30/11


Key projects in the FY 2012 Capital Budget include:

   Terminal 1 central utility plan design, podium and gate information displays, portions
   of fire suppression system and portions of seismic retrofit
   BART – Oakland Airport Connector
   East Apron Reconstruction Phase III
   Pavement Improvements – Taxiway W & U
   ADP Settlement Agreements – San Leandro Residential Noise Insulation
   Airport Noise Monitoring System Upgrade
   Replacement of Pump Houses 4 and 6
   Purchase of Aircraft Rescue and Firefighting truck
   Runway Safety Area – Environmental Assessment and Design, Phase B
   Shore Power Program – portion only
   Improvements at the TraPac Terminal (project closeout activities)
   Maritime security projects
   Dredging
   Jack London Square and Union Point Park environmental remediation
   reimbursement
   Oak-to-Ninth Tidelands Trust and closing costs
   Enterprise Resource Planning system

STAFFING IMPACT

The FY 2012 Operating Budget reflects 474 funded FTEs, an increase of 9 FTEs from
FY 2011. See “Staffing Plan” above.

SUSTAINABILITY

Adoption of the FY 2012 Operating and Capital Budgets does not directly provide
opportunities for sustainability. However, the budgets were developed to be financially
and operationally sustainable. That is, the budgets reflect the Port’s operating and
capital needs while reducing expenses and ensuring that capital projects, if and when
implemented, are consistent with the Port’s resources and strategy.

ENVIRONMENTAL

This action is not a project as defined by the California Environmental Quality Act
(CEQA). Therefore, no environmental review is required.




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MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)

The matters contained in this Agenda Report do not fall within the scope of the Port of
Oakland Maritime and Aviation Project Labor Agreement (MAPLA) and, therefore, the
provisions of the MAPLA do not apply.

OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

Not applicable.

GENERAL PLAN

Not applicable.

LIVING WAGE

Neither the Port’s Living Wage Ordinance (Port Ordinance No. 3666) nor the living
wage requirements set forth in Section 728 of the Charter of the City of Oakland apply
to this Section because the action requested is not for a “Port Contract” as defined by
Port Ordinance No. 3666 and Section 728.

OPTIONS

1. Adopt the Operating and Capital Budgets for FY 2012 as presented.
2. Adopt the Operating and Capital Budgets for FY 2012 with modifications that may be
   provided by the Board during the course of its deliberations, and direct staff to
   directly incorporate those modifications into the final adopted Budgets.
3. Do not adopt the Operating and Capital Budgets as presented, and direct staff to
   make revisions and return to the Board for approval of the budget at a later date in
   July 2011.

RECOMMENDATION

It is recommended that the Board of Port Commissioners:

   Adopt the Annual Operating and Capital Budgets for the fiscal year ending
   June 30, 2012;
   Approve a resolution authorizing the payment of operating, interest, and other
   expenses, and the payment of debt service of the Port, as described in the Budget
   Summary provided as Attachment D to this Agenda Report.
   Approve a resolution authorizing the payment of approximately $85.6 million of total
   capital expenditures, as provided in the Capital Budget for the fiscal year ending
   June 30, 2012.


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                  Attachment A
Proposed Operating Budget for FY 2012 through FY 2014
         Including Highlights and Assumptions




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                                        STATEMENT OF REVENUE, EXPENSES AND CHANGE IN NET ASSETS
                                          FOR THE FISCAL YEARS ENDED JUNE 30, 2010 THROUGH 2014
                                                             (In $Thousands)

                                                                                                Proposed                                             Variance % Variance
                                                              Actual            Budget            Budget          Projected        Projected        2012P vs.  2012P vs.
 Division                                                    2009-10            2010-11           2011-12          2012-13           2013-14           20118      20118
 Operating Revenue
 Aviation                                                  $ 126,593 $ 129,019                 $ 135,699 $ 146,489 $ 145,473 $                         6,680        5.2%
 Maritime                                                    139,029           134,011           141,864           147,700          153,564            7,853        5.9%
 CRE                                                          11,485            10,932            11,398            11,597           12,305              466        4.3%
 Utilities                                                     8,118             8,360             8,035             8,912           10,285             (325)      -3.9%
 Bad Debt Reserve                                                  0              (421)             (426)             (426)            (426)               (5)     -1.2%
 Total Operating Revenue                                     285,225           281,902           296,570           314,273          321,202           14,668        5.2%
 Operating Expenses
 Administration                                                    (61)               0               (258)            (266)            (279)            (258)         n/a
 Aviation                                                    (72.706)          (74,197)          (74,954)          (77,376)         (80,366)            (757)      -1.0%
 Maritime                                                    (16,770)          (18,090)           (17,576)         (18,450)         (19,211)              513       2.8%
 Commercial Real Estate                                        (6,339)           (6,532)           (6,291)           (6,484)          (6,704)             241       3.7%
 Corporate Administrative Services                             (3,583)           (4,187)           (3,114)           (3,218)          (3,356)          1,073      256%
 Information Technology                                        (2,878)           (3,418)           (3,560)           (3,674)          (3,822)           (141)      -4.1%
 Engineering                                                   (8,061)           (9,214)         (10,479)          (10,960)         (11,428)          (1,265)    -13.7%
 Environmental Programs & Planning                             (2,671)          (2,609)            (2,758)           (2,849)         (2,975)            (150)     -5.7%
 Utlilities Cost of Sales                                      (4,497)           (4,818)           (4,482)           (5,176)          (6.023)             336       7.0%
 Social Responsibility                                         (1.559)          (1,661)            (1,814)           (1,872)         (1,956)            (153)     -9.2%
 External Affairs                                                    0                0            (2,350)          (2,425)          (2,523)          (2,350)         n/a
 Executive Office                                              (1,395)          (1,471)            (1,207)           (1,245)         (1,295)              264     17.9%
 Board of Port Commissioners                                     (447)             (471)             (540)             (557)            (580)             (69)   -14.7%
 Office ofAuditServices                                       (1,131)           (1,170)            (1,268)          (1,309)          (1,370)              (98)    -8.4%
 Port Attorney’s Office                                       (3,911)           (4,478)            (4,371)          (4,510)          (4,695)              107       2.4%
 Financial Services                                           (5,075)           (4,867)            (5,150)          (5,368)          (5,573)            (283)     -5.8%
 Non-Departmental Expenses                                   (30.982)          (28,927)          (26,103)          (24.907)         (25.769)           2,824        9.8%
Absorption of Labor & Overhead to                             12,166            10,124            11,585            12,073           11,938           1,461       14.4%
 Capital Assets
Depreciation & Amortization                                  (98,810)         (102,085)          (99,323)         (100,191)        (100,654)          2,762        2.7%
Total Operating Expenses                                    (248,709)         (258,070)         (254,014)         (258,764)        (266,641)          4,056        1.6%
Operating Income        (A)                                  36,516            23,832            42,556            55,509           54,561           18,724       78.6%
Non-Operating Items
Interest Income                                               8,570             5,443              2.488            3,660            4,862           (2,955)     -54.3%
Interest Expense                                            (82,676)          (76,426)           (70.458)         (72,795)         (75,260)           5,968        7.8%
Passenger Facility Charges (PFC’s)                           19.702            19,881             19,934           20,382           20,841               53        0.3%
Customer Facility Charges (CFC’s)                             4,530             4,177              4,764            4,871            4,981              587       14.1%
Abandoned Capital Assets                                       (358)             (300)              (300)            (300)            (300)               0        0.0%
Other Income (Expenses)                                      (5,847)            8,857              8,629           (2,893)          (2,985)            (228)      -2.6%
                       (B)                                  (56,079)          (38,368)           (34,943)         (47,075)         (47.861)           3,425        8.9%
Capital Contributions
Grants from GovernmentAgencies(C)                            21,343            31,218            25,891            24,613           40,097           (5.327)     -17.1%
ICHANGE IN NET ASSETS (A+8+C)                          $      1,780       $    16,682      $     33,504       $    33,047           46,797           16,823
                                                                                                                               $                $                100.8%I
NetAssets, Beginning of the Year                            889,206           890,986           907,668           941,172          974,220           16,682
Net Assets, End of the Year
                                                                                                                                                                   1.9%
                                                       $ 890,986 $ 907,668                 $ 941,172          $ 974,220        $ 1,021,016 $         33,504        3.7%

ChangeinPortEquity(A+B)                                $ (19,563) $           (14,536) $          7,613       $     8.434      $     6,700      $    22,149      152.4%
Change in Port Equity before
 PFCs and remaining CFCs                               $ (39,735) $           (34,724) $        (12,767) $        (12,032) $       (14,212) $       21,957       63.2%
Senior Lien Debt Service Coverage Ratio                        1.76              2,03              1.99              2.10             2.29
Intermediate Lien Debt Service Coverage Ratio                  1.42              1.28              1.32              1.40             1.35
Combined DebtService Coverage Ratio                            1.42              1.27              1.31              1.39             1.33
Operating Ratio                                               52.6%             55.3%             52.2%             50,5%            51 .7%
Funded FTE’s (Full-Time Equivalent)                            446.5              465                474              477              480




                                                                        B-9




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 FY2OII-12                                                                                                            Operating Budget




                         OPERATING BUDGET HIGHLIGHTS AND ASSUMPTIONS

 OBJECTIVES
 •    Develop a balanced budget in which total revenues exceed total expenditures.
•     Develop an operating budget that strives to achieve an Intermediate Lien debt service coverage
      1
      ratio (DSCR) of at least 1 .32x.
•     Maintain a minimum General Fund cash balance at the end of the fiscal year of at least $85 million.
•     No layoffs.
 •    No furloughs.

GENE RAL
•     FY 2012-14 Operating Revenues for Aviation, Maritime and Commercial Real Estate (CRE) and
      Utilities are based on divisional input incorporating known market and competitive factors, existing
      contracts, viability of outstanding agreements, and the execution of anticipated future contracts.
•     FY 2012 Operating Expenses incorporate known and anticipated cost increases and decreases, with
      an emphasis on reducing contractual services, supplies and general and administrative costs in
      aggregate by $4.2 million compared to FY 2011 Budget and negotiating $3.3 million of Labor
      adjustments.
•     FY 2013 and FY 2014 Operating Expense incorporate known and anticipated cost increases and
      decreases.

FY 2012 REVENUE BUDGET HIGHLIGHTS AND ASSUMPTIONS
Note: All comparisons are to FY 2011 Budget, unless otherwise noted.

•     Port-wide Operating Revenues of $296.6 million are $5.0 million or 1.8% higher than FY 2011
      anticipated actuals; $14.7 million or 5.2% higher compared to FY 2011 Budget.
•     Aviation Revenues of $135.7 million are $6.7 million or 5.2% higher compared to FY 2011 Budget;
      Aviation Revenues for FY 2011 are anticipated to meet budget.
      >    Enplanements projected to be 4.76 million or flat compared to FY 2011 Budget.
      >    Parking Revenues increase by $0.5 million or 2.2%.
           Cargo-related rental revenues increases included in certain signed contracts of $3.6 million.
•     Maritime Revenues of $141.9 million are $1.8 million or 1.3% lower than FY 2011 anticipated actuals;
      Maritime Revenues for FY 2011 are anticipated to be $9.7 million higher than FY 2011 Budget. In
      comparison to FY 2011 Budget, Maritime Revenues for FY 2012 of $141.9 million are $7.9 million or
      5.9% higher.
      >    Full TEU growth rate is 3% higher than FY 2011 anticipated actuals (or 4% higher compared to
           FY 2011 Budget).
           $2.7 million increase in Ports America lease pursuant to signed contract.
      >    Changes in container activity among terminals results in a net $1.8 million decrease in projected
           revenues compared to FY 2011 anticipated actuals.
(1)   Intermediate Lien DSCR is Net Revenues (as defined in the Bond Indentures) divided by net debt service on Senior and Intermediate
      Lien Bonds and DBW Loan.


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Pr’ 2011-12                                                                                                     Operating Budget




    >    Space assignment and truck parking revenues is $0.7 million or 7% lower than FY 2011
         anticipated actuals ($0.9 million or 11% higher compared to FY 2011 Budget).
         BNSF lease at OIG is assumed to be extended at existing lease rate terms for one year.
         Inland Point Intermodal (IPI) Incentive Program of $2 million for ocean carriers.

•   CRE Revenues of $1 1.4 million are $0.5 million or 4.3% higher compared to FY 2011 Budget; ORE
    Revenues for FY 2011 are anticipated to meet budget.
         Parking revenues and percentage rent consistent with FY 2011 Budget.
         Assumed close of escrow on Oak-to-Ninth project by January 1, 2012.

•   Utilities Revenues of $8 million is $0.3 million or 3.9% lower compared to FY 2011 Budget.
    >    Electricity revenues anticipated to increase modestly due to ships utilizing shore power; offset by
         one-time capacity management charges for the new FAA tower that were recognized in FY 2011.

FY 2012 OPERATING EXPENSE BUDGET HIGHLIGHTS AND ASSUMPTIONS
Note: All comparisons are to FY 2011 Budget, unless othe,wise noted.

•   Port-wide Operating Expenses before (i) Depreciation and Amortization and (ii) Absorption of Labor
    and Overhead to Capital Assets are flat compared to FY 2011 Budget.
•   Port-wide Operating Expenses before Depreciation and Amortization are lower by $1.3 million or
    0.8%.
•   Personnel costs is higher by $4.5 million or 5.6%; Personnel costs represent 51% of the Operating
    Expense Budget before (i) Depreciation and Amortization and (ii) Absorption of Labor and Overhead
    to Capital Assets.
         474 Full-time Equivalents (FTEs); currently 467 FTEs.
    >    No layoffs.
    >    No furloughs.
         CaIPERS employer pension contribution rate increase from 19.9% to 23.6%, resulting in a $2.6
         million or 27% increase.
    >    Post retirement benefits (retiree medical costs or OPEB”) increase by $1.3 million or 13% based
         on an updated actuarial study, using January 2011 data.
         Workers’ Compensation expense increase by $0.6 million or 57% based on an updated Workers’
         Compensation actuarial study, using March 2011 data.
    >    Medical premiums assumed to increase 10% on January 1, 2012, resulting in $0.9 million
         increase.
    >    $3.3 million of Labor adjustments negotiated and realized
                                                          .
                                                          1
    -    Vacancy factor of, on average 15 FTEs due to retirements, normal attrition and normal lags in
         hiring; results in reduction of Personnel costs of $2.25 million.




    The SEIU and WOE contracts expire
                                         on June 30, 2011. The Local 21 contract calls for a wage re-opener for FY 2012. The IBEW
    contract expires on December31, 2011



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FY 2011-12                                                                                          operating Budget




    Significant Decreases in Non-Personnel Operating Expenses.
    >   Middle Harbor Shoreline Park costs decrease by $0.35 million or 35% due to full year of new
        management contracts in place. Compared to FY 2010, costs are 61% lower.
    >   Electricity for Port use decreases by $1.0 million due to forward utility rate contracts.
    >   Absorption of Labor and Overhead to Capital Assets higher by $1.5 million; that is the amount of
        Port salaries and overhead which is allocated to the capital budget (not included in operating
        budget) increase due to higher personnel costs and capital expenditures. See “5-Year Capital
        Needs Assessment”, page E-1.

•   Significant Increases in Non-Personnel Operating Expenses.
    >   Increased sewer and utility substation maintenance cost of $0.3 million due to regulatory
        changes.
    >   Maintenance dredging increase by $0.2 million or 10% due to regulatory requirements impacting
        FY2O11-13.

FY 2012 NON-OPERATING EXPENSE BUDGET HIGHLIGHTS AND ASSUMPTIONS
Note: All comparisons are to FY 2011 Budget, unless otherwise noted.
•   Interest income of $2.5 million is lower by 54% due to low interest rate environment and changes in
    treatment of accounting accruals associated with bond premiums. Interest earnings rate on Port
    funds assumed to be 0.2 1.2%.
                              —




•   Interest expense of $70.5 million, which includes letter of credit fees and accounting accruals, is lower
    by $6.0 million, or 8% due to repayment of bond principal and changes in treatment of accounting
    accruals associated with bond premium.
    >   The Port’s revenue bonds and Department of Boating and Waterways (DBW) loan bear interest
        at fixed rates ranging from 3.25% to 5.875%.
    >   The Port’s Commercial Paper (CP) Program has a maximum rate of 12%. The Port assumes a
        0.3% interest rate for its outstanding CP notes.
•   Passenger Facility Charges (PFC) revenue of $19.9 million is virtually unchanged compared to FY
    2011 Budget, reflecting the relatively flat projected enpianement growth rate for FY 2012. PFCs are
    approved by the FAA and used to fund eligible capital improvement for specific projects at OAK. See
    “Capital Project Funding Sources Passenger Facility Charges,” page E-12.
                                       —




•   Customer Facility Charges (CFC) revenue of $4.8 million is 14.1% higher compared to FY 2011
    Budget (or 1 .5% higher than FY 2011 anticipated actuals). CFCs are used to reimburse rental car
    and shuttle bus operating costs and to fund improvements of the rental car facility at OAK. See
    “Capital Project Funding Sources Customer Facility Charges,” page E-1 3.
                                       —




•   Other income (expense) reflects the one-time gain of $12.7 million on the sale of Oak-to-Ninth
    partially offset by payments to the City for general services and Lake Merritt maintenance of $2.2
    million, $0.6 million in retroactive CaIPERS retirement contribution for airport servicemen, $0.8 million
    for demolition of Building L-1 42 at North Field and $0.4 million for the transfer of ownership of Damon
    Slough.
•   Loss on abandoned and demolished assets budgeted at $0.3 million annually.




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FY 2011-12                                                                                   Operating Budget




•   Grants from government agencies include anticipated AlP grants and Maritime grants for
    reimbursement of certain capital expenditures. See “Capital Project Funding Sources”, pages E12
    and E13.

FY 2013 and 2014 REVENUE PROJECTION HIGHLIGHTS AND ASSUMPTIONS
FY 2013
•   Port-wide Operating Revenues of $314.3 million is $17.7 million or 6% higher compared to FY 2012
    Budget.

•   Aviation Revenues increase by $10.8 million or 8% compared to FY 2012 Budget.
    > Enplanements anticipated to increase 2.25% compared to FY 2012 Budget.
        Cargo related rental revenue increases included in certain signed contracts of $2.5 million.
    >   Rates and charges true-up adjustments.

•   Maritime Revenues increase by $5.8 million or 4% compared to FY 2012 Budget.
    >   Full TEU growth rate of 3.5% compared to FY 2012 Budget.
        $2.7 million increase in Ports America lease pursuant to signed contract.
    >   Rate increase at most terminals pursuant to lease terms.
    >   $0.3 million increase in space assignment revenues resulting from anticipated tariff increase.
        New long-term lease anticipated for GIG with terms and conditions similar to current lease.
    >   IPI Incentive Program continues.

•   CRE Revenues of $11.6 million increase by $0.2 million or 2% compared to FY 2012 Budget.
        Increase in percentage rent projections.
    >   Rental adjustments.

•   Utilities Revenues of $8.9 million is $0.9 million or 11% higher compared to FY 2012 Budget.
    > 3% increase for gas and water revenues.
    >   Additional electricity revenues from anticipated increase in shore power use.

FY2014
•   Port-wide Operating Revenues of $321.2 million is $6.9 million or 2.2% higher compared to FY 2013
    Projected.

•   Aviation Revenues decrease $1.0 million or 1.0% compared to FY 2013 Projected.
        Enplanements anticipated to increase 2.25% over FY 2013 Projected.
        Reflects no rates and charges true-up adjustments.

•   Maritime Revenues increase by $5.9 million or 4% compared to FY 2013 Projected.
        Full TEU growth rate of 3.5% compared to FY 2013 Projected.
        $0.7 million increase in Ports America lease pursuant to signed contract.
        No IPI Incentive Program anticipated.
    >   Full year impact of anticipated tariff increase at certain terminals.



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FY2OII-12                                                                                       Operating Budget




        New lease for Berths 25-26 marine terminal anticipated with terms and conditions similar to
        current lease.

•   CRE Revenues of $12.3 million increase by $0.7 million or 6% compared to FY 2013 Projected.
       Adjust certain below-market leases up to market rents primarily in the Business Park.

•   Utilities Revenues of $10.3 million is $1.4 million or 15% higher than FY 2013 Projected.
         3% increase for gas and water revenues.
        Additional electricity revenues from assumed increase in shore power use.

FY 2013 AND 2014 OPERATING EXPENSE PROJECTION HIGHLIGHTS AND ASSUMPTIONS

•   Operating Expenses before (i) Depreciation and Amortization and (ii) Absorption of Labor and
    Overhead to Capital Assets assumed to increase 2.6% and 4.3%, in FY 2013 and FY 2014,
    respectively.
•   Personnel costs
    >   FTEs increasing to 480 FTEs by FY 2014 (additional 6 FTEs from FY 2012 Budget).
    >   No layoffs.
    >   No furloughs.
    >   Medical premiums assumed to grow at 8.75% and 7.75% in FY 2013 and FY 2014, respectively,
        based on recent OPEB actuarial study.
        CaIPERS employer pension contribution rate assumed to be 24.9% and 28.4% based on
        CaIPERS projections as provided to the Port (a 6% and 14% increase in FY 2013 and FY 2014,
        respectively).
    ‘   $5.6 million of Labor adjustments negotiated and realized in FY 2013 and FY 2014 each.
    >   Vacancy factor of, on average, 13 FTEs due to retirements, normal attrition and normal lags in
        hiring; results in reduction of Personnel costs of $2 million.
•   Non-Personnel costs are assumed to grow in aggregate at 3% per annum.
•   Utilities Cost of Sales increases proportional to increased usage.

FY 2013 AND 2014 NON-OPERATING REVENUE & EXPENSE PROJECTION HIGHLIGHTS AND
ASSUMPTIONS
•   Interest income is higher as interest earnings rate assumed to increase to 0.7%   —   1 .7% and 1 .2%    —




    2.2%, respectively, in FY 2013 and FY 2014.
•   Interest expense increases as interest rate on Port’s outstanding Commercial Paper Notes assumed
    to increase to 0.3% 1.3% and 0.8% 1.8%, respectively in FY 2013 and FY 2014 and outstanding
                        —                  —




    debt increases based on 5-Year Capital Needs Assessment, See Section E, “Capital Budget and
    Capital Needs Assessment.”

•   PFC’s increase at rate of projected enplanement growth rate of 2.25% in FY 2013 and 2.25% in
    FY 2014.

•   CFC’s increase at rate of projected enplanement growth rate of 2.25% in FY 2013 and 2.25% in
    FY 2014.



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    FY2OI1-12                                                                                                                Operating Budget




•       Other income (expense) reflects payments to the City of Oakland for general services and Lake
        Merritt maintenance of approximately $2.2 million and $0.7 million in retroactive CaIPERS retirement
        contributions for airport servicemen for both FY 2013 and FY 2014.

•       Loss on abandoned and demolished assets budgeted at $0.3 million annually.
•       Grants from Government Agencies include anticipated AlP grants and Maritime grants for
        reimbursement of certain capital expenditures and is based on 5-year Capital Needs Assessment.
        See Capital Project Funding Sources”, pages E12 and E13.

DEPRECIATION AND AMORTIZATION

The budget for Depreciation and Amortization reflects the anticipated rate of depreciation on the existing
asset base and additions to the asset base based on anticipated in-service date and life expectancy of
capital projects.

PRELIMINARY DEBT SERVICE AND DEBT SERVICE COVERAGE RATIO

•       Debt Service is scheduled to increase $7.3 million in FY 2012 compared to FY 2011.
•       The Ports scheduled bond debt service payments, anticipated interest payments on its outstanding
        CP Notes, as well as projected debt service associated with new borrowings to support the Port’s
        capital expenditures are as follows:

                                                           FY2OII                  FY2012                 FY2013                  FY2014

Existing Bond Debt Service                                  105,187                113,052                 114,007                 114,007
Projected New Bond Debt Service
                        1                                            0                      0                 2,783                   7,648
DBW Loan                                                         458                     457                      457                   457
CP interest
   2                                                             867                     333                      929                 1,624

Total Debt Service                                          106,513                113,842                 118,176                123,736
Less: Pledged Funds
              3                                                   n/a                    621                      n/a                    n/a
Total Net Debt Service                                      106,513                113,221                118,176                 123,736
Intermediate Lien DSCR
                  4                                               n/a                  1.32x                  1.40x                   1.35x
Combined DSCR
         5                                                        n/a                 1.31x                   1.39x                   1.33x




      In FY 2013, it is assumed that $106 million of the Ports outstanding OP Notes is taken out with bonds in order to free-up OP capacity and
      lock in long-term interest rates.
2     op Notes outstanding balance fluctuates between $87-si 50 million and interest rate assumed to be 0.3% 1.8%.
                                                                                                              -




      Unspent Series M Bond proceeds is being pledged toward debt service.
      Intermediate Lien DSCR is Net Revenues (as defined in the Bond Indentures) divided by net debt service on Senior and Intermediate Lien
      Bonds and DBW Loan.
      Combined DSCR is Net Revenues (as defined in the Indentures) divided by net debt service on Senior and Intermediate Lien Bonds, DBW
      Loan and OP Notes interest.



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FY2OII-12                                                                                Operating Budget




CHANGE IN PORT EQUITY AND CHANGE IN NET ASSETS
The projected Change in Port Equity for FY 2012 is a positive $7.6 million, compared to negative $14.5
million for FY 2011 Budget. The projected Change in Net Assets for FY 2012 is a positive $33.5 million,
an increase of $16.8 million compared to FY 2011 Budget.

The projected Change in Port Equity for FY 2013 and FY 2014 is $8.4 million and $6.7 million,
respectively.

The projected Change in Net Assets for FY 2013 and FY 2014 is $33.0 million and $46.8 million,
respectively.




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                          BOARD MTG. DATE: 06/30/11




         Attachment B

Proposed Capital Budget for FY 2012




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FY 2011-12                                                                                                Capital Budget and Capital Needs Assessment




                                    5-YEAR CAPITAL NEEDS ASSESSMENT
                                                                  Capital Budget
                                                                    FY 2011-12
                                                                  ($ Thousands)

                                                                                                 Non.Aviation
                                                             Aviation          Maritime           CRE      Surn,ort             Total            Total
 PROJECTS

 Contractual Obligations                                      50,081              28,275         2,778           2,980        34,033              84,114
 Pro-Development                                                 500                   0             0               0             0                 500
 Misc. Facilities Replacement Projects (<$1 00K)                 500                 500             0               0           500               1,000

    Total Initial Projects                                    51,081              28,775         2,778           2,980        34,533              85,614



  ESTIMATED SOURCES OF FUNDS

  Grants                                                        8,662             17,057              0            173        17,230              25,891
  CFC                                                               0                  0              0              0             0                   0
  PFC
     Pay-Go [1]                                               27,128                   0              0              0               0            27,128
    Timing Shortfall [21                                       3,873                   0              0              0               0             3,873
     Total PFC                                                31,001                   0              0              0               0            31,001
  Port Share
     Port Cash [3]                                             11,418                n/a            n/a             n/a        16,688             28,106
     To Be Determined [4]                                           0                n/a            n/a             n/a           616                616
     Total Port Share                                          11,418             11,718         2,778           2,808         11,304             28,722

     Total Estimated Funding                                   51,081             28,775         2,778           2981          34,534             85,614




  [1] Assumes $9.5 million of PFCs available at beginning of FY 2012.
  12] PFC-eligibte expenditures from FY 201 2-2016 is greater than the expected PFC revenues dung the same pexiod, assuming a $4.50 PFC
      collection rate. A debt financing vehide or Port cash is needed for the PFC liming Shortfall. The PFC Timing Shortfall is expected to be
      repaid with PFC revenues in 2017-2023 depending on passenger level and congressional PFC authorization level.
  [3] Assumes $4.5 million is received from close & Oak-to-Ninth transaction in FY 2012.
  [4) Sources of Port Share may be (1) additional grants, (2) third-party contributions, (3) Port cash, (4) debt or (5) other.




                                                                           E-20




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                                BOARD MTG. DATE: 06/30/11




               Attachment C
Proposed 5-Year Capital Needs Assessment (CNA)
          for FY 2012 through FY 2016




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FY 2011-12                                                       Capital Budget and Capital Needs Assessment




                          5-YEAR CAPITAL NEEDS ASSESSMENT
                                 Allocated By Division and Year
                                    FY 2011-12 to FY 2015-16
                                         (S Thousands)

       OMsions                  FYII-12   FYI2-13      FY1314    FYI4-15     FYI5-16          Total

       Aviation                  63,481   100647        97,580    71,648      89,400       422,756
       Maritime                  49,256    41,816       17,029    21,700      16,450       146,251
       Commercial Real Estate     7,498       675          349     1409          180        10,111
       Support                    5,600     4,402        1,600     2,250       1,500        15352

       ITotal                   125,835   147,540      116,558    97,007     107,530       594,470    I




                                                E-16




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FY2OII-12                                             Capital Budget and Capital Needs Assessment




                         5-YEAR CAPITAL NEEDS ASSESSMENT
                               Allocated By Division and Year
                                  FY 2011 -12 to FY 201 5-16
                                       (S Thousands)

DMSIONS                           FYII-12   FYI2.13   FYI3-14    FYI4-15    FYI5-16          Total
AViATION

North Airport
   Airfield                             0         0      500        500           0         1,000
   Leased Area                        700     1,861    1,550      1,500       1,750         7,361
   Other                              350         0        0          0           0           350
Subtotal North Airport              1,050     1,861    2,050      2,000       1,750         8,711    1
South Airport
   Airfield                         8867      9,075   22,400      9,000      35,500        84,842
   Leased Area                        250       100        0          0           0           350
   Ground Access                      700         0        0          0           0           700
   BART Connector                  12,600    12,600   10,700          0           0        35,900
   Terminal                        27,783    51,787   40,630     27,550      26,000       173,750
   Other                                0         0        0          0           0             0
Subtotal South Airport             50,200    73,562   73,730     36,550      61,500       295,542    I
Common Areas
   Airfield                         2,787    22,200   20,000     30,000      26,000      100,987
   Ground Access                       50       724      800          0           0        1,574
   Terminal                             0         0        0          0           0            0
   Utilities                        3,369     2,100    1,000      3,048           0        9,517
   Other                            6,025       200        0         50         150        6,425
Subtotal Common Areas              12,231    25,224   21,800     33,098      26,150      118,503     I

ITOTAI AViATION                    63,481   100,647   97,580     71,648      89,400      422,756




                                            E47




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FY2OII-12                                                Capital Budget and Capital Needs Assessment




                          5-YEAR CAPITAL NEEDS ASSESSMENT
                                Allocated By Division and Year
                                   FY 2011-12 to FY 201 5-16
                                        ($ Thousands)

DMSIONS                            FYI 1-12   FYI 2-13   FYI 3-14    FYI 4-15   FYI 5.16        Total

MARITIME

TRAPAC Terminal                        250          0          0           0          0          250
EMS/APL Terminal                       150          0          0      15,000     14,450       29,600
Vision 2000                              0          0          0       1,500          0        1,500
Security                             8,785      1,500      3,350           0          0       13,635
Oakland Army Base                    1,440      3,500        500           0          0        5,440
Dredging                             1,400      1,508          0       2,200          0        5,108
Other Terminals & Misc               3,300          0          0           0      2,000        5,300
Shore Power Program                 33,931     35,308     13,179       3,000          0       85,418

TOTAL MARITIME                      49,256     41,816     17,029      21,700     16,450      146,251    I

COMMERCIAL REAL ESTATE

Jack London Square (JLS)             6,270        575        249       1,209        180        8,483
Embarcadero Cove                       418        100          0           0          0          518
Business Park                          150          0        100         200          0          450
Oak-to-Ninth Avenue District           600          0          0           0          0          600
CRE Miscellaneous
     -                                  60          0          0           0          0           60

TOTAL CRE                             7,498       675        349       1,409        180       10,111    I

SUPPORT

Capital Equipment Purchases           2,000     1,000      1,000       1,000      1,000        6,000
IT Infrastructure                     3,600     3,402        600       1,250        500        9,352

TOTAL SUPPORT                         5,600     4,402      1,600       2,250      1,500       15,352    I

ITOTAL                              125,835   147,540    116,558      97,007    107,530      594,470    I




                                              E-18




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                                                                               ____________________________________________
                                                                               __________________________________________
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FY 2011-12                                                                                                      Capital Budget and Capital Needs Assessment




                                      5-YEAR CAPITAL NEEDS ASSESSMENT

                                                              Pipeline Projects
                                                   (Projects Not Included in Capital Budget)
                                                                  FY 2011-12
                                                               ($ Thousands)




                                                                                                        Non-Aviation
 PIPELINE PROJECTS                                              Aviation             Maritime            CRE      Support           Total        Total

 Contractual Obligations                                               0                   0               0               0           0               0
 Regulatoty Compliance                                               830                 300               0               0         300           1,130
 Revenue Maintenance                                               8,870              16,241           1,220           2,245      19,706          28,576
 Revenue Enhancement                                                   0               1,440           3,500               0       4,940           4,940
 Life & Safety                                                     2,700               2,000               0               0       2,000           4,700
 Customer Service                                                  1,000               1,000               0             375       1,375           2,375
 Environment   and Community Benefit                                   0                   0               0               0           0               0

    Total Pipehne Projects                                        13,400              20,981           4,720           2,620      28,321          41,721

    Adjustments
    Pre-Developnient                                                (500)                  0                0               0          0            (500)
    Misc. Facilities Replacement Prect (4100K)                      (500)               (500)               0               0       (500)         (1,000)
    Total Adlustments                                             (1,000)               (500)               0               0       (500)         (1,500)

    Total Pipeline Projects                                       12,400              20,481           4,720           2,620      27,821          40,221


 ESTIMATED SOURCES OF FUNDS

Grants                                                                  0                  0               0                0          0                 0
CFC                                                                     0                  0               0                0          0                 0
PFC
   Pay-Go [1]                                                          0                   0               0               0           0               0
    TimingShortfall [2]                                            8,838                   0               0               0           0           8,838
   Total PFC                                                       8,838                   0               0               0           0           8,838
Port Share
   Port Cash [3]                                                      0                  ri/a            n/a             n/a          0               0
   To Be Determined [4]                                           3,562                  n/a             n/a             n/a     27,821          31,383
   Total Port She                                                 3,562              20,481           4,720           2,620      27,821          31,383

   Total Estimated Funding                                       12,400              20,481           4,720           2,620      27,821          40,221


[1] Assumes $9.5 million of PFCs available at beginning of FY 2012.

j2] PFC-eligible expenditures from FY 2012-2016 are greater than the expected FEC revenues during the same period, assuming a $4.50 PFC
    collection rate. A debt financing vehicle or Port cash is needed for the PFC Timing Shortfall. The PFC Timing Shortfall is expected to be
    repaid with PEG revenues in FY 2017-2023 depending on passenger level and congressional PFC authorization level.

[3] Assumes $4.5 million is received from close of Oak-to-Ninth transaction in FY 2012.

[4) Sources of Port Share may be (1) additional grants, (2) thirtl-party contributions, (3) Port cash, (4) debt or (5) other.




                                                                              E-21




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                  BOARD MTG. DATE: 06/30/11




  Attachment D
Draft Budget Summary




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                                   BUDGET & FINANCE Tab 3.1




                      Budget Summary
Three-Year
Operating Budget
Fiscal Years ending
June 30, 2012 through 2014

         One-Year
         Capital Budget
         Fiscal Year ending
         June 30, 2012         PORT OF OAKLAND
Five-Year
Capital Needs Assessment
Fiscal Years ending
June 30, 2012 through 2016




                              DRAFT - June 27, 2011
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                                                                 BUDGET & FINANCE Tab 3.1


                                        Three-Year Operating Budget
                                    Fiscal Years 2011-12 through 2013-14

                                               One-Year Capital Budget
                                                 Fiscal Year 2011-12

                                                                and

                                    Five-Year Capital Needs Assessment
                                   Fiscal Years 2011-12 Through 2015-16


                             Board of Port Commissioners of the City of Oakland
                             James Head, President
                             Pamela Calloway, First Vice President
                             Gilda Gonzales, Second Vice President
                             Margaret Gordon, Commissioner
                             Michael Lighty, Commissioner
                             Victor Uno, Commissioner
                             Alan Yee, Commissioner


                             Senior Staff
                             Omar R. Benjamin, Executive Director
                             Joyce Washington, Acting Deputy Executive Director
                             Deborah Ale Flint, Director of Aviation
                             David L. Alexander, Port Attorney
                             Arnel Atienza, Chief Audit Officer
                             John T. Betterton, Secretary of the Board
                             Diann Castleberry, Director of Social Responsibility
                             Chris Chan, Acting Director of Engineering
                             Oliviér Y. Flewellen, Director of Finance
                             Denyce Holsey, Director of Administration
                             Pam Kershaw, Acting Director of Commercial Real Estate
                             Isaac Kos-Read, Director of External Affairs
                             James J. Kwon, Director of Maritime
                             Sara Lee, Chief Financial Officer
                             Marsha Carpenter Peterson, Port Labor Advisor
                             Richard Sinkoff, Director of Environmental Programs and Planning


                             Prepared by:
                             Financial Planning Staff
                             Delphine Prévost
                             David K. Kikugawa
    530 Water Street         Christina Lee
Oakland, California 94607    Sandra Yee
                             Saw May Khoo
  Phone: 510-627-1100
Website: portofoakland.com   Patricia Del Favero




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                                       DISCLOSURE
This Budget Summary Book is disclosed publicly for general information relating to the Port only
and should not be construed as an offering document nor part of the Port’s Annual Report
pursuant to SEC Rule 15c2-12 for the Port’s revenue bonds or commercial paper notes. The
information and expressions of opinion in this Budget Summary Book are subject to change
without notice after the date hereof, and future use of this Budget Summary Book shall not
otherwise create any implication that there has been no change in the matters referred to in this
Budget Summary Book since the date hereof. The Goals and Objectives of the Port set forth in
this Budget Summary Book should not be construed as commitments by the Port that such Goals
and Objectives will, in fact, be achieved or occur within such time frames. The Goals and
Objectives are subject to change.

Certain statements included or incorporated by reference in this Budget Summary Book
constitute “forward-looking statements.” Such statements are generally identifiable by
the terminology used such as “plan,” “expect,” “anticipate,” “intend,” “believe,”
“estimate,” “budget” or other similar words. The achievement of certain results or other
expectations contained in such forward-looking statements are based upon certain
assumptions and involve known and unknown risks, uncertainties and other factors,
including business levels during the relevant periods, that may cause actual results,
performance or achievements described to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking statements.
Actual results will vary and may vary materially. The Port does not plan to issue any
updates or revisions to those forward-looking statements if or when its expectations or
events, conditions or circumstances on which such statements are based change.

The Port has not yet obtained funding for all the capital projects described in this Budget
Summary Book, some of which may not ultimately be implemented by the Port. Furthermore, the
overall cost of the Capital Needs Assessment is subject to change, and the variance from the
cost estimates described in this Budget Summary Book could be material. Failure to complete
the projects may adversely affect the Port’s ability to generate the currently anticipated revenues.




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FY 2011-12                                                                                                                                 Port of Oakland




                                                     TABLE OF CONTENTS



 A.      Overview
         Mission Statement ................................................................................................................ A-1
             Vision Statement................................................................................................................... A-2
             Strategic Plan........................................................................................................................ A-3
             San Francisco Bay Area Region Map................................................................................... A-6
             Port of Oakland Area Map .................................................................................................... A-7
             Port of Oakland Overview ..................................................................................................... A-8
             Financial Policy Guidelines ................................................................................................... A-38



 B.      Operating Budget
         Operating Budget Process.................................................................................................... B-1
             Operating Budget Highlights and Assumptions .................................................................... B-2
             Statement of Revenue, Expenses and Change in Net Assets ............................................. B-9
             Operating Expenses by Category......................................................................................... B-10
             Organization Chart................................................................................................................ B-11
             Staff Summary ...................................................................................................................... B-12
             Personnel Services by Division ............................................................................................ B-14
             Salaries and Fringes by Division .......................................................................................... B-15



 C.      Revenue Divisions
         Aviation ................................................................................................................................. C-1
             Maritime ................................................................................................................................ C-7
             Commercial Real Estate ....................................................................................................... C-15
             Utilities - Engineering ............................................................................................................ C-19



 D.      Support Divisions
         Corporate Administrative Services ....................................................................................... D-1
             Engineering ........................................................................................................................... D-3
             Environmental Programs and Planning ................................................................................ D-8
             External Affairs...................................................................................................................... D-10
             Social Responsibility ............................................................................................................. D-12
             Office of the Board of Port Commissioners .......................................................................... D-15
             Executive Office .................................................................................................................... D-16
             Office of Audit Services......................................................................................................... D-18
             Port Attorney’s Office ............................................................................................................ D-19




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FY 2011-12                                                                                                                                 Port of Oakland




             Financial Services................................................................................................................. D-20
             Non-Departmental................................................................................................................. D-22



 E.      Capital Budget and Capital Needs Assessment
         Capital Planning                                                                                                       E-1
         P
         5-Year Capital Needs Assessment....................................................................................... E-1
             Capital Project Funding Sources .......................................................................................... E-12
             FY 2012 Capital Budget and Pipeline Projects..................................................................... E-14



 F.      Debt Service and Cash Flow
         Debt Service.......................................................................................................................... F-1
             Cash Flow ............................................................................................................................. F-5



 G.          Glossary
             Acronyms .............................................................................................................................. G-1
             Definitions ............................................................................................................................. G-4




                  Go to http://www.portofoakland.com/portnyou/public.asp to see this book online.




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                                James Head      Pamela Calloway        Gilda Gonzales
                                  President      1st Vice President   2nd Vice President




             Margaret Gordon   Michael Lighty      Victor Uno             Alan Yee
              Commissioner      Commissioner      Commissioner          Commissioner



The Port of Oakland delivers the highest value to our customers
and community through sustainable stewardship and growth of
our assets, optimal performance of our people, and focus on our
         aviation, maritime, and real estate businesses.
                           .
                                                                Mission Statement



                                     A-1




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                                  Omar Benjamin
                                    Executive Director




                 Joyce Washington                  David Alexander
               Acting Deputy Executive Director          Port Attorney




                    Arnel Atienza                   John Betterton
                    Chief Audit Officer             Secretary, Board of
                                                    Port Commissioners


 We are an innovative and                                                 Vision Statement
                       .
sustainable Port through an
aggressive focus on business
 and optimal performance.                          A-2




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FY 2011-12                                                                               Port of Oakland Overview




                                      STRATEGIC PLAN
                                  FISCAL YEARS 2011-2015


STRATEGIC PLAN
The Port of Oakland (Port) Strategic Plan FY 2011-2015 identifies the major challenges and opportunities
facing the Port and provides a stable and adaptable policy framework to guide the Port during the next
five years.

The Strategic Plan allows the Port to focus on growing and expanding its core businesses and enhancing
its stewardship by aligning and strengthening finances, people, systems, policies, processes and
governance. The Strategic Plan aspires to create an organizational culture based upon the values of
collaboration, accountability and innovation. Through commitment to the Strategic Plan, the Port will
realize its highest potential for the City of Oakland, the region, and the State of California and our global
partners.



Guiding Principles
1. Economic development is the center of the Port’s work.
2. Environmental stewardship is a lens for all Port activities.
3. The Port is a public enterprise that uses all appropriate public and private business development
   models to pursue and ensure its business and strategic goals.
4. The Port seeks opportunities to leverage cross-business line benefits.
5. The Port proactively communicates with its multiple stakeholders.
6. The Port maximizes its assets, investments and resources.
7. Relevant and timely information is fundamental to effective Board stewardship and decision-making.
8. The Port staff is appropriately aligned with the Port’s strategic goals.
9. All Port activities must incorporate a full financial assessment.
10. The Port is a high performing workplace with partnership, accountability and teamwork among staff.
11. The Port delivers the highest value in its services and facilities at the most competitive price.



Strategic Priority Areas
 •   Sustainable Economic and Business Development

 •   Stewardship and Accountability

 •   Port Workforce and Operations

 •   Communications and Information




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FY 2011-12                                                                               Port of Oakland Overview




Goals and Objectives

Goal A:      Create sustainable growth for the Port and beyond.
             1. Maximize the use of existing assets.
             2. Affirm Port identity as a public enterprise.
             3. Increase revenue, job creation and small business growth.
             4. Pursue strategic partnerships at all levels: local, regional, national and international.

Goal B:      Maintain and aggressively grow core businesses.
             1. Retain existing customers and tenants.
             2. Market strategically and aggressively to attract new customers and tenants.
             3. Price Port services to provide a highly competitive value.
             4. Promote effective strategic communication with Port customers.
             5. Enhance customer services (i.e., market intelligence, technical knowledge, strategic
                advice and problem solving).

Goal C:      Promote equitable community access to employment and business opportunities.
             1. Comply with all federal, state, local and Port workforce mandates.
             2. Conduct comprehensive communication and outreach to stakeholders and strategic
                partners to improve workforce and small business opportunities.
             3. Integrate workforce mandates into all Port agreements, policies and processes at
                inception.

Goal D:      Improve the Port’s financial position.
             1. Improve cash position and debt service coverage ratio (DSCR).
             2. Minimize expenditures and focus on core services.
             3. Maximize return on investments (ROI).
             4. Pursue refunding of Port debt for interest rate savings.
             5. Explore debt restructuring options.

Goal E:      Improve the processes for evaluating and managing capital expenditures for long-term
             management of Port property and infrastructure.
             1. Implement a new planning and funding model for capital improvements.
             2. Improve analytical tools to evaluate return on investment and other financial indicators.
             3. Manage cash flow and capital planning as distinct, but related, items.
             4. Strengthen contract expenditure controls.
             5. Prepare plans for long-term use, development and management of Port property and
                infrastructure.

Goal F:      Aggressively obtain maximum amount of external grant and government funding and
             regulatory relief.
             1. Seek out and pursue all promising and prospective grants and external funding
                resources.
             2. Partner with other agencies to create joint grant strategies.
             3. Enhance governmental affairs outreach efforts and capacity.




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Goal G:       Sustain healthy communities through leading edge environmental stewardship.
              1. Ensure effective communication and education regarding environmental and safety
                 standards with business partners and the community.
              2. Partner to share risk, accountability, benefits and improve environmental and safety
                 compliance.
              3. Increase cost recovery for environmental and safety compliance activities.
              4. Continue to provide quality public access and open space at a financially-sustainable
                 level.
              5. Develop effective relationships with regulatory and resource agencies.

Goal H:       Develop and maintain a high performing workforce.
              1. Identify, assess and implement key skills and knowledge required for an employee within
                 a public enterprise.
              2. Conduct targeted training.
              3. Continue to elevate health and safety of the Port workforce.
              4. Strengthen the performance management system.
              5. Create an organizational culture in which employees and the Board acknowledge and
                 hold themselves and each other accountable for the consistent execution of strategic
                 goals and effective operations.

Goal I:       Align the Port’s workforce, organizational structure and personnel management
              practices for optimal performance of the Port.
              1. Identify requirements for organizational change.
              2. Build and strengthen an effective partnership with labor unions.
              3. Align responsibilities, authorities and incentives to ensure accountability and
                  transparency in achieving the Port’s strategic goals.

Goal J:       Improve internal governance practices.
              1. Develop a new Board meeting schedule, order of business, and agenda report format to
                 focus on strategic and policy issues.
              2. Strengthen leadership by designing and implementing a governance and business
                 curriculum for Board and staff.
Goal K:       Promote a proactive and responsive communications model.
              1. Develop a strategic and comprehensive communications plan which reaches out to a
                 wide range of internal and external stakeholders and incorporates state-of-the-art
                 practices and technology.

Goal L:       Provide timely and relevant information to support critical analysis and decision-
              making.
              1. Strengthen long range planning.
              2. Develop performance measures to monitor and improve achievement of objectives and
                 for earliest notification of areas of concern.
              3. Modernize and update Port technology systems and tools to enhance organizational
                 productivity, efficiency and data analysis capabilities.




The goals set forth above are subject to change at any time by the Port and may not be achieved depending on the Port’s
available financial resources and personnel.

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             Region Map




A-6



                        57 of 218
                                                                                           Estuary Park and




                                                                                                                                                                     E. 8TH
            PORT a nOF OAKLAND
                                                                                          J.L. Aquatic Center
                                                                                                                                     9th Ave.
                                                                                                                                                                                                    BUDGET & FINANCE Tab 3.1




                                                                                                                                                                        ST.
                                                                                                                                     Terminal
               S
                       Francisco                                                                                                                       Coast
                                                                                                                                                      Guard Is.
       N                  Bay
                        Ben E. Nutter
                                                                                                         Embarcadero
                                                                                                            Cove
                                                                             80
W




                                                                                                                                                                                    E. 12TH
                         Container
                          Terminal                                                                          Port
                                                             Outer                                        Boundary
        E




                                                                                                                                                                                      ST.
                                                             Harbor
S                  Port View                 TraPac                                                                     Union
                     Park     Middle          Terminal                                                                  Point
                                                                       Ports
                              Harbor                                                                                                                                         29TH AVE.
                             Shoreline                              America
                               Park                                Ports
                                                      Outer Harbor Terminal                                                                                                         IT-
                                                                                                                                                                                 FRU LE
                                                                 America
                                                                                                                                                                                  VA .
                                                                                               .                                                                                   AVE
                                                                                    MARITIME ST
                                 TTI Terminal
                                  (Hanjin)                                                     880
                                                                                                                                                               HIGH ST.
                                                                                         Railport – Oakland

                                                     MID
        Oakland Int’l. Gateway                                                              Union Pacific
                                                         DLE
           BNSF Railway              Oakland Int’l.                                       Intermodal Yard
          Intermodal Yard            Container Tml.                                                          San NE ST.
                                        (SSA) Bay Farm Island                                                   ELI




                                                                                                                                                                             Distribution Center
                                                    HA




                                                                                                                                                                    RT ST.


                                                                                                                                                                              Business Park &
                                                       RB                                                     AD




                                                                                                                                                                              Oakland Airport
                                                     (Alameda)
                                                                                                           Leandro
                                                                                                         Oakland
                                                          OR
                                       Global Gateway        RD                                              Bay




                                                                                                                                                               OAKPO
                                                                .                                               .                                        T.
                                     Central (EMS/APL)                                                    WY                                        TS
                                               O                                                        PK                                    RK
                                                                                                                                                 E




                                                                                                         7TH
                                                      ak                                                                                MA
                          Port                              lan                                 BA
                                                                                                   Y
                                                                                                                         M.L. King, Jr.


                                                                                                             ST.
                        Boundary                                  d                        OR                             Regional
                                                                                         RB                                980
                                                                       Es           HA                                  Shoreline Park
                                                                            tua                                                                                                                                Aviation Division Area
                                                                                    r y Charles P. Howard

                                                                                                                   DR.
                                                                                          North
                                                    Alameda,                             Terminal (Matson)        RD.                                               Oakland
                                                                                           Field
                                                                                                             ITTLE
                                                                                                                                                                    Coliseum




                                                                                                                                                        DR.
                                                                                                                                                                                                               Commercial Real Estate
                                                                                                              ART
                                                    Oakland,                                                                             AY
                                                                                                                                     AD W                                                .                     Division Area
                                                                                                                               BRO



                                                                                                                                                  WATER
                                                    SF Ferry                                                                                                                         RD
                                                                                                         EARH

                                                                                                        DOOL
                                                                             RON




                                                                                                                                                                                                               Maritime Division Area
                                                                                                                                             EDGE
                                                                                 COW




                                                AIR CARGO WAY
                                                                      Port
                                                                                                             E MB

                                                                                                                       D R.




                                                        Offices                                                                                L
                                 Alame              a
                                                  d Air
                                                                                    AN P




                                                                                                                                         ST. Me ake
                                                                                                               ARC
                                                                                                                         EE




                                                              Jack
                                                  Cargo Oakland                                                                      OAK       r
                                                                                                                                            ER rit
                                                                                        KWY




                                                                                                                    PARD
                                                                                                                  ADE




                                                             London                                                                        RG                  t
                                                        Maintenance                                                                      BE
                                                                                           .




                                                                                                                      RO




                                                             Square                                                                   N
                                                            Center                                                                 GE             880
                                       Oakland                                                                                  HE
                                 International Airport
                                                    Estuary Park and
                                                                                                                                     E. 8TH




                                    (South Field) J.L. Aquatic AIRP
                                                               Center                    ORT DR.
                                                                                                     9th Ave.                                                 98TH AV
                                                                                                                                                                     E.
                                                                                                                                        ST.




                                                                                                     Terminal
                                                                                                            Metropolitan
       San                                         Port                                                      Golf Links

    Francisco                                    Boundary
                                                                                                                        S
                                                                                                                      Coasta n                  Leandro
       Bay                                                                                                           Guard Is.                                                                     6/10
                                                                        Embarcadero
                                                                           Cove
                                                                                                                                                    E. 12TH
                                                                                                                                                      ST.




                                                                                         Union
                                                                                         Point
                                                                                                                                             29TH AVE.

                                                                                                                                                    IT-
                                                                                                                                                 FRU LE
                                                                                                                                                  VA .
                                                                                                                                                   AVE



                                                                                                                               HIGH ST.




                                                                                            San
                               Bay Farm Island
                                                                                                                                             Distribution Center




                                                                                          Leandro
                                                                                                                                    RT ST.


                                                                                                                                              Business Park &
                                                                                                                                              Oakland Airport




                                 (Alameda)
                                                                                            Bay
                                                                                                                               OAKPO




                                                                                .
                                                                            WY
                                                                       PK
      Port                                                      Y
                                                             BA                           M.L. King, Jr.
    Boundary                                         OR                                    Regional
                                                   RB
                                                HA                                       Shoreline Park
                                                                                                                                                                                                     Aviation Division Area
                                                                                   DR.




                                                            North
                                                                                  RD.




                                                                                                                                    Oakland
                                                            Field
                                                                             ITTLE




                                                                                                                                    Coliseum
                                                                                                                        DR.




                                                                                                                                                                                                     Commercial Real Estate
                                                                              ART




                                                                                                                                                       .                                             Division Area
                                                                                                                  WATER




                                                                                                                                                     RD
                                                                         EARH

                                                                        DOOL
                                          RON




                                                                                                                                                                                                     Maritime Division Area
                                                                                                             EDGE
                                              COW




                          AIR CARGO WAY
                                                                                      D R.
                                                 AN P




                            Air
                                                                                         EE




                           Cargo
                                                     KWY




                                     Oakland                                                                   ER
                                                                                    PARD




                                    Maintenance                                                              RG
                                                                                                         BE
                                                        .




                                      Center                                                      G    EN
                  Oakland                                                                       HE                  880
            International Airport
               (South Field)                 AIRPOR
                                                   T DR.                                                                      98TH AV
                                                                                                                                     E.
                                                                                    Metropolitan
                             Port                                                    Golf Links
                           Boundary                                                                                                                                                A-7
                                                                                           San                 Leandro                                               6/10


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                                 PORT OF OAKLAND OVERVIEW


Oakland, California                                            Costa County. The City of Oakland may be the
                                                               only city in the United States with a natural
Founded in 1852, the City of Oakland (City) is
                                                               saltwater lake wholly contained within its border
located on the eastern shore of the San
                                                               (115-acre Lake Merritt). By vote of the state
Francisco Bay and is one of three major cities
                                                               legislature in 1870, the Lake Merritt Wildlife
that make up the San Francisco Bay Area (Bay
                                                               Refuge became the first legally established
Area). In early 2010, the City’s population was
                                                               public wildlife sanctuary in North America.3
430,666. It is the third-largest city in the Bay
Area, after San Jose and San Francisco, and
                                                               Demographics
the eighth-largest city in California.1 The City is
one of the 14 cities in Alameda County,                        According to the U.S. Census Bureau’s 2007-
California.                                                    2009 American Community Study (ACS), the
                                                               City’s population consisted of approximately
Climate                                                        27.7% African American, 27.3% Caucasian
                                                               American, 25.0% Latino American, 15.9% Asian
The mild climate of the City facilitates year-
                                                               American and Pacific Islander, 0.4% Native
round business activities. It is generally warmer
                                                               American, 0.8% from other races, and 2.9%
than San Francisco and cooler than San Jose in
                                                               from two or more races.         The average
the South Bay. While it does not abut the
                                                               household size was 2.51 and the average family
Pacific Ocean, its position on the San Francisco
                                                               size was 3.47.
Bay directly across from the Golden Gate bridge
means that the City gets cooling marine fog
during the summer. It is far enough inland,
however, that the fog often burns off by midday,
                                                                                    Demographics - City of Oakland
providing sunny California days.
                                                                 27.7%      27.3%
                                                                                         25.0%
Geography                                                                                            15.9%

The City lies at the center of the Pacific Coast                                                                                           2.9%
                                                                                                                  0.4%         0.8%
between Canada and Mexico. The City has a
                                                                 African   Caucasian   Hispanic or   Asian &      Nativ e   Other races Tw o or more
total area of 78.2 mi²; 71.7% of the area is land               American                 Latino      Pacific     American                  races
and 28.3% is water. Elevation is 42 feet above                                                       Islander

sea level.2 The City is bordered on the north by
the cities of Berkeley and Emeryville and to the
south by the city of San Leandro. To the west
and across the estuary channel is the City of
Alameda and to the east, various cities in Contra


______________________________
1
    California Department of Finance, http://www.dof.ca.gov/ under Demographic Reports
2
    http://www.city-data.com/us-cities/The-West/Oakland-Geography-and-Climate.html
3
    http://www.baynature.org/places/lake-merritt-water




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Population and Income                                                                Educational Attainment of People in City of Oakland

                                                                             25.0%                                                      Graduate or professional
According to the ACS, the City’s population by                                                21.1%                          21.4%      degree
                                                                                                                     18.7%              Bachelor's degree
age is apportioned as follows: 22.3% under the                               20.0%
                                                                                                             17.7%
                                                                                      15.5%
age of 18 years, 8.4% from 18 to 24 years,                                   15.0%
                                                                                                                                        Associate's degree


34.3% from 25 to 44 years, 24.4% from 45 to 64                               10.0%
                                                                                                                                        Some college, no degree

                                                                                                      5.6%
years, and 10.6% who were 65 years of age or                                  5.0%
                                                                                                                                        High school diploma or
                                                                                                                                        equivalency
older. The median age was 35.8 years.                                                                                                   Less than high school
                                                                              0.0%                                                      diploma


According to the ACS, the median income for a
                                                                            Port of Oakland
household in the City was $49,785, and the
median income for a family was $57,250. The                                 The Port of Oakland (Port) is an independent
per capita income for the City was $30,833.                                 department of the City. The Port area is situated
                 Age Distribution - City of Oakland                         along approximately 20 miles of waterfront. The
                                                                            City has operated a public harbor to serve
    40.0%                         34.3%                                     waterborne commerce since its incorporation in
    35.0%
    30.0%                                    24.4%                          1852 and has operated an airport since 1927.
    25.0%    22.3%
    20.0%                                                                   The     seven-member       Board     of      Port
    15.0%                                                 10.6%
    10.0%
                        8.4%                                                Commissioners of the City of Oakland (Board)
     5.0%
     0.0%
                                                                            has exclusive control and management of Port
            Under 18   18 to 24   25 to 44   45 to 64   65 and over
                                                                            property and revenues under the City Charter.
                                                                            The Board is nominated by the Mayor of the City
About 14.8% of families and 17.3% of the
                                                                            and appointed by the City Council. The Board
population were below the poverty line, including
                                                                            commissioners are residents of the City and
25.5% of those under age 18 and 12.4% of
                                                                            serve staggered four-year terms without
those over the age of 65. Approximately 66.5%
                                                                            compensation.
of those over 16 years of age were in the labor
force. 16.3% of the population was unemployed
                                                                            The Port generates and supports economic
as of December 2010.1
                                                                            activity locally, regionally and globally through
                                                                            three major business lines. The Port’s Aviation
Education
                                                                            Division operates Oakland International Airport
The ACS reports that 78.6% of people in the                                 (OAK), a passenger, cargo and general aviation
City 25 years and older had graduated from at                               airport which offers more than 134 daily
least high school and 36.6% had a bachelor’s                                commercial        passenger     departures     to
degree or higher. 21.4% were dropouts; they                                 approximately 32 domestic and international
were not enrolled in school and had not                                     destinations as well as all-cargo flights to and
graduated from high school. The total school                                from destinations around the globe. The Port’s
enrollment for the City was 100,769. Nursery                                Maritime Division manages the fifth busiest
school and kindergarten enrollment was 13,606                               container seaport in North America based on the
and elementary and high school enrollment was                               number of twenty-foot equivalent units (TEUs)
55,076 children. College and graduate school                                handled annually. In CY 2010, 2.3 million TEUs
enrollment was 32,087.                                                      moved through the seaport. The seaport is an
                                                                            international gateway, with approximately 88%
                                                                            of its trade with international trading partners
                                                                            and regions, and the remaining 12%
                                                                            representing domestic trade within the U.S.
1
    State of California Employment Development Department, http://www.labormarketinfo.edd.ca.gov



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The Port’s Commercial Real Estate (CRE)                         According to an economic study undertaken by
Division oversees a total of approximately 876                  the Port in 2010-2011, Port related economic
acres of land along the Oakland Estuary                         activities support approximately 73,560 direct,
containing warehouses, public parking, hotels,                  induced and indirect jobs in the region and
offices, shops, restaurants, and hundreds of                    approximately 827,000 related jobs in California
acres of public parks and habitat conservation                  and the U.S. In addition, the Port affects the
areas. The Port also serves as a trustee for                    generation of business revenue totaling
waterfront    property    serving   commercial,                 approximately $6.8 billion annually.
navigational and recreational purposes.




                       ECONOMIC IMPACTS OF THE PORT OF OAKLAND
                                                       CY 2010

                                                                                COMMERCIAL                TOTAL
ECONOMIC IMPACTS                               AVIATION          MARITIME       REAL ESTATE                PORT
REVENUE (in $ millions)
     Business Revenue                           $4,216              $2,108             $500                $6,824
     Personal Income                            $1,868              $2,222             $316                $4,406
     State/Local Taxes                            $197                $233              $33                  $463
     Local Purchases                              $271                $522              $58                  $851

DIRECT AND OTHER JOBS (in thousands)
   Types of Bay Area jobs:
     Direct                                      7,680              10,927            3,336                21,943
     Induced                                     5,578              11,600            1,433                18,611
     Indirect                                    1,408               6,306              868                 8,582
TOTAL DIRECT AND OTHER JOBS                     14,666              28,833            5,637                49,136

VISITOR INDUSTRY JOBS
     (direct and induced)                       24,428                  ---              ---               24,428

RELATED JOBS                                   383,010             443,988               ---              826,998


   Source: Martin Associates, April 18, 2011 (draft)




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Definitions of categories listed in the table:             Direct Jobs: Bay Area jobs wholly-dependent
                                                           upon the Port’s existence.
Business Revenue: Revenue generated by
                                                           Induced Jobs:       Jobs, generally but not
businesses due to Port activity.
                                                           necessarily in the Bay Area, which are
Personal Income: Wages and salaries of direct              generated by direct job holders spending their
job holders plus wages and salaries of indirect            salaries on goods and services.
job holders plus re-spending and consumption.
                                                           Indirect Jobs: Similar to induced jobs, but
State/Local Taxes: Includes state and local                generated by businesses re-spending their
income tax, sales tax, motor vehicle registration          income on local goods and services.
and licensing tax, state motor fuel tax, county
                                                           Visitor Industry Jobs: Direct, induced and
property tax and local city tax. This includes
                                                           indirect jobs supported in the Bay Area visitor
direct, induced/local consumption, and indirect
                                                           industry as the result of out-of-town passengers
taxes.
                                                           using the OAK.
Local Purchases: Purchases of goods and
                                                           Related Jobs: Jobs with companies that ship
services by firms dependent upon the Port.
                                                           or receive goods through the seaport or airport
These support local, indirect jobs.
                                                           to the extent such jobs are directly connected to
                                                           the companies’ activities at the Port.




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AVIATION                                                     three international airports serving the fifth
                                                             largest U.S. aviation market.          Commercial
For eighty-four years, OAK has served the travel
                                                             airlines serving OAK provide service to over 30
and air cargo needs of the San Francisco Bay
                                                             destinations in the U.S., as well as to Mexico.
area. Work crews at OAK in 1927 constructed
                                                             OAK is a popular place to do business for the
what was then the world's longest runway. The
                                                             nation’s most profitable airlines and also with
then 7,020-foot strip served as the takeoff point
                                                             airline passengers who appreciate affordable
for the first trans-Pacific flight from the U.S.
                                                             flights, superior aeronautical reliability and
mainland to Hawaii, spanning 2,400 miles. OAK
                                                             convenient airport access to all of the major San
received national recognition at its 1927
                                                             Francisco Bay Area business and leisure
dedication when Col. Charles A. Lindbergh
                                                             destinations. Southwest Airlines operates its
declared OAK “one of the finest airports” he had
                                                             largest California station at OAK and is the
ever seen. It also was the departure point for
                                                             dominant carrier at the airport today. It is joined
Australian World War I ace Sir Charles
                                                             by other profitable U.S. airlines including Alaska
Kingsford-Smith, who made the first flight
                                                             Air Group, Jet Blue Airways, Allegiant Air and
between North America and Australia in 1928.
                                                             Hawaiian Airlines.     In total, 12 air carriers
OAK is perhaps best known historically as the
                                                             currently serve OAK.
departure point for Amelia Earhart on her fateful
round-the-world flight in 1937. OAK was the
                                                             In addition to its status as a major passenger
West Coast terminus for United Airlines' newly
                                                             airport, OAK is the North American west coast
introduced service to New York in 1937. The
                                                             hub for FedEx, the world’s largest air cargo and
new DC-3s carried 14 passengers and made the
                                                             logistics company. FedEx performs intermodal
trip in 15 hours and 20 minutes, with three stops.
                                                             sort and distribution of freight and overnight
                                                             packages from around the world from its state of
In 1962, a 14-gate terminal (Terminal 1), 10,000-
                                                             the art facilities at OAK. Another air cargo
foot runway (South Field) and 10-story air traffic
                                                             company, UPS, also maintains a large hub
control tower were built to usher in the jet-age of
                                                             operation at OAK.
commercial aviation. An additional two gates
were added to Terminal 1 in 2000. A second,
                                                             Passenger Traffic
eight-gate terminal (Terminal 2) was opened in
1985 and was expanded to a total of 13                       From 1997-2007, OAK had ten consecutive
passenger gates in 2007. Terminals 1 and 2                   year-over-year growth in passenger activity.
have a total of 29 gates and serve all                       However, a combination of negative events
passengers on commercial airlines operating at               associated with high fuel prices, the economic
South Field. The original airfield (North Field) is          crisis of 2008-2009 and new air carrier activity at
presently used by air cargo and corporate and                San Francisco International Airport (SFO)
general aviation operators. The North Field                  resulted in a significant decline in enplanements
alternate runway is used by commercial airlines              at OAK by 2009. Analysis of Department of
when the South Field runway is not operational.              Transportation traffic data reveals that as much
                                                             as 40% of OAK traffic in key markets shifted to
Oakland International Airport Today                          SFO during this time. These key markets are
                                                             Los Angeles, San Diego, Las Vegas, New York
OAK is located in the heart of the San Francisco
                                                             – JFK, Boston, and Washington DC – Dulles.
Bay Area region (see San Francisco Bay Area
Region Map on page A-6) and is the airport
closest to most Bay Area residents. It is one of




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In CY 2009, passenger activity in all markets                          levels. The number of aircraft takeoffs and
decreased by 17.2% to 9.5 million passengers                           landings in CY 2010 was 219,652 compared to
compared to CY 2008. CY 2010 passenger                                 233,183 in CY 2009, a decrease of 5.8%.
activity remained essentially flat from CY 2009


                                                     OAK Historical Passenger Volumes
            16,000,000
            14,000,000
            12,000,000
            10,000,000
   Volume




             8,000,000
             6,000,000
             4,000,000
             2,000,000
                    0
                         1970   1973   1976   1979   1982   1985    1988   1991    1994   1997   2000   2003    2006   2009

                                                                   Calendar Year


Air Service                                                            selected was Los Angeles International Airport
                                                                       (LAX).
Since 2008, several airlines have ceased
service at OAK and service to some destinations
                                                                       Alaska Airlines launched trans-Pacific flights
was discontinued. However, during this time,
                                                                       between OAK and both Maui and the Big Island
other airlines have initiated service at OAK.
                                                                       of Hawaii in November 2009. Alaska Airlines
Since 2009, OAK has welcomed two new
                                                                       added Lihue, Kauai to its schedule in March
airlines, added several new destinations, and
                                                                       2011 and will increase the frequency of the Maui
maintained consistent service on major routes.
                                                                       flight from four times weekly to daily in June
                                                                       2011. Since 2008, Hawaiian Airlines has flown
In February 2009, Allegiant Airlines moved its
                                                                       daily between OAK and Honolulu. In response
operation to OAK from SFO, and began service
                                                                       to high demand, Hawaiian Airlines expanded
to Bellingham, Washington, a gateway to British
                                                                       service from OAK in 2010 with the addition of a
Columbia, Canada.         The airline expanded
                                                                       daily flight to Maui. Seats offered from OAK to
service from OAK to Eugene, Oregon’s second
                                                                       Hawaii will reach a historic record high during
largest city, in June 2009. Allegiant continues to
                                                                       summer 2011 with 836 daily seats to four
pursue plans for further growth at OAK in 2011-
                                                                       Hawaiian Islands. This represents a significant
2012.
                                                                       shift of traffic from SFO to OAK and also the
Volaris, now the second largest airline in Mexico                      emergence of OAK as a major North American
and a commercial partner of Southwest Airlines,                        trans-Pacific gateway to Hawaii.
began service at OAK in July 2009. Volaris held
                                                                       Air Cargo
discussions with over a dozen U.S. airports,
which resulted in OAK being one of only two                            OAK ranked as the 12thth largest cargo airport in
U.S. airports selected in 2009. The other airport                      the U.S. in 2010 and among the top 40 cargo
                                                                       airports in the world in 2010. OAK handled


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approximately 1.13 billion pounds of air cargo              The global recession experienced in 2008-2009,
(freight plus mail) during CY 2010. This was an             led to a worldwide reduction in air cargo volume,
increase of 4% above CY 2009 levels.                        which, coupled with relatively high fuel prices,
                                                            forced carriers to reduce the number of freighter
At OAK, FedEx is the major operator of freighter            flights and make additional stops on other
aircraft with 5,530 flights arriving (averaging 15          flights, in an effort to maximize load factors and
flights a day) and 907 million pounds handled in            to service as many points as possible. The
CY 2010. UPS, another major worldwide air                   available capacity in the lower cargo
cargo carrier, operated 1,295 flights (averaging            compartments of passenger aircraft has also
4 flights a day) and handled 174 million pounds             been utilized to maintain service to many
in CY 2010. Both of these carriers picked up                destinations.
most of the cargo volume previously handled by
DHL when it ceased domestic operations.                     Terminal 1 Program
However, for both of these operators, the current
                                                            Terminal 1 is in the middle of an extensive
daily operations are down substantially from
                                                            renovation and retrofit, consistent with the Port’s
early 2008.
                                                            Strategic Plan to sustain economic and business
                                                            development by maximizing the use of existing
In addition, small general aviation aircraft
                                                            assets. The Terminal 1 Program focuses on
freighters also operate at OAK. Ameriflight
                                                            replacement of aging infrastructure, bringing
operated approximately 4,800 flights (averaging
                                                            building systems up to code, and improving life
13 flights a day) and handled over 6 million
                                                            cycle costs.     Improvements include seismic
pounds of cargo in CY 2010. Ameriflight also
                                                            retrofit, mechanical upgrades, new special
provides some feeder service to UPS.            In
                                                            systems and some architectural/life cycle
addition, Ameriflight operates Learjet aircraft to
                                                            maintenance upgrades.          The project also
the Northwest, Los Angeles and Phoenix areas.
                                                            includes a new mechanical building and
Southwest Airlines ranks as the third largest               upgraded Central Utility Plant (CUP).
volume cargo carrier at OAK. With a large fleet
                                                            The Terminal 1 Program, which began in 2007,
of aircrafts with lower deck cargo space and as
                                                            is being implemented in a phased manner
many as 107 flights a day at OAK, Southwest
                                                            addressing priority       needs    and funding
handled 15 million pounds of cargo in CY 2010.
                                                            availability. The majority of the renovation will
The volume ranking for cargo carriers at OAK in             be funded using passenger facility charges.
CY 2010 is shown in the table below:                        Several projects have been completed in FY
                                                            2011, including a new food, beverage and retail
                                                            concessions program; updated gate podiums
         Cargo Carrier        Volume                        and gate information displays; expanded
                          (in millions of lbs)
                                                            meet/greet area with more customer amenities;
                                                            improved universal access and visual paging;
              FedEx              907
                                                            seismic retrofit in the concourse, and upgraded
               UPS               174                        fire protection.

             Southwest            15                        During FY 2012, as authorized by the Board, the
                                                            final design documents for life safety
               Other              31
                                                            improvements in building M102 will be
                                                            completed. The M102 building houses security,
                                                            ticket counters, current South Field FAA Air
                                                            Traffic Control Tower, and miscellaneous other


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facilities for travelers. Additional projects include
design and installation of fire suppression and
fire alarm systems in the concourse (M103),
upgraded paging and communications, and a
new substation.           It is anticipated that
construction on the CUP will begin in 2011, and
construction of         the    M102     life   safety
improvements will begin in 2012. OAK intends
to keep Terminal 1 operational while
improvements are constructed, so an important
focus will be placed on phasing in improvements
to minimize disruption to the traveling public and
tenants.

In addition to maintaining, upgrading, and
expanding its terminal facilities to serve
customer needs, OAK must also continuously
monitor and maintain its major infrastructure,
including the airfield pavement and lighting
systems to ensure safe and secure operating
conditions.      Ongoing airfield pavement
improvement projects are largely funded by the
Federal Aviation Administration (FAA) Airport
Improvement Program (AIP). Aircraft apron
projects have also received American Recovery
and Reinvestment Act of 2009 (ARRA) funding
and FAA Voluntary Airport Low Emissions grant
funding.




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                           OAK PASSENGER AND CARGO STATISTICS


                                                       CY 2010     CY 2009    % Change
              PASSENGERS
              Enplaned                                4,769,923   4,750,185       0.4%
              Deplaned                                4,772,410   4,755,096       0.4%
                Total                                 9,542,333   9,505,281       0.4%

              FREIGHT (in 000 lbs)
              Inbound                                   536,985     509,627       5.0%
              Outbound                                  569,287     554,302       2.7%
                 Total                                1,106,272   1,063,929       4.0%

              MAIL (in 000 lbs)
              Inbound                                    12,468     10,193       22.3%
              Outbound                                    7,934      8,872      -10.6%
                 Total                                   20,402     19,065        7.0%

              TOTAL AIR CARGO
                (Freight & Mail) (in 000 lbs)         1,126,674   1,082,994       4.0%

              LANDED WEIGHT (in 000 lbs)              8,726,868   9,124,284      -4.4%

              AIRCRAFT OPERATIONS
                 (South and North Airport)              219,652    233,183       -5.8%


             Source: Port of Oakland, www.oaklandairport.com




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             OAK PASSENGER ACTIVITY AND MARKET SHARE BY CARRIER
                                   CY 2010


                                                     Passengers Served                   Market Share
             Airline
                                                          in 2010                          in 2010
         Southwest                                        6,990,417                         73.3%
         Alaska/Horizon Air                                 642,039                          6.7%
         JetBlue                                            616,879                          6.5%
         Delta                                              305,833                          3.2%
         US Airways/US Airways Express                      301,851                          3.2%
         Hawaiian                                           221,111                          2.3%
         United                                             167,466                          1.8%
         Volaris                                            163,406                          1.7%
         Allegiant                                            75,465                         0.8%
         Azores    Express/SATA1                                 5,828                       0.1%
         Charter/Other                                        52,038                         0.5%
         Total                                            9,542,333                        100.0%




         ____________________________
         1    Azores Express, operated by SATA, provided seasonal service at OAK from June 2010 to October 2010


             Source: Port of Oakland, www.oaklandairport.com




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                          AVIATION OPERATIONS AT-A-GLANCE


Domestic Scheduled Service:        Alaska Airlines, Horizon Air, Allegiant Air, Delta Air Lines,
                                   Skywest Airlines dba Delta Connection, Hawaiian Airlines,
                                   JetBlue Airways, Southwest Airlines, United Airlines, US Airways

International Scheduled Service:   Volaris Airlines, SATA International Airlines

Major All-Cargo Carriers:          FedEx, UPS, Ameriflight, WestAir

Number of Daily Departures:        191 (57 are all-cargo flights)

Acreage:                           2,500 acres

Passenger Facilities:              Two terminals (556,000 sq ft), 29 boarding gates

Runways:                           10,000-foot asphalt runway (can be extended to 11,600 feet)
                                   6,212-foot asphalt runway
                                   5,454-foot asphalt runway
                                   3,372-foot crosswind asphalt runway

Number of Employees:               Approximately 8,000 Port and tenant employees (about one-third
                                   of tenant employees are in cargo-related jobs)

Largest Airport Employers:         Southwest Airlines, 2,236 employees (includes crew base staff)
                                   FedEx, 2,100 employees
                                   Rolls Royce Engine Services, 386 employees
                                   UPS, 293 employees
                                   Port of Oakland, 249 employees (Aviation division)

Public Parking:                    6,944 vehicle capacity

Flight Crew Facilities:            Flight Attendant Base – Southwest Airlines, 1,044 employees
                                   Pilot Base – Southwest Airlines, 712 employees

Cargo Sort Facilities:             FedEx (73.7 acres)
                                   UPS (15.4 acres plus 50,000 sq ft warehouse)

U.S. Customs:                      International Arrivals Facility (29,000 sq ft)




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MARITIME                                                     dredging to deepen the channels, with the
                                                             federal government and the Port sharing in the
In the early and mid-1900s, the shipping
                                                             cost of the -50 ft Project. The -50 ft Project
business was rapidly expanding in Oakland due
                                                             received ARRA funds which allowed for
in part to the Panama Canal’s opening and
                                                             substantial completion in September 2009.
World War I. To accommodate the growing
maritime seaport activities, City voters approved
                                                             The Port deepened the berths to match the
bonds in 1925 to finance the construction and
                                                             depth of the channel. However, berths at
development of a municipal port overseen by an
                                                             Howard and APL terminals remain at -42 ft. The
autonomous Board of Port Commissioners. Two
                                                             APL wharf requires strengthening and
years later, the Port was officially established as
                                                             reconstruction before the berth area can be
an independent department of the City. The
                                                             dredged to a -50 ft depth. Completion and, now
Port’s seaport facilities would serve the Port for
                                                             maintenance, of the -50 ft Project is critical to
the next 40 years, with relatively few changes,
                                                             the Port’s competitiveness as an international
until   containerized     shipping     dramatically
                                                             gateway.
changed seaport operations. Developed in the
U.S. in the 1950s, the new technology                        Terminal Redevelopment Projects
transformed shipping worldwide through the use
of standardized steel containers that are carried            In July 2008, the Port completed reconstruction
by ship, truck and train. In the 1960s the Port              of the Global Gateway Central Terminal (Berths
became one of the pioneers of large-scale                    60-63), operated by Eagle Marine Services/APL.
containerization in the U.S.                                 In summer 2010, the Port completed a
                                                             renovation of the TraPac Terminal (Berths 30-
Vision 2000 Maritime Expansion                               32). Both of these projects, about $100 million
                                                             of investment, provide significantly upgraded
To meet regional, national, and global cargo
transport needs for the 21st century, the Port               facilities intended to improve operational
completed its Vision 2000 maritime expansion                 efficiencies and capacity in the short and long
program in 2002. The Vision 2000 Program                     terms. Projects such as these are critical to
included two new container terminals, a                      efficient and modernized operations at the Port,
medium-sized intermodal facility called Oakland              and go hand-in-hand with other initiatives at the
International Gateway (OIG), (formerly known as              seaport.
the Joint Intermodal Terminal), the addition of
super-post-panamax cranes to accommodate                     Berths 20-24 Terminal Concession
newer, wider container ships, a new public park              Following a solicitation process that began in
– Middle Harbor Shoreline Park, and new roads.               May 2008, the Board approved the selection of
                                                             Ports America Outer Harbor Terminal, LLC
Deepening the Oakland Harbor (-50 Ft Project)
                                                             (PAOH) as the new concessionaire for Port
The Port began the planning and design for                   Outer Harbor Berths 20-24 for 50 years
deepening its channels and berths to -42 ft in               beginning in January 2010. PAOH is part of the
1972.    Due to complex environmental and                    Ports America Group, which includes Marine
regulatory issues, the project was completed                 Terminals Corporation, a stevedoring company
more than 20 years later and the Port                        that has a long history of operating at the Port.
immediately commenced efforts to further                     The PAOH Terminal is one of the Port’s largest
deepen its harbor and berths to -50 ft to                    marine terminals, with approximately 4,400
accommodate the newest generation of                         linear feet of berth length and about 168 acres of
container ships.    The U.S. Army Corps of                   land.
Engineers was responsible for conducting the



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In late 2009, PAOH completed construction on                    international standard of measurement for the
new entry and exit gates for the terminal. The                  volume of business that moves through a
gate construction work was the first project of                 container port. Containers vary in length, from
PAOH’s renovation plans. The Port expects                       20 feet to 53 feet with the majority of the
PAOH to upgrade and develop the terminal into                   containers being 40 feet long. In CY 2010,
a state-of-the-art facility to maximize throughput.             approximately 2.3 million TEUs, or about 1.3
This vision will require substantial capital                    million containers, moved through the Port.
investment by PAOH, and is expected to                          Approximately 88% of the Port’s trade is with
enhance maritime activity by attracting                         international trading partners/regions and 12% is
intermodal cargo with a state-of-the-art terminal               domestic. Asia is the most significant trading
and deliver long-term economic, environmental,                  partner of the Port. In CY 2010, 83% of the
and community benefits.                                         TEUs that moved through the Port either
                                                                originated from, or were destined for, Asia.
International Gateway Today
The Port is ranked as the fifth busiest cargo
container port in North America, based on the
number of TEUs handled annually. A TEU is an




                              NORTH AMERICA CONTAINER PORT
                                    RANKING BY TEU VOLUME
                                                      CY 2010         CY 2009
                                                        TEUs            TEUs     % CHANGE
                     LOS ANGELES (CA)             7,831,902          6,748,995        16.1%
                     LONG BEACH (CA)              6,263,499          5,067,597        23.6%
                     NEW YORK/NEW JERSEY          5,292,020          4,561,527        16.0%
                     SAVANNAH (GA)                2,825,178          2,356,574        19.9%
                     OAKLAND (CA)                 2,330,214          2,045,211        13.9%

                     Sources: Respective port websites, 2011




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                                   MARITIME CARGO STATISTICS
                                       CY 2009 and CY 2010
                                             CY 2010 TEUs     CY 2009 TEUs    % CHANGE

                          IMPORT                  802,913         701,501         14.5%
                          EXPORT                  954,814         966,882         -1.3%
                          FULL (IMP/EXP)         1,757,727       1,668,383         5.4%
                          EMPTY                   572,487         376,828         51.9%
                          TOTAL                  2,330,214       2,045,211        13.9%

Source: Port of Oakland, www.portofoakland.com, Maritime, Facts & Figures, Container Statistics


Loaded container cargo activity at the Port                   methods of compliance with this regulation and
increased by 5.4% in CY 2010. Imports surged                  a key element of the State’s Goods Movement
14.5% compared to CY 2009 and exports were                    Emission Reduction Program. Shore power
slightly off declining 1.3%.      The Port has                provides electrical infrastructure so that ships
historically been a strong export seaport moving              can connect to the power grid and turn off their
California agricultural products and other U.S.               diesel-fueled auxiliary engines while docked at
goods overseas to foreign markets. However,                   the Port. The Port began planning for shore
export volume at the Port in CY 2010 was                      power in 2009. Construction of the first phase of
hindered by a lack of equipment availability as               the Port’s Shore Power Program started in
ocean carriers sent empty containers back to                  Spring 2011 and will be completed in 2012. The
Asia quickly to take on cargo waiting to be                   first phase comprises infrastructure for 3 berths.
imported to the U.S. In fact, the export of empty             The second phase of construction will start in
containers from the Port increased 116% in CY                 early 2012 and is scheduled for completion by
2010 compared to CY 2009. In CY 2010,                         late 2013. The program cost is estimated at $90
imports comprised 46% of all loaded container                 million.   Funding for the program assumes
activity, while exports represented 54%.                      approximately $39.6 million in grants, of which
                                                              $12.8 million have been secured.
The Port currently has 8 marine terminals and
36 container cranes (post-Panamax and super                   Former Oakland Army Base
post-Panamax). More than 25 shipping lines
                                                              Between 2003 and 2007, the Port acquired
call at the Port, linking the Bay Area with direct
                                                              approximately 241 acres of the former Oakland
all-water service routes to most of the world’s
                                                              Army Base (OAB). The Port is currently in
major producing, consuming, and trading
                                                              negotiations with a development partner to
economies. The Port’s current maritime assets
                                                              redevelop approximately 168 acres of the 241
include adequate capacities to accommodate
                                                              acres into a trade and logistics center. The
some future growth.
                                                              developer(s) will be required to demonstrate its
Shore Power Program                                           ability to design, construct, and finance facilities
                                                              that will enhance maritime cargo handling
In 2008, the California Air Resources Board                   capabilities at the Port such as intermodal rail
(CARB) adopted a new regulation, requiring                    terminal expansion and trade and logistics
significant reductions in the air emissions from              business facilities. The Port remains committed
ships docked at California ports including the                to the redevelopment of the OAB into a world
Port. Shore power is one of the principal                     class trade and logistics center.



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                                                    MARITIME
                                                CARGO STATISTICS
                                              CY 2000 through CY 2010
                                                        (000s)

              Calendar Year            Revenue Tons (1)          Loaded TEUs     Total TEUs
                     2000                      22,814               1,322          1,777
                     2001                      21,215               1,245          1,644
                     2002                      21,667               1,280          1,708
                     2003                      23,623               1,399          1,923
                     2004                      25,511               1,508          2,048
                     2005                      28,803               1,683          2,274
                     2006                      29,542               1,718          2,392
                     2007                      30,602               1,780          2,388
                     2008                      29,362               1,707          2,234
                     2009                      28,940               1,668          2,045
                     2010                      30,934               1,758          2,330


              Compounded
                Annual
              Growth Rate
                   2000-2010                   3.1%                 2.9%           2.7%




             Source: Port of Oakland, 2011

             (1)
                   Containerized cargo only




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                           MARITIME OPERATIONS AT-A-GLANCE

 2010 Cargo Vessel Arrivals:            1,973

 Shipping Lines:                        ANL Container Line, APL, CCNI, China Ocean Shipping Co,
                                        China Shipping Agency, CMA-CGM, Evergreen Line, Hamburg
                                        Sud, Hanjin Shipping Co, Hapag-Lloyd, Horizon Line, Hyundai
                                        Merchant Marine, “K” Line, Maersk Sealand, Maruba Line,
                                        Matson Navigation, Mediterranean Shipping Company, Mitsui
                                        OSK Lines, Norasia, NYK Line, OOCL, Pacific International
                                        Line, Polynesia Line, PO Shipping, U.S. Lines, Wan Hai, Yang
                                        Ming Line, Zim Container Line

 Container Terminals:                   Ben E. Nutter Terminal (Operator: Evergreen Marine
                                        Corporation), Charles P. Howard Terminal (Operator: SSA
                                        Terminals, LLC), Global Gateway Central Terminal (Operator:
                                        Eagle Marine Services), Oakland International Container
                                        Terminal (Operator: SSA Terminals, LLC), Ports America Outer
                                        Harbor Terminal Berths 25/26 (Operator: Ports America), Ports
                                        America Outer Harbor Terminal Berths 20-24 (Operator: Ports
                                        America), TraPac Terminal (Operator: TransPacific Container
                                        Service Corp.), TTI Terminal (Operator: Total Terminals, Inc.)

 Deepwater Ship Berths:                 18

 Container Gantry Cranes:               36

 Container Terminals:                   Approximately 775 acres

 Freeways Serving Port:                 Interstate 80 (north & eastbound)
                                        880 (southbound)
                                        580 (eastbound)
                                        980 (eastbound)

 Railroads:                             BNSF Railway Company
                                        Union Pacific Railroad Company

 Principal Exports:                     Edible fruits and nuts, meat/prepared meat/fish, etc., machinery,
                                        vehicles/not railway, beverages, inorganic chemicals/rare earth
                                        materials, metal scrap, hides and skins, misc. chemical
                                        products, wood pulp/paper/paperboard, organic chemicals,
                                        cereals/grain/seed/fruit, preserved food, plastic, cotton and
                                        yarn/fabric

 Principal Imports:                     Machinery, beverages, furniture and bedding, vehicles/not
                                        railway, apparel, toys and sports equipment, plastic, iron/steel
                                        products, wood, footware, spices/coffee and tea, medical
                                        instruments, misc. textile articles, aluminum, paper/paperboard



Source: Port of Oakland and U.S. Department of Commerce, Bureau of Census


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COMMERCIAL REAL ESTATE                                     several years and many of these projects are
                                                           being      realized  through     public/private
The Port's CRE Division oversees approximately
876 acres of land along the Oakland Estuary.               partnerships to enhance the City's "front yard"
Development projects worth more than $1.2                  and meet the needs of City residents and the
                                                           entire region.
billion have been in the works over the past




Much of the commercial land that historically              The primary challenge for the CRE Division is to
had been put to industrial use in the Port area            enhance profitability of the Port’s real estate
between Clay Street and Hegenberger Road is                portfolio in an environment of increased
being transformed with new development.                    competition, diverse public interest groups in the
Warehouses, parking lots, and vacant land are              community, and regulatory uncertainty. As a
expected to be converted into homes, hotels,               first step towards meeting this challenge, a 1999
offices, shops, restaurants, parks and industrial          study of CRE’s assets and operations led to a
flex/research and development projects. The                decision to sell some Port-owned property in the
majority of the land was granted to the Port               Hegenberger Road and Airport Business Park
years ago as part of the State Tidelands Trust             area and use the proceeds to support
grants. In recent years, the Port has sold some            development of other Port projects and facilities.
properties to help finance waterfront projects,            CRE has been successful with these efforts and
but in most cases, CRE has entered into                    has generated substantial cash for the Port from
agreements with private developers to ground               the sales of property over the past 10 years.
lease and develop the projects using private
funds.




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Jack London Square                                        perhaps the voice of Jack London who is said to
                                                          have sung sea shanties (sailors’ tunes) or spun
The Port property that likely has the greatest
                                                          stories for the pleasure of those around him.
direct visibility to most Bay Area residents is
Jack London Square (JLS), at the foot of
                                                          The history of JLS dates back to the Gold Rush
Broadway. The area has a rich history of
                                                          days when ferry service between San Francisco
maritime activity. Envision the mid and late
                                                          and the City docked at the foot of Broadway. In
1800s along the City’s thriving waterfront, with
                                                          1852, when the State Legislature incorporated
tall ships sailing into the harbor and smaller
                                                          the Town of Oakland, the first meeting of the
boats making their way among the larger
                                                          board of Town Trustees was held in this
commercial operations. Those who walked the
                                                          location.
docks may have heard not only the vibrant
clamor of working sailors and laborers, but




        Picture above circa 1980


Over the last 30 years, the Port has worked to            addition    of    complementary   retail and
strengthen JLS’s traditional reputation as a              entertainment businesses, including a world-
restaurant and transportation center with the             class jazz club and a cinema.




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Jack London Square Phase II                                 of the overall revitalization of JLS. The public
                                                            market is expected to be the largest of its kind
The Port is currently working with a private
                                                            on the West Coast. The building was recently
developer on Jack London Square Phase II (JLS
                                                            completed, is six stories, and will house vendors
Phase II). The project is designed to enhance
                                                            offering local and California produce, baked
the Jack London District’s natural character, and
                                                            goods, organic products, cheese, coffee, and
enhance the public access and pedestrian
                                                            quality fresh fish and meats and artisan foods.
experience along the waterfront. Some of JLS
                                                            The Jack London Market will also house ethnic
Phase II is already completed. Once the multi-
                                                            bistros and fine dining on the second floor;
year project is fully constructed and operational,
                                                            culinary businesses on the third floor; and class-
it is expected to have created important public
                                                            A office space above.
benefits: up to 2,000 permanent jobs; 650 jobs
during the construction phase (some of these
                                                            A 32,000 square-foot retail/office building was
jobs have already been realized); an additional
                                                            completed in March 2008 as part of JLS
$2.9 million in annual taxes for the City, and
                                                            Phase II. There is a public deck on the second
attractive public waterfront access. The project
                                                            floor on the water side with views of the Oakland
received approval from the Oakland City Council
                                                            estuary and the bay, and a public lawn area
and the San Francisco Bay Conservation and
                                                            between the building and the waterfront that
Development Commission (BCDC) in 2004.
                                                            provides space for casual public enjoyment. At
                                                            one end of the structure, ten palm trees, each
The centerpiece of this redevelopment project is
                                                            rising 30 feet high, frame a path to the water’s
a 170,000-square-foot marketplace called Jack
                                                            edge.
London Market. A groundbreaking ceremony for
the market was held in October 2007 to highlight
                                                            The restoration of the building at 66 Franklin
a major step in the progress toward completion
                                                            Street to its original 1926 facade was completed
                                                                                    in June 2006.

                                                                                  A new seven-story, 1,100-
                                                                                  stall parking garage has
                                                                                  been     completed     and
                                                                                  serves     customers     at
                                                                                  Amtrak and JLS.       Also
                                                                                  included in JLS is the
                                                                                  existing Waterfront Hotel
                                                                                  which recently underwent
                                                                                  a major renovation under
                                                                                  new      ownership     and
                                                                                  management.          Other
                                                                                  projects          currently
                                                                                  envisioned include a 250-
                                                                                  room      urban      resort
                                                                                  conference center hotel
                                                                                  and spa.




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Oak-to-9th/Brooklyn Basin                                  project prior to exercising the Purchase and Sale
                                                           Agreement or Ground Lease from the Port
Over the next few years, the Oak-to-9th Avenue
                                                           (among other approvals). Close of escrow for
waterfront district, centrally located on the
                                                           the 30+/- acres to be sold as well as the
Oakland Estuary minutes from JLS and the City
                                                           execution of the ground lease for the remaining
downtown, is expected to be redeveloped as a
                                                           land are anticipated in late 2011.
new residential neighborhood by a private
developer. The concept for the area is to
                                                           Parks and Public Access
develop the underutilized former maritime
industrial district into a mixed-use waterfront            The Port's waterfront has evolved through the
neighborhood known as the Oak-to-9th/Brooklyn              decades to include commercial and recreational
Basin Project. Intended uses for the site include          development as well as significant public access
a variety of residences with a retail component,           areas. In 1999, the Port and the City approved
interconnected public parks, and open spaces.              The Oakland Estuary Policy Plan, which
The project also calls for the renovation of the           established public access policies for 5.5 miles
Clinton Basin and Fifth Avenue Marinas. The                of urban waterfront located between the Port’s
objectives of this project are to deliver a                maritime and aviation areas.        Major public
revitalized waterfront for public use and to               access improvements along the waterfront on
provide a new neighborhood for the City with a             Port-owned land already developed include:
wide range of available housing types.                     Middle Harbor Shoreline Park – 40 acres in the
                                                           heart of the seaport incorporating an informal
The Oak-to-9th Project was approved by the City            amphitheater, large open space areas,
Council on July 18, 2006. The project site is              interpretive exhibits, an observation tower,
approximately 64 acres of waterfront property              nature trails, stunning views and the City’s only
bounded by Embarcadero Road, Fallon Street,                major beach; Union Point Park – 9 acres
Tenth Avenue and the Oakland Estuary. The                  donated by the Port to create waterfront
project permits granted by the City include                recreational open space for a nearby
approval for up to 3,100 residential units                 neighborhood with a high population density of
including 465 affordable housing units, 200,000            children; Martin Luther King, Jr. Regional
square feet of ground-floor commercial space,              Shoreline – approximately 600 acres of land and
approximately 32 acres of parks and public open            water area, offering picnicking, fishing, hiking,
space, and two renovated marinas (total 170                bicycling,     boating    and   bird    watching
boat slips). The existing buildings on the site            opportunities; Estuary Park and the Jack London
are expected to be demolished with the                     Aquatic Center – within Estuary Park, a City
exception of the Jack London Aquatic Center, a             park located on Port property, in which the Port
portion of the Ninth Avenue Terminal shed                  helped fund the construction of a 16,000 square
building, and a portion of the Ninth Avenue                foot multi-purpose boathouse and community
Terminal wharf structure.                                  center; and portions of the San Francisco Bay
                                                           Trail, where 19 of the 450 miles of trail will be
The project does not include the privately-held            located in the City and its waterfront when the
property on Fifth Avenue.       The project is             regional project is completed. The Port has
expected to be constructed in four to six phases           improved several segments of the San
over a 15-17 year period.                                  Francisco Bay Trail between JLS and
                                                           Embarcadero Cove.          More public access
Pursuant to the terms of an Option Agreement
                                                           improvements are forthcoming through various
between the Port and Oakland Harbor Partners,
                                                           Port projects.
the developer is required to obtain approval of
the environmental review component of the




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                    COMMERCIAL REAL ESTATE OPERATIONS AT-A-GLANCE

    Land Area Managed:                 Approximately 876 acres

    Major Planned Developments by      Jack London Square Phase II Project:
    Private Developer:                 250,000 sq ft of retail/entertainment (completed);
                                       1,100 space public parking garage and public access;
                                       improvements throughout JLS (completed);
                                       200,000 sq ft of office space, and
                                       250-room full service hotel

                                       Oak-to-9th Project:
                                       3,100 residential units, 200,000 sq ft of commercial space,
                                       2 marinas and 32 acres of open space

    Parking:                           2,400 public parking spaces in Jack London Square

    2010 Gross Sales1:                 $50.0 million

    Current Tenant Mix:                26 Warehouse Agreements
                                       6 Hotel Agreements
                                       13 Restaurant Agreements
                                       18 Retail Agreements
                                       20 Office Agreements
                                       31 Various Other Agreements (Parking, Billboards, Radio
                                       Towers, Land, etc.)

    Public Access and Open Space:      About 600+ acres of public access and open space is located on
                                       Port-owned property managed by CRE

    Land Use Standards:                The majority of CRE properties are subject to the City of
                                       Oakland General Plan and City of Oakland land use authority as
                                       well as State Tidelands Trust restrictions. A few of the other
                                       regulatory agencies which may have regulations applicable to
                                       CRE properties are BCDC, RWQCB, CARB, DTSC, Coast
                                       Guard, Corps of Engineers and FAA
1
     Sales generated by Port tenants


Source: Port of Oakland, May 2011




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SECURITY                                                       COMMUNITY CONNECTION
After September 11, 2001, airport and seaport                  The Port recognizes that its business can
security became issues of greater national                     profoundly affect the community and the
concern. At OAK, intensified passenger security                environment.      As a result, the Port has
screening, baggage screening and matching,                     expanded its original focus on “commerce and
and other measures have been and continue to                   navigation” to include a commitment to doing its
be introduced.        OAK partners with the                    part in promoting the economic, social, and
Transportation Security Administration (TSA)                   environmental well-being of the City and the
which is within the Department of Homeland                     region.
Security (DHS) and with the Alameda County
Sheriff’s Office, which is under contract to the               The Port is located on San Francisco Bay, one
Port to provide law enforcement services at                    of    the     most    productive,   scenic    and
OAK, to evaluate and address security-related                  environmentally sensitive estuaries in the world.
issues and to implement TSA regulations. The                   The Port is committed in its role as a steward of
Port’s Maritime Division partners with the U.S.                the public trust and to improving the
Coast Guard, U.S. Customs and Border                           environment, being socially responsible and
Protection, local law enforcement and maritime                 relieving congestion. The Port engages with the
tenants and customers to tighten security at the               public, businesses, advocacy groups, tenants
seaport. The cost of meeting security guidelines               and regulatory agencies to improve its
is rising as more requirements are put into                    performance on traditional and emerging
place.                                                         environmental issues ranging from air and water
                                                               quality to climate change and sustainability.
Aviation security requirements and regulations
continue to evolve as the DHS responds to                      Alternative Energy
known and anticipated threats to aviation                      The Port is moving on several fronts to increase
security. One of the most recent changes                       the use of renewable and alternative energy.
includes the installation of Advanced Imaging                  On July 6, 2004, the Board adopted a
Technology at OAK’s passenger screening                        Renewable Portfolio Standard (RPS) for the
checkpoints.                                                   Port’s wholesale electric power.      The RPS
                                                               establishes that 20% of the Port’s electricity
The Maritime Division has several projects,
                                                               purchases for resale be from renewable sources
which include Radiation Portal Monitors, video
                                                               of energy, with an objective of 40% by 2017,
surveillance, intrusion detection and reporting
                                                               based on the 2004 adopted methodology for
system, truck tracking, communication systems
                                                               defining renewable sources.
between law enforcement/emergency agencies
and     Transportation   Worker    Identification              On April 12, 2011, Governor Jerry Brown signed
Credential (access control), that have been or                 SBX1 2 into law, setting forth new, California-
are currently being implemented to enhance                     wide RPS requirements. The new RPS requires
Port security.                                                 the Port to purchase electricity from renewable
                                                               sources at the following percentages: 20% by
The Port anticipates that it will continue to look
                                                               2013, 25% by 2016, and 33% by 2020. The
to the federal government for increased security
                                                               new law is expected to be finalized in the
funding. The major challenge to funding security
                                                               second half of FY 2012. In the latter part of FY
initiatives is that most of the grants are limited to
                                                               2012, staff will be recommending to the Board
infrastructure, training and equipment and
                                                               methodologies to implement the new RPS,
require that the participating port pay a share of
                                                               including consideration of the Port’s current goal
the costs.


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for the year 2017, which is not included in SBX1            Port over $17.5 million since 2004, and has
2.                                                          generated approximately $1 million in revenue.

The Port currently receives an allocation of                Maritime Air Quality
hydroelectric power from Western Areas Power
                                                            In the seaport area, the Port is implementing
Administration (WAPA), an agency of the United
                                                            programs to comply with air quality regulations
States Department of Energy.        Under the
                                                            and to curb the effects of emissions from Port
methodology adopted by the Board in 2004, all
                                                            sources on the environment. In 2007, the Port
of the power received from WAPA is considered
                                                            established a task force comprising neighbors,
a renewable source.         Studies are being
                                                            seaport tenants, customers, regulatory agencies
conducted by the California Energy Commission
                                                            and other stakeholders to develop the Maritime
to determine whether or not the power received
                                                            Air Quality Improvement Plan (MAQIP). The
from WAPA can continue to be counted as a
                                                            MAQIP was developed over the course of
renewable resource in the future.
                                                            almost two years in response to recognized
                                                            public health issues, complex new State
In November 2007, the Port and Sun Edison,
                                                            regulations and a broad spectrum of diverse
LLC entered into a power purchase for a solar
                                                            interests concerned with the issue of maritime-
power system located at OAK. The solar power
                                                            related air quality. The MAQIP represents the
system, which consists of nearly 4,000 panels,
                                                            Port’s comprehensive policy framework to
generates over 1,000,000 kilowatt hours of
                                                            improve air quality and public health related to
energy annually. The Port purchases all the
                                                            emissions from seaport operations. In 2008, the
energy generated by the solar power system
                                                            Board voted unanimously to adopt and
under a long-term, predictably-priced contract
                                                            implement a Maritime Air Quality Policy
for use by the Port and Port tenants.
                                                            Statement which includes a goal to reduce the
In April 2011, the Board approved the Port’s                cancer health risk from diesel particulate matter
participation in a geothermal power plant project.          (DPM) at the seaport by 85% by 2020 (using
The Port expects the project to meet 10% of the             2005 emissions as the baseline). In 2009, the
Port’s electric needs and 33% of the new 2020               Board adopted the MAQIP.
RPS requirement.
                                                            The MAQIP establishes an emissions reduction
Materials Management Program                                approach comprised of three strategies:

The OAK Materials Management Program                        1. Target emissions reductions earlier than
(MMP) is expected to process and handle over                   required by regulations (“early actions”);
700,000 cubic yards of recyclable concrete,
                                                            2. Support enforcement of regulations; and
asphalt, soil and green waste over a 15-year
period from construction, demolition, and                   3. Target emissions reductions above and
maintenance activities at OAK. The goal of the                 beyond those required by law.
MMP is to recycle all of the construction waste
on-site for use in future capital improvement               In support of these strategies, the MAQIP
projects. Recently, the MMP was expanded to                 identifies near-term control measures to guide
include recycling of construction waste                     the work of Port staff:
generated by Port tenants. In addition to saving
                                                            •   Cooperate with funding agencies in the
resources through reuse, this program reduces
                                                                retrofitting and/or replacement of Port
truck emissions by reducing the amount of
                                                                drayage trucks;
materials that need to be trucked to and from
Port construction sites. The MMP has saved the


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•   Support compliance       with   shore    power               CARB regulation for “vessels at berth.” The
    regulations;                                                 first phase of construction, at three of the
•   Promote seaport design and operational                       Port’s berths, started in Spring 2011 and is
    efficiencies;                                                expected to be completed in 2012. The
                                                                 second phase of construction will start in
•   Participate in pilot and verification projects
                                                                 early 2012 and is expected to be completed
    for pollution reduction strategies;
                                                                 by late 2013.
•   Continue early action construction emissions
                                                             •   The Vision 2000 Air Quality Mitigation
    reduction program;
                                                                 Program (V2K AQMP) was a Port-funded
•   Support enforcement of regulations through                   program of emissions reductions projects
    coordination with tenants; and                               including: truck replacements; terminal
•   Ensure accountability,      monitoring     and               cargo handling equipment retrofits, repowers
    reporting.                                                   and replacements; a tugboat engine
                                                                 replacement; AC Transit bus retrofits; air
In partnership with maritime stakeholders, staff                 quality monitoring; and other air quality
is actively seeking grants and other funding                     programs and projects.       In early 2011,
opportunities to pay for emissions reduction                     remaining V2K AQMP funds were re-
projects in support of these measures.                           allocated to other Port projects that provide
                                                                 air quality and environmental benefits.
The Port has been involved in a number of
projects to improve air quality:                             •   The Port awarded grants to terminal
                                                                 operators from 2002 to 2006 to retrofit or
•   As part of its Comprehensive Truck                           replace older cargo handling equipment
    Management Program (CTMP), the Port                          which reduced diesel pollution by 24 tons –
    coordinated with the Bay Area Air Quality                    which is equivalent to 1,200 trucks being
    Management         District  (BAAQMD)        in              taken off the roads for a year.
    FY 2009-2011 to assist Oakland drayage                   •   At the seaport, the Port constructed OIG as
    truck drivers serving marine terminals with                  part of Vision 2000, a near-dock rail terminal
    the purchase and installation of diesel                      operated by Burlington Northern Santa Fe
    particulate filters to meet State of California              (BNSF) Railway. OIG eliminated the need
    regulatory requirements.       In addition to                for a 12 mile truck trip between the Port and
    contributing $5 million for truck retrofits or               the BNSF rail yard in Richmond thereby
    replacement, the Port helped staff the                       significantly reducing truck emissions.
    trucker grant information and outreach
    center in the seaport area and helped                    Habitat Restoration and Park Development
    negotiate a compliance schedule for grant
    recipients.                                              The Port is committed to environmental
                                                             restoration as part of its developments and
•   Another key environmental initiative is the              operations. The Port has implemented and
    Shore Power Program.             Shore power             participated in a number of wetlands restoration
    provides electrical infrastructure that allow            projects around San Francisco Bay such as the
    ships to connect to the power grid and turn              Arrowhead Marsh wetlands restoration project at
    off their diesel-fueled auxiliary engines while          Martin Luther King Jr. Regional Shoreline (MLK),
    docked at the Port. Shore power is a key                 Sonoma Baylands, the Hamilton Base Wetlands
    element of the State’s Goods Movement                    Restoration Project and Damon Slough
    Emission Reduction Program and one of the                seasonal wetlands at MLK.
    principal methods of compliance with the


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A major restoration project in the heart of the               wildlife. The most comprehensive of these
seaport is the Middle Harbor Enhancement Area                 programs is to prevent pollution from water
(MHEA). Port staff coordinated with federal and               runoff, especially from industrial, construction
state agencies, community representatives and                 and municipal sources. The Port has developed
scientists to design the habitat restoration for the          a comprehensive Storm Water Management
180-acre water area of the Port’s Middle Harbor,              Plan (SWMP), currently undergoing regulatory
a former U.S. Navy vessel berthing area. It was               review, which will authorize new initiatives and
created by using dredged materials from the                   offer new enforcement mechanisms to prevent
Port’s -50 ft Project. MHEA is a model project                storm water runoff. As part of SWMP, the Port
which demonstrates the benefits of reuse of                   also engages the public, sponsoring shoreline
dredged materials to restore habitat. Birds,                  clean-up events annually since 1992.
aquatic species and eelgrass are thriving in the
area due to its specific environmental and                    Green Design
hydrological design and features.                             The concourse at OAK Terminal 2 incorporates
                                                              green building features that save energy, reduce
Adjacent to MHEA, the Port designed and
                                                              waste, and protect the environment. These
constructed the approximately 40+ acre Middle
                                                              features were selected using guidelines put forth
Harbor Shoreline Park with areas for fishing,
                                                              by the Leadership in Energy and Environmental
strolling, picnicking, bicycling and special
                                                              Design (LEED).          LEED is the nationally
events. This park offers panoramic views of San
                                                              recognized rating system developed by the U.S.
Francisco Bay, the cities of Oakland and San
                                                              Green Building Council. Terminal 2 at OAK was
Francisco, and Port maritime operations, and
                                                              awarded LEED’s Silver Certification by the U.S.
provides residents and visitors with the City’s
                                                              Green Building Council for its environmental
first and only major beach area in San Francisco
                                                              leadership in extending and renovating
Bay.
                                                              Terminal 2, the first airport passenger terminal in
                                                              the U.S. to receive the “Silver” level of this
Energy Conservation
                                                              prestigious award.
In 2011, for the fifth consecutive year, the Port
headquarters, located at 530 Water Street, was
                                                              SOCIAL RESPONSIBILITY
awarded the Energy Star label by the United
States Environmental Protection Agency (EPA)                  Some of the ways that the Port contributes to
and the United States Department of Energy                    the vitality of the City and surrounding
(DOE). The Energy Star is a joint program of                  communities are through the programs
the EPA and DOE to help Americans save                        administered by its Social Responsibility Division
money and protect the environment through                     (SRD).     SRD aims to facilitate inclusion,
energy efficient products and practices. To                   fairness, equity, and access to economic
achieve an Energy Star award, a facility must                 opportunities, programs and services of the Port
rank among the top 25% most energy efficient                  for the people and businesses in the Port
buildings in the market on a scale of 1 to 100.               community. SRD seeks to achieve access and
The Port’s headquarters scored an 84 in the                   equity through the following activities:
EPA benchmarking of facilities nationwide.
                                                              •   Administering and managing federal, state,
                                                                  local and Port policies and regulatory
Storm Water Management
                                                                  requirements as they relate to economic and
To protect the water and natural resources of                     equal employment opportunity;
San Francisco Bay, the Port implements
programs to reduce pollution and safeguard                    •   Providing the local community access to
                                                                  business and workforce opportunities;


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•   Ensuring that the Port and its contractors,               To support the NDSLBUP provisions and
    vendors and tenants fulfill their regulatory              process, the Board approved a formal Port
    compliance requirements (i.e., federal, state,            certification of small and local businesses.
    local and Port mandates);                                 Preference points and/or discounts are awarded
                                                              to bidders and proposers utilizing Port-certified
•   Promoting equitable and fair policies,
                                                              firms in the Local Impact Area (LIA)/Local
    programs and procedures for employees
                                                              Business Area (LBA). LIA firms are those
    and external stakeholders; and,
                                                              located in the cities of Oakland, Alameda,
•   Strengthening the Port’s commitment to                    Emeryville and San Leandro. LBA firms are
    strategic collaboration and outreach with key             those located in other cities outside of the LIA
    stakeholders     (Port    staff,  contractors,            but within Alameda and Contra Costa counties.
    tenants, vendors and community partners
    and residents) to maximize community                      The Port also encourages participation by firms
    economic opportunity and development.                     that have been certified as Small Business
                                                              Enterprise (SBE – meets the dollar threshold
These efforts are focused on addressing the                   earning $14 million or less in gross receipts
community’s priorities around equitable, fair and             annually) and Very Small Business Enterprise
inclusive economic opportunity, sustainable                   (VSBE – meets the dollar threshold earning $2
wages and workforce utilization, access to jobs               million or less in gross receipts annually). Port-
and business opportunities.                                   certified firms are entered into the Port’s web-
                                                              based business database, where local and small
Equitable Contracting at the Port                             businesses can receive free marketing and
On October 7, 1997, the Board adopted its Non-                where prime companies can locate small and
Discrimination and Small Local Business                       local businesses to utilize on their project teams.
Utilization Policy (NDSLBUP) to ensure non-
discrimination in Port contracting processes and              In June 2002, the Board adopted the Alternative
facilitate small and local business participation in          Project Delivery Approach (APDA) within the
Port public works and goods and services                      NDSLBUP. This collaborative policy introduced
contracts.                                                    new strategies for facilitating local and small
                                                              business participation when the project and
The NDSLBUP provides preference points for                    specifications are not sufficiently defined to allow
local, small and very small businesses bidding                bidders to identify their subcontractors,
on Port contracts; sets aside contracts for small             suppliers, or sub-consultants, at the time of bid
businesses; and facilitates technical assistance              submission. Five major enhancements were
and other financial services to ensure equitable              added to the policy to cover occasions when
access to Port contracting opportunities. The                 alternative project delivery methods are used.
NDSLBUP can only apply to those projects                      The APDA pairs minimum local and small
where no federal assistance (i.e. U.S.                        business utilization requirements with financial
Department of Transportation, Federal Aviation                incentives for exceeding goals and penalties for
Administration, etc.) is received.     Federally              under-achieving the goals:
assisted projects require specific guarantees
and special provisions that must be met in order              1. Anyone proposing to contract with the Port
to accept and retain federal monies (grants).                    must demonstrate a past history of
The NDSLBUP is a Port policy and can be                          effectively utilizing small and local
amended at any time by the Board.                                businesses, and a measurable plan for
                                                                 doing so on the project proposed.




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2. Overall minimum utilization requirements will                     based programs which contracting parties
   be set for each project.                                          will be required to use.

3. Proposers must identify goals, which meet
                                                                As a result of the NDSLBUP policy, the Port has
   or exceed the Port’s minimum requirements.
                                                                achieved noteworthy small and local business
   The winning proposer’s goals will become
                                                                utilization. As demonstrated in Table 1 below, in
   part of the contract.
                                                                FY 2010, the Port achieved 59% Local Business
4. If the contract goals are exceeded, the                      Utilization and 27% Small Business Utilization
   contracting party will be rewarded. If the                   for Port contracts in major contract categories
   goals are not met, the contracting party will                (excluding goods and services). For Local
   be penalized.                                                Business Utilization by Contract Type please
                                                                see Table 2.
5. Data on local and available firms will be
   maintained and reporting requirements will
   be integrated via frequently updated web-


  Table 1. FY 2010 Contract Dollars, Local and Small Business Utilization

   Total Contract Amount             Local Business Utilization                Small Business Utilization
   (includes “Under Bid Limit”,            (includes LIA + LBA)                      (includes SBE + VSBE)
     “Consultant” and “Public
        Works” Contracts)

         $35,425,395                $20,801,254                59%             $9,559,240                27%


  Table 2. FY 2010 Local Business Utilization Percentage

                                                                        Local Business Utilization

        Contract Type               Contract Amount                     In Dollars                Percentage


      Under the Bid Limit                 $2,487,439                   $982,075                       39%

     Consultant Contracts             $20,686,999                     $11,805,160                     57%

         Public Works                 $12,250,957                     $8,014,019                      65%

   Total Contract Amount              $35,425,395                     $20,801,254                     59%


Sustainable Wages         and     Local    Workforce            Ordinance and adjusted annually based on the
Utilization at the Port                                         Consumer Price Index for the San Francisco,
                                                                City and San Jose area.
On March 5, 2002, the voters of the City passed
Measure I, adding to the City Charter Section                   The Living Wage rate as of July 1, 2011 is set at
728 (§728) entitled "Living Wage and Labor                      $11.35 per hour for employees who receive
Standards at Port-assisted Businesses." §728                    health benefits and $13.05 per hour for
requires Port aviation and maritime businesses                  employees who do not receive health benefits.
that meet specified minimum threshold                           Specifically, §728 applies to Port contractors
requirements to pay all non-exempt employees                    and financial assistance recipients with the
a Living Wage rate established by City                          Aviation or Maritime Divisions that have


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contracts worth more than $50,000 and that                 two years as a result of the settlement of an
employ more than 20 employees who spend                    arbitrator’s award extending coverage of the
more than 25% of their time on Port-related                MAPLA to Port tenants’ construction activities
work. §728 also provides applicable employers              (through December 2006) and has been further
with incentives to provide health benefits to              extended three times by Board action and the
employees, establishes a worker retention                  concurrence of the Building Trades Unions on a
policy, and requires applicable employers to               month-by-month basis. In June 2010, the Board
provide access to payroll records in order to              extended the MAPLA for five years (through
monitor compliance. The applicable employers               June 30, 2015).
are also required to allow labor organization
representatives to access the workforce during             The MAPLA Local Hire Program continues to
non-work time and on non-work sites.                       advance the Port’s local-hire goals. The MAPLA
                                                           sets specific goals for the hiring of residents
The Board passed a resolution on August 6,                 from the Port’s LIA and LBA. LIA residents are
2002, to extend coverage of §728 to Aviation               to perform 50% of all hours worked, on a craft-
and Maritime Division tenants that have month-             by-craft basis to ensure local-resident utilization
to-month tenancy. On October 1, 2002, the                  in all crafts. If LIA residents are not available,
Board amended Port Ordinance Number 3666                   capable or willing to work, LBA residents may
with Ordinance 3719 to incorporate the                     count for compliance purposes. Subject to any
provisions of §728 and to apply those provisions           restrictions by law, apprentices are to perform
to     month-to-month      tenants      effective          20% of all project hours performed on a craft-by-
November 1, 2002.                                          craft basis and the goal is that all of these hours
                                                           will be performed by LIA resident apprentices,
The Port has also developed a number of                    with LBA resident apprentices as an allowable
strategic partnerships to stimulate local                  back up. The MAPLA also maintains a “Social
workforce utilization. Some of those efforts               Justice Trust Fund” used to fund local training
include partnering with the ATLAS program, an              and employment programs.
innovative program of Peralta Colleges designed
to create career path training and employment              Successes:
for East Bay residents in warehousing and                  •   Over 3.7 million craft hours have been
logistics   (truck    driving,  supply    chain                worked under the MAPLA resulting in
management, technologies, etc.) and the Port’s                 1.15 million LIA craft hours of employment.
partnership with labor and community through
                                                           •   LIA/LBA resident craft hours total over
the Maritime and Aviation Project Labor
                                                               2.2 million – 59% of the total craft hours
Agreement (MAPLA).
                                                               were performed by LIA/LBA workers, well
Maritime and Aviation Project Labor Agreement                  over the 50% goal established in the
                                                               MAPLA.
MAPLA was adopted by the Board in 2000. It
                                                           •   Over $109 million in wages were earned by
was intended to cover the capital projects in the
                                                               LIA/LBA residents; $57 million went to LIA
Port’s Aviation and Maritime areas. In response
                                                               residents.
to Board policies, the MAPLA was designed to
ensure project labor stability, the employment of          •   Contractors’ contribution of 15 cents per
Port LIA residents, and the utilization of Port                craft hour to the Social Justice Trust Fund
recognized small businesses.                                   has resulted in over $385,000 in grants
                                                               distributed to community groups working to
Initially adopted for five years (through                      achieve the Port’s local-hire goals.
December 2004), the MAPLA was extended for



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Challenges:                                                  ECONOMIC FORCE FOR THE REGION

•   Reduced construction activity and the                    The Port began operations in 1927 and is now in
    economic downturn have created new                       its 85th year. After more than eight decades, the
    challenges for the program.                              Port continues to meet challenges and leverage
•   Trade unions have high unemployment in                   opportunities to ensure its competitiveness and
    many prominent craft jobs such as                        financial health, which in turn allows the Port to
    carpenters, operating engineers, and                     deliver meaningful and diverse benefits locally
    electricians.                                            and regionally, as well as throughout the State
                                                             of California and beyond.
•   Increased compliance scrutiny from federal
    and state agencies who provide grants to                 The global economic downturn in 2008-2009
    the Port.                                                negatively impacted Port revenues. As we look
                                                             to FY 2012, we recognize the business climate
The Port, labor and community have benefitted                is modestly improving, but challenges will
greatly from the MAPLA. The Port has enjoyed                 continue to face the Port in light of a fragile
more than ten years of labor peace and the local             economic recovery.     Furthermore, personnel
community has gained jobs and experience                     costs, regulatory costs, and debt service
through the local hiring goals requirements of               payments are increasing significantly. The Port
the MAPLA. Through the MAPLA’s Social                        has been addressing, and will continue to
Justice Trust Fund, a national model, local                  address, these challenges aggressively in a
contractors have become proactive in investing               number of ways, including but not limited to:
in community training programs, helping the
local community to grow.                                                Pursuing revenue enhancement
                                                                        opportunities
                                                                        Reducing the capital budget
PORT PAYMENTS            TO    THE     CITY    OF
OAKLAND                                                                 Reducing operating expenses
                                                                        Debt defeasance and/or refinancing
The Port pays for a wide variety of special                             New public-private partnerships for
services provided by the City such as fire, police                      infrastructure development
and treasury. The Port anticipates paying the                           Strengthening relationships with our
City approximately $13.5 million in FY 2011 for                         business, community and labor
special services, general services, Lake Merritt                        partners, and other public agencies
payments, and for tax revenue collected on the
City’s behalf, primarily parking taxes.                      Even in these challenging times, the Port’s
                                                             economic contributions are significant. In 2010,
Although some U.S. port operations receive                   approximately $105.7 billion of economic activity
funding from local tax revenues, this is not the             was associated with the Port 1 .
case at the Port. The Port is a self-sufficient and
independent department of the City. Thus, the                Key highlights of economic activity associated
Port must generate sufficient revenue to                     with the Port include:
financially support its day-to-day operations.                          Over 73,000 jobs
While businesses at the Port are creating jobs                          Approximately $6.8 billion in direct
and revenue, they are also generating tax                               business revenue
revenues for the City and State of California.                          Approximately $4.4 billion in personal
                                                                        income

                                                             1
                                                                 Martin Associates, April 18, 2011 (draft)


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In 2011, the Board adopted a 5-year Strategic
Plan, which highlights the Port’s key goals and
objectives, including: delivering economic and
environmental benefits, growing core business
revenues, ensuring the Port’s financial health,
and optimal operational and workforce
performance. Going forward, the Port envisions
building up and allocating its resources in a
manner that is consistent with its strategic
objectives, and making critical, and sometimes
difficult decisions in order to continue its history
of providing value to its partners and being
successful. The Port will continue to manage a
competitive and dynamic business environment
through leadership, teamwork, and innovation at
all levels of the Port organization while
improving the quality of life for those who live,
work, and play in the City, its neighboring
communities and the region.




Website: www.portofoakland.com




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                             FINANCIAL POLICY GUIDELINES
The Operating and Capital Budgets are used to assess the financial strength and management of the
organization.


General Guidelines
•   The basis on which the budget is prepared is consistent with the basis of accounting used, as
    promulgated by GASB Section 1700.116. The operating budget is presented on the accrual basis of
    accounting, wherein revenues are recognized when they are earned, not when received, and
    expenses are recognized when they are incurred, not when paid.
•   The Port adopts a balanced operating budget in which total revenues exceed total expenditures.
•   All known expected revenues and expenses are reflected.
•   Expected future revenue, which may not have signed contracts, has been budgeted only to the extent
    such expectation is reasonable.
•   Incremental revenue from new capital projects, some of which are completed and others of which are
    expected to be completed within the budget period, are included in the operating revenue only to the
    extent such expectation is reasonable.
•   A monthly operating budget and quarterly capital budget variance report is analyzed and distributed
    to the Board in order to determine if corrective action is needed.

•   Funding sources for operating and capital expenditures are identified and allocated, including Port-
    generated cash, bonds and commercial paper proceeds, grant proceeds, Passenger Facility Charges
    and Customer Facility Charges.

•   The City Charter requires the Port to send its adopted Budget to the City by the third Monday in July.


Bond Covenant
•   The Port’s Bond Indentures require a minimum debt service coverage ratio of 1.25 for Senior Lien
    and 1.10 for Intermediate Lien debt service.


Board-Initiated Reserve Policies
•   Port Operating Reserve Fund – 12.5% of operating expense budget.
•   Port Bond Reserve Fund (separate from Debt Service Reserve Funds held by Trustee) – established
    at $30.0 million.
•   Capital Reserve Fund – established at $15.0 million.




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Financial Reporting Policies
•   Include Statement of Net Assets; Statement of Revenues, Expenses and Changes in Net Assets; and
    Statement of Cash Flow in financial reporting.
•   Prepare financial statements in accordance with accounting principles generally accepted in the
    United States of America, as promulgated by GASB.
•   Adopted GASB Statement No. 34, Basic Financial Statements and Management Discussion and
    Analysis for State and Local Governments, for financial reporting beginning Fiscal Year ended
    June 30, 2002.

•   The Port is a department, and accounted for as a public enterprise fund, of the City and its year-end
    financial reports are included in the City's Comprehensive Annual Financial Report.
•   Produce fully allocated income statements by business line for annual variance reporting.

•   Conduct an annual independent external audit in accordance with generally accepted auditing
    standards.
•   Include an annual management letter prepared by external auditors for management and the Board.
•   Adopted GASB Statement No. 43, Financial Reporting for Post Employment Benefit Plans Other
    Than Pension Plans, and GASB Statement No. 45, Accounting and Financial Reporting by Employers
    for Post Employment Benefits Other Than Pensions, beginning Fiscal Year ending June 30, 2008.
•   Adopted GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation
    Obligations, beginning Fiscal Year ending June 30, 2009.




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                             OPERATING BUDGET PROCESS




The Port’s operating budget is an essential and major component in the Port's overall planning and
management process. The operating budget is a plan for each division's operating revenue and
expenses and for Port-wide non-operating income and expenses.

Preliminary budget policies are determined early in the cycle by executive management. Preliminary
budget meetings provide the opportunity for discussion and review of new programs, and proposed
increases in revenue and expenses, as well as operational needs. Budget instructions, forms and
worksheets based upon the outcome of these meetings are distributed in April to all divisions and
departments responsible for budget preparation. The primary responsibility for budget preparation rests
with the division directors and each division is responsible for presenting a seasonally-adjusted proposed
budget. The Financial Services Division ensures consistency in budget submissions and compiles the
proposed budgets.

A three-year operating budget is presented to the Board, which adopts the upcoming year’s operating
budget. The subsequent years’ operating budgets are provided in concept only. The final budget is
adopted through resolution of the Board. Copies of the adopted budget are provided to various City
officials in accordance with the City Charter. The operating budget may only be amended by a resolution
of the Board.

During the fiscal year, monthly variance reports are produced comparing actual monthly results to
seasonally-adjusted monthly budgets.




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                        OPERATING BUDGET HIGHLIGHTS AND ASSUMPTIONS
OBJECTIVES
•     Develop a balanced budget in which total revenues exceed total expenditures.
•     Develop an operating budget that strives to achieve an Intermediate Lien debt service coverage
      ratio(1) (DSCR) of at least 1.32x.
•     Maintain a minimum General Fund cash balance at the end of the fiscal year of at least $85 million.
•     No layoffs.
•     No furloughs.

GENERAL

•     FY 2012-14 Operating Revenues for Aviation, Maritime and Commercial Real Estate (CRE) and
      Utilities are based on divisional input incorporating known market and competitive factors, existing
      contracts, viability of outstanding agreements, and the execution of anticipated future contracts.

•     FY 2012 Operating Expenses incorporate known and anticipated cost increases and decreases, with
      an emphasis on reducing contractual services, supplies and general and administrative costs in
      aggregate by $4.2 million compared to FY 2011 Budget and negotiating $3.3 million of Labor
      adjustments.
•     FY 2013 and FY 2014 Operating Expense incorporate known and anticipated cost increases and
      decreases.

FY 2012 REVENUE BUDGET HIGHLIGHTS AND ASSUMPTIONS
Note: All comparisons are to FY 2011 Budget, unless otherwise noted.
•     Port-wide Operating Revenues of $296.6 million are $5.0 million or 1.8% higher than FY 2011
      anticipated actuals; $14.7 million or 5.2% higher compared to FY 2011 Budget.
•     Aviation Revenues of $135.7 million are $6.7 million or 5.2% higher compared to FY 2011 Budget;
      Aviation Revenues for FY 2011 are anticipated to meet budget.

           Enplanements projected to be 4.76 million or flat compared to FY 2011 Budget.
           Parking Revenues increase by $0.5 million or 2.2%.
           Cargo-related rental revenues increases included in certain signed contracts of $3.6 million.
•     Maritime Revenues of $141.9 million are $1.8 million or 1.3% lower than FY 2011 anticipated actuals;
      Maritime Revenues for FY 2011 are anticipated to be $9.7 million higher than FY 2011 Budget. In
      comparison to FY 2011 Budget, Maritime Revenues for FY 2012 of $141.9 million are $7.9 million or
      5.9% higher.
           Full TEU growth rate is 3% higher than FY 2011 anticipated actuals (or 4% higher compared to
           FY 2011 Budget).
           $2.7 million increase in Ports America lease pursuant to signed contract.
           Changes in container activity among terminals results in a net $1.8 million decrease in projected
           revenues compared to FY 2011 anticipated actuals.
(1)   Intermediate Lien DSCR is Net Revenues (as defined in the Bond Indentures) divided by net debt service on Senior and Intermediate
      Lien Bonds and DBW Loan.


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        Space assignment and truck parking revenues is $0.7 million or 7% lower than FY 2011
        anticipated actuals ($0.9 million or 11% higher compared to FY 2011 Budget).
        BNSF lease at OIG is assumed to be extended at existing lease rate terms for one year.
        Inland Point Intermodal (IPI) Incentive Program of $2 million for ocean carriers.

•   CRE Revenues of $11.4 million are $0.5 million or 4.3% higher compared to FY 2011 Budget; CRE
    Revenues for FY 2011 are anticipated to meet budget.
        Parking revenues and percentage rent consistent with FY 2011 Budget.
        Assumed close of escrow on Oak-to-Ninth project by January 1, 2012.

•   Utilities Revenues of $8 million is $0.3 million or 3.9% lower compared to FY 2011 Budget.
        Electricity revenues anticipated to increase modestly due to ships utilizing shore power; offset by
        one-time capacity management charges for the new FAA tower that were recognized in FY 2011.

FY 2012 OPERATING EXPENSE BUDGET HIGHLIGHTS AND ASSUMPTIONS

Note: All comparisons are to FY 2011 Budget, unless otherwise noted.
•   Port-wide Operating Expenses before (i) Depreciation and Amortization and (ii) Absorption of Labor
    and Overhead to Capital Assets are flat compared to FY 2011 Budget.

•   Port-wide Operating Expenses before Depreciation and Amortization are lower by $1.3 million or
    0.8%.
•   Personnel costs is higher by $4.5 million or 5.6%; Personnel costs represent 51% of the Operating
    Expense Budget before (i) Depreciation and Amortization and (ii) Absorption of Labor and Overhead
    to Capital Assets.
        474 Full-time Equivalents (FTEs); currently 467 FTEs.
        No layoffs.
        No furloughs.
        CalPERS employer pension contribution rate increase from 19.9% to 23.6%, resulting in a $2.6
        million or 27% increase.
        Post retirement benefits (retiree medical costs or “OPEB”) increase by $1.3 million or 13% based
        on an updated actuarial study, using January 2011 data.
        Workers’ Compensation expense increase by $0.6 million or 57% based on an updated Workers’
        Compensation actuarial study, using March 2011 data.
        Medical premiums assumed to increase 10% on January 1, 2012, resulting in $0.9 million
        increase.
                                                                 1
        $3.3 million of Labor adjustments negotiated and realized .
        Vacancy factor of, on average 15 FTEs due to retirements, normal attrition and normal lags in
        hiring; results in reduction of Personnel costs of $2.25 million.




________________________
1
    The SEIU and WCE contracts expire on June 30, 2011. The Local 21 contract calls for a wage re-opener for FY 2012. The IBEW
    contract expires on December 31, 2011.



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•   Significant Decreases in Non-Personnel Operating Expenses.
        Middle Harbor Shoreline Park costs decrease by $0.35 million or 35% due to full year of new
        management contracts in place. Compared to FY 2010, costs are 61% lower.
        Electricity for Port use decreases by $1.0 million due to forward utility rate contracts.
        Absorption of Labor and Overhead to Capital Assets higher by $1.5 million; that is the amount of
        Port salaries and overhead which is allocated to the capital budget (not included in operating
        budget) increase due to higher personnel costs and capital expenditures. See “5-Year Capital
        Needs Assessment”, page E-1.

•   Significant Increases in Non-Personnel Operating Expenses.
        Increased sewer and utility substation maintenance cost of $0.3 million due to regulatory
        changes.
        Maintenance dredging increase by $0.2 million or 10% due to regulatory requirements impacting
        FY 2011-13.

FY 2012 NON-OPERATING EXPENSE BUDGET HIGHLIGHTS AND ASSUMPTIONS
Note: All comparisons are to FY 2011 Budget, unless otherwise noted.
•   Interest income of $2.5 million is lower by 54% due to low interest rate environment and changes in
    treatment of accounting accruals associated with bond premiums. Interest earnings rate on Port
    funds assumed to be 0.2 – 1.2%.

•   Interest expense of $70.5 million, which includes letter of credit fees and accounting accruals, is lower
    by $6.0 million, or 8% due to repayment of bond principal and changes in treatment of accounting
    accruals associated with bond premium.
        The Port’s revenue bonds and Department of Boating and Waterways (DBW) loan bear interest
        at fixed rates ranging from 3.25% to 5.875%.
        The Port’s Commercial Paper (CP) Program has a maximum rate of 12%. The Port assumes a
        0.3% interest rate for its outstanding CP notes.
•   Passenger Facility Charges (PFC) revenue of $19.9 million is virtually unchanged compared to FY
    2011 Budget, reflecting the relatively flat projected enplanement growth rate for FY 2012. PFCs are
    approved by the FAA and used to fund eligible capital improvement for specific projects at OAK. See
    “Capital Project Funding Sources – Passenger Facility Charges,” page E-12.
•   Customer Facility Charges (CFC) revenue of $4.8 million is 14.1% higher compared to FY 2011
    Budget (or 1.5% higher than FY 2011 anticipated actuals). CFCs are used to reimburse rental car
    and shuttle bus operating costs and to fund improvements of the rental car facility at OAK. See
    “Capital Project Funding Sources – Customer Facility Charges,” page E-13.

•   Other income (expense) reflects the one-time gain of $12.7 million on the sale of Oak-to-Ninth
    partially offset by payments to the City for general services and Lake Merritt maintenance of $2.2
    million, $0.6 million in retroactive CalPERS retirement contribution for airport servicemen, $0.8 million
    for demolition of Building L-142 at North Field and $0.4 million for the transfer of ownership of Damon
    Slough.
•   Loss on abandoned and demolished assets budgeted at $0.3 million annually.




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•   Grants from government agencies include anticipated AIP grants and Maritime grants for
    reimbursement of certain capital expenditures. See “Capital Project Funding Sources”, pages E12
    and E13.


FY 2013 and 2014 REVENUE PROJECTION HIGHLIGHTS AND ASSUMPTIONS
FY 2013
•   Port-wide Operating Revenues of $314.3 million is $17.7 million or 6% higher compared to FY 2012
    Budget.

•   Aviation Revenues increase by $10.8 million or 8% compared to FY 2012 Budget.
        Enplanements anticipated to increase 2.25% compared to FY 2012 Budget.
        Cargo related rental revenue increases included in certain signed contracts of $2.5 million.
        Rates and charges true-up adjustments.

•   Maritime Revenues increase by $5.8 million or 4% compared to FY 2012 Budget.
        Full TEU growth rate of 3.5% compared to FY 2012 Budget.
        $2.7 million increase in Ports America lease pursuant to signed contract.
        Rate increase at most terminals pursuant to lease terms.
        $0.3 million increase in space assignment revenues resulting from anticipated tariff increase.
        New long-term lease anticipated for OIG with terms and conditions similar to current lease.
        IPI Incentive Program continues.

•   CRE Revenues of $11.6 million increase by $0.2 million or 2% compared to FY 2012 Budget.
        Increase in percentage rent projections.
        Rental adjustments.

•   Utilities Revenues of $8.9 million is $0.9 million or 11% higher compared to FY 2012 Budget.
        3% increase for gas and water revenues.
        Additional electricity revenues from anticipated increase in shore power use.

FY 2014
•   Port-wide Operating Revenues of $321.2 million is $6.9 million or 2.2% higher compared to FY 2013
    Projected.

•   Aviation Revenues decrease $1.0 million or 1.0% compared to FY 2013 Projected.
        Enplanements anticipated to increase 2.25% over FY 2013 Projected.
        Reflects no rates and charges true-up adjustments.

•   Maritime Revenues increase by $5.9 million or 4% compared to FY 2013 Projected.
        Full TEU growth rate of 3.5% compared to FY 2013 Projected.
        $0.7 million increase in Ports America lease pursuant to signed contract.
        No IPI Incentive Program anticipated.
        Full year impact of anticipated tariff increase at certain terminals.




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        New lease for Berths 25-26 marine terminal anticipated with terms and conditions similar to
        current lease.

•   CRE Revenues of $12.3 million increase by $0.7 million or 6% compared to FY 2013 Projected.
        Adjust certain below-market leases up to market rents primarily in the Business Park.

•   Utilities Revenues of $10.3 million is $1.4 million or 15% higher than FY 2013 Projected.
        3% increase for gas and water revenues.
        Additional electricity revenues from assumed increase in shore power use.

FY 2013 AND 2014 OPERATING EXPENSE PROJECTION HIGHLIGHTS AND ASSUMPTIONS

•   Operating Expenses before (i) Depreciation and Amortization and (ii) Absorption of Labor and
    Overhead to Capital Assets assumed to increase 2.6% and 4.3%, in FY 2013 and FY 2014,
    respectively.

•   Personnel costs
        FTEs increasing to 480 FTEs by FY 2014 (additional 6 FTEs from FY 2012 Budget).
        No layoffs.
        No furloughs.
        Medical premiums assumed to grow at 8.75% and 7.75% in FY 2013 and FY 2014, respectively,
        based on recent OPEB actuarial study.
        CalPERS employer pension contribution rate assumed to be 24.9% and 28.4% based on
        CalPERS projections as provided to the Port (a 6% and 14% increase in FY 2013 and FY 2014,
        respectively).
        $5.6 million of Labor adjustments negotiated and realized in FY 2013 and FY 2014 each.
        Vacancy factor of, on average, 13 FTEs due to retirements, normal attrition and normal lags in
        hiring; results in reduction of Personnel costs of $2 million.

•   Non-Personnel costs are assumed to grow in aggregate at 3% per annum.
•   Utilities Cost of Sales increases proportional to increased usage.

FY 2013 AND 2014 NON-OPERATING REVENUE & EXPENSE PROJECTION HIGHLIGHTS AND
ASSUMPTIONS
•   Interest income is higher as interest earnings rate assumed to increase to 0.7% – 1.7% and 1.2% –
    2.2%, respectively, in FY 2013 and FY 2014.
•   Interest expense increases as interest rate on Port’s outstanding Commercial Paper Notes assumed
    to increase to 0.3% – 1.3% and 0.8% – 1.8%, respectively in FY 2013 and FY 2014 and outstanding
    debt increases based on 5-Year Capital Needs Assessment, See Section E, “Capital Budget and
    Capital Needs Assessment.”

•   PFC’s increase at rate of projected enplanement growth rate of 2.25% in FY 2013 and 2.25% in
    FY 2014.

•   CFC’s increase at rate of projected enplanement growth rate of 2.25% in FY 2013 and 2.25% in
    FY 2014.



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•    Other income (expense) reflects payments to the City of Oakland for general services and Lake
     Merritt maintenance of approximately $2.2 million and $0.7 million in retroactive CalPERS retirement
     contributions for airport servicemen for both FY 2013 and FY 2014.

•    Loss on abandoned and demolished assets budgeted at $0.3 million annually.
•    Grants from Government Agencies include anticipated AIP grants and Maritime grants for
     reimbursement of certain capital expenditures and is based on 5-year Capital Needs Assessment.
     See “Capital Project Funding Sources”, pages E12 and E13.

DEPRECIATION AND AMORTIZATION

The budget for Depreciation and Amortization reflects the anticipated rate of depreciation on the existing
asset base and additions to the asset base based on anticipated in-service date and life expectancy of
capital projects.

PRELIMINARY DEBT SERVICE AND DEBT SERVICE COVERAGE RATIO

•    Debt Service is scheduled to increase $7.3 million in FY 2012 compared to FY 2011.

•    The Port’s scheduled bond debt service payments, anticipated interest payments on its outstanding
     CP Notes, as well as projected debt service associated with new borrowings to support the Port’s
     capital expenditures are as follows:

                                                         FY 2011                 FY 2012                FY 2013                 FY 2014

Existing Bond Debt Service                               105,187                 113,052                 114,007                 114,007

Projected New Bond Debt Service1                                   0                      0                 2,783                   7,648

DBW Loan                                                       458                     457                    457                      457

CP Interest2                                                   867                     333                     929                  1,624

Total Debt Service                                       106,513                 113,842                 118,176                 123,736
                            3
Less: Pledged Funds                                             n/a                    621                     n/a                     n/a

Total Net Debt Service                                   106,513                 113,221                 118,176                 123,736
                                4
Intermediate Lien DSCR                                          n/a                  1.32x                  1.40x                   1.35x
                      5
Combined DSCR                                                   n/a                  1.31x                  1.39x                   1.33x




1   In FY 2013, it is assumed that $106 million of the Port’s outstanding CP Notes is taken out with bonds in order to free-up CP capacity and
    lock in long-term interest rates.
2   CP Notes outstanding balance fluctuates between $87-$150 million and interest rate assumed to be 0.3% - 1.8%.
3   Unspent Series M Bond proceeds is being pledged toward debt service.
4   Intermediate Lien DSCR is Net Revenues (as defined in the Bond Indentures) divided by net debt service on Senior and Intermediate Lien
    Bonds and DBW Loan.
5   Combined DSCR is Net Revenues (as defined in the Indentures) divided by net debt service on Senior and Intermediate Lien Bonds, DBW
    Loan and CP Notes interest.



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CHANGE IN PORT EQUITY AND CHANGE IN NET ASSETS
The projected Change in Port Equity for FY 2012 is a positive $7.6 million, compared to negative $14.5
million for FY 2011 Budget. The projected Change in Net Assets for FY 2012 is a positive $33.5 million,
an increase of $16.8 million compared to FY 2011 Budget.

The projected Change in Port Equity for FY 2013 and FY 2014 is $8.4 million and $6.7 million,
respectively.

The projected Change in Net Assets for FY 2013 and FY 2014 is $33.0 million and $46.8 million,
respectively.




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                                      STATEMENT OF REVENUE, EXPENSES AND CHANGE IN NET ASSETS
                                        FOR THE FISCAL YEARS ENDED JUNE 30, 2010 THROUGH 2014
                                                           (In $Thousands)

                                                                                           Proposed                                         Variance % Variance
                                                            Actual          Budget           Budget        Projected       Projected       2012P vs.  2012P vs.
Division                                                   2009-10          2010-11          2011-12         2012-13         2013-14          2011B      2011B
Operating Revenue
Aviation                                              $ 126,593       $ 129,019 $ 135,699 $ 146,489 $ 145,473 $                               6,680        5.2%
Maritime                                                139,029         134,011   141,864   147,700   153,564                                 7,853        5.9%
CRE                                                      11,485          10,932    11,398    11,597    12,305                                   466        4.3%
Utilities                                                 8,118           8,360     8,035     8,912    10,285                                  (325)      -3.9%
Bad Debt Reserve                                              0            (421)     (426)     (426)     (426)                                   (5)      -1.2%

Total Operating Revenue                                   285,225           281,902         296,570         314,273         321,202          14,668        5.2%

Operating Expenses
Administration                                                 (61)               0            (258)           (266)           (279)           (258)         n/a
Aviation                                                   (72,706)         (74,197)        (74,954)        (77,376)        (80,366)           (757)      -1.0%
Maritime                                                   (16,770)         (18,090)        (17,576)        (18,450)        (19,211)            513        2.8%
Commercial Real Estate                                      (6,339)          (6,532)         (6,291)         (6,484)         (6,704)            241        3.7%
Corporate Administrative Services                           (3,583)          (4,187)         (3,114)         (3,218)         (3,356)          1,073       25.6%
Information Technology                                      (2,878)          (3,418)         (3,560)         (3,674)         (3,822)           (141)      -4.1%
Engineering                                                 (8,061)          (9,214)        (10,479)        (10,960)        (11,428)         (1,265)     -13.7%
Environmental Programs & Planning                           (2,671)          (2,609)         (2,758)         (2,849)         (2,975)           (150)      -5.7%
Utlilities Cost of Sales                                    (4,497)          (4,818)         (4,482)         (5,176)         (6,023)            336        7.0%
Social Responsibility                                       (1,559)          (1,661)         (1,814)         (1,872)         (1,956)           (153)      -9.2%
External Affairs                                                 0                0          (2,350)         (2,425)         (2,523)         (2,350)         n/a
Executive Office                                            (1,395)          (1,471)         (1,207)         (1,245)         (1,295)            264       17.9%
Board of Port Commissioners                                   (447)            (471)           (540)           (557)           (580)            (69)     -14.7%
Office of Audit Services                                    (1,131)          (1,170)         (1,268)         (1,309)         (1,370)            (98)      -8.4%
Port Attorney's Office                                      (3,911)          (4,478)         (4,371)         (4,510)         (4,695)            107        2.4%
Financial Services                                          (5,075)          (4,867)         (5,150)         (5,368)         (5,573)           (283)      -5.8%
Non-Departmental Expenses                                  (30,982)         (28,927)        (26,103)        (24,907)        (25,769)          2,824        9.8%

Absorption of Labor & Overhead to                          12,166            10,124          11,585          12,073          11,938           1,461      14.4%
 Capital Assets
Depreciation & Amortization                                (98,810)       (102,085)         (99,323)       (100,191)       (100,654)          2,762       2.7%

Total Operating Expenses                                  (248,709)       (258,070)        (254,014)       (258,764)       (266,641)          4,056        1.6%

Operating Income        (A)                                36,516            23,832          42,556          55,509          54,561          18,724      78.6%

Non-Operating Items
Interest Income                                              8,570            5,443           2,488           3,660           4,862          (2,955)     -54.3%
Interest Expense                                           (82,676)         (76,426)        (70,458)        (72,795)        (75,260)          5,968        7.8%
Passenger Facility Charges (PFC's)                          19,702           19,881          19,934          20,382          20,841              53        0.3%
Customer Facility Charges (CFC's)                            4,530            4,177           4,764           4,871           4,981             587       14.1%
Abandoned Capital Assets                                      (358)            (300)           (300)           (300)           (300)              0        0.0%
Other Income (Expenses)                                     (5,847)           8,857           8,629          (2,893)         (2,985)           (228)      -2.6%
                       (B)                                 (56,079)         (38,368)        (34,943)        (47,075)        (47,861)          3,425        8.9%

Capital Contributions
Grants from Government Agencies (C)                        21,343            31,218          25,891          24,613          40,097          (5,327)     -17.1%
CHANGE IN NET ASSETS (A+B+C)                          $      1,780    $      16,682    $     33,504    $     33,047    $     46,797    $     16,823     100.8%

Net Assets, Beginning of the Year                       889,206         890,986          907,668         941,172           974,220           16,682       1.9%
Net Assets, End of the Year                           $ 890,986       $ 907,668        $ 941,172       $ 974,220       $ 1,021,016     $     33,504       3.7%

Change in Port Equity (A+B)                           $ (19,563) $          (14,536) $        7,613    $      8,434    $      6,700    $     22,149     152.4%

Change in Port Equity before
 PFC's and remaining CFC's                            $ (39,735) $          (34,724) $      (12,767) $ (12,032) $           (14,212) $       21,957      63.2%

Senior Lien Debt Service Coverage Ratio                       1.76             2.03            1.99            2.10            2.29
Intermediate Lien Debt Service Coverage Ratio                 1.42             1.28            1.32            1.40            1.35
Combined Debt Service Coverage Ratio                          1.42             1.27            1.31            1.39            1.33
Operating Ratio                                              52.6%            55.3%           52.2%           50.5%           51.7%

Funded FTE's (Full-Time Equivalent)                          446.5              465             474             477             480




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                                  STATEMENT OF OPERATING EXPENSES
                        FOR THE FISCAL YEARS ENDING JUNE 30, 2010 THROUGH 2014
                                           (In $Thousands)


                                                                                             Variance % Variance
                                 Actual     Budget       Budget     Projected   Projected   2012 B vs. 2012 B vs.
Operating Expenses              2009-10     2010-11      2011-12      2012-13     2013-14      2011 B     2011 B

Personnel Services              (81,813)    (80,061)     (84,572)    (85,442)    (89,515)      (4,511)     -5.6%
Contractual Services            (53,037)    (58,892)     (56,324)    (58,503)    (60,217)       2,569       4.4%
Supplies                         (3,500)     (3,308)      (3,214)     (3,310)     (3,409)          95       2.9%
General & Administrative        (18,062)    (19,484)     (17,962)    (18,501)    (19,056)       1,522       7.8%
Utilities                        (4,497)     (4,818)      (4,482)     (5,176)     (6,023)         336       7.0%
Departmental Credits             11,008      10,579       11,862      12,359      12,233        1,283      12.1%
Depreciation & Amortization     (98,810)   (102,085)     (99,323)   (100,191)   (100,654)       2,762       2.7%

Total Operating Expenses       (248,709)   (258,070)    (254,014)   (258,764)   (266,641)      4,056        1.6%




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                                                                                        PORT OF OAKLAND
                                                                                       ORGANIZATION CHART
                                                                                              Fiscal Year 2011-12

                                                                            474 Funded FTEs (Full-Time Equivalents)

                                                                                                   BOARD OF
                                                                                                     PORT
                                                                                                 COMMISSIONERS
                                                                                                   7 members                   SECRETARY of
                                     PORT                   AUDIT
                                                                                                                                the BOARD
                                   ATTORNEY                SERVICES
                                                                                                                                  2 FTEs
                                    13 FTEs                 7 FTEs

                                                                                                 Executive Director
                                                                                                           3 FTEs
                                                                                                                                                      Acting Deputy
                                                                                              -Labor Relations
                                                                                                                                                        Executive
                                                                                                                                                         Director
                                                                                                                                                           1 FTE




                                                                                                                                                                      CORPORATE          SOCIAL
                                                                                                                                                 ENVIRONMENT
                                                                                                                         ENGINEERING                                    ADMIN         RESPONSIBILITY
    FINANCIAL                                                                                        EXTERNAL                                     PROG/PLAN
                           AVIATION               MARITIME                     CRE                                         53 FTEs                                     SERVICES           9 FTEs
    SERVICES                                                                                          AFFAIRS                                       12 FTEs
                            249 FTEs               66 FTEs                    8 FTEs                                                                                    13 FTEs
      30 FTEs                                                                                          8 FTEs

                                                                                                                       -Administration           -Administration   -Administration    -Administration
-Administration       -South Airport         -Administration & Finance   -Development           -Administration        -Project Design &         -Compliance and   -Human Resources   -Economic Opportunity &
-Finance/Controller     --Administration     -Business Development &     -Asset Management      -Gov’t Affairs           Delivery – Aviation       Safety          -Organizational     Contract Compliance
-Financial Planning     --Services             Marketing                 -Building Services     -Community Relations   -Project Design &         -Aviation/         Effectiveness     -Equal Employment
-Purchasing             --Planning &         -Terminal Operations &                             -Communications          Delivery – Maritime       Commercial                          Opportunity
-Risk Management           Development         Security                                                                -Utilities                  Real Estate
                        --Airport Business   -Facilities                                                               -Engineering Services     -Maritime
                        --Landside                                                                                     -Information Technology
                            Operations
                        --Airside
                            Operations
                        --Security
                        --Properties
                      -North Airport
                      -Marketing
                      -Facilities
                        --Administration
                        --Construction &
                            Maintenance
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                                          STAFF SUMMARY
Since FY 2008, the Port has reduced its FTEs by approximately 30% to address the severe downturn in
the economy. The FY 2011 Budget reflected 465 funded positions.

During FY 2011, the Port completed a five-year Strategic Plan and determined it needed to add two key
senior level positions to implement the initiatives set forth in the Strategic Plan. This effectively raised the
FY 2011 FTEs to 467. In addition, the Port created an External Affairs Division, added a Labor Relations
Department, moved the Information Technology Department from Financial Services to Engineering, and
realigned the Executive Office, Corporate Administrative Services, and Social Responsibility Divisions.
The divisional and departmental reorganizations kept the FTEs at 467.

For FY 2012, the Port is budgeting for the addition of seven FTEs including a full-time Deputy Executive
Director and Director of Engineering to fulfill the objectives of the Port’s FY 2012 Budget. The FY 2012
Budget reflects 474 FTEs.

In FY 2012, the Port will be re-evaluating its organizational structure (“Organizational Re-alignment”). At
this time, no assumptions can be made with respect to what changes to the Port’s organizational
structure, if any, are to be made as a result of the Organizational Re-alignment efforts.




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                                                 STAFF SUMMARY
                                               (FULL-TIME EQUIVALENT)
                                                                                        Adjusted2
                                                                       Unaudited         Budget        Funded3
                                                                        2009-101        2010-11        2011-12
               FTEs
               Administration4                                                    0.5          0              1
               Aviation                                                          238         249            249
               Maritime                                                         62.5          65             66
               Commercial Real Estate                                               8          8              8
               Corporate Administrative Services5                               16.5          14             13
               Engineering                                                         37         38             41
               Information Technology6                                             12         12             12
               Environmental Programs & Planning                                  12          12             12
               External Affairs7                                                  n/a          8              8
               Social Responsibility8                                               7          8              9
               Board of Port Commissioners                                          2          2              2
               Executive Office9                                                    4          3              3
               Audit Services                                                       7          7              7
               Port Attorney10                                                     13         13             13
               Financial Services                                                 27          29             30


               Total FTEs                                                      446.5         467            474


 1    Represents FTE positions that were filled as of June 30, 2010.
 2    See Notes 4-9 below.
 3    3 FTEs are limited duration appointments
 4    Deputy Executive Director.
 5    Added Director of Administration, transferred Port Assistant Management Analyst from SRD, transferred Equal Opportunity
      Department to SRD, and transferred Media Public Relations Department to External Affairs.
 6    Transferred Executive Assistant to External Affairs (shared with CRE).
 7    Added Director of External Affairs, transferred Media Public Relations Department from CAS, transferred Government
      Affairs Department from Executive, transferred 1 FTE from Community Relations from SRD, and transferred 1 Executive
      Assistant from IT.
 8    Transferred Equal Opportunity Department from CAS, transferred 1 FTE in Community Relations to External Affairs, and
      transferred 1 Port Assistant Management Analyst to CAS.
 9    Transferred Government Affairs Department to External Affairs Division and added Labor Relations Advisor.
 10   Transferred 1 FTE to Executive Office.




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                              PERSONNEL SERVICES BY DIVISION1
                                                     ($ THOUSANDS)


                                                    Actual           Budget         Budget        Projected        Projected
                                                  2009-10           2010-11        2011-12         2012-13          2013-14

 Administration2                                       61                 0             251             260              272
 Aviation                                          32,542            32,749          34,546          35,756          37,497
 Maritime                                           9,968            10,296          11,281          11,662          12,220
 Commercial Real Estate                             1,397             1,270           1,360           1,406           1,474
 Corporate Administrative Services                  2,834             2,979           2,519           2,605           2,724
 Engineering                                        6,818             6,383           7,449           7,699           8,070
 Information Technology                             1,833             1,918           2,086           2,156           2,258
 Environmental Programs & Planning                  2,225             1,964           2,122           2,194           2,300
 External Affairs                                       0                 0           1,361           1,407           1,474
 Social Responsibility                              1,342             1,228           1,505           1,555           1,629
 Board of Port Commissioners                          259               252             337             348              365
 Executive Office                                     869               849             767             791              828
 Audit Services                                     1,106             1,131           1,231           1,271           1,331
 Port Attorney                                      2,645             2,714           2,716           2,805           2, 939
 Financial Services                                 4,371             4,109           4,470           4,620           4,844
 Non-Departmental                                  13,572            12,219          10,571           8,909           9,291

 TOTAL PERSONNEL SERVICES                          81,813            80,061          84,572          85,442          89,515

 % Change from Prior Year                                             -2.1%           5.6%             1.0%            4.8%


 1   Mainly consist of salaries, fringe benefits, retiree medical costs, workers’ compensation, overtime, temporary help,
     professional development, continuing education, training, college tuition program, meal allowance, unemployment insurance
     and vacation/sick leave accrual.
 2   Deputy Executive Director.




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                              SALARIES AND FRINGES BY DIVISION1
                                                         ($ THOUSANDS)


                                                     Budget FY 2010-11                             Budget FY 2011-12
                                              Salaries       Fringes          Total        Salaries        Fringes          Total

Administration2                                     0              0             0             180             71             251
Aviation                                       21,599         10,613        32,212          22,199         12,219         34,418
Maritime                                        6,917          3,267        10,184           7,347          3,823         11,170
Commercial Real Estate                            871            398         1,269             903            454           1,357
Corporate Administrative Services               1,652            793         2,445           1,313            687           1,999
Engineering                                     4,341          2,007         6,348           4,922          2,493           7,415
Information Technology                          1,223            599         1,822           1,322            678           2,001
Environmental Programs & Planning               1,330            631         1,961           1,390            724           2,114
External Affairs                                    0              0             0             904            430           1,334
Social Responsibility                             836            371         1,208             956            475           1,432
Board of Port Commissioners                       176             76           252             230            104             334
Executive Office                                  593            256           849             526            241             767
Audit Services                                    789            341         1,131             831            400           1,231
Port Attorney                                   1,884            806         2,690           1,819            872           2,692
Financial Services                              2,801          1,275         4,076           2,944          1,472           4,416
Non-Departmental3                                   0              0             0          (1,500)        (2,250)         (3,750)

TOTAL                                          45,012         21,434        66,446          46,285         22,894         69,179
Funded FTEs                                                                    465                                           474


   1   Salaries and Fringes for FY 2011-12 Budget reflect an increase of $2.7 million or 4.1% compared to FY 2011 Budget.
       Salaries include merit pay, step increases, and overtime pay. Fringes include Employer CalPERS, Employee CalPERS
       paid by the Port, health insurance, life insurance, disability insurance, vision and dental costs, employee assistance, and
       Medicare payments.

   2   Deputy Executive Director.

   3   Non-Departmental includes assumed salary and fringe savings resulting from vacancy factor and a portion of labor
       adjustments. When these adjustments are known, actual savings will be applied to divisions.




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FY 2011-12                                                                                      Aviation Division




establish the City as the preferred airport for traveling passengers and air cargo carriers. This department
also promotes OAK to commercial airlines that are considering San Francisco Bay Area service.
AVIATION FACILITIES
Aviation Facilities performs ongoing maintenance, repair and construction of airport facilities and physical
plant components.

•       Aviation Facilities Administration manages and coordinates Aviation Facilities’ activity,
        administers small public works contracts and provides technical and administrative program support.
•       Construction and Maintenance maintains building exteriors, landscaping, pavement, drainage,
        fences, dikes and the interior of the airport terminals which includes electrical, lighting, heating,
        ventilating and air conditioning systems, baggage handling systems, elevators, escalators and
        passenger loading bridges.




                                            ACTIVITY LEVELS
                                                 (Thousands)
                                            Actual          Budget      Budget      Projected       Projected
                                           2009-10          2010-11     2011-12       2012-13         2013-14
    Enplaned Passenger Traffic               4,777            4,746       4,764        4,871            4,981
    % Growth                                 -3.6%          -0.65%       0.38%        2.25%            2.25%
    Landing Weight                       8,830,255      8,518,000     8,488,649    8,658,422       8,831,590
    % Growth                               -12.25%         -3.54%        -0.34%       2.00%           2.00%
    Air Freight + Mail (lbs)             1,079,243      1,083,629     1,105,302    1,127,408       1,149,956
    % Growth                                -9.70%         0.41%         2.00%        2.00%           2.00%
    Parking Volume                              942             959         908          929              949
    % Growth                                -9.77%           1.80%      -5.32%        2.31%            2.15%
    AirBART Ridership                           756             769         754          771              788
    % Growth                                -9.57%           1.72%      -1.95%        2.25%            2.20%




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                                             AVIATION DIVISION
                                             OPERATING REVENUE
                                                    ($ Thousands)
                                               Actual           Budget     Budget      Projected       Projected
                                              2009-10           2010-11    2011-12       2012-13         2013-14

    Fueling Revenue                             3,590             3,511      3,720         3,928            4,057
    Field Revenue                              29,042            29,654     29,922        29,954          28,970
    Terminal Concessions                       18,797            18,949     19,068        19,144          19,237
    Other Terminal                              5,656             6,072      6,619         7,980            7,781
    Other Airport Rentals                      19,777            19,810     24,364        26,651          26,879
    Parking and Ground Access                  28,002            28,127     28,828        29,479          30,142
    Terminal Rent                              21,176            22,659     22,976        29,226          28,306
    Delinquency Charges                           217               59          21            21               21
    Miscellaneous                                 336              178         181          106                81
        Subtotal                              126,593           129,019    135,699      146,489          145,473
    Bad Debt Reserve                                0             (101)      (101)         (101)            (100)
    TOTAL                                     126,593           128,919    135,598      146,388         145,373

•      FY 2013-14:          Terminal rent lower by $0.9 million or 3% due to decreased rates and charges.

•      FY 2012-13:       Other terminal revenues higher by $1.3 million due to increased baggage revenue
       (rates and charges). Other airport rentals higher due primarily to cargo related rental revenue
       increases of $2.5 million as a result of rate increases included in certain signed contracts. Parking
       revenues increase by $0.7 million or 2.3%. Terminal rent increases by $6.2 million primarily due to
       the loss of airline credits related to prior years’ true-up adjustments.

•      FY 2011-12:      Other terminal revenues higher by $0.5 million due to increased customs and
       baggage revenues (rates and charges). Other airport rental revenue increases $4.6 million or 30%
       primarily due to cargo related rental rate increases included in certain signed contracts of $3.6 million.
       Parking and ground access higher by $0.7 million.

•      FY 2010-11:       Field revenue increases primarily due to higher landing fees of $1.2 million (rates and
       charges) partially offset by lower ground handling revenues of $0.6 million. Other terminal revenue
       higher by $0.4 million due to increased baggage revenue (rates and charges). Terminal rent increase
       of $1.5 million or 7% due to increased rates and charges.




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FY 2011-12                                                                                            Aviation Division




                                              AVIATION DIVISION
                                             OPERATING EXPENSES
                                                     ($ Thousands)
                                                   Actual         Budget       Budget     Projected       Projected
                                                  2009-10         2010-11      2011-12      2012-13         2013-14

    Personnel Services                             32,542         32,749        34,546      35,756           37,497
    Contractual Services                           36,493         38,293        37,215      38,331           39,481
    Supplies                                        2,038          1,647          1,539      1,586            1,633
    General & Administrative                        1,632          1,695          1,676      1,727            1,778
    Dept’l (Credits) Charges                            0           (188)          (22)        (23)             (24)
    TOTAL                                          72,706         74,197        74,954      77,376           80,366
    Funded FTEs (headcount)                           238            249           249         249               249

Personnel Services
•      FY 2011-12:    CalPERS pension employer contribution rate increasing from 19.9% to 23.6%.
       Health care premiums assumed to increase 10% on January 1, 2012.
•      FY 2010-11:    Includes the impact of furlough/mandatory layoff days and impact of retirement
       program and reduction in force that occurred during FY 2009-10.

Contractual Services
•      FY 2011-12:      Major maintenance and runway repair costs lower by $0.3 million; security and life
       related services lower by $0.3 million.
•      FY 2010-11:      Alameda County Sheriff expenses higher by $0.7 million partially mitigated by lower
       security and life related services. Increased major maintenance $0.3 million and Airport Shuttle
       Service (AirBART & parking lot shuttle) by $0.4 million.

Supplies
•      FY 2011-12:         Lower maintenance supplies partially offset by higher electrical supplies.
•      FY 2010-11:         Primarily lower maintenance, electrical, janitorial and mechanical supplies.

Dept’l (Credits) Charges
•      FY 2011-12:         Elimination of interdepartmental transfer of $0.2 million.
•      FY 2010-11:         Interdepartmental transfer budgeted at $0.2 million.




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                                                  MARITIME DIVISION
                                                                               AREA MAP
                                                                                                                                                  Lake
                                                                                              MA


                                                                                                                                                  Merritt
                                                                              AD




                                                                                                                              BRO
                                                                                                RK
                                                                                ELI




                                                                                                  ET




                                                                                                                                 ADW
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                                                                                                     ST.




                                                                                                                                                                                 ST.




                                                                                                                                                    OAK
                                                                                                                                                                          E. 8TH
                                                                                      ST.




                                                                                                                                    AY
                                                                                                                 980




                                                                                                                                                        ST.
                                                                          Oakland
                                                                  Port
                                                                Boundary                                                                                      RO
                                                                                                                                                          ADE
                                                                                                           T.                                       ARC
                                                                                                       S                                      EMB
                                              Former Oakland




                                                                                                   7TH                         Port
                                                Army Base




                                                                 Oakland Int’l.                                              Boundary
                                                                   Gateway
                                   MARITIME ST.




                       Ports
                      America                                     (BNSF Railway
                                                                                                                     Charles P. Howard
                      Ports                                       Intermodal Yard)
                                                                                             880
                      America                                                                              Schnitzer Terminal (Matson)
                                                                                                                Steel
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                                                                                                                         r




                                                                                                                                  Port Offices    Jack
                                                                                                                           o




                                                                                                                                                                Estuary Park &
                                                                                                                        rb




   80                 Terminal                                     Railport–Oakland                                                              London          J.L. Aquatic
                                                                                                                        Ha




                                                                          (Union Pacific                                                         Square             Center
                                                                                                                    er




          Outer
                                                                                                                 Inn




                                                                        Intermodal Yard)
          Harbor                                                                              Global Gateway
                                                                     RD.
                                                                                                                                                           da
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                TraPac                                     ARB
                                                       LE H
                                                                                                                                                     e
                                                                                                                                                 lam
                                                 D
                Terminal                      MID
                                                                  Oakland Int’l
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                        Middle     (Hanjin)
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                                                                                                  San Francisco Bay
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FY 2011-12                                                                                   Maritime Division




                                         MARITIME DIVISION
                                               FUNCTION
To manage, promote and develop modern logistics facilities, services and programs which stimulate
international business and trade; to provide increased revenue to support the overall mission of the Port;
and to promote economic growth in the San Francisco Bay Area.


                                    DEPARTMENT FUNCTIONS
The Maritime Division manages the Oakland seaport. In December 2008, the Board approved a
reorganization of the Maritime Division which streamlined the functions and reorganized staff into three
main areas. The Administration and Finance area works on all existing business such as current
contracts and capital projects. The Business Development and Marketing area focuses on maintaining
and increasing business. The Terminal Operations and Security, and Maritime Facilities (also known as
Harbor Facilities) manage tenant relations, security and safety, facility and equipment maintenance,
utilities and diving services.

Maritime Administration and Finance develops, coordinates and manages all Maritime Division
programs in order to achieve the division’s stated function, goals and objectives. The department
provides general oversight and management direction for division personnel and business operations.

Specifically, the department provides:

    •    Administration for marine terminal agreements such as terminal pricing, contract negotiations,
         billing, tariff adjustments and auditing activity.
    •    Financial analysis and projections, including budget development and statistical data collection.
    •    Planning, project management and grant development for all marine terminals and related
         infrastructure facilities and capital projects.
    •    Management of Maritime air quality improvement initiatives and regulatory compliance.
    •    Long-term operational strategic planning for other ancillary issues that arise from the operation
         of the seaport including rail negotiations.

Maritime Business Development and Marketing develops, recommends and implements a broad
range of targeted marketing and business development programs to address the commercial, operational,
and strategic needs of the seaport and its customers while maximizing the utilization of seaport assets
and services.

Specifically, the Maritime Business Development and Marketing department:

    •    Seeks opportunities in domestic and foreign markets; formulates and executes market entry
         strategies.
    •    Develops and maintains business relationships with ocean carriers, terminal operators,
         beneficial cargo owners (importers/exporters), railroads, and other supply chain partners from
         the local operational offices to the senior executives at global headquarters.




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    •    Actively markets vacant land within the seaport area and manages the entire business
         development process from solicitation and selection of the optimum business partner to the
         execution of the final lease agreement.
    •    Identifies, targets and influences cargo flows using intermodal services and other multimodal
         logistics capabilities to promote Oakland as a preferred gateway to/from Asia in addition to
         promoting the entire U.S. West Coast through the U.S. West Coast Collaboration consisting of
         the six major U.S. West Coast container ports and the two western railroads.
    •    Coordinates maritime marketing activities to support the Port’s public relations and governmental
         affairs efforts.
    •    Manages a marketing communication program that focuses on strategies to differentiate
         Oakland from other U.S., Canada, and Mexico gateways and grow market share.
    •    Coordinates overseas agency representation and supports senior level overseas trade missions.
    •    Fosters sister-port relationships and other international collaborative partnerships.
    •    Gathers and analyzes statistical data and other market intelligence.

Maritime Terminal Operations and Security is responsible for day-to-day contact with the local terminal
operators and serves as the liaison between marine tenants and Port services. The wharfingers
determine maintenance and repair responsibilities and coordinates with the Harbor Facilities Department
by issuing work orders and assigning priorities based on tenant needs. The wharfingers also serve as the
day-to-day liaison with U.S. Customs, U.S. Coast Guard, the San Francisco Bar Pilots, the Marine
Exchange, and the Harbor Safety Committee, as well as other government entities. The operations area
ensures that Port tariff requirements and marine terminal lease terms are enforced, and markets and
manages space assignment and non-marine terminal leases. Operations is also responsible for
implementation of the CTMP.

•    Security for the Port is managed by the Port Facilities Security Officer (PFSO). The PFSO acts as a
     liaison between the U.S. Coast Guard, U.S. Customs and Border Protection, local law enforcement
     and the eight marine terminal operators with respect to security regulations and enforcement
     strategies. The PFSO is a member of the Northern California Area Maritime Security Committee and
     the Port Readiness Committee. The PFSO ensures compliance with all mandates of the Federal
     Maritime Transportation Security Act and United States Coast Guard Facility. The PFSO is also
     responsible for planning, developing and evaluating seaport security programs and public safety
     activities in the seaport area. In addition, the PFSO manages Port security grant programs.

Maritime Facilities, also known as the Harbor Facilities Department, is responsible for maintaining Port-
owned utilities, facilities and equipment primarily in the harbor and CRE areas and to a lesser extent at
OAK and the Airport Business Park. It also provides support during construction of capital projects;
performs regular and preventive maintenance; administers major maintenance through the Port’s annual
on-call contracts; and provides first response and stabilization during emergencies and natural disasters.
Following are the major functions within the department:

•    Facilities Management plans, leads, organizes and controls the department’s budget, programs,
     resource management and cost allocation. It interfaces with other departments and divisions and
     oversees job prioritization and general day-to-day operations. Facilities Management controls and
     updates the facility master table for much of the Port. The group interfaces with its clients to
     mutually prioritize work and establish levels of service for maintenance of facilities within its areas of



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     responsibility. It also provides contract administration and railroad master-track inspection and
     coordination. Under existing agreements, Facilities Management oversees certain utility work
     performed by staff on the City’s portion of the former OAB and prepares and sends out cost reports
     to Engineering’s Utilities Department who bills the City as appropriate.

•    General Maintenance performs a wide variety of maintenance services within the harbor and CRE
     areas. This group plans, coordinates, maintains, inspects and performs roofing, paving, building
     maintenance, carpentry, painting and striping, miscellaneous signage, and custodial services; and
     oversees landscaping/gardening/weed-abatement in the harbor and CRE areas and Airport Business
     Park (which is currently outsourced). The group also maintains and sweeps Port-controlled roads;
     provides flood response; maintains shorelines, parks, storm drains, catch basins, and sanitary
     sewers; and supports special events. The General Maintenance group will undertake construction
     activities when requested and often acts in a “general contractor” capacity, drawing on various
     harbor facility trades when needed.

•    Utilities Group “operates” and maintains all Port-owned water and power distribution systems within
     the harbor and CRE areas and is also responsible for both Port and City-owned facilities at the
     former OAB. This group supports the Engineering Division in implementing major public works
     contracts in underground utility locations, shutdowns, temporary utilities, inspections, facility
     startup/turnovers, and sometimes takes the lead on certain construction requests. The group reads
     over 200 electric, gas and water meters. It also provides fire prevention services throughout the Port
     including OAK. The group also maintains approximately 50 electrical substations (including two
     115kV Outer Harbor substations that feed OAB and Treasure Island), approximately 10 sewer lift
     stations, and provides heating, ventilation and air conditioning, security, fabrication, welding and
     related services. The group also maintains streetlights and assists in responding to problems with
     railroad crossing protection on Port-owned roads.

•    Fleet Maintenance maintains and services Port vehicles, construction equipment, and aircraft crash
     and fire rescue vehicles. This group is responsible for preparation of vehicle specifications,
     procurement, registration, smog compliance, and disposal of surplus equipment through the Port’s
     procurement policies for all Port equipment. The group also coordinates the operation of the Port’s
     fossil fuel and compressed natural gas fueling stations, including leak monitoring, daily inspections
     and fuel procurement. The group coordinates its operations with the Port’s Environmental Programs
     and Planning Division and conforms its operations to comply with various air quality regulations as
     well as the Highway Patrol bi-annual terminal inspections.

•    Diving Services plans, coordinates, and performs inspection and repair of the Port’s waterfront
     marine structures throughout the harbor and CRE areas and the runway light structure, tide gates
     and buoys at OAK. Primary work includes programmed inspection/repair of approximately 27,000
     concrete piles to prevent structural failure of decks/cranes as well as pile inspection during
     construction. The Diving Services group is capable of providing on-call response for aircraft and
     ferry boat accidents in the San Francisco Bay, provides first response on waterside oil spill
     containment and raises/disposes of derelict vessels in coordination with the Environmental Programs
     and Planning Division. The group also performs miscellaneous whaler/chock, marine fender, ferry
     float, tide gate, and related repairs within all Port areas as requested and as time allows.

•    Crane Design and Maintenance performs design and specification services for purchasing,
     upgrading, modifying, maintaining, surplusing and replacing the Port’s container cranes. The group
     also provides project management, and construction administration, and oversees construction


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       inspection, testing, loading, delivery, unloading and commissioning of cranes. The group is
       responsible for the structural integrity and major operational maintenance of Port-owned container
       cranes.



                                        MARITIME DIVISION
                                          ACTIVITY LEVELS
                                            Actual            Budget      Budget    Projected         Projected
                                           2009-10            2010-11     2011-12     2012-13           2013-14

Number of Deep Water Cargo Vessels           1,873             1,890       2,088       2,088               2,088

Total Loaded TEUs 1 Handled              1,703,570          1,752,390   1,821,913   1,885,385         1,951,075
% Growth                                    8.75%              2.87%       3.97%       3.48%             3.48%

1   TEU – Twenty-Foot Equivalent Unit

•     Increased activity not always proportional to revenue increase because of Minimum Annual
      Guarantees (MAG) and agreements.
•     Activity levels assume renewal of agreements that expire in FY 2011-12 through FY 2012-14 period,
      as well as completion of capital projects.
•     Anticipated FY 2010-11 Number of Deep Water Cargo Vessels is 2,068.
•     Anticipated FY 2010-11 Total Loaded TEUs Handled is 1,769,391.




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FY 2011-12                                                                                      Maritime Division




                                        MARITIME DIVISION
                                         OPERATING REVENUE
                                                ($ Thousands)
                                              Actual          Budget     Budget     Projected        Projected
                                             2009-10          2010-11    2011-12      2012-13          2013-14

    Inner Harbor                              10,122            9,962    10,095       10,399           10,554
    Middle Harbor                             71,150           68,379    72,259       74,349           77,095
    7th Street Harbor Complex                 17,889           16,469    17,793       17,996           18,204
    Outer Harbor                              28,473           29,240    31,946       34,851           35,578
    Space Assignments                          9,717            8,382     9,260        9,573             9,579
    Oakland International Gateway              1,678            1,579     2,511        2,532             2,554
    Miscellaneous                                  0               0     (2,000)      (2,000)                 0
        Subtotal                             139,029          134,011   141,864      147,700          153,564
    Bad Debt Reserve                               0            (250)      (250)       (250)             (250)
    TOTAL                                    139,029          133,761   141,614      147,450          153,314

•      FY 2013-14:      Middle Harbor revenues higher by $2.7 million due to full year impact of anticipated
       tariff increase and over MAG activity. Outer Harbor revenues increase of $0.7 million due to
       contractual rent escalation. Berths 25-26 lease term assumed to be extended at terms and conditions
       similar to the current lease. 7th Street Harbor Complex revenues higher by $0.2 million due to over
       MAG revenues. No IPI incentive program anticipated.

•      FY 2012-13:      Middle Harbor revenues increase by $2.1 due to anticipated semi-annual tariff
       increases and over MAG activity. Outer Harbor revenues higher by $2.9 million primarily due to
       contractual rent increase. New long-term lease for OIG anticipated with terms and conditions similar
       to current lease. Space assignment revenue gains due to anticipated tariff increases. IPI incentive
       program for ocean carriers.

•      FY 2011-12:       Middle Harbor and 7th Street Harbor Complex revenues increase by $3.9 million and
       $1.3 million, respectively, due to higher over MAG activities. Outer Harbor revenues increase by $2.7
       million due to contractual rent escalation. BNSF lease at OIG is assumed to extend at existing lease
       terms for one year. Space assignment revenues higher primarily due to increased rental and truck
       parking activity. IPI incentive program of $2.0 million for ocean carriers.




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                                             MARITIME DIVISION
                                            OPERATING EXPENSES
                                                    ($ Thousands)
                                                   Actual          Budget    Budget    Projected        Projected
                                                  2009-10          2010-11   2011-12     2012-13          2013-14

    Personnel Services                             9,968           10,296    11,281      11,662           12,220
    Contractual Services                           4,543            5,154     3,974       4,397             4,529
    Supplies                                       1,253            1,337     1,360       1,400             1,442
    General & Administrative                       1,028            1,315       996       1,026             1,057
    Dept’l (Credits) Charges                         (22)             (13)      (34)        (35)              (36)
    TOTAL                                         16,770           18,090    17,576      18,450           19,211
    Funded FTEs (headcount)                         62.5               65        66          66                66

Personnel Services
•      FY 2011-12:    Salaries higher by $0.4 million due to addition of 1.0 FTE for Maritime Security
       Project Administrator. Cost of new FTE partially offset by elimination of consultant expenses.
       CalPERS pension employer contribution rate increasing from 19.9% to 23.6%. Health care premiums
       assumed to increase 10% on January 1, 2012.
•      FY 2010-11:     Includes impact of furlough/mandatory layoff days and impact of retirement program
       and reductions in force that occurred in FY 2009-10.

Contractual Services
•      FY 2011-12:       Reallocation of CTMP costs of $0.9 million and major maintenance expenses of $0.5
       million to the 5-Year Capital Needs Assessment budget; $0.4 million in lower costs for Middle Harbor
       Shoreline Park partially offset by increases of $0.3 million for sewers (inspection, cleaning, repair),
       $0.2 million for crane maintenance and $0.2 million for electrical repairs.
•      FY 2010-11:    Increase in CTMP expenses of $0.9 million compared to $0 in 2010, higher
       professional consulting expenses of $0.3 million partially mitigated by lower crane maintenance
       expenses of $0.2 million and electrical repairs of $0.4 million.

Supplies
•      FY 2010-11:         Increase in automobile fuel cost.

General & Administrative
•      FY 2011-12:   Higher reimbursement to the Port by the City related to the costs of maintaining utility
       system at OAB of $0.3 million.
•      FY 2010-11:   Lower reimbursement to the Port by the City related to the costs of maintaining utility
       system at OAB of $0.3 million.




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                                            Area Map
                                                           Oa
                                                                kla




                                                                                                                                  980
                                                                      nd
                                                                           Es
                                                                                tu
                                                                                     ar
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                                                                                              Howard
            N                                         Alameda,                                Terminal
                                                                                                                                       AY
       W                                              Oakland,                                                                      ADW
                                                                                                                                 BRO
                                                      SF Ferry
                                                            Ports
                                                           America
                                                                                                                                Oakland




                                                                                                            EMB
            E                                                Port
        S




                                                                                                               ARCA
                                                                                                                                            ST.
                                                           Offices                                                                      OAK




                                                                                                                   DERO
                                                                                                                                                Lake
                                                                                                                                                   Merritt
                                                                       Jack
                                                                      London
                                                                      Square




                                                                                                                                        E. 8TH
                                                               Estuary                                      9th Ave.
                                                                Park &                                      Terminal




                                                                                                                                          ST.
                                                             J.L. Aquatic
                                                                Center
                                                                                                                             Coast
                                                 Alameda                                                                    Guard Is.


                                                                       Embarcadero




                                                                                                                                                    E. 12TH
       San Francisco                                                      Cove
            Bay



                                                                                                                                                      T.    S
                                                                                          Union Point
                                                                                                                                                 29TH AVE.

                                                                                                                                                     IT-
                                                                                                                                                 FRU LE
                                                                                                                                                  VA E.
                                                                                                                                                    AV



                                                                                                                                                   HIGH ST.


                                                                                                                                                  880
                                                                                                   San
                                          Alameda                                                Leandro
                                                                                                                                     RT ST.




                                                                                                   Bay
            Port Boundary
                                                                                                                                OAKPO




                                                                                           M.L. King, Jr.
                                                                                          Reg’l. Shoreline
                                                                                                Park
                                                                                     DR.




                                                                                                                       R.
                                                                                                                 ATER D
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                                                                                                                                     Oakland
                                                                                                                                     Coliseum
                                                                                                                                                            .
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                                                             North                                                                                    R
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                                                                                              .




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                                                                                                                                       G
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                               Cargo       Oakland
                                          Maintenance
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                        Oakland             Center                                                                           Oakland Airport
                                                        Y




                  International Airport                                                                                      Business Park
                                                        .




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                                                                                              98T
                                                 AIRPO                                              HA
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                                                      R
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                                                        Metropolitan
                                  a ry




                                                         Golf Links
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                                                                                                    San            Leandro
                            Po




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FY 2011-12                                                                           Commercial Real Estate Division




                             COMMERCIAL REAL ESTATE DIVISION
                                                  FUNCTION
To care for, promote, develop and enhance the City’s urban waterfront for economic benefit and public
enjoyment. Our customers include:

       •      Businesses and individuals who manage, purchase, develop and/or lease Port land, buildings,
              marinas and other facilities;
       •      Employees and patrons of those businesses;
       •      Users of the public spaces such as streets, plazas, piers and promenades; and
       •      Other Port divisions and departments.

The CRE Division performs several major functions: marketing and managing Port assets; providing
information, services and special events to the public; planning and facilitating new development on the
urban waterfront; and providing building services support to all Port divisions.



                                          OPERATING REVENUE
                                                 ($ Thousands)
                                                Actual           Budget    Budget       Projected       Projected
                                               2009-10           2010-11   2011-12        2012-13         2013-14

    Jack London Square                          5,853             5,920     6,270           6,554           6,807
    Embarcadero Cove                            1,649             1,483     1,613           1,708           1,782
    Business Park                                 624               650       663            655              673
    Distribution Center                           257               257       257            300              599
    Other Areas                                 3,102             2,622     2,595          2,379            2,444
           Subtotal                            11,485            10,932    11,398         11,597           12,305
    Bad Debt Reserve                                  0             (70)      (75)           (75)             (75)
    TOTAL                                      11,485            10,862    11,323         11,522           12,230

Jack London Square
•      FY 2011-12 through FY 2013-14:      Increase in percentage rents and density adjustments (actual
       constructed building square footage higher than originally projected at time of ground lease signing).

Embarcadero Cove
•      FY 2011-12 through FY 2013-14:       Projected increase in percentage rent and rate adjustments.

Other Areas
•      FY 2012-13:     Lower rental income due to the anticipated close of escrow on the Oak-to-Ninth
       project by January 1, 2012.



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                               COMMERCIAL REAL ESTATE DIVISION
                                       OPERATING EXPENSES
                                               ($ Thousands)
                                             Actual          Budget    Budget       Projected       Projected
                                            2009-10          2010-11   2011-12        2012-13         2013-14

    Personnel Services                        1,367           1,270      1,360         1,406            1,474
    Contractual Services                      4,618           4,801      4,537         4,674            4,814
    Supplies                                     85             124        124           128              132
    General & Administrative                    425             493        430           443              456
    Dept’l (Credits) Charges                  (156)            (156)     (161)          (166)           (171)
    TOTAL                                     6,339           6,532      6,291         6,484            6,704
    Funded FTEs (headcount)                       8               8          8              8                8

Personnel Services
•      FY 2011-12:    CalPERS pension employer contribution rate increasing from 19.9% to 23.6%.
       Health care premiums assumed to increase 10% on January 1, 2012.
•      FY 2010-11:      Includes impact of furlough/mandatory layoff days and impact of retirement program
       that occurred in FY 2009-10.

Contractual Services
•      FY 2011-12:    Lower security and life related services and Jack London Square common area
       maintenance of $0.3 million.




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                                UTILITIES
                                    AREA MAP

                            Ben E. Nutter                                                                    Port
                             Terminal                                                                      Boundary
                                                     Outer
                         Port View          TraPac Harbor
                           Park               Terminal     Ports                                    80
                              Middle Harbor                America
                              Shoreline Park               Outer Harbor
                                                                Ports
                                                           Terminal
                                                             America
                                                                                       MARITIME ST.

                                                   MIDD
                                       TTI Terminal
                                 Oak




                                       (Hanjin)      LE H
                                   land




                                                         ARB                           880
                                       E st
                                         uar



                                                          OR R


                                                                     BNSF Railway
                                          y




                             Oakland International                  Intermodal Yard                                                         ST.
                                                            .  D




                             Container Terminal (SSA) Union Pacific                                                                      NE
                                                       Intermodal                                                                     ELI
                                                                                                                                    AD
                                                           Yard
                                                                                                Oakla nd
                                               Global Gateway                                                                                 ST.
                                                                                                                                         ET
                                               Central (EMS/APL)                                                                       RK
                                                         Inn
                                                                                              7TH                               MA
                                                             er
                                                                                                T.S
                                                                Ha
                                                                  rb                                                 980
                                                                    or

                                                                   Charles P. Howard
                                                                           Terminal                                                 AY
                                                                                                                                 ADW
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                                                                    Offices
                                                                                              E MB A
                                                                                                RCAD




                                                                       Jack
                                                                                                                                    T. La
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                                                                                                                               OA
                                                                                                     E




                                                                      Square                                                           rr
                                                                                                  RO




                                                                                                                                                itt
                                                                                                                              E. 8TH




                                                                                               9th Ave.
                                                                                               Terminal
                                                                                                                                ST.
                                                                                                          Coast Guard Is.




                                                          Alameda
                                                                                                                                         E. 12TH




       San Francisco
                                                                                                                                          ST.




            Bay

                                                                                                                                             E.
                                                                                                                                     29TH AV

                                                                                                                                           IT-
                                                                                                                                        FRU LE
                                                                                                                                         VA E.
                                                                                                                                          AV



                                                                                                                            HIGH ST.




                                     Bay Farm Island                                      San
                                       (Alameda)
                                                                                                                            OAKPO




                                                                                        Leandro
                                                                                          Bay
                                                                                                                    RT ST.




                                                                          .           Port
                                                                       WY
                                                                     PK             Boundary
             Port
                                                            AY
           Boundary
                                                      O   RB
                                                   RB
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                                                                                                                             Oakland
                                                                               TT




                                                                                                      R.




                                                                                                                             Coliseum
                                                                         DOOLI




                                                                                                           D




                                                                                                                                               .             Sources of Utility Revenues
                                                                                                     WATER




                                                                                                                                            RD
                                                                 North                                                                   ER
                                               RON




                                                                                                                                     G                       Aviation Division
                                                                 Field                                                            ER
                                                                                                                                NB
                                                                                                EDGE




                                                                                                                              GE
                                                 COW




                             AIR CARGO WAY
                                                                                                                            HE
                                                                                    R.




                                                                                                                                                             Maritime Division
                                                                                 EE D
                                                   AN P




                                  Air
                                 Cargo
                                                                                PARD
                                                        KWY




                                           Oakland
                       Oakland
                                                            .




                                          Maintenance
            N    International Airport
                    (South Field)
                                            Center
                                                                                                   880
       W
                                                   AIRPOR
             E                                           T DR.                                                 98TH AV
       S                                                                                                              E.

                               Port
                                                                              Oakland
                                                                               Metro.
                             Boundary                                         Golf Links
6/10




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FY 2011-12                                                                           Utilities - Engineering Division




                           UTILITIES – ENGINEERING DIVISION
                                                FUNCTION
The Utilities Department is a unit within the Engineering Division and provides the expertise to manage
the Port’s utility distribution system (electrical, gas, water, sewer and telephone). It ensures that the Port
plans, operates and upgrades its utility systems in an effective and efficient manner in compliance with all
rules and regulations. The Utilities Department purchases and manages the delivery of electricity to the
Port’s customers at OAK and in certain Maritime areas. It also obtains renewable energy for the Port,
takes measures to reduce the Port’s greenhouse gas emissions due to electricity generation and
promotes energy efficiency. The Utilities Department is comprised of technical and administration
sections, see “Engineering Division – Utilities” on page D-4. Utility revenues and cost of sales are
reported separately for budget purposes. Personnel costs, maintenance and other associated expenses
of the Utilities Department are included as part of the Engineering Division budget.




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                                UTILITIES – ENGINEERING DIVISION
                                          REVENUE BY AREA
                                              ($ Thousands)
                                             Actual          Budget    Budget    Projected          Projected
                                            2009-10          2010-11   2011-12     2012-13            2013-14

    South Airport                            1,849            2,269     1,707        1,499              1,544
    North Airport                            1,842            2,086     2,087        2,150              2,214
    Marine Terminals – Retail                  685              501       501          516                532
    Marine Terminals – Wholesale             3,258            3,159     3,396        4,395              5,634
    Commercial Real Estate                     111              112       111          114                118
    Oakland Army Base                          373              253       233          238                244
    TOTAL                                    8,118            8,360     8,035        8,912             10,285

                                   REVENUE BY COMMODITY TYPE
                                              ($ Thousands)
                                             Actual          Budget    Budget    Projected          Projected
                                            2009-10          2010-11   2011-12     2012-13            2013-14

    Electricity – Retail                       779              596       596          614                632
    Electricity – Wholesale                  6,948            6,650     6,888        7,994              9,343
    Electricity – Capacity                     102              481       325            73                 73
    Gas                                         89               48        48            49                 51
    Telecom – Capacity                           0              330         0              0                 0
    Water                                      143              128       128          132                136
    Water – Capacity                             0               77         0              0                 0
    Miscellaneous                               57               50        50            50                 50
    TOTAL                                    8,118            8,360     8,035        8,912             10,285

•      FY 2012-13 and 2013-14:     Higher Marine Terminals-Wholesale revenues projected due to ships
       utilizing shore power.
•      FY 2012-13:    Lower revenues at South Airport due to one-time revenue gain of $0.25 million from
       capacity charges at the East Apron in FY 2011-12.
•      FY 2011-12:    Decreased revenue at South Airport due to one-time revenue gain of $0.8 million
       from capacity charges for the new FAA tower at South Airport in FY 2010-11 partially mitigated by
       one-time revenue gain of $0.25 million from capacity charges at the East Apron.




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                                 UTILITIES - ENGINEERING DIVISION
                                          COST OF SALES BY AREA
                                                   ($ Thousands)
                                                 Actual          Budget    Budget      Projected         Projected
                                                2009-10          2010-11   2011-12       2012-13           2013-14

    South Airport                                   994             802        647          666                686
    North Airport                                 1,036           1,258        933          961                990
    Marine Terminals – Retail                       670             501        525          541                557
    Marine Terminals – Wholesale                  1,606           2,056      2,173        2,798              3,573
    Commercial Real Estate                          105             112        117          120                124
    Oakland Army Base/OHIT                           84              89         88            90                 93
    TOTAL                                         4,497           4,818      4,482        5,176              6,023



                                  COST OF SALES BY COMMODITY TYPE
                                                   ($ Thousands)
                                                 Actual          Budget    Budget      Projected         Projected
                                                2009-10          2010-11   2011-12       2012-13           2013-14

    Electricity – Retail                            760             596        626          644                664
    Electricity – Wholesale                       3,589           4,045      3,681        4,350              5,173
    Gas                                              51              49         48            49                 51
    Water                                            97             128        128          132                136
    TOTAL                                         4,497           4,818      4,482        5,176              6,023

•      FY 2012-13 and 2013-14:        Marine Terminals – Wholesale costs projected higher due to increased
       utilization of shore power.
•      FY 2011-12:    Decrease cost of sales at the South and North Airport due to lower commodity costs.
       Marine Terminals – Wholesale increase due to short power use commencing in February 2012.
•      FY 2010-11:         Marine Terminals – Wholesale costs higher due to increased load at TTI Terminal.




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FY 2011-12                                                              Corporate Administrative Services Division




               CORPORATE ADMINISTRATIVE SERVICES DIVISION
                                              FUNCTION
The Corporate Administrative Services (CAS) Division provides administrative support services to internal
customers – the executive, revenue and support divisions and the Board, and maintains effective
partnerships with external customers – job applicants, program associates and employee organizations.
These services are carried out by the departments of Administration, Human Resources, and
Organizational Effectiveness.


                                    DEPARTMENT FUNCTIONS

CAS ADMINISTRATION
CAS Administration provides the management direction and coordination of the departments and
functions within the division.

HUMAN RESOURCES
The Human Resources Department is responsible for the effective delivery of employee services as
required by City Civil Service Rules and Procedures, Port Personnel Rules and Procedures,
Administrative Policy, the various memoranda of understanding, the City Charter, California workers’
compensation laws, employment laws, and the other rules and procedures governing the Port.
The functional areas of responsibility of the Human Resources Department include the following services:
•    Payroll and Benefits provides to the Financial Services Division all payroll information and changes;
     maintains benefit, salary and payroll records; administers the Deferred Compensation Program and
     Professional Development budget; administers the employee benefit programs, including health
     care, dental and vision plans, 125/129 plans, and life insurance; administers the Retiree Benefit
     Plan; and provides for new employee orientation program in conjunction with Personnel and
     Employee Services.
•    Personnel and Employee Services administers classification, compensation, recruitment and
     examination systems; maintains employee records and files, including performance measurement
     records (Performance Incentive Program, Civil Service evaluations); maintains the staffing plan;
     provides for new employee orientation program; and administer temporary agency employees’
     function.
•    Employee and Labor Relations administers the correct application of the four labor contracts at the
     Port; prepares and engages Port labor unions in negotiation of successor contracts; when
     appropriate, meets and confers with labor unions over changes in wages, hours and working
     conditions; processes and provides assistance and guidance to management in grievance handling
     and employee discipline matters; provides support to Port legal counsel for litigation or arbitrations
     arising out of contract disputes; and provides guidance and assistance to management in resolving
     employee relations issues.
•    Workers’ Compensation maintains and operates a self-insured, self-administered workers’
     compensation program in compliance with state law; provides support to the Port Attorney’s Office
     and outside counsels; investigates and reports on suspected fraudulent claims; monitors
     occupational clinic services; monitors changes in workers’ compensation laws; and maintains
     statistical information.


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ORGANIZATIONAL EFFECTIVENESS
The Organizational Effectiveness Department develops and implements programs and projects in the
following areas: Port-wide training for employee development (managerial and non-managerial)
consistent with organizational development goals; strategic planning and internal consulting in
organizational effectiveness and process improvement; administrative policies and procedures;
performance management and measurement; talent management and succession planning; and college
education assistance.


                                             OPERATING EXPENSES
                                                     ($ Thousands)
                                                    Actual         Budget       Budget          Projected         Projected
                                                   2009-10         2010-11      2011-12           2012-13           2013-14

    Personnel Services                              2,834           2,979           2,519           2,605             2,724
    Contractual Services                              634             995             475              489              504
    Supplies                                           27              38                6               6                 6
    General & Administrative                           88             175             114              118              121
    TOTAL                                           3,583           4,187           3,114           3,218             3,356
    Funded FTEs (headcount)                           16.5             17               13              13               13

Personnel Services
•      FY 2011-12:    Add Director of Administration, transfer 1.0 FTE from SRD, transfer Equal
       Opportunity Department to SRD, transfer Media Public Relations Department to External Affairs.
       CalPERS pension employer contribution rate increasing from 19.9% to 23.6%. Health care premiums
       assumed to increase 10% on January 1, 2012.
•      FY 2010-11:      Primarily increased professional development costs based on budgeted FTEs entitled
       to receive. Includes impact of furlough/mandatory layoff days and impact of retirement program that
       occurred in FY 2009-10.

Contractual Services
•      FY 2011-12:         Transfer of $0.3 million to External Affairs Division.
•      FY 2010-11:     Increased consulting costs for one-time human resource studies (not conducted and
       included in FY 2011-12).

General & Administrative
•      FY 2011-12:         Transfer of $0.1 million to External Affairs Division.
•      FY 2010-11:         Increase in personnel recruitment expense of $0.1 million.




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FY 2011-12                                                                                  Engineering Division




                                    ENGINEERING DIVISION
                                                FUNCTION
The Engineering Division has multiple functions within a number of technical, scientific, and engineering
disciplines. Each supports the general mission of planning, designing, constructing, delivering and
maintaining Port-funded facilities and physical and information infrastructure assets. The Engineering
Division is responsible for:

•   Administration and effective and accountable project management of Port-funded construction
    contracts in support of the Port's capital and major maintenance programs.

•   Management, operation, development, and maintenance of the Port’s utility systems in the aviation
    and maritime areas, including revenue-generating systems.

•   Management, operation, development, and maintenance of the Port’s information technology
    systems, including the Enterprise Resource Planning (ERP) system.

•   Administration and execution of the Port’s maintenance dredging program and oversight of the
    Federal contracts to deepen and maintain the Inner and Outer Harbor Channels.

•   Administration of land and bathymetric surveying and mapping.

•   Building permits for the Port, its tenants and other landowners in Port area and code compliance
    support.

The Engineering Division has five departments reporting to Engineering Administration: Project Design &
Delivery – Aviation, Project Design & Delivery – Maritime, Engineering Services, Utilities, and Information
Technology. The Project Design & Delivery Departments focus on project management including
planning, design and construction management for a particular revenue division or other Port-wide
request and provide oversight on tenant improvement projects. The Engineering Services Department
covers items that are both divisional and Port-wide. It has the contract administration functions for
consultants and contractors as well as all other engineering support functions. The Utilities Department
oversees all aspects of utility related services as well as the utility business for the Port and its tenants.
The Information Technology Department oversees all aspects of information technology services and
operations as well as the ERP system for the Port.


                                     DEPARTMENT FUNCTIONS
ENGINEERING ADMINISTRATION
Engineering Administration provides the management direction, coordination, support services and
systems for the division’s operations. The department formulates divisional policy, assigns project work,
coordinates work efforts with other Port divisions, monitors performance through the use of schedules
and cost-reporting systems, and reviews and accepts completed work on behalf of the Port.

PROJECT DESIGN & DELIVERY - AVIATION
The Aviation Project Design & Delivery (APDD) Department provides engineering, project management,
construction management and other technical services (cost estimating, scheduling, facility
inspections/assessments, inspection of tenant improvements, technical studies, etc.) to support the Port’s


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Aviation business. Preparation of Plans and Specifications are accomplished largely through outside
professional services contracts with oversight and management being provided by the department. In
conjunction with SRD, the APDD team ensures that there is consideration for the use of local businesses
in executing the program. Also, working with other departments, the APDD team supports the application
for and implementation of outside grants/funding sources as these relate to Aviation projects.

PROJECT DESIGN & DELIVERY - MARITIME
The Maritime Project Design & Delivery (MPDD) Department provides engineering, project management,
construction management and other technical services (cost estimating, scheduling, facility
inspections/assessments, inspection of tenant improvements, technical studies, etc.) as required to
support the Port’s Maritime business. Preparation of Plans and Specifications are accomplished largely
through outside professional services contracts with oversight and management being provided by the
department. In conjunction with SRD, the MPDD team ensures that there is consideration for the use of
local businesses in executing the program. Also, working with other departments, the MPDD team
supports the application for and implementation of outside grants/funding sources as these relate to
Maritime projects.
•    Dredging is charged with providing water depth in the channels and berths required for safe and
     efficient maritime navigation at the Port. This includes the -50 Foot Project, berth maintenance
     dredging, and federal channel maintenance dredging.

UTILITIES
The Utilities Department manages all aspects of utility services as well as the Port’s utility business,
including the buying and selling of electricity, water, and gas; provides master planning on the Port’s utility
systems; and supports infrastructure developments. Additionally, it serves as technical liaison with the
utility companies and handles business-related designs and continuity across the division. Services of
the department are provided through the following sections:
•    Utilities Section provides the technical expertise to manage the Port’s utility distribution systems,
     including power (both gas and electricity), water, sewer and communications. It also ensures that
     the Port plans, operates and upgrades its utility systems in an effective and efficient manner in
     compliance with all rules and regulations. It reviews and supports tenant improvement projects as
     well as the Port’s capital projects.

•    Utilities Administration Section ensures that the Port is efficient in its purchase of electricity, sets
     electricity rates and related services, as well as manages billing, Port-use utilities accounts, and
     other utility financial matters. Also see “Utilities – Engineering Division” on page C-21.

ENGINEERING SERVICES
The Engineering Services Department provides a variety of engineering-related support services to the
Port, Port tenants, and the public. These support services include the following:
•    Specifications prepares the project manual that includes project specifications and bidding
     documents for public works projects, prepares Requests for Proposals (RFPs) for professional
     services contract, and prepares procurement manuals for procurement of equipment and materials in
     support of the Project Design and Delivery Departments. This section also works closely with SRD
     and the Port Attorney’s Office and, at times, contractors, to ensure bidders comply with the contract
     provisions as well as the Port’s NDSLBUP.




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•    Drafting provides computer aided drafting services to the Engineering Division and others. Drafting
     is also responsible for the maintenance and archival of the record drawings for all Port projects after
     receiving the as-built drawings from the construction contractors.

•    Geomatics (Surveys and Land Records) provides survey, mapping and land records management
     services to support the Port’s development needs.

•    Permits provides building permit and code compliance support for the Port, its outside tenants and
     other landowners within the Port area. Additionally, this section maintains permit files and records,
     and provides technical assistance to Port staff regarding compliance with the Americans with
     Disabilities Act (ADA).

•    Project Controls and Contract Administration is responsible for tracking project budgets and
     schedules being executed by the Engineering Division, administering the consultant and construction
     contracts that are issued by the Engineering Division and assisting in the management of the
     MAPLA.

•    Document Control is responsible for administering the bid process for public works contracts and
     long-term management of project manuals and engineering documents.

INFORMATION TECHNOLOGY
The Information Technology Department is responsible for the planning, management, operation,
development, and maintenance of the Port’s information technology (IT) needs (with the exception of
specialized systems at OAK). The department collaborates with users to provide long term IT planning,
integrates information technology into Port operations to allow Port business objectives and strategies to
be met, manages resources to ensure that the Port’s IT systems run efficiently with minimal downtime,
and prepares contingency and disaster recovery plans.




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                                         ENGINEERING DIVISION
                            (EXCLUDING INFORMATION TECHNOLOGY DEPARTMENT)
                                            OPERATING EXPENSES
                                                   ($ Thousands)
                                                  Actual         Budget     Budget     Projected      Projected
                                                 2009-10         2010-11    2011-12      2012-13        2013-14

    Personnel Services                            6,818           6,383      7,449        7,699           8,070
    Contractual Services                          1,280           2,746      2,921        3,149           3,243
    Supplies                                         32              49         74           76              78
    General & Administrative                         67              65         65           67              69
    Dept’l (Credits) Charges                       (135)            (30)       (30)         (31)            (32)
    TOTAL                                         8,061           9,214     10,479       10,960         11,428
    Funded FTEs (headcount)                          37              38         41           41              41

Personnel Services
•      FY 2011-12:    CalPERS pension employer contribution rate increasing from 19.9% to 23.6%.
       Health Care premiums assumed to increase 10% on January 1, 2012. Addition of 1 Director of
       Engineering and 2 Engineers to support Shore Power Program.
•      FY 2010-11:      Includes impact of furlough/mandatory layoff days and impact of retirement program
       that occurred in FY 2009-10.

Contractual Services
•      FY 2011-12:         Maintenance dredging increases by $0.2 million due to regulatory requirements.
•      FY 2010-11:     Maintenance dredging increases by $1.1 million due to regulation requirements and
       professional services related to maintenance dredging increases by $0.3 million.




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                           INFORMATION TECHNOLOGY DEPARTMENT
                                            OPERATING EXPENSES
                                                   ($ Thousands)
                                                 Actual         Budget    Budget    Projected      Projected
                                                2009-10         2010-11   2011-12     2012-13        2013-14

    Personnel Services                            1,833          1,918     2,086       2,156           2,258
    Contractual Services                          1,005          1,446     1,426       1,469           1,513
    Supplies                                         18             32        30          31              32
    General & Administrative                         22             23        18          18              19
    TOTAL                                         2,878          3,418     3,560       3,674           3,822
    Funded FTEs (headcount)                          12             12        12          12              12

Personnel Services
•      FY 2011-12:     CalPERS pension employer contribution rate increasing from 19.9% to 23.6%.
       Health Care premiums assumed to increase 10% on January 1, 2012. Add 1 IT Manager and
       transfer 1 Administrative Assistant to External Affairs Division (shared with CRE Division).
•      FY 2010-11:    Primarily higher temporary help related to ERP implementation. Includes impact of
       furlough/mandatory layoff days.

Contractual Services
•      FY 2010-11:         Increase in ERP and email hosting services.

Supplies
•      FY 2010-11:         Primarily higher expendable equipment costs.




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FY 2011-12                                                            Environmental Programs and Planning Division




             ENVIRONMENTAL PROGRAMS AND PLANNING DIVISION
                                                FUNCTION
The Environmental Programs and Planning Division (EP&P) has primary responsibility to promote the
highest levels of environmental stewardship, and ensure environmental compliance with all federal, state,
and local statutes and regulations, in all Port plans, activities, operations, and development programs and
projects.

EP&P provides professional and technical leadership and support services to all Port departments and
divisions to achieve the Strategic Plan goal of “sustaining healthy communities through leading edge
environmental stewardship.”


                                     DEPARTMENT FUNCTIONS
The core functional responsibilities of EP&P are:

    •   Environmental planning and assessment in compliance with the California Environmental Quality
        Act (CEQA) and the National Environmental Policy Act (NEPA)

    •   Regulatory permitting for Port operations and development projects (i.e. U.S. Army Corps of
        Engineers, Regional Water Quality Control Board, Bay Area Air Quality Control District, Bay
        Conservation and Development Commission, California Department of Fish and Game, Federal
        Aviation Administration, etc.)

    •   Environmental management and remediation, including surface and ground water pollution
        prevention; air quality planning, programs and inventories; handling, abatement and disposal of
        hazardous materials and waste; environmental remediation of contaminated Port property; and
        environmental liability insurance recovery support technical services.

    •   Environmental health and safety, including emergency spill response, employee injury protection
        and safety, Cal-OSHA compliance, and disaster preparedness and business recovery.

    •   Materials management of dredged materials, including disposal and beneficial reuse and
        handling and management, crushing, reuse and recycling of Port construction materials.

In emerging topical areas, such as global climate change, greenhouse gas regulation, sea level rise,
human health risk, energy efficiency, renewable energy, sustainability, and environmental justice, the
EP&P is the Port’s lead division in the development and design of related plans, programs, policies,
procedures and guidelines.

EP&P is currently organized into four functional areas: Administration, Compliance and Safety,
Aviation/Commercial Real Estate, and Maritime.

The Administration section is chiefly responsible for division operations, including preparation of the
annual business plan and budget, staffing plan, division-wide work program, and personnel-related
activities, with an important focus on staff professional development and training.

The three other functional areas are chiefly responsible for providing technical environmental and safety
services to the three Port business lines – Maritime, Aviation, and Commercial Real Estate - and to other
internal Port clients, with a focus on the Executive Office, Port Attorney’s Office, Engineering Division and
Finance Division.


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               ENVIRONMENTAL PROGRAMS AND PLANNING DIVISION
                                            OPERATING EXPENSES
                                                       ($ Thousands)
                                              Actual              Budget    Budget         Projected        Projected
                                             2009-10              2010-11   2011-12          2012-13          2013-14

    Personnel Services                         2,225               1,964      2,122           2,194             2,300
    Contractual Services                        471                  676        627             646               665
    Supplies                                     11                   13          11              11               11
    General & Administrative                     32                   23         28               29               30
    Dept’l (Credits) Charges                    (69)                 (68)       (30)            (31)              (32)
    TOTAL                                      2,671               2,609      2,758           2,849             2,975
    Funded FTEs (headcount)                      12                   12          12              12               12

Personnel Services
•      FY 2011-12:    CalPERS pension employer contribution rate increasing from 19.9% to 23.6%.
       Health care premiums assumed to increase 10% on January 1, 2012.
•      FY 2010-11:      Includes impact of furlough/mandatory layoff days and impact of retirement program
       that occurred in FY 2009-10.

Contractual Services
•      FY 2011-12:      Lower consulting expenses of $0.2 million partially offset by higher security and life
       safety related services of $0.1 million.
•      FY 2010-11:         Primarily higher environmental consulting expense of $0.2 million.

Dept’l (Credits) Charges
•      FY 2011-12:         Lower reimbursement of environmental permit fees anticipated based on historical
       trending.




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FY 2011-12                                                                               External Affairs Division




                               EXTERNAL AFFAIRS DIVISION
                                               FUNCTION
The External Affairs Division supports the mission of the Port by:
    •   Enhancing the quality of Port communication with all relevant stakeholders internally and
        externally, including employees, media, business partners, community, and government.
    •   Building and maintaining positive relations with partner institutions and leaders in the community.
    •   Maximizing grant funding and policy support from local, regional, state, federal, and international
        levels of government.
    •   Enhancing our corporate brand by ensuring consistent visual standards and unifying messages
        across all external and internal audiences.

To fulfill these objectives, the External Affairs Division directly communicates proactively and positively
with external stakeholders while also supporting Port divisions and departments in their communications.


                                     DEPARTMENT FUNCTIONS
EXTERNAL AFFAIRS ADMINISTRATION
External Affairs Administration works collaboratively with each functional department within the division to
implement their respective goals and objectives in line with the Strategic Plan. Administration handles
overall administrative functions of the division, interfaces among senior management, Board and division
staff, and provides strategic direction and support.

GOVERNMENT AFFAIRS
The Government Affairs Department works with other Port divisions to develop legislative, regulatory and
advocacy strategies and to establish the Port's position on legislative and regulatory proposals, all for the
express purpose of supporting the Port's goals and priorities. This department takes the lead in
identifying and securing other governmental agency funding for Port projects and programs. In addition,
the department manages and coordinates the Port’s relationships with local, regional, state and federal
governments.

COMMUNITY RELATIONS
The Community Relations Department is responsible for defining, developing and administering a
comprehensive community education and outreach program in support of Port projects that are most
critical to the Port’s mission, goals and objectives. The department plans and implements education and
outreach that serve to increase awareness and understanding of the Port, its projects and policies; builds
and maintains cooperative and effective working relationships through partnerships and engagement; and
promotes goodwill with both internal and external stakeholders. This department carries out “good
neighbor” activities through Port assistance and resources that create benefits and value to the
community. In addition, the department provides strategic advice and stakeholder process development
support to divisions and departments throughout the Port.




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FY 2011-12                                                                             External Affairs Division




COMMUNICATIONS
The Communications Department (formerly referred to as the Media and Public Relations Department)
provides timely, proactive, cost-effective and strategic communications to both internal and external
stakeholders. The department’s functions are designed to increase public awareness and understanding
of the Port, its projects and policies. The department:
       •    Develops and updates communication strategies that seek to promote, protect and defend the
            Port’s reputation;
       •    Handles news media relations with local, regional, national, international and trade-specific
            outlets;
       •    Produces Port events, Port presentations, and targeted advertising;
       •    Supports meaningful and timely employee communications; and
       •    Provides professional design, art, photography, publishing and related services to all Port
            divisions.

                                        OPERATING EXPENSES
                                               ($ Thousands)
                                              Actual          Budget    Budget     Projected       Projected
                                             2009-10          2010-11   2011-12      2012-13         2013-14

    Personnel Services                           n/a              n/a    1,361        1,407            1,474
    Contractual Services                         n/a              n/a      635          654              674
    Supplies                                     n/a              n/a        7            7                 7
    General & Administrative                     n/a              n/a      347          357              368
    TOTAL                                        n/a             n/a     2,350        2,425            2,523
    Funded FTEs (headcount)                      n/a              n/a        8            8                 8

Personnel Services
•      FY 2011-12:      CalPERS pension employer contribution rate increasing from 19.9% to 23.6%.
       Health care premiums assumed to increase 10% on January 1, 2012. Addition of 1 Director of
       External Affairs and transfer Media Public Relations Department from CAS Division, Government
       Affairs Department from Executive Office, 1.0 Community Relations FTE from SRD and Executive
       Assistant from IT Department (shared with CRE Division).

Contractual Services
•      FY 2011-12:   Transfer of Media Public Relations Department expenses from CAS Division and
       Government Affairs Department expenses from Executive Office; $0.2 million increase in professional
       services.

General & Administrative
•      FY 2011-12:    Transfer of Media Public Relations Department expenses from CAS Division,
       Government Affairs Department expenses from Executive Office, and Community Relations related
       expenses from SRD.




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FY 2011-12                                                                        Social Responsibility Division




                           SOCIAL RESPONSIBILITY DIVISION
                                              FUNCTION
SRD aims to facilitate inclusion, fairness, equity, and access to economic opportunities, programs and
services of the Port for the people and businesses in the Port community. SRD is guided by the following
principles:

    •   Advocacy and compliance in the delivery of policies and programs that promote inclusion,
        fairness and equity for small, local and/or disadvantaged business participation in procurement
        and contracting opportunities at the Port as well as for job seekers and employees in economic
        and equal employment opportunities at the Port.

    •   Strategic collaboration and outreach with key stakeholders (Port staff, contractors, tenants,
        vendors and community partners and residents) to maximize economic opportunity and
        development in the community.

    •   Promotion and facilitation of job opportunities and sustainable wages for the local community, and
        establishment and continuation of strategic partnerships.

SRD is tasked with developing, maintaining, implementing and promoting regulatory compliance, policies
and programs to meet the intent of its mission. These functions are carried out in coordination with all
Port divisions and departments.      Currently, the division is comprised of three groups:        SRD
Administration, Economic Opportunity and Contract Compliance, and Equal Employment Opportunity.



                                    DEPARTMENT FUNCTIONS
SRD ADMINISTRATION
Administration provides management direction and coordination of the division’s strategic planning,
operations, program and overall budget. It works closely with the Executive Office and all Port divisions
to administer and manage federal, state, local, and Port policies and regulatory requirements as they
relate to equal opportunity and civil rights. The division promotes equitable and fair policies, programs
and procedures for employees and external stakeholders engaged with the Port.

ECONOMIC OPPORTUNITY AND CONTRACT COMPLIANCE
The Economic Opportunity and Contract Compliance Department ensures equal access and compliance
with federal, state, and local labor and business requirements by encouraging the participation of small,
disadvantaged and local contractors, consultants and vendor businesses in Port contracting and
purchasing opportunities. The department further promotes job pathways and sustainable wages through
innovative policies and programs, strategic partnerships, outreach and compliance.

As a means to achieving these goals, the Port has developed and is implementing the NDSLBUP
designed to award preference points to small and local businesses on bid opportunities. The department
certifies compliance with the Airport Concession Disadvantaged Business Enterprise (ACDBE) Program,
and the Disadvantaged Business Enterprise (DBE) Program, federally mandated programs that monitor
utilization of disadvantaged business enterprises as defined by Federal regulations.




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FY 2011-12                                                                         Social Responsibility Division




The department also manages the MAPLA Social Justice Program and the Limited English Proficiency
Program. Additionally, the department is responsible for the administration and monitoring of the Port’s
Living Wage and federal/state prevailing wage regulations. Dee “Port Overview – Social Responsibility,
page A-1)

EQUAL EMPLOYMENT OPPORTUNITY
The Office of Equal Employment Opportunity offers multifaceted services to Port employees and acts as a
resource to Port divisions and departments on equal employment opportunity and civil rights matters.
The office promotes fairness, equity, inclusion and diversity for all employees and job applicants, without
regard to age, ancestry, color, disability, marital status, medical condition, national or ethnic origin,
political affiliation, race, religion, sex, or sexual orientation. The office ensures nondiscrimination by
designing, coordinating and implementing policies, procedures and training programs. The office works
in collaboration with the Human Resources Department, hiring supervisors and managers, to recruit, train,
and retain a workforce that is representative of the regions’ diverse workforce. The office’s primary
functions include:

    •   Fulfillment of federal and state laws by developing policies to implement equal employment
        opportunity and accessibility requirements (not limited to employment);
    •   Ensuring equitable access to employment opportunities and to Port facilities; and
    •   Administering the process for the investigation and resolution of discrimination complaints.
Equal Employment Opportunity policies, programs and procedures are guided in part by the Equal Pay
Act of 1963, Title VII of the Civil Rights Act of 1964, Age Discrimination in Employment Act of 1967,
Pregnancy Discrimination Act of 1978, Title I and Title II of Americans with Disabilities Act of 1990, the
California Fair Employment Housing Act of 2000, and Veterans and Individuals with Disabilities.




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FY 2011-12                                                                             Social Responsibility Division




                                           OPERATING EXPENSES
                                                   ($ Thousands)
                                                  Actual          Budget    Budget     Projected        Projected
                                                 2009-10          2010-11   2011-12      2012-13          2013-14

    Personnel Services                             1,342           1,228       1,505       1,555            1,629
    Contractual Services                             74              165        226          232               239
    Supplies                                          2                3          4             4                 4
    General & Administrative                        140              265         79           82                84
    TOTAL                                          1,559           1,661       1,814       1,872            1,956
    Funded FTEs (headcount)                           7                8          9             9                9

Personnel Services
•      FY 2011-12:    CalPERS pension employer contribution rate increasing from 19.9% to 23.6%.
       Health care premiums assumed to increase 10% on January 1, 2012. Transfer Equal Opportunity
       Department from CAS Division and transfer 1 FTE to External Affairs Division.
•      FY 2010-11:      Includes impact of furlough/mandatory layoff days and impact of retirement program
       that occurred in FY 2009-10.

Contractual Services
•      FY 2011-12:      Transfer Equal Opportunity Department related expenses from CAS Division partially
       offset by transfer of Community Relations related expenses to External Affairs Division.
•      FY 2010-11:         Higher professional and consulting costs assumed.

General & Administrative
•      FY 2011-12:    Transfer of dues and registration expenses of $0.1 million and community outreach
       expenses of $0.1 million to External Affairs Division.
•      FY 2010-11:         Increased dues and registration and community outreach.




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FY 2011-12                                                                      Office of Board of Port Commissioners




                  OFFICE OF BOARD OF THE PORT COMMISSIONERS
                                                    FUNCTION
The Board, as established in the City Charter, was specifically created to promote and assure the
comprehensive development of the Port through continuity of control, management and operation.

The exclusive control and management of the Port is vested in the Board, composed of seven (7)
members who are nominated by the Mayor of Oakland and approved by the Oakland City Council. The
Board is specifically charged with the tasks presented in Article 7 of the City Charter.

The Board Secretary and other department staff manage the functions of the Office of the Board of Port
Commissioners. The department’s key duties include assuring public’s right to know and participate in a
meaningful way in the decision making processes of the Port; publishing the Board Agendas, Minutes,
Resolutions and Ordinances in conformance with the City Charter and Ralph M. Brown Act; receiving and
publically opening all sealed bids; coordinating Public Information Requests; and filing the Fair Political
Practices Commission’s Form 700, Statement of Economic Interest. The Board Secretary also serves on
the Port’s senior management team.


                                            OPERATING EXPENSES
                                                    ($ Thousands)
                                                  Actual          Budget    Budget      Projected        Projected
                                                 2009-10          2010-11   2011-12       2012-13          2013-14

    Personnel Services                              259              252        337           348              365
    Contractual Services                             41               36         36            38               39
    Supplies                                           9               5          5              5                5
    General & Administrative                        138              177        161           166              171
    TOTAL                                           447              471        540           557              580
    Funded FTEs (headcount)                           2                2          2              2                2

Personnel Services
•      FY 2011-12:    CalPERS pension employer contribution rate increasing from 19.9% to 23.6%.
       Health care premiums assumed to increase 10% on January 1, 2012. Salary adjustment for certain
       employee.
•      FY 2010-11:         Includes impact of furlough/mandatory layoff days.

General and Administrative
•      FY 2011-12:         Primarily reduced travel expense.




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FY 2011-12                                                                                     Executive Office




                                       EXECUTIVE OFFICE
                                               FUNCTION
EXECUTIVE OFFICE
The Executive Office provides leadership, vision, inspiration and direction to all Port divisions and
departments. The Executive Director, who is appointed by the Board, is the Port’s top management
official. In accordance with the Board’s policies, the Executive Director is responsible for the formulation,
interpretation and implementation of Port policy.

The Executive Office also provides guidance and oversight to the Port’s divisions and departments in
strategic, long-range, and policy planning. This includes strategic development, business planning, and
managing projects and services that will meet the Port’s future operational and organizational needs. In
addition, the Executive Director is responsible for labor relations.

LABOR RELATIONS
Labor Relations exercises overall responsibility for the Port’s Labor Relations Program. Labor Relations
engages, improves and encourages meaningful labor relations between the Port and its unions – Service
Employees International Union (SEIU) Local 1021, Western Council of Engineers (WCE), International
Brotherhood of Electrical Workers (IBEW), and the International Federation of Professional and Technical
Engineers (IFPTE), Local 21. Labor Relations develops and directs the Port’s overall labor strategy;
develops proposals and directs negotiations of sustainable memoranda of understanding (MOU)
reflective of the Port’s operational needs and objectives; provides interpretation of the MOU in grievances
of discipline and contract interpretation; provides interpretation of various employee policies and
procedures as they impact labor relations; provides guidance to ensure results of meet and confer
sessions with unions on wages, hours and working conditions are aligned with labor strategy; meets at
regularly scheduled Labor Management Partnership Meetings with union leadership; ensures labor
relation objectives support the Port’s overall strategic plan; and updates, informs and trains stakeholders
on a consistent basis on evolving or current labor relations issues.




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FY 2011-12                                                                                            Executive Office




                                            EXECUTIVE OFFICE
                                            OPERATING EXPENSES
                                                    ($ Thousands)
                                                  Actual          Budget        Budget    Projected       Projected
                                                 2009-10          2010-11       2011-12     2012-13         2013-14

    Personnel Services                               869             849           767         791              828
    Contractual Services                             363             330           209         215              222
    Supplies                                           1               8             7           7                 7
    General & Administrative                         163             284           225         232              239
    TOTAL                                          1,395           1,471         1,207       1,245            1,295
    Funded FTEs (headcount)                            4               4             3           3                 3

Personnel Services
•      FY 2011-12:    CalPERS pension employer contribution rate increasing from 19.9% to 23.6%.
       Health care premiums assumed to increase 10% on January 1, 2012. Transfer Government Affairs
       Department to External Affairs Division. Add Port Labor Advisor.
•      FY 2010-11:         Includes impact of furlough/mandatory layoff days.

Contractual Services
•      FY 2011-12:     Transfer $0.3 million of legislative representative expense to External Affairs Division.
       Transfer $0.2 million to Labor Relations consulting expense from CAS Division.

General and Administrative
•      FY 2011-12:         Lower promotional expenses.
•      FY 2010-11          Higher expenses related to community and public relations and promotional
       expenses.




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FY 2011-12                                                                                      Port Attorney’s Office




                                       PORT ATTORNEY’S OFFICE
                                                      FUNCTION
The Port Attorney’s Office, as provided under City Charter Section 706, paragraph 20, passes upon the
form and legality of all contracts within the jurisdiction of the Board; gives legal advice to the Board, its
officers and employees on all matters within its jurisdiction; defends and prosecutes or compromises all
actions at law or equity and special proceedings for or against the City related to Port activities or any
Port officers in their official capacity; prepares all legal briefs and memoranda, contracts, ordinances,
resolutions and other documents of the Port; and makes all appearances in actions and proceedings on
behalf of the Port. The Port Attorney’s Office discharges these duties directly and through assistants and
deputies. Duties are assigned among the staff attorneys on a case-by-case basis with some
specialization in maritime, aviation, commercial real estate, environmental, litigation, public finance, and
personnel areas.



                                             OPERATING EXPENSES
                                                     ($ Thousands)
                                                   Actual          Budget     Budget     Projected       Projected
                                                  2009-10          2010-11    2011-12      2012-13         2013-14

    Personnel Services                              2,645           2,714        2,716      2,805            2,939
    Contractual Services                            1,162           1,603        1,493      1,538            1,584
    Supplies                                           12              35          35          36                37
    General & Administrative                           92             127         128         131               135
    TOTAL                                           3,911           4,478        4,371      4,510            4,695
    Funded FTEs (headcount)                            13              14          13          13                13

Personnel Services
•      FY 2011-12:    CalPERS pension employer contribution rate increasing from 19.9% to 23.6%.
       Health care premiums assumed to increase 10% on January 1, 2012. Transfer of 1.0 FTE to Labor
       Relations Department under the Executive Office.
•      FY 2010-11:         Includes impact of furloughs/mandatory layoff days.

Contractual Services
•      FY 2011-12:         Lower legal services of $0.1 million.
•      FY 2010-11:         Primarily higher legal services of $0.4 million.

General & Administrative
•      FY 2010-11:   Reclassification of on-line subscription services from Contractual Services to
       General & Administrative.




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FY 2011-12                                                                            Financial Services Division




                              FINANCIAL SERVICES DIVISION
                                               FUNCTION
The Financial Services Division provides the Port with financial guidance, short and long term, in the
areas of financial planning, financial management, capital project funding, internal and external financial
reporting, risk management and purchasing.


                                    DEPARTMENT FUNCTIONS
Financial Services Administration provides the management direction and coordination of the
departments and functions within the division. Administration plans and manages the Port’s overall
financial operations.

Finance/Controller provides the Port with centralized accounting services. The information generated is
utilized by internal and external users, as well as regulatory agencies. The functions of the department
include the recording of revenue, expenses, assets, liabilities, payments to vendors, payroll, billing of
tenants, and collection of accounts receivable, as well as the preparation of financial reports and studies.
The department is also responsible for the coordination and oversight of internal and external audits.

Financial Planning prepares and monitors the Port’s operating and capital budgets, prepares financial
analyses and forecasts, and develops and coordinates the funding of the capital projects. The
department is also responsible for cash management, fixed assets management, debt structuring and
debt compliance.

Purchasing facilitates and manages the acquisition of supplies, equipment and services for the Port
except for those items and services which are procured through construction bids. In order to maximize
use of cooperative purchasing agreements, the department maintains contact with and coordinates with
the State of California, the County of Alameda and the City.

Risk Management is an integral part in protecting the long term viability and sustainability of the Port.
This department is responsible for preserving the Port's assets by identifying, evaluating and
recommending risk transfer of insurable loss exposures faced by the Port. Under the supervision of the
Port's Risk Manager, the department directs and coordinates risk transfer functions, including: risk
analysis, purchase of insurance, claims administration (in conjunction with the Port Attorney’s Office),
selection of insurance agents or brokers, allocation of risk charges (insurance and claims costs) to
operating departments, recovery from insurance companies for insured loss and from other responsible
parties for uninsured losses, and review of deductible and self-insured retention options. Risk
Management also reviews the various Port contract agreements and recommends insurance protection
levels for tenants, vendors, consultants and suppliers and tracks compliance with the insurance required
of them. Risk Management administers the Port’s Owner-Controlled Insurance Program (OCIP) to
manage insurance coverage and costs related to capital improvement projects. This includes
identification and analysis of the risk of accidental loss; purchase of related casualty insurance; and
administration of the claims, other insurance related activities and coordination of risk prevention and
control measures with the insurers and relevant Port staff.




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FY 2011-12                                                                               Financial Services Division




                                    FINANCIAL SERVICES DIVISION
                                            OPERATING EXPENSES
                                                   ($ Thousands)
                                                  Actual          Budget    Budget     Projected       Projected
                                                 2009-10          2010-11   2011-12      2012-13         2013-14

    Personnel Services                             4,371           4,109     4,470           4,620          4,844
    Contractual Services                            655              701       635            701             681
    Supplies                                          6                9         5              6                6
    General & Administrative                         42               47        40             41              42
    TOTAL                                          5,075           4,867     5,150           5,368          5,573
    Funded FTEs (headcount)                          27               29        30             30              30

Personnel Services
•      FY 2011-12:    CalPERS pension employer contribution rate increasing from 19.9% to 23.6%.
       Health care premiums assumed to increase 10% on January 1, 2012. Addition of 1 Staff Accountant.
•      FY 2010-11:      Includes impact of furlough/mandatory layoff days and impact of retirement program
       that occurred in FY 2009-10.

Contractual Services
•      FY 2012-13:      Increase in professional consulting expense due to requirement of a physical
       inventory of Port assets.
•      FY 2011-12:         Lower copy machine rental, payroll services and audit expenses.
•      FY 2010-11:    Higher financial consulting and copy machine maintenance expenses partially offset
       by lower copy machine rental.




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FY 2011-12                                                                                                       Non-Departmental




                                                    NON-DEPARTMENTAL
                                                                  FUNCTION
Non-Departmental is a cost center created to identify Port-wide non-discretionary expense items which
are not allocated directly to Port divisions and departments. These expenses include personnel vacation
and sick leave accruals, retiree medical expenses, workers’ compensation costs, unemployment
insurance, City charges for administrative services, telecommunications costs, insurance premiums,
utilities for Port usage, and contingencies for legal and environmental mitigation.

                                                      OPERATING EXPENSES
                                                                 ($ Thousands)
                                                               Actual            Budget    Budget    Projected        Projected
                                                              2009-10            2010-11   2011-12     2012-13          2013-14

    Personnel Services                                         13,572            12,219    10,571       8,909             9,291
    Contractual Services                                        1,698             1,939     1,909       1,966             2,025
    Supplies                                                          0               0         0           0                 0
    General & Administrative                                   14,171            14,769    13,623      14,032           14,453
    TOTAL                                                      30,982            28,927    26,103      24,907           25,769
    Funded FTEs (headcount)*                                        n/a              n/a       n/a          3                 6

*      Budgeted Personnel Expenses related to projected additional FTEs are allocated across all divisions.
       It is unknown at this time where the additional FTEs will be placed.

Personnel Services
•      FY 2013-14:       Savings of $2.0 million for vacancy factor and $3.8 million in labor adjustments1
       partially offset by higher projected retiree medical costs of $0.2 million and workers’ compensation
       costs of $0.2 million. Actual savings from vacancy factor and labor adjustments will be applied to
       divisions when known.
•      FY 2012-13:       Savings of $2.0 million for vacancy factor and $3.8 million in labor adjustments1
       partially offset by higher retiree medical costs of $0.2 million and higher workers’ compensation costs
       of $0.1 million. Actual savings from vacancy factor and labor adjustments will be applied to divisions
       when known.
•      FY 2011-12:       Savings of $2.3 million for vacancy factor and $1.5 million in labor adjustments1
       partially offset by higher retiree medical costs of $1.3 million, workers’ compensation costs of $0.6
       million and vacation accrual of $0.3 million. Actual savings from vacancy factor and labor
       adjustments will be applied to divisions when known.
•      FY 2010-11:      Lower workers’ compensation expense based on historical trends and reduced
       vacation/sick leave accruals.

1
       Additional $1.8 million of labor adjustments allocated to divisions.




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FY 2011-12                                                                                  Non-Departmental




Contractual Services
•    FY 2010-11:    Higher expenses related to City Special Services.

General & Administrative
•    FY 2011-12: Primarily lower electricity for Port use costs of $1.0 million due to forward utility rate
     contracts and decreased legal contingency expense of $0.2 million partially offset by higher pollution
     remediation costs of $0.1 million.
•    FY 2010-11: Higher Port use electricity costs of $0.8 million and increased legal contingency
     expense of $0.7 million partially mitigated by lower pollution remediation costs of $0.6 million and
     crane insurance of $0.3 million.




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FY 2011-12                                                                                     Office of Audit Services




                                      OFFICE OF AUDIT SERVICES
                                                     FUNCTION
The Office of Audit Services provides independent and objective reviews and evaluations of the financial
and operational activities of the organization for the benefit of the Port, its management and the Board.
Additionally, it also manages and administers the Whistleblower Program.


                                           DEPARTMENT FUNCTIONS
Internal Audit provides reasonable assurance that the controls are adequate and effective so that all
applicable laws and regulations are complied with; resources are safeguarded; data and information are
reliable; operations are effective and efficient; and the plans and intentions of the Board and management
are carried out. It also conducts investigation of whistleblower hotline reports, furnishes constructive
recommendations for improvements and provides assistance in implementing them.

Field Audit verifies that revenues owed the Port and expenses                                reimbursed/paid        to
consultants/contractors by the Port were properly computed and reported.


                                             OPERATING EXPENSES
                                                    ($ Thousands)
                                                 Actual          Budget      Budget       Projected       Projected
                                                2009-10          2010-11     2011-12        2012-13         2013-14

    Personnel Services                            1,106           1,131        1,231         1,271            1,331
    Contractual Services                              0               6            5             5                 6
    Supplies                                          5               8            7             7                  7
    General & Administrative                        20               26           25            25                26
    TOTAL                                         1,131           1,170        1,268         1,309            1,370
    Funded FTEs (headcount)                           7               7            7             7                 7

Personnel Services
•      FY 2011-12: CalPERS pension employer contribution rate increasing from 19.9% to 23.6%.
       Health care premiums assumed to increase 10% on January 1, 2012.
•      FY 2010-11:         Includes impact of furloughs/mandatory layoff days.

Contractual Services
•      FY 2010-11:         Outside consultant to help perform internal audit functions.




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FY 2011-12                                                 Non-Departmental




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FY 2011-12                                                             Capital Budget and Capital Needs Assessment




                               CAPITAL PLANNING PROCESS

The Port updated its capital expenditure and                and    miscellaneous     facilities replacement
budget approval process in the Spring of 2010,              projects that are less than $100,000.
as illustrated in the diagram on page E-15. The             Authorization to proceed with other capital
capital planning process begins with the                    projects included in the CNA will be authorized
identification of the Port’s 5-Year Capital Needs           by the Board on a project-by-project basis based
Assessment (CNA).           The 5-Year CNA is               on the need, financial analysis, cost estimates,
updated on an annual basis and presented to                 alignment with Port goals and strategies and
the Board. The 5-Year CNA is not a committed                available funding sources.
capital improvement program of the Port.
Instead, it only identifies the anticipated capital         The Revenue Divisions manage the projects on
needs of the Port over the next five years.                 an ongoing day-to-day basis and meet regularly
                                                            with the Engineering Division, other service
For FY 2011-12, budget authorization will be                providers and the Financial Services Division to
requested from the Board for those projects for             track and manage the scope, budget and
which there is already a contractual obligation,            schedule.
as well as an amount for pre-development work


                        5-YEAR CAPITAL NEEDS ASSESSMENT

The $594 million FY 2012-16 CNA includes                    In addition, the 5-Year CNA takes into account
projects in the Aviation, Maritime, Commercial              available funding sources (e.g., grants and
Real Estate and Support Divisions (see pages                PFCs), overall Port finances and Port staffing
E-16 through E-18). The 5-Year CNA does not                 resources.
include significant capacity expansion projects
and thus will generally not generate significant            Capital projects are those expenditures that may
new revenues. The 5-Year CNA is primarily                   be capitalized as defined in the Port’s
focused on asset renewal, modernization and                 Capitalization Policy (AP506).            Capital
facility  upgrading,     maintaining   revenue,             expenditures are defined as:
enhancing customer service, and marginally
                                                            •   Port-owned
improving revenue through better customer
service and greater efficiency. For a project to            •   Costing $5,000 or more
be included in the 5-Year CNA, it must meet one             •   Having an economic useful life of three or
or more of the following criteria:                              more years
                                                            •   Intended to provide productive benefit to
•   Contractual Obligation (Board approved
                                                                the Port during its useful life
    contract, accepted grant or lease obligation)
•   Regulatory Compliance
                                                            In addition, the Port allocates indirect overhead
•   Revenue Maintenance                                     costs to capital projects. The Port has conducted
•   Revenue Enhancement                                     an indirect cost allocation analysis and as of
•   Life and Safety                                         September 2010, changed the administrative
                                                            overhead rate on capital project costs from
•   Customer Service
                                                            187.66% on Port labor costs and 4.64% on non-
•   Environment and Community Benefits                      labor costs, to 194.92% on labor costs and



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3.61% on non-labor costs. The Port has made               lightning masts), will enable the FAA to improve
all required submissions to the FAA concerning            efficiency by reducing duplicative activities
the indirect cost overhead rate.                          necessitated by maintaining the two existing
                                                          towers. The new ATCT’s 13,000 square foot
The projected annual cost of the 5-Year CNA               ‘base building’ (administrative offices) will
represents estimated costs for numerous                   contain the latest electronic equipment
individual projects. The cost estimates for such          associated with a new, state of the art air traffic
projects are subject to uncertainties, such as            control system as well as offices, kitchen area
unanticipated increases in the cost of materials,         and showers. The tower is being designed to
and are therefore subject to change. In addition,         meet U.S. Green Building Council LEED criteria
projects may be added to or removed from the              for Gold certification using design features such
5-Year CNA as the needs of the Port evolve. No            as a 250 kW solar array to be constructed on
assurances can be made that cash and/or                   roofs of the base building and carports, and a
financing will be available to complete projects          geothermal well component to the building’s
included in the 5-Year CNA. Failure to complete           heating, ventilation and air conditioning system
such projects may adversely impact projected              (HVAC). By circulating water through 16
Port revenues.                                            encased wells drilled 300 feet below the tower’s
                                                          parking lot, the FAA expects to reduce its need
Aviation Division Projects                                for HVAC power by about 12%.
The 5-Year CNA includes $423 million of
projects in the Aviation Division and is divided          Although the tower project is FAA funded and
into eight programmatic areas: Airfield Safety            constructed, the Port has certain obligations.
and Security; Airfield Pavement; Security;                The Port will contribute a new airfield lighting
Terminal Renovation and Retrofit; Parking,                control panel and crash phone once the FAA's
Roadways, and Rental Car; Environmental                   contractor has completed the building, now
and/or Community Benefit; Utility Infrastructure          expected to be in February 2012. Additionally,
Maintenance; and Infrastructure Renovation for            the Port is responsible for demolishing the old
Leased Facilities.                                        North Field Tower which will visually obstruct the
                                                          view of both thresholds of Runway 27.
Airfield Safety and Security
                                                          Perimeter Dike Improvements. The perimeter
Approximately $153 million is included in the 5-          dike separates the South Field airfield from San
Year CNA for airfield safety and security                 Francisco Bay waters.          The Port and its
projects. Key projects in this category include           consultants have completed a series of studies
utilities for the FAA’s planned new Air Traffic           that assess existing geotechnical conditions,
Control Tower (ATCT), a new Remote and                    vulnerability of the dike to storms, sea level rise
Transmit Tower, perimeter dike improvements,              and potential future seismic events, and
runway safety area improvements, airport layout           identifies improvements needed to address
plan update, acquisition of a new Aircraft                those vulnerabilities. In FY 2011, environmental
Rescue and Firefighting (ARFF) vehicle, and               review and design of the improvements were
enhancement of airfield signage and lighting.             initiated, as well as preliminary discussions with
Approximately $5.4 million is programmed for              the two pipeline companies who own active and
FY 2012, a majority of which is contractually             inactive fuel lines within the airport perimeter
obligated through AIP grants or design                    dike. The $49.2 million total project budget
consultant agreements in progress.                        reflected in the 5-Year CNA includes the
                                                          balance of design and environmental work;
FAA Air Traffic Control Tower. The new ATCT,              continued negotiations with the pipeline
designed to reach a height of 236 feet above              companies; mitigation of potential wetland
ground level (plus 20 feet of antennas and                wildlife impacts from the project; and


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construction      of     the     recommended               RSA recommended alternatives, the FAA
improvements.      Staff continues to actively             requested that the Port revisit the 2005 RSA
pursue potential governmental funding sources              report using revised evaluation criteria --
for this project.                                          specifically relaxing the criterion that had
                                                           eliminated alternatives from consideration based
Runway Safety Area Improvement Project. The                on maximum feasible cost. Accordingly, a re-
FAA requires that commercial airports, regulated           evaluation analysis was prepared and submitted
under Part 139, have standard Runway Safety                to the FAA for review. Based on this analysis,
Areas (RSAs) where practicable. The FAA has                two new preferred RSA alternatives for North
a high-priority program to enhance safety by               and South Fields were identified that met the
upgrading the RSAs at commercial airports and              new criteria. The Port is now proceeding with
provide federal funding to support those                   preliminary design and environmental review of
upgrades.      RSAs enhance the safety of                  those options. Approximately $100 million has
airplanes which undershoot, overrun, or veer off           been included in the 5-Year CNA. Although the
the runway. RSAs are required at both ends                 grant funding is not yet in place, the 5-Year CNA
and along the sides of runways to provide                  assumes that that this project would be AIP
greater accessibility for firefighting and rescue          grant funded using PFCs as the local match.
equipment during such incidents.         At most
commercial airports, the typical RSA is 500 feet           Airfield Pavement
wide and extends 1,000 feet beyond each end of
                                                           In FY 2012 Port staff will continue with its
the runway. Since many airports were built
                                                           strategic  airport   pavement       management
before the 1,000-foot RSA length was adopted
                                                           program.    This program ensures that the
some 20 years ago, the area beyond the end of
                                                           pavement at the airport, one of the Port’s largest
the runway is where many airports cannot
                                                           assets, is managed in the most cost-effective
achieve the full standard RSA. This is due to
                                                           manner providing for the longest pavement life,
obstacles such as the presence of bodies of
                                                           ensuring aircraft safety through quality
water, highways, railroads, populated areas, or
                                                           pavement that does not lead to foreign object
severe drop-off of terrain.
                                                           debris damage, and maximizing FAA AIP grant
Most of the RSAs at OAK do not meet current                funding.
FAA airport design standards. A planning study
entitled “Runway Safety Area Study – Final                 During FY 2011, rehabilitation of high speed
Report” (Phase I Report) was completed in                  Taxiways Victor and Yankee was completed,
October 2005 to identify and evaluate how to               and the construction of East Apron Phase 3
bring these RSAs at OAK into conformance with              (EAP3) was continued, including successful
FAA criteria. In consultation with the FAA and             expenditure of $15 million in federal stimulus
based on application of the RSA evaluation                 funds. The EAP3 total project cost is estimated
criteria in effect at the time, one improvement            at $31 million (a portion of the costs have been
alternative was identified for Runway 11/29 and            expended and not included in the current 5-Year
another for Runways 9L/27R and 9R/27L. While               CNA). Budgeted EAP3 funding includes 50%
these alternatives would have improved OAK’s               ARRA grant funds, 40% AIP grant funds, and
RSAs, they were not fully compliant with FAA               10% PFC funds.
RSA       standards;     several   fully-compliant
alternatives were discarded because they                   Pavement rehabilitation activities slated for FY
exceeded the FAA cost criteria in use at the               2012 will focus on projects that support the RSA
time.                                                      improvement      program     described     above,
                                                           including the design and Phase 1 construction of
In 2009, after the Port had initiated an AIP-              improvements to Taxiways Whiskey and
funded project to prepare an Environmental                 Uniform, and an update of OAK’s FAA-required
Assessment (EA) and a 25% design of the OAK


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                                               Terminal 1




The Terminal 1 Program has been implemented                  renovation/replacement was completed in CY
in a phased manner, addressing near term                     2011 and construction is planned to begin for
needs, prioritized life safety and other code                this project by the end of FY 2012.
requirements, and funding availability. Projects
completed in FY 2011 include new flooring, gate              The renovation program will include green
podiums, ADA-related enhancements, seismic                   building principles and will continuously evaluate
retrofitting of the concourse building (M103),               customer and tenant needs as projects are
carpet replacement, window glazing to reduce                 designed and implemented. This program is
radiant heat exposure in M152, and completion                funded primarily through PFCs, on average 88%
of a new pre-security waiting area. Board                    PFC-eligible and 12% Port Share 1 , with a
approval       in  October     2010       authorized         relatively small amount funded through the
approximately $25 million dollars for T1                     concession infrastructure improvement fee paid
renovation projects, including the final design for          by the concessionaire. Approximately $174
the life safety improvements in M102 and three               million is included in the 5-Year CNA for the
early delivery projects: fire suppression and fire           Terminal-related improvements.
alarm installation in M103, communication and
paging upgrades in M103, and a new substation.
The design for the M102 life and safety
improvements was completed in CY 2011 and
construction of these improvements expected to
begin by the end of FY 2012. The final design
                                                             1 Sources of Port Share may be (1) additional grants, (2) third-
for        the      central       utility      plant
                                                             party contributions, (3) Port cash, (4) debt or (5) other.


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Parking, Roadways, and Rental Car                            determines the relative cost effectiveness of
                                                             improving or replacing, rather than maintaining,
This program category includes a range of
                                                             an asset, in order to avoid catastrophic failure.
airport ground access-related projects intended
                                                             Approximately $9.5 million has been included in
to improve customer service, fulfill regulatory
                                                             the 5-Year CNA for stormwater and utility
permit obligations and/or maintain revenues.
                                                             infrastructure projects.
Approximately $38.2 million is included in the 5-
Year CNA for these projects, a majority of which
                                                             Water and Sewer Upgrades. Reconstruction of
is contractually obligated for the Bay Area Rapid
                                                             water lines at North Field and major sewer
Transit (BART) – Oakland Airport Connector
                                                             infrastructure replacement are slated for design
(OAC), described below.
                                                             and partial construction in FY 2012.
BART – OAC.          BART is constructing a
                                                             Replacement of Pump Stations #4 and #6.
connector to improve access between OAK and
                                                             Much of OAK’s stormwater management
the regional rail transit system using an
                                                             infrastructure has aged beyond its useful life, no
automated people mover. The 3.2 mile system
                                                             longer functions as designed, and is in need of
includes elevated guideway sections along
                                                             renewal and modernization. Areas of ponding
Hegenberger Road, a tunnel beneath Doolittle
                                                             and flooding have increased over the years.
Drive, and at-grade and elevated sections on
                                                             Construction of replacement Pump Station #4
airport property approaching the terminal
                                                             and completion of the design of replacement
facilities. The BART-OAC project is intended to
                                                             Pump Station #6 are slated for FY 2012, based
provide reliable scheduled service; connections
                                                             on recommendations of the Stormwater Master
that are safe, convenient, and predictable; and
                                                             Implementation Plan completed by the Port and
travel time savings between BART and OAK.
                                                             its consultants in 2009. Approximately $2.4
Nearly $36 million of the Port contribution of
                                                             million is contractually obligated for these
approximately $44 million (of an estimated total
                                                             projects.
project cost of $480 million) is included in the 5-
Year CNA. This project will be PFC-funded.                   Infrastructure Renovation for Leased Facilities

Environmental and/or Community Benefit                       One of the Strategic Plan implementing actions
                                                             is to complete required infrastructure projects to
Approximately $4.5 million has been included in
                                                             meet existing lease requirements (apron,
the Aviation 5-Year CNA for environmental
                                                             foundation, roofing, and walls) to support
and/or community benefit projects. Examples of
                                                             revenue retention and generation.
projects in this program category include
improvements to OAK’s noise monitoring system                Some leased facilities at North Field are in poor
and payments to the City of San Leandro for                  condition and must be improved in accordance
noise insulation under the Airport Development               with the Port’s contractual obligations to tenants.
Program (ADP) Settlement Agreement.                          A thorough assessment of the North Field
                                                             properties’ lease requirements has been
Utility Infrastructure Maintenance
                                                             conducted and an on-going program to address
OAK contains an extensive network of utility                 the required improvements is being developed.
infrastructure components throughout the 2,500               Approximately $7.4 million is included in the 5-
acre campus.        Water, stormwater, sewer,                Year CNA for this program category, a majority
information technology, telecommunications,                  of which is contractually obligated by lease
and electrical infrastructure are vital to the               agreements.
ongoing operation of airport facilities; significant
failures must be avoided through a combination
of maintenance and continuous capital
investment.      Strategic asset management


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Maritime Division Projects                                   emissions control measures available at the
                                                             wharf for the vessels. After reviewing the
The 5-Year CNA includes approximately $146
                                                             regulation and following discussions with the
million of projects in the Maritime Division.
                                                             terminal operators, the Port determined that the
                                                             most effective compliance option is for vessels
Maritime Security Initiatives
                                                             to be retrofitted to receive electric power supply
Since 2001, the Port, state and federal                      from the shore power, reducing vessel auxiliary
government have focused on seaport security as               engine use while at berth.
a critical link in the national defense. Leveraging
both state and federal security grant programs,              The Port has a role as an electric utility company
the Port continues to implement security                     for parts of its Maritime area, including Berths
enhancements at the seaport. To date, the Port               55-59 and the crane power at Berths 22-26. For
has installed radiation portal monitors, which               vessel fleets to comply with this law, they will
scan all imported containers for radiation at all of         need the cooperation of the Port’s marine
the Port’s international marine terminals. The               terminal operator tenants, as well as the electric
Port has implemented a comprehensive                         utility provider for these terminals (either the Port
intrusion detection and surveillance system                  or a third party provider) to ensure that the
throughout the seaport area, offering security               appropriate electricity supply is available to the
personnel the ability to identify what is                    fleets while berthed at the Port. The Port’s
happening throughout the seaport, including the              Shore Power Program requires significant new
marine terminals, roadways and other key                     electrical power service infrastructure to each of
infrastructure.                                              the berths at the Port. The Port has started to
                                                             implement the electrical system upgrades to
Ongoing security projects include the installation           ensure that its tenants and customers are able
of a waterside surveillance system of cameras                to fully comply with the law based on the
mounted on select cranes which can identify a                specifics of their vessels’ power demands.
security breach at the wharf; construction of a
security network to better incorporate all the               The Port began planning for shore power in
surveillance technology through a common                     2009. The first phase of construction, at 3 of the
network; and a Radio Frequency Identification                12 berths in the Port's Shore Power Program,
(RFID)-based truck tracking program to better                started in Spring 2011 and is expected to be
monitor truck activity within the Port. The                  completed in 2012. The second phase of
security projects are anticipated to cost $14                construction will start in early 2012 and should
million and be completed in FY 2014. In FY                   be completed by late 2013.
2012, the Port plans to spend $8.8 million on
these ongoing security projects which are almost             The total estimated cost of the Shore Power
fully funded by grants. Upon completion, the                 Program, is $90 million. Approximately $85.4
annual maintenance cost of the intrusion                     million is included in the 5-Year CNA, as $4.5
detection and surveillance systems is estimated              million has already been expended. Funding for
to be $0.7 million, which will be grant funded               the assumes approximately $39.6 million in
through FY 2014.                                             grants of which $12.8 million has already been
                                                             secured.
Shore Power Program
                                                             Site Preparation and Redevelopment of the
California law requires container vessels berthed
                                                             Former Oakland Army Base (OAB)
at the Port to reduce emissions associated with
auxiliary engines powering the vessel. In order              Between 2003 and 2007, the Port received 241
to ensure vessels are able to comply with this               acres of property which formerly was part of the
regulation, the Port’s tenants must have                     OAB. The base had been decommissioned in
                                                             1999, and the Oakland Base Reuse Authority


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Pavement      Management        System.    Total          Through studies and analysis, it was determined
estimated costs for these FY 2012 projects is             that T1 would be retained for the foreseeable
about $6.8 million, a majority of which is                future to accommodate existing air passenger
contractually obligated in the form of                    traffic and near-term growth. To retain the T1
programmed AIP grant funding and PFC-funded               structures and related systems, substantial
local share. Approximately $34 million has been           renovations are required to meet current codes,
included in the 5-Year CNA           for airfield         mitigate life safety issues, replace inefficient and
pavement rehabilitation projects.                         outdated infrastructure, improve passenger
                                                          service, prolong service life and improve life
Security                                                  cycle costs. The Strategic Plan includes the
Approximately $1.0 million is included in the 5-          Terminal 1 Renovation and Retrofit Project as
Year CNA for general airport security projects.           an implementing action to sustain economic and
Key projects include closed circuit television            business development by maximizing the use of
expansion, upgrades, and replacement and                  existing assets, retaining existing customers and
general security system upgrades.                         tenants, and pricing Port services to provide a
                                                          highly competitive value.         The Terminal 1
Terminal Renovation and Retrofit                          Program addresses building code and life safety
                                                          upgrades (fire suppression/alarm, seismic, ADA
The passenger terminal complex at OAK                     compliance), renovation of major building
includes Terminal 1 (16 gates) and Terminal 2             systems, such as HVAC and the paging system,
(13 gates).      An extensive expansion and               as well as potential architectural/life cycle
renovation of Terminal 2 was completed in 2006.           maintenance upgrades, such as flooring
Minor capital projects associated with Terminal 2         materials, lighting and signage.
are included in the 5-Year CNA, including
scheduled re-roofing of Building M130. The
majority of the other capital improvements are
focused on Terminal 1 (T1).




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(OBRA) determined that a portion of the base                 Redevelopment Agency and its developer(s) are
would be transferred to the Port to                          required to contribute to the Community Trust
accommodate plans for the development of a                   Fund. Once the City and its developer(s)
new Berth 21, in line with and adjacent to Berth             contribute, the Port is required to make an equal
22, and the use of much of the Army’s property               contribution, not to exceed $2 million, within 30
east of Maritime Street for the redevelopment                days of the City and its developer(s)' payment.
into intermodal rail facilities and other Port-              If the City and its developer(s) do not make a
related uses.      Since receiving title to the              contribution, then the Port has no obligation.
property, the Port has been demolishing the                  The CNA for FY 2013 includes $2 million for the
Army buildings, investigating and remediating                Community Trust Fund in case the City and its
environmental contamination, and planning for                developer(s) contribute to the fund.
the ultimate build out of additional intermodal rail
terminal capacity and other Port related uses.               Navigational Channel Deepening Project
The Port has been in ongoing negotiations for                With a water depth of 50-feet throughout the
leasing approximately 168 acres of the property              Port, shipping lines can schedule some of the
with prospective developers since August 2009                world’s largest vessels to call at the Port. The
for a long-term lease and redevelopment of the               Port and the U.S. Army Corps of Engineers plan
property. In FY 2012, the Port plans to continue             to improve the MHEA, a shallow water habitat
remediating the site, lease negotiations, interim            surrounded by the Port’s Middle Harbor
site preparation and redevelopment, including                Shoreline Park. The shallow water habitat was
approximately $1.4 million in FY 2012 for                    built by the Port as a mitigation measure for the
improvements to the site, such as grading and                redevelopment of the U.S. Navy’s Fleet
paving, fencing and lighting to support interim              Industrial Supply Center, which included the
uses, which are not inconsistent with the larger             park, an enhancement area, five new shipping
redevelopment anticipated for the former base.               berths, two marine terminals, and an intermodal
                                                             rail terminal. The 5-Year CNA includes $5.1
In the Amended and Restated Memorandum of
                                                             million in total expenditure for this project.
Agreement (ARMOA) for the OAB, the Port and
the City agreed to pay into a Community Trust
Fund which would provide funding for activities
that benefit the community.        The City




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TraPac (Berths       30-32)   Marine    Terminal           In Fall 2010, the Port substantially completed
Redevelopment                                              the last portion of the terminal improvements,
                                                           representing an investment of approximately
The Port has a long standing relationship with
                                                           $27 million. Some minor pending work will be
Mitsui OSK Lines (MOL), a Japanese shipping
                                                           completed in FY 2012.
company that has operated the (Berth 30-3)
container terminal since its construction in 1994.
                                                           Comprehensive Truck Management Program
MOL is part of the New World Alliance, which
includes MOL, APL and Hyundai Merchant                     As the Port continues implementing its CTMP,
Marine. In July of 2008, TraPac, a subsidiary of           which includes improving circulation of truck
MOL, entered into a new agreement with the                 traffic in the seaport, the Port plans on
Port for an expanded and renovated terminal,               undertaking certain street-related improvements.
comprising approximately 65 acres.            This         $1 million has been included in the CNA for FY
expansion and redevelopment is intended to                 2012.
improve TraPac’s operational efficiencies and
capacity in the short and long terms. TraPac               Sewer Upgrade
agreed to increase its MAG by approximately
$2.8 million per year in exchange for the new              Some of the sewer lines in the Port area need to
agreement and the associated terminal                      be upgraded due to age, new regulations
improvements.      Under the new agreement,                requiring inspection and certain repairs as
TraPac will continue to operate the Berths 30-32           needed. $300,000 has been included in the 5-
marine terminals through 2024.                             Year CNA.



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Commercial Real Estate Division Projects                      PROJECTS NOT INCLUDED IN THE 5-YEAR
                                                              CNA
The 5-Year CNA includes about $10 million of
projects in the CRE Division.                                 The Port’s planned capital projects have been
                                                              greatly reduced over the last three years due to
The Port is currently working with a private                  budgetary and staffing constraints and
developer on JLS Phase II for the                             reductions in demand for services. Provided
redevelopment of the eastern portion of JLS.                  below is a summary of the major projects
The Port agreed to contribute $2 million toward               excluded from the current 5-Year CNA.
the environmental remediation of JLS Phase II
                                                              The Port continues to assess and explore
parcels. Approximately $1.6 million of the $2.0
                                                              alternative funding strategies for projects not
million will be expended by June 30, 2013. The
                                                              included in the 5-Year CNA and may include
developer project is valued at approximately
                                                              these projects in a future 5-Year CNA. If the
$300 million.
                                                              Port fails to undertake the Maritime and Aviation
The Port is currently working with a private                  projects not included in the 5-Year CNA, any
developer, Oakland Harbor Partners, to                        resulting limitations on the Port’s operating
redevelop the Oak-to-Ninth waterfront district,               capacity could lower the rate of cargo and
centrally located on the Oakland Estuary                      enplanement growth and adversely affect Port
minutes from JLS and downtown Oakland.                        revenues.
Approximately $600,000 is allocated in the FY
                                                              Aviation
2012 CNA to facilitate development plans.
                                                              Aviation continues to explore alternative
In addition, approximately $7.3 million is                    strategies for funding certain terminal and
included in the 5-Year CNA for improvements                   infrastructure projects. Major Aviation projects
related   to    revenue  maintenance   and                    under consideration but not included or partially
enhancements.                                                 included in the 5-Year CNA are:

Support Projects                                              •   Scope of Terminal 1 renovation reduced
                                                                  from an estimated $300 million to
The 5-Year CNA includes $15.4 million of
                                                                  approximately $174 million.
projects for support and capital equipment.
These projects include capital equipment                      •   Utility infrastructure improvement scope
purchases for the Port such as computer                           reduced to highest priority utility needs only
hardware and software, website modernization,                     from approximately $25 million to $3.1
network upgrades, telecommunications, office                      million.
equipment, and replacement of trucks and other
                                                              •   Stormwater          system       infrastructure
vehicles.    They also include the continued
                                                                  improvement scope reduced to highest
implementation and enhancement of the Port’s
                                                                  priority utility needs from approximately $15
ERP system, supporting finance, human
                                                                  million to $6.4 million.
resources, procurement, projects and asset
management functions across the Port. The                     •   North Field facilities improvements limited to
majority of the ERP costs are anticipated in FY                   highest    priority     needs   only     from
2012. ERP represents approximately 31% of                         approximately $10 million to $7.4 million.
the total $15.4 million identified in this category.




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Maritime                                                  •   Utility     and     Sewer      Infrastructure
                                                              improvements - $8 million. Studies will
Maritime continues to explore alternative                     identify a more exact need and estimate.
strategies for funding certain terminal and yard
                                                          OHIT and 7th Street grade separation projects
reconstruction projects. Maritime projects under
                                                          are currently under negotiation for possible
consideration but not included or partially
                                                          inclusion in the master lease of the OAB.
included in the 5-Year CNA are:
                                                          Commercial Real Estate
•   Reconstruction of APL wharf (partially) -
    $115 million.                                         •   Capital improvements at 530 Water Street –
                                                              $1.5 million.
•   Outer Harbor Intermodal Terminal (OHIT) -
    $274 million.                                         •   Various improvements at 530 Washington
                                                              Street Garage – $0.8 million.
•   7th Street Grade Separation - $220 million.
•   Additional Dredging - $10 million.




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                        CAPITAL PROJECT FUNDING SOURCES

                                                             received a total of approximately $49.2 million in
Capital projects at the Port are funded by a
                                                             AIP grants.      In FY 2011, OAK anticipates
variety of sources including grants, PFCs
                                                             receiving approximately $6.9 million in AIP
(including PFC-supported CP Notes), Port-
                                                             funds. The AIP grants will be applied to the
generated cash, private sector contributions and
                                                             grant-eligible portion of airfield and apron related
debt. Based on current estimates of available
                                                             projects for both North and South Fields.
grants, PFC funds, and Port-generated cash, the
5-Year CNA estimates a funding gap of
                                                             Passenger Facility Charges (Including PFC-
approximately $62.5 million. In addition, there is
                                                             Supported CP Notes)
a timing gap of approximately $128.5 million for
PFC-eligible projects. That is, assuming a $4.50             PFC is a user fee charged by the airport and
PFC rate, the amount of PFC-eligible projects in             collected by the airlines for revenue passengers
the 5-Year CNA is greater than the anticipated               enplaning at OAK. The current rate is $4.50 per
PFC collection over the next five years.                     enplaned      passenger.          Airlines    retain
                                                             approximately 2.4% ($0.11 per passenger) and
Port staff is currently evaluating on a project-by-
                                                             disburse the remainder to the Port. PFCs are
project basis, how any funding gaps can be
                                                             collected at the time that airline tickets are sold,
bridged.      To the extent additional funding
                                                             and are forwarded approximately 30 days after
sources are not available and a decision is
                                                             the month in which they are collected. Initiated
made to move forward with a project included in
                                                             at OAK in September 1992, PFCs are approved
the 5-Year CNA, additional debt may be
                                                             by the FAA and are used to fund eligible capital
required to fund the project. Projects included in
                                                             improvement projects at OAK.
the 5-Year CNA will be approved on a project-
by-project basis based on the need, financial                In the 5-Year CNA, the Port includes
analysis, cost estimates, alignment with Port                approximately $219 million of PFC-eligible
goals and strategies and available funding                   projects and anticipates collecting $106 million
sources. (See page E-19)                                     based on the current passenger forecast and a
A description of the various funding sources is              PFC level of $4.50. Congress is currently
described below:                                             reviewing proposals in the FAA re-authorization
                                                             legislation that could increase the PFC up to
Federal Aviation Administration            Airport           $7.00 per enplaned passenger. If the Board
Improvement Program Funds                                    approves all the PFC-eligible projects in the 5-
                                                             Year CNA, CP Notes or other debt is anticipated
The AIP funds approximately 80% of eligible
                                                             to address the timing difference of $128.5
Aviation projects. The Port is required to fund
                                                             million 2 . It is estimated that this amount will be
the other 20%. The Port’s share may come from
                                                             repaid with PFC revenues in FY 2017-2023
PFCs or internally generated revenues. The
                                                             based on assumed passenger activity levels and
Port typically receives AIP grant reimbursements
                                                             a $4.50 PFC rate.
60 days after expenditures are made.

From FY 2012 - 2016 total AIP grants for OAK,
which consist of AIP entitlement and
discretionary funds, are estimated to be $108                2 The PFC timing difference takes into account an assumed July
million. From FY 2008 through FY 2010, OAK                   1, 2011 PFC balance of $9.5 million, and that costs to finance
                                                             PFC projects will be reimbursed with PFCs.


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FY 2011-12                                                                           Capital Budget and Capital Needs Assessment




Customer Facility Charges                                                Port Cash
Effective April 2002, the rental car companies                           Cash generated from operations may be used to
operating at OAK are required to collect a $10-                          fund capital projects after payment of operating
per-transaction CFC from their rental customers.                         expenses, debt service and other payment
CFCs are received approximately 20 days after                            obligations. Approximately $152.8 million of
the month in which they are collected. CFC                               such internal funds may be applied to the 5-Year
revenues in FY 2010 totaled approximately $4.5                           CNA.
million. Future CFC revenues are projected
based on a historical ratio of CFC collections per                       Other/Third-Party Contributions
enplaned passenger.                                                      The Port continues to actively seek private-
                                                                         public partnerships to fund portions of its 5-Year
CFCs can fund both operating and capital
                                                                         CNA.
improvement costs related to rental car activity.
In the current 5-Year CNA, no CFCs are
                                                                         Commercial Paper/Bonds/Debt
anticipated to be used for capital costs. CFCs
are anticipated to be used only to offset rental                         To the extent that the above listed funding
car busing operating costs.                                              sources are insufficient on a timely basis to pay
                                                                         for projects included in the 5-Year CNA, the Port
Maritime Grants                                                          would need to issue additional CP Notes/debt to
The Port expects to receive approximately $11.6                          fund its capital projects. Based on the current 5-
million in Maritime security grants and                                  Year CNA and estimated funding sources,
approximately $39 million in other local, state,                         approximately $62.5 million of additional debt
and federal grants 3 from FY 2011 to FY 2015                             may be needed by the Port to fund certain
which it intends to apply toward security projects                       projects included in the 5-Year CNA and an
and the Shore Power Program, respectively. Of                            additional $128.5 million for PFC-eligible
the $39.6 million of grant funding anticipated for                       projects.
the Shore Power Program, approximately $39
million is budgeted for FY 2012-2015.




3 Granting agencies that have awarded or may award the grants

are: U.S. Dept. of Transportation, Maritime Administration; Bay
Area Air Quality Management District; California Air Resources
Board; Metropolitan Transportation Commission; and U.S.
Environmental Protection Agency.


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FY 2011-12                                                             Capital Budget and Capital Needs Assessment




     FY 2012 CAPITAL BUDGET AND FY 2012 PIPELINE PROJECTS

For FY 2012, budget authorization for $85.6                 •   Purchase of Aircraft Rescue and Firefighting
million will be requested from the Board which                  truck
represents those projects for which the Board               •   Runway Safety Area – Environmental
already has a contractual obligation, as well as                Assessment and Design, Phase B
an amount for pre-development work and
                                                            •   Shore Power Program – portion only
miscellaneous facilities replacement projects
that are less than $100,000.                                •   Improvements at the Trapac             Terminal
                                                                (project closeout activities)
Contractual obligations included in the FY 2012
                                                            •   Maritime security projects
Capital Budget include, but not limited to,
expenditures for:                                           •   Dredging
                                                            •   Jack London Square and Union Point Park
•   Terminal 1 central utility plan design, podium              environmental remediation reimbursement
    and gate information displays, portions of
                                                            •   Oak-to-Ninth Tidelands Trust and closing
    fire suppression system and portions of
                                                                costs
    seismic retrofit
                                                            •   Enterprise Resource Planning system
•   BART – Oakland Airport Connector
•   East Apron Reconstruction Phase III                     Additional projects as identified in the 5-Year
•   Pavement Improvements – Taxiway W & U                   CNA will be brought to the Board throughout the
                                                            fiscal year on a project-by-project basis.
•   ADP Settlement Agreements – San Leandro
                                                            Authorization to proceed with these capital
    Residential Noise Insulation
                                                            projects will be authorized by the Board on a
•   Airport Noise Monitoring System Upgrade                 project-by-project basis based on the need,
•   Replacement of Pump Houses 4 and 6                      financial analysis, cost estimates, alignment with
                                                            Port goals and strategies and available funding
                                                            sources. (See pages E-19, E-20 and E-21)




                                                     E-14




                                                                                                                     166 of 218
                   ( YEAR
                   ISCAL
                   4
                       2013



                   ISCAL
                   4 YEAR
                       2014



                   4
                   ( YEAR
                   SCAL
                      2015




             n-i
                                                                                   O rdApçnoval ma        U
             C,,                                                                   neodod on cartaiss AcS
                                                                                  puneuantto SpaosOog ansI
                                                                                    contractnaAathoray
                                                                                      Ordinance 1600




                                                                  Stage 2
                                                                  Project Approval
                                                                  For tasks such as;

                                                                  C   Project Management

                                                                  C   Engineering/Planning Development

                                                                  =   Design

                                                                  :   Environmental

                                                                  C   Construction

                                                                  C   Testing and Commissioning




                                                           Stage 1
                                                      Pie-Development                                                                       Stage 2
                              Pequesbng Division —a Engineering —a Finance     —a Execuhve Oft/ce
                                                                                                                                       Project Approval
                                                                                                                                    (after Board Green light)
                                    tn-house Labor            Cc&actuat Ezpendsture (professional services)

                        Executive Director           *50000    Executive Director               $100000                             —   Engineering   —   Finence   —   Executive Ofrice
                                                                                                              Requesting Division




167 of 218
                                                                                                                                                                                           BUDGET & FINANCE Tab 3.1
                                                                     BUDGET & FINANCE Tab 3.1

FY 2011-12                                                         Capital Budget and Capital Needs Assessment




                           5-YEAR CAPITAL NEEDS ASSESSMENT
                                 Allocated By Division and Year
                                    FY 2011-12 to FY 2015-16
                                         ($ Thousands)

       Divisions                FY 11-12   FY 12-13     FY 13-14   FY 14.15    FY 15-16         Total

       Aviation                  63,481    100,647       97,580     71,648      89,400       422,756
       Maritime                  49,256     41,816       17,029     21,700      16,450       146,251
       Commercial Real Estate     7,498        675          349      1,409         180        10,111
       Support                    5,600      4,402        1,600      2,250       1,500        15,352

       ITotal                   125,835    147,540      116,558     97,007     107,530       594,470    I




                                                 E-16




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                                                                BUDGET & FINANCE Tab 3.1

FY2OII-12                                             Capital Budqet and Capital Needs Assessment




                         5-YEAR CAPITAL NEEDS ASSESSMENT
                               Allocated By Division and Year
                                  FY 2011-12 to FY 2015-16
                                       ($ Thousands)

DIVISIONS                         FYII-12   FYI2.13   FYI3-14    FYI4-15    FYI5-16          Total

AVIATION

North Airport
   Airfield                             0         0      500         500          0         1,000
   Leased Area                        700     1,861    1,550       1,500      1,750         7,361
   Other                              350         0        0           0          0           350
Subtotal North Airport              1,050     1,861    2,050       2,000      1,750         8,711    I
South Airport
   Airfield                         8,867     9,075   22,400       9,000     35,500        84,842
   Leased Area                        250       100        0           0          0           350
   Ground Access                      700         0        0           0          0           700
   BART Connector                  12,600    12,600   10,700           0          0        35,900
   Terminal                        27,783    51,787   40,630      27,550     26,000       173,750
   Other                                0         0        0           0          0             0
Subtotal South Airport             50,200    73,562   73,730      36,550     61,500       295,542    I
Common Areas
   Airfield                         2,787    22,200   20,000      30,000     26,000       100,987
   Ground Access                       50       724      800           0          0         1,574
   Terminal                             0         0        0           0          0             0
   Utilities                        3,369     2,100    1,000       3,048          0         9,517
   Other                            6,025       200        0          50        150         6,425
Subtotal Common Areas              12,231    25,224   21,800      33,098     26,150       118,503    I

ITOTAL AVIATION                    63,481   100,647   97,580      71,648     89,400       422,756    I




                                            E-1 7




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FY 2011-12                                                  Capital Budget and Capital Needs Assessment




                           5-YEAR CAPITAL NEEDS ASSESSMENT
                                 Allocated By Division and Year
                                    FY 2011-12 to FY 2015-16
                                         ($ Thousands)

DIVISIONS                           FY 11-12   FYI2-13      FYI3-14    FYI4-15    FYI5-16          Total

MARITIME

TRAPAC Terminal                         250          0            0          0          0           250
EMS/APL Terminal                        150          0            0     15,000     14,450        29,600
Vision 2000                               0          0            0      1,500          0         1,500
Security                              8,785      1,500        3,350          0          0        13,635
Oakland Army Base                     1,440      3,500          500          0          0         5,440
Dredging                              1,400      1,508            0      2,200          0         5,108
Other Terminals & Misc                3,300          0            0          0      2,000         5,300
Shore Power Program                  33,931     35,308       13,179      3,000          0        85,418

TOTAL MARITIME                       49,256     41,816       17,029     21,700     16,450       146,251


COMMERCIAL REAL ESTATE

Jack London Square (JLS)              6,270           575      249       1,209        180         8,483
Embarcadero Cove                        418           100        0           0          0           518
Business Park                           150             0      100         200          0           450
Oak-to-Ninth Avenue District            600             0        0           0          0           600
CRE Miscellaneous
     -                                   60             0        0           0          0            60

TOTAL CRE                             7,498       675          349       1,409        180        10,111    I

SUPPORT

Capital Equipment Purchases           2,000      1,000        1,000      1,000      1,000         6,000
IT Infrastructure                     3,600      3,402          600      1,250        500         9,352

TOTAL SUPPORT                         5,600      4,402        1,600      2,250      1,500        15,352    I

ITOTAL                              125,835    147,540      116,558     97,007    107,530       594,470




                                               E-18




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                                                                                                         BUDGET & FINANCE Tab 3.1

FY 201 1-12                                                                                                Capital Budget and Capital Needs Assessment




                                    5-YEAR CAPITAL NEEDS ASSESSMENT
                                                         Estimated Funding Sources
                                                          FY 2011-12 to FY 2015-16
                                                               ($ Thousands)

                                                                                           Non.Aviation
                                                  Aviation            Maritime           CRE       Support               Total             Total

     Grants                                         108,084               50,635                 0           1,393          52,028         160,112
     CFC                                                  0                    0                 0               0               0               0
     PFC
        Pay-Go [1]                                   90,555                      0               0                0                 0       90,555
        Timing Shortfall [2]                        128,471                      0               0                0                 0      128,471
        Total PFC                                   219,025                      0               0                0                 0      219,025
     Port Share
        Port Cash [3]                                72,575                   n/a              n/a             n/a         80228           152,803
        To Be Determined [4]                         23,072                   n/a              n/a             n/a         39,458           62,530
        Total Port Share                             95,647               95,616           10,111          13,959         119,686          215,333

     Total Esmated Funding                          422,756              146,251           10,111          15,352         171,714          594,470




     [1] Assumes $9.5 million of PFCs available at beginning of FY 2012.

     [2] PFC-eligible expenditures from FY 201 2-2016 are greater than the expected PFC revenues during the same period, assuming a $4.50 PFC
         collection rate. A debt financing vehicle or Port cash is needed for the PFC Timing Shortfall. The PFC Timing Shortfall is expected to be
         repaid with PFC revenues in FY 2017-2023 depending on passenger level and congressional PFC authorization level.

     [3] Assumes $4.5 million and $13.5 million is received from close of Oak-to-Ninth transaction in FY 2012 and FY 2015, respectively.

     [4] Sources of Port Share may be (1) additional grants, (2) third-party contributions, (3) Port cash, (4) debt or (5) other.




                                                                             E-19




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FY2OII-12                                                                                                 Capital Budget and Capital Needs Assessment




                                    5-YEAR CAPITAL NEEDS ASSESSMENT
                                                                  Capital Budget
                                                                    FY 2011-12
                                                                  ($ Thousands)

                                                                                                  Non.Aviation
                                                             Aviation          Maritime            CRE      Support              Total           Total
 PROJECTS

 Contractual Obligations                                      50,081             28,275          2,778           2,980         34,033             84,114
 Pre-Development                                                 500                  0              0               0              0                500
 Misc. Facilities Replacement Projects (<$1 00K)                 500                500              0               0            500              1,000

    Total Initial Projects                                    51,081             28,775          2,778           2,980         34,533             85,614


 ESTIMATED SOURCES OF FUNDS

 Grants                                                         8,662            17,057               0            173         17,230             25,891
 CFC                                                                0                 0               0              0              0                  0
 PFC
    Pay-Go [1]                                                27,128                   0              0              0               0            27,128
   Timing Shortfall [2]                                        3,873                   0              0              0               0             3,873
    Total PFC                                                 31,001                   0              0              0               0            31,001
 Port Share
    Port Cash [3]                                             11,418                 n/a            n/a             n/a        16,688             28,106
    To Be Determined [4]                                           0                 n/a            n/a             n/a           616                616
    Total Port Share                                          11,418             11,718          2,778           2,808         17,304             28,722

    Total Estimated Funding                                   51,081             28,775          2,778           2,981         34,534             85,614




 [1] Assumes $9.5 million of PFCs available at beginning of FY 2012.
 [2] PFC-eligible expenditures from FY 201 2-2016 is greater than the expected PFC revenues during the same period, assuming a $4.50 PFC
     collection rate. A debt financing vehicle or Port cash is needed for the PFC Timing Shortfall. The PFC Timing Shortfall is expected to be
     repaid with PFC revenues in 201 7-2023 depending on passenger level and congressional PFC authorization level.
 [3] Assumes $4.5 million is received from close of Oak-to-Ninth transaction in FY 2012.
 [4] Sources of Port Share may be (1) additional grants, (2) third-party contributions, (3) Port cash, (4) debt or (5) other.




                                                                          E-20




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                                                          ____________
                                                          ____________
                                                          ____________
                                                                                                  BUDGET & FINANCE
                                                                              ___________________________________________
                                                                              ______________________________________________
                                                                              _________________________________                                              Tab 3.1

FY 2011-12                                                                                                     Capital Budaet and Capital Needs Assessment




                                      5-YEAR CAPITAL NEEDS ASSESSMENT
                                                                    Pipeline Projects
                                                   (Projects Not Included in Capital Budget)
                                                                  FY 2011-12
                                                                (S Thousands)

                                                                                                       Non-Aviation
 PIPELINE PROJECTS                                              Aviation           Maritime             CRE      Support           Total         Total

 Contractual Obligations                                               0                  0               0               0           0                0
 Regulatory Compliance                                               830                300               0               0         300            1,130
 Revenue Maintenance                                               8,870             16,241           1,220           2,245      19,706           28,576
 Revenue Enhancement                                                   0              1,440           3,500               0       4,940            4,940
 Life & Safety                                                     2,700              2,000               0               0       2,000            4,700
 Customer Service                                                  1,000              1,000               0             375       1,375            2,375
 Environment and Community Benefit                                     0                  0               0               0           0                0

    Total Pipeline Projects                                       13,400             20,981           4,720           2,620      28,321           41,721

    Adiustments
    Pre-Development                                                 (500)                  0               0               0           0            (500)
    Misc. Facilities Replacement Project (<slacK)                   (500)               (500)              0               0        (500)         (1000)
    Total Adjustments                                             (1,000)               (500)              0               0        (500)         (1,500)

    Total Pipeline Projects                                       12,400             20,481           4,720           2,620      27,821           40,221


 ESTIMATED SOURCES OF FUNDS

 Grants                                                                 0                  0               0               0           0                 0
 CFC                                                                    0                  0               0               0           0                 0
 PFC
    Pay-Go [1]                                                         0                   0               0               0           0               0
    Timing Shortfall [2]                                           8,838                   0               0               0           0           8,838
    Total PFC                                                      8,838                   0               0               0           0           8,838
 Port Share
    Port Cash [3]                                                      0                 n/a             n/a             n/a          0               0
    To Be Determined [4]                                           3,562                 n/a             n/a             n/a     27,821          31,383
    Total Port Share                                               3,562             20,481           4,720           2,620      27,821          31,383

    Total Estimated Funding                                      12,400              20,481           4,720           2,620      27,821          40,221


 [1] Assumes $9.5 million of PFCs available at beginning of FY 2012.

 [2] PFC-eligible expenditures from FY 2012-2016 are greater than the expected PFC revenues during the same period, assuming a $4.50 PFC
     collection rate. A debt financing vehicle or Port cash is needed for the PFC Timing Shortfall. The PFC Timing Shortfall is expected to be
     repaid with PFC revenues in FY 2017-2023 depending on passenger level and congressional PFC authorization level.

 [3] Assumes $4.5 million is received from close of Oak-to-Ninth transaction in FY 2012.

 [4] Sources of Port Share may be (1) additional grants, (2) third-party contributions, (3) Port cash, (4) debt or (5) other.




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                           E-22




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FY 2011-12                                                                          Debt Service & Cash Flow




                                        DEBT SERVICE

Capital projects are funded by a combination of         reborrowed from time to time) and the flexibility
sources that includes cash, grants, PFCs and            to borrow funds on short notice. The Port has at
debt. The debt service as reflected in this             times had CP Notes outstanding for years prior
budget is based on the scheduled annual                 to long-term takeout.
principal and interest payments required of the
                                                        CP Notes have no scheduled amortization and
Port’s outstanding debt plus additional
                                                        principal repayment of CP Notes is not included
anticipated debt to fund the Port’s 5-Year CNA.
                                                        other than as noted in “Planned Debt below”.
                                                        The interest rate on the CP Notes is variable
Outstanding and Planned Debt                            and resets every 1 to 270 days and is assumed
The Port does not have taxing power and has             to be 0.3% - 1.8% in FY 2012 through FY 2014.
issued debt secured by a pledge of Port                 The Port currently has two letter of credits (LOC)
revenues (with certain exceptions).                     securing the CP Notes, $50 million with
                                                        JPMorgan Chase Bank and $150 million with
Outstanding Debt
                                                        Wells Fargo Bank, allowing the Port to have
The Port currently has Senior      Lien Bonds           outstanding up to $200 million in CP Notes. The
(Series K, L, M and N), a          DBW Loan,            LOCs will expire on August 2, 2012 and 2013,
Intermediate Lien Bonds (Series   A, B and C)           respectively. The Port intends to extend or
and CP Notes outstanding in       the following         replace the JPMorgan Chase Bank LOC that will
amounts:                                                be expiring in 2012, but no assurances can be
                                                        given at this time that the Port will be able to do
                                                        so or that the terms or any replacement or
                                  Unaudited
                                                        extension will be similar to the existing LOC.
                               June 30, 2011

    Senior Lien Bonds         $ 834,230,000             Pursuant to the provision of the ARRA, the Port
                                                        in May 2009, refunded and converted its
    DBW Loan                       5,762,145            outstanding $55.4 million AMT CP Notes issued
                                                        in 2006 through 2008 to non-AMT CP Notes.
    Intermediate Lien Bonds     479,850,000
                                                        The converted CP Notes will remain non-AMT
    CP Notes                      87,268,000            CP Notes for as long as it remains outstanding.
                                                        The ARRA law was not extended beyond
    Total                     $1,407,110,145            December 31, 2010 and any new borrowings
                                                        that are subject to AMT will be issued as AMT
The current outstanding revenue bonds (Senior           debt.
Lien and Intermediate Lien) were issued in
March 2000 through October 2007 at fixed rates          The priority of payment for the Port’s debt is as
ranging from 3.25% to 5.875% with principal             follows:
repayment scheduled for FYs 2012-2033. The
                                                            1. Senior Lien Bonds
DBW Loan financed the renovation in 1999 of
the Jack London Square Marinas and has a                    2. DBW Loan
fixed rate of 4.5%.                                         3. Intermediate Lien Bonds
                                                            4. CP Notes
The Port initiated a $300 million CP program in
1998 to provide funding for a portion of the
capital program (which may be repaid with cash,
PFCs or long-term debt in the future and may be


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FY 2011-12                                                                              Debt Service & Cash Flow




Planned Debt                                                 maintain a minimum Intermediate Lien DSCR of
                                                             1.10.
Based on the 5-Year CNA, the Port anticipates
issuing additional CP Notes and converting a                 On May 1, 2009, the Port entered into a Second
portion of the outstanding CP Notes to new                   Supplemental Intermediate Lien Trust Indenture,
Intermediate Lien Bonds in FY 2013. See                      which amended the Intermediate Lien Master
“Capital    Budget    and     Capital   Needs                Trust Indenture.      Among other things, the
Assessment,” Section E. The Port’s Three-Year                amendment permitted the Port to include certain
Debt Service Schedule identifies the scheduled               other funds in addition to Net Revenues for
and anticipated annual principal and interest                purposes of determining compliance with the
payments for FY 2012 through FY 2014 (see                    rate covenant in the Intermediate Lien Indenture.
page F-4).                                                   Unless the insurer or reinsurer of the
                                                             Intermediate Lien Bonds approves an extension
The interest rate on the outstanding CP Notes is
                                                             of the terms of the Second Supplemental
assumed to be 0.3% in FY 2012; 0.3%-1.3% in
                                                             Intermediate Lien Trust Indenture, the
FY 2013 and 0.8%- 1.8% in FY 2014. Under the
                                                             amendment permitting the inclusion of such
CP Indenture, the maximum CP Notes interest
                                                             other funds shall only apply until June 30, 2012.
rate is 12% with a maximum term of 270 days.
                                                             On July 1, 2010, the Port identified the other
The Port assumes that in FY 2013,
                                                             funds to be included in Net Revenues for FY
approximately $106 million of CP Notes will be
                                                             2011. The same identification is expected be
converted to new Intermediate Lien Bonds (with
                                                             done for the final time for FY 2012. The other
a principal amount of $117.5 million). It is
                                                             funds include $30 million of the Port’s Bond
anticipated that the new bonds will carry an
                                                             Reserve Fund and $15 million of the Capital
interest rate of 6.25% for non-AMT debt and
                                                             Reserve Fund. This coverage test is identified
6.75% for AMT debt.
                                                             in the table following as “Intermediate Lien with
In addition, the Port is considering refunding               Rolling Coverage.”
2000 Series K Bonds or other bonds in FY 2012
if interest rates are favorable and the Port is able         Debt Service Coverage Ratios
to achieve economic savings.             No such
refunding is assumed in the budget.                          The budgeted Senior Lien, Intermediate Lien,
                                                             Intermediate Lien with Rolling Coverage, and
                                                             Combined DSCR are shown in the table
Debt Covenants
                                                             following. The Intermediate Lien DSCR takes
The Port has covenanted in the Bond Indentures               into account Senior Lien Bond, DBW Loan and
and in the LOC Agreements to maintain Net                    Intermediate    Lien   Bond     debt    service.
Revenues (Pledged Revenue less Operation                     Intermediate Lien with Rolling Coverage DSCR
and Maintenance Expenses) at or above                        includes other funds ($30 million from the Port
specified levels of the annual debt service paid             Bond Reserve Fund and $15 million from the
by the Port each fiscal year. The minimum debt               Capital Reserve Fund) in addition to Net
service coverage ratio (DSCR) for Senior Lien                Revenues. The Combined DSCR includes all
Bonds is 1.25 and the minimum DSCR for the                   debt service including interest on CP Notes.
Intermediate Lien Bonds is 1.10. Under the
LOC Agreements, the Port has also agreed to




                                                       F-2




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                                                                                               BUDGET & FINANCE Tab 3.1

FY 2011-12                                                                                                          Debt Service & Cash Flow




                                                 DEBT SERVICE COVERAGE
                                                    FY 2009-10 TO FY 2013-14
                                                             ($ THOUSANDS)


                                                                              Actual         Budget       Budget      Projected     Projected
                                                                             2009-10        2010-11       2011-12       2012-13       2013-14


Operating Revenue                                                           $285,225       $281,902      $296,570      $314,273      $321,202
Operating Expense before Depr & Amort &         CFC/Grants (1)              (145,931)     (152,115)     (150,373)      (153,786)     (161,077)
Operating Income before Depreciation & Amortization                           139,294       129,787       146,197       160,487        160,125


Interest Earned (2)                                                             8,566          5,428         2,387         3,509         4,661


Net Revenue                                                                   147,860       135,215       148,583       163,996        164,785


Debt Service:
Debt Service – Senior Lien Bonds                                               84,218        66,641         74,507        75,459        64,343
Debt Service – Senior & Intermediate Lien Bonds & DBW Loan (3)                113,303       105,646       113,509       117,247        122,112
Debt Service – Combined (4)                                                   113,611       106,513       113,842       118,176        123,736


Debt Service Coverage Ratio:
Senior Lien (5)                                                                   1.76          2.03          1.99           2.10          2.29
Intermediate Lien (6) (9)                                                         1.42          1.28          1.32           1.40          1.35
Intermediate Lien with Rolling Coverage (7) (9)                                   1.86          1.71          1.71            n/a           n/a
Combined (8) (9)                                                                  1.42          1.27          1.31           1.39          1.33




(1)   Does not include operating expenses paid with CFCs or certain Maritime grants.
(2)   Interest Earned is Interest Income in accordance with generally accepted accounting principles and does not include the interest earned on
      PFC and CFC funds.
(3)   Based on the 5-Year CNA, it is assumed that $106 million of CP Notes is taken out with Intermediate Lien Bonds in FY 2013. The principal
      amount is assumed to be $117.5 million and the interest rate is assumed to be 6.25% for non-AMT bonds and 6.75% for AMT bonds.
(4)   Includes debt service on Senior and Intermediate Lien Bonds, DBW Loan and interest due on CP Notes, but not principal on CP Notes.
      Based on the 5-Year CNA, CP Notes balance is assumed to be $132.0 million, $96.7 million and $127.3 million with interest rates of 0.3%,
      0.3%-1.3%, and 0.8%-1.8% for FYs ending 2012, 2013 and 2014, respectively. However, as described in Section E “Capital Budget and
      Capital Needs Assessment,” the Port has not yet obtained funding for all capital projects described, some of which may ultimately not be
      implemented by the Port.
(5)   Senior Lien DSCR equals Net Revenues divided by Senior Lien Bond debt service.
(6)   Intermediate Lien DSCR equals Net Revenues divided by Senior and Intermediate Lien Bond debt service and DBW Loan debt service.
(7)   Net Revenue includes other funds, $30 million of the Port Bond Reserve Fund and $15 million of the Capital Reserve Fund, for purposes of
      calculating Intermediate Lien with Rolling Coverage.
(8)   Combined DSCR equals Net Revenues divided by Debt Service - Combined.
(9)   Intermediate, Intermediate with Rolling Coverage and Combined Debt Service Coverage Ratios reflect the reduction in debt service of $9.8
      million due to the release of funds from the Series F, Series K, Series L and Series N bond reserve funds and release of $0.6 million of
      Series M unspent bond proceeds, in FY 2010 and FY 2012, respectively.


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                                                   DEBT SERVICE SCHEDULE
                                                     FY 2011-12 TO FY 2013-14
                                                                ($ THOUSANDS)


                                                   FY 2011-12                            FY 2012-13                          FY 2013-14
            Description
                                       Principal    Interest       Total     Principal    Interest       Total   Principal    Interest       Total
Senior Lien Revenue Bonds
2000 Revenue Bonds Series K             $ 8,660     $19,795      $28,455     $10,145      $19,261      $29,406   $10,750      $18,661      $29,411

2002 Revenue Bonds Series L                   0      18,300       18,300            0      18,300       18,300          0      18,300       18,300

2002 Revenue Bonds Series M              14,560       1,545       16,105       15,245         860       16,105      4,565         422        4,987

2002 Refunding Bonds Series N             7,570       4,077       11,647        7,940       3,708       11,648      8,335       3,310       11,645

Subtotal Sr. Lien Rev. Bonds             30,790      43,717       74,507       33,330      42,129       75,459     23,650      40,693       64,343

Loans
Dept. of Boating & Waterways Loan           198         259         457           207         250         457         216         241         457

Intermediate Lien Revenue Bonds
2007 Refunding Bonds Series A            14,670      10,628       25,298       15,420       9,880       25,300     16,210       9,090       25,300

2007 Refunding Bonds Series B               585       8,734        9,319          610       8,710        9,320     12,040       8,396       20,436

2007 Refunding Bonds Series C                 0       3,928        3,928            0       3,928        3,928          0       3,928        3,928

New Proposed Debt (1)                         0           0           0             0       2,783        2,783          0       7,648        7,648

Subtotal Int. Lien Rev. Bonds            15,255      23,290       38,545       16,030      25,301       41,331     28,250      29,062       57,312

Subtotal Sr. & Int. Lien Rev. Bonds
and DBW Loan                             46,243      67,266      113,509       49,567      67,680      117,247     52,116      69,996      122,112

Commercial Paper (2)                          0         333         333             0         929         929           0       1,624        1,624

Total Debt Service                      $46,243     $67,599     $113,842     $49,567      $68,609     $118,176   $52,116      $71,620     $123,736


Note: The “Interest” on this table is on a cash basis but on the Income Statement Interest expense is on an accrual basis.




(1)   Based on the 5-Year CNA, it is assumed that $106 million of CP Notes is taken out with Intermediate Lien Bonds in FY 2013. The principal
      amount is assumed to be $117.5 million and the interest rate is assumed to be 6.25% for non-AMT bonds and 6.75% for AMT bonds.
(2)   Based on the 5-Year CNA, CP Notes balance is assumed to be $132.0 million, $96.7 million and $127.3 million with interest rates of 0.3%,
      0.3%-1.3%, and 0.8%-1.8% for FYs ending 2012, 2013 and 2014, respectively,




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                                                          CASH FLOW

Flow of Funds
                                                                            7. To establish and maintain reserve or other
The application of the Port’s revenues is                                      funds to insure the payment on or before
governed by certain provisions of the City’s                                   maturity of any or all revenue bonds.
Charter. All income and revenue from the
operations of the Port or from Port facilities is to                        8. To establish and maintain such other
be deposited in a special fund in the City                                     reserve funds pertaining to the facilities of
Treasury and to be designated as the “Port                                     the Board as determined by a resolution(s)
Revenue Fund” (also known as “General Fund”)                                   of the Board, and
and to be applied as follows:
                                                                            9. For transfer to the General Fund to the City,
1. To pay principal and interest on any or all                                 to the extent that the Board determines that
   general obligation bonds of the City issued                                 surplus moneys exist in such fund which is
   for Port purposes (1).                                                      not then needed for any of the above
                                                                               purposes.
2. To pay the principal and interest on revenue
   bonds.
                                                                            Board Established Cash Reserves
3. To pay all costs of maintenance and                                      The Board has established the following
   operation of the facilities together with                                reserves with balances as of July 1, 2011 shown
   general costs of administration and                                      below:
   overhead allocable to such facilities.

4. To defray the expenses of any pension or
   retirement system applicable to the
                                                                                                    Board Reserves
   employees.
                                                                                  Port Bond Reserve                       $30,000,000
5. For necessary additions, betterments,
   improvements, repairs or replacements of                                       Operating Reserve                        19,336,000
   any facilities.
                                                                                  Capital Reserve                          15,000,000
6. To establish and maintain reserve or other
   funds to insure the payment on or before                                       Total                                   $64,336,000
   maturing of any or all general obligation
   bonds of the City issued for any facility
   under the control of the Board.




     (1)
           There are currently no outstanding general obligation bonds of the City issued for Port purposes. The Board has covenanted in
           the Senior Lien and Intermediate Lien Bond Indentures that it will not adopt a resolution permitting the use of Pledged
           Revenues to pay debt service on the City’s general obligation bonds.



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The Board established Reserve Funds are to be            Restricted Cash
used as follows:
                                                         Restricted cash are sources that have a
                                                         designated purpose and cannot be used for any
1. Bond Reserve Fund – Fixed at $30 million.
                                                         other reasons.      The Port’s restricted cash
   Amounts may be withdrawn from the
                                                         includes the following:
   reserve fund for the following purposes:
    a. to pay principal of and interest on               1. Series-specific     Bond     Reserve/Rebate
       indebtedness of the Port in the event                Funds – As stated in the indentures, series-
       that reserve funds established under the             specific bond reserve funds are to be used
       various resolutions of issue and                     to pay debt service if the Port has
       indentures relating to such indebtedness             insufficient funds to pay the scheduled debt
       and revenues of the Port are insufficient            service for the applicable series. Rebate
       to pay such principal or interest then               funds are held under the Indenture to hold
       due and owing by the Port, or                        rebate payments to be made to the United
                                                            States Government.
    b. to    pay   for   emergency     capital
       expenditures or extraordinary operating           2. Bond Construction Fund – Funds received
       and maintenance expenditures of the                  from Bond proceeds to pay for qualifying
       Port.                                                capital improvement projects while under
                                                            construction.
2. Operating Reserve Fund – Equal to 12.5%
   of the Port’s approved annual operating               3. Passenger Facility Charge – A user fee
   expense budget and is adjusted each July 1               charged by OAK and collected by the
   for the fiscal year. The Port may withdraw               airlines for revenue passengers enplaning
   funds for unanticipated working capital                  air carrier flights. The Federal Aviation
   requirements.                                            Administration approves the PFCs that are
                                                            used to fund eligible capital improvements
3. Capital Reserve Fund – Fixed at $15 million.
                                                            for specific projects at the airport.
   The reserve may be used for the following
   purposes:                                             4. Customer Facility Charge – A per-contract
    a. to pay principal of and interest on                  fee charged by rental car companies on
       indebtedness of the Port in the event                behalf of OAK. CFCs are used to fund
       that reserve funds established under the             ground transportation (including buses and
       various resolutions of issue and                     shuttle services) and construction related to
       indentures relating to such indebtedness             rental car facilities.
       and revenues of the Port are insufficient
       to pay such principal or interest then            5. Construction Escrow – Portion of the
       due and owing by the Port, or                        amount due to a contractor is set aside until
                                                            the project has been signed off and placed
    b. for extraordinary capital improvements,              into service.
       or
    c.   for extraordinary operating     and/or
         maintenance expenditures.




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                           STATEMENT OF CASH FLOW – UNRESTRICTED
                                           FY 2011-12 TO FY 2013-14
                                                   ($ THOUSANDS)

                                                               Projected       Projected   Projected
                                                                2011-12         2012-13     2013-14
             Unrestricted Cash
             General Fund (1)                                  $100,000         $85,109     $85,912
             Port Bond Reserve Fund                              30,000          30,000      30,000
             Operating Reserve Fund                              19,336          19,882      20,748
             Capital Reserve Fund                                15,000          15,000      15,000
                 JULY 1 BALANCE                                 164,336         149,931     151,660

             Sources
             Operating Revenue                                     296,570      314,273     321,202
             Less: Non-Cash Revenue Accruals                        (3,778)      (3,778)     (3,778)
             Grants & CFCs for Operating Expense                      4,318        4,787       4,910
             PFCs for Debt Service (2)                                  238        1,269       2,569
             Interest/Other Income (3)                                6,384        3,006       4,158
                 Total Receipts                                    303,732      319,557     329,061

             AIP, PFC, Other Grants                                 53,019       42,213       60,057
             Commercial Paper (4)                                   32,000       24,000            0
             Commercial Paper (PFC) (4)                             12,710       46,543       30,554
                 Total Capital and Financing Proceeds               97,729      112,756       90,611

                 TOTAL SOURCES                                     401,461      432,312     419,672

             Uses
             Non-Personnel Expenses                             (70,119)        (73,131)    (76,472)
             Personnel Expenses                                 (84,572)        (85,442)    (89,515)
                Total Operating Expenses                       (154,691)       (158,573)   (165,987)

             Debt Service
                Principal                                       (45,622)        (49,567)    (52,116)
                Interest (4)                                    (67,599)         (68,610    (71,620)
                Total Debt Service Payments                    (113,221)       (118,177)   (123,736)

             Capital Projects (5)                              (125,835)       (147,540)   (116,558)
             Other Payment (6)                                  (22,119)         (6,293)     (6,449)

                 TOTAL USES                                    (415,866)       (430,583)   (412,730)

             Net Cash Flow (Sources less Uses)                     (14,405)        1,729       6,942

             TOTAL UNRESTRICTED AT JULY 1                      $149,931        $151,660    $158,602




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________________________________________________


(1)   General Fund balance on July 1, 2011 is an estimate. General Fund balances in subsequent years are projected.
(2)   PFCs used to reimburse portion of eligible CP Notes interest payment and associated costs such as LOC fees.
(3)   Excludes non-cash interest accrual. In FY 2011-2012, assumes receipt of $4.5 million for Oak-to-Ninth sale.
(4)   Assumes that the Port's 5-Year CNA is fully implemented and that CP Notes/debt will be used to fund the "To Be Determined"/“Timing
      Shortfall” portion. However, the Port has not yet obtained funding for all capital projects described, some of which may ultimately not be
      implemented by the Port. See Section E “Capital Budget and Capital Needs Assessment “.
(5)   Assumes the Port's 5-Year CNA is fully implemented. See Section “E” Capital Budget and Capital Needs Assessment”.
(6)   Includes, but not limited to LOC fees on $200 million letter of credit supporting Port's CP program, payments to the City, retroactive
      pension contributions for certain aircraft rescue fire fighters personnel, demolition costs of Building L-142, and endowment for Damon
      Slough transfer.




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                                   STATEMENT OF CASH FLOW - RESTRICTED
                                                   FY 2011-12 TO FY 2013-14
                                                           ($ THOUSANDS)



                                                                              Projected      Projected       Projected
                                                                               2011-12        2012-13         2013-14
                   Restricted Cash
                   Bond Reserve/Rebate Funds                                    $71,512         $71,927         $83,034
                   Bond Construction Funds                                          621               0               0
                   Passenger Facility Charge                                      9,500           2,149           3,783
                   Customer Facility Charge                                       2,771           3,587           4,401
                   Construction Escrows                                           2,876           3,076           3,376
                       JULY 1 BALANCE                                            87,280          80,739          94,594

                   Sources
                   Interest Income                                                   516            964           1,440
                   Restricted Revenue (PFC)                                       19,934         20,382          20,841
                   Restricted Revenue (CFC)                                        4,764          4,871           4,981
                   Commercial Paper (PFC) (1)                                     12,710         46,543          30,554
                   New Debt Reserve Fund (2)                                           0         10,294               0
                        TOTAL SOURCES                                             37,924         83,054          57,816

                   Uses
                   Construction Escrow                                               200            300           (300)
                   Debt Service Payment                                            (621)              0               0
                   PFC Projects & Financing Costs                               (40,076)       (65,412)        (53,083)
                   CFC Operating Expenses                                        (3,968)        (4,087)         (4,210)

                        TOTAL USES                                              (44,465)       (69,199)        (57,593)

                   Net Cash Flow (Sources less Uses)                             (6,541)         13,855             223

                   TOTAL RESTRICTED AT JULY 1                                   $80,739         $94,594         $94,817


(1)   Assumes the Port’s 5-Year CNA is fully implemented. See Section E “Capital Budget.”
(2)   Assumes $106 million of CP Notes is taken out with Intermediate Lien Bonds in FY 2013 and that a Debt Reserve Fund is established in
      conjunction with the bonds.




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FY 2011-12                                                            Acronyms




                                     ACRONYMS
ACDBE        Airport Concession Disadvantaged Business Enterprise
ACS          U.S. Census Bureau American Community Survey
ADA          Americans with Disabilities Act
ADP          Airport Development Program
AIP          Airport Improvement Program
AMT          Alternative Minimum Tax
AP           Administrative Policy
APDA         Alternative Project Delivery Approach
APDD         Aviation Project Design & Delivery
APL          American President Lines
ARFF         Aircraft Rescue and Firefighting
ARMOA        Amended and Restated Memorandum of Agreement
ARRA         American Recovery and Reinvestment Act of 2009
ATCT         Air Traffic Control Tower
BAAQMD       Bay Area Air Quality Management District
BART         Bay Area Rapid Transit
BCDC         Bay Conservation and Development Commission
BNSF         Burlington Northern-Santa Fe
CalPERS      California Public Employees Retirement
CARB         California Air Resources Board
CAS          Corporate Administrative Services
CEQA         California Environmental Quality Act
CFC          Customer Facility Charge
CNA          Capital Needs Assessment
CP           Commercial Paper
CRE          Commercial Real Estate
CTMP         Comprehensive Truck Management Program
CUP          Central Utility Plant
CY           Calendar Year
DBE          Disadvantaged Business Enterprise
DBW          Department of Boating and Waterways
DHS          Department of Homeland Security
DOE          Department of Energy
DPM          Diesel Particulate Matter
DSCR         Debt Service Coverage Ratio


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DTSC         Department of Toxic Substances Control
EA           Environmental Assessment
EAP3         East Apron Phase 3
EPA          Environmental Protection Agency
EP&P         Environmental Programs and Planning Division
ERP          Enterprise Resource Planning
FAA          Federal Aviation Administration
FTE          Full-Time Equivalent
FY           Fiscal Year
GASB         Governmental Accounting Standards Board
HVAC         Heating, Ventilation and Air Conditioning
IBEW         International Brotherhood of Electrical Workers
IFPTE        International Federation of Professional and Technical Engineers
IPI          Inland Point Intermodal
IT           Information Technology
JLS          Jack London Square
LBA          Local Business Area
LEED         Leadership in Energy and Environmental Design
LIA          Local Impact Area
LOC          Letter of Credit
MAG          Minimum Annual Guarantee
MAPLA        Maritime and Aviation Project Labor Agreement
MAQIP        Maritime Air Quality Improvement Plan
MHEA         Middle Harbor Enhancement Area
MLK          Martin Luther King Jr. Regional Shoreline
MMP          Materials Management Program
MOL          Mitsui OSK Lines
MOU          Memoranda of Understanding
MPDD         Maritime Project Design & Delivery
NDSLBUP      Non-Discrimination and Small Local Business Utilization Policy
NEPA         National Environmental Policy Act
OAB          Oakland Army Base
OAC          Oakland Airport Connector
OAK          Oakland International Airport
OBRA         Oakland Army Base Reuse Authority
OCIP         Owner-Controlled Insurance Program




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FY 2011-12                                                                              Acronyms




OHIT         Outer Harbor Intermodal Terminal
OIG          Oakland International Gateway (formerly known as Joint Intermodal Terminal - “JIT”)
OPEB         Other Post Employment Benefits
PAOH         Ports America Outer Harbor Terminal, LLC
PFC          Passenger Facility Charge
PFSO         Port Facilities Security Officer
RFID         Radio Frequency Identification
RFP          Request for Proposals
ROI          Return on Investments
RPS          Renewable Portfolio Standard
RSA          Runway Safety Area
RWQCB        Regional Water Quality Control Board
SBE          Small Business Enterprise
SEIU         Service Employees International Union
SFO          San Francisco International Airport
SRD          Social Responsibility Division
SWMP         Storm Water Management Plan
T1           Terminal 1
TEU          Twenty-Foot Equivalent Unit
TSA          Transportation Security Administration
TTI          Total Terminals International
TWIC         Transportation Worker Identification Credential
UP           Union Pacific
UPS          United Parcel Service, Inc.
V2K AQMP     Vision 2000 Air Quality Mitigation Program
VSBE         Very Small Business Enterprise
WAPA         Western Area Power Administration
WCE          Western Council of Engineers




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FY 2011-12                                                                                             Definitions



                                              DEFINITIONS
Aircraft operation — Refers to landing and                    Consumer Price Index (CPI) — An inflationary
  subsequent takeoff (also known as a “turn”).                  indicator that measures the change in the cost
Aircraft Rescue and Firefighting (ARFF) —                       of a fixed basket of products and services,
  FAA-required specialized emergency response                   including housing, electricity, food, and
  services for which OAK contracts with the                     transportation.
  Oakland Fire Department.                                    Contractual    services — Professional     and
Airport Business Park — Business park near                      support personnel services used by the Port
  Oakland Airport and Oakland-Alameda County                    other than employees or temporary agencies.
  Coliseum Complex. The park consists of 340                  Cranes, post-panamax —        Container cranes
  acres, of which 280 acres are privately owned.                designed to handle cargo vessels that are too
Airport Improvement Program (AIP) — Federal                     large to fit through the Panama Canal. See
  program that provides funding from the Airport                Post-panamax vessels
  and Airway Trust Fund for airport development,              Cranes. super post-panamax — Container
  airport planning, noise compatibility planning,               cranes designed to handle cargo vessels that
  and to carry out noise compatibility programs.                are too large to fit through the Panama Canal.
Americans with Disabilities Act (ADA) —                         See Super post-panamax vessels
  Federal legislation that prohibits discrimination           Department — An organizational unit within the
  against all individuals with mental or physical               Port which is part of a division.
  disabilities.
                                                              Departmental credits — The application of direct
Amortization —        See      Depreciation     and             labor and overhead to capital projects or the
  Amortization                                                  transfer of expenses from one unit, department
Component Unit in the City of Oakland Basic                     or division to another.
  Financial Statement — The account the City                  Depreciation and Amortization — The value of
  uses to record the financial activities of the Port           an asset is reduced through use, deterioration
  due to the enterprise nature of the Port's                    or obsolescence. Depreciation describes the
  operations. The Port is a department of the                   decrease in the value of the asset over its
  City.                                                         estimated useful life. Tangible assets, such as
Comprehensive Annual Financial Report of                        buildings and equipment are depreciated.
  the City of Oakland (CAFR) — Document                         Amortization refers to intangible assets such as
  published annually by City of Oakland detailing               computer software and noise easements.
  financial,    statistical,  budgetary     and                 Intangible assets are amortized over the
  demographic data to be distributed to the                     estimated service capacity of the asset.
  public.    It includes the Port's financial                 Division — A major administrative segment of
  information.                                                  the Port which indicates overall management
Comprehensive Truck Management Program                          responsibility for an operation or a group of
  (CTMP) —       The CTMP is the Port’s                         related operations within a functional area.
  Comprehensive Truck Management Program,                     Dockage — The charge levied against a vessel
  a plan to address air quality, safety and                     for berthing space.
  security, community impacts, and business
                                                              Dredging — Removal of sediments on the
  operation issues related to trucks serving the
                                                                bottom of a waterway for the safe passage of
  Port’s maritime facilities. The CTMP seeks to
                                                                vessels.
  balance the needs of its customers with those
  of its neighboring community in an effort to                Embarcadero Cove — Recreational marina area
  improve commerce and quality of life for those                on the waterfront south of Lake Merritt Channel
  living and working in and around the seaport.                 which includes marinas, a public fishing pier,
                                                                shops, offices, hotels and restaurants.



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FY 2011-12                                                                                            Definitions



Enterprise Fund — A fund established to                     Jack London Square (JLS) — A 25-acre
  account for government operations financed                mixed-use development area at the foot of
  and operated in a manner similar to private               Broadway.
  business enterprises.
                                                            Lake Merritt payments — See         Payments      to
Federal Aviation Administration (FAA) — The                   the City, Lake Merritt
  federal agency responsible for regulating and
                                                            Leadership in Energy and Environmental
  funding U.S. airports.
                                                              Design (LEED) — A nationally recognized
Fiscal year (FY) — A twelve-month time period                 green building rating system established by
   signifying the beginning and ending period for             Building Council.
   recording financial transactions. The Port has
                                                            Loss on abandoned and demolished assets —
   specified July 1 through June 30 as its fiscal
                                                              Abandonment losses result on projects written
   year.
                                                              off because it is not feasible to complete the
Fueling revenue — Port revenue for providing                  project or the project does not result in an
  facilities for fuel storage (tank farm) and                 asset. Losses on demolished assets result
  delivery (fuel hydrant system) for aircraft and             when a depreciable asset is destroyed, usually
  ground vehicles.        A fuel consortium of                to make way for another project.
  passenger and cargo airlines operating at OAK,
                                                            Net assets — The amount by which the value of
  under lease, reimburses the Port for all costs
                                                              a company’s assets exceeds its liabilities.
  associated with its use of the fueling
  infrastructure. The consortium contracts with a           Non-operating items — Income or expenses
  third-party operator to provide fueling services.           that are not associated with operations. In the
                                                              Port’s financial reporting, these include interest
Full-Time Equivalent (FTE) — A measure of
                                                              income, interest expense, and other income
  employment used when the work force includes
                                                              and expenses that are either nonrecurring in
  both full- and part-time employees.
                                                              nature or do not result from its ordinary
General aviation — Aviation activity not air                  operations.
  carrier related, such as private aircraft,
                                                            Oakland International Gateway (OIG) — Facility
  business aircraft, and corporate aviation
                                                              that provides ocean carriers with a near-dock
  activities. OAK's North Field is considered a
                                                              intermodal facility. OIG became operational in
  general aviation airport, although some air
                                                              March 2002 and is operated by Burlington
  carrier activity takes place there.
                                                              Northern-Santa Fe Railroad under a ten-year
General Services — See Payments to the City,                  lease agreement. Union Pacific Railroad is
  General Services                                            allowed access and usage. Formerly known as
Generally Accepted Accounting Principles                      the Joint Intermodal Terminal (JIT).
  (GAAP) — A widely accepted set of rules,                  Owner-Controlled        Insurance        Program
  conventions, standards, and procedures for                  (OCIP) — Port-managed          program        for
  reporting financial information, as established             consolidated purchase of insurance to assist
  by the Financial Accounting Standards Board.                small and local businesses to participate in Port
Governmental Accounting Standards Board                       capital projects.
  (GASB) — The independent private-sector                   Panamax vessels — Those vessels that fit
  organization, formed in 1984, that establishes              through the Panama Canal and are no more
  and improves financial accounting and                       than 13 containers wide. See Post-panamax
  reporting standards for state and local                     and Super post-panamax vessels
  governments.
Inland Point Intermodal (IPI) — Refers to
inland points (non-ports) that can be served by
carriers (shipping lines) on a through bill of
lading.




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FY 2011-12                                                                                        Definitions



Passenger traffic — Enplanements, deplane-               Radio Frequency Identification (RFID) —
  ments and connecting passenger activity.                 Method used to track trucks, cargo, containers
  Enplanement is an originating passenger who              and goods.
  boards a flight; deplanement is a passenger            Super post-panamax vessels — Vessels that
  whose final destination is OAK; and connecting           are at least 18 containers wide. See Panamax
  passenger is a passenger who uses OAK to                 and Post-panamax vessels
  connect between flights.           Connecting
                                                         T-hangar — General aviation aircraft storage
  passengers are considered enplanements for
                                                           facilities    at     OAK's    North      Field.
  the purpose of collecting PFCs.
                                                           T-hangars        are    modular     structures,
Payments to the City, General Services —                   differentiated from tie-downs. Port derives
  General Services include police and fire                 revenues from T-hangar monthly rental rates.
  services and payable upon the Port’s                     Some T-hangars are Port-owned, some
  declaration of surplus funds.                            privately owned.
Payments to the City, Lake Merritt —                     Twenty-foot equivalent unit (TEU) — A TEU or
  Reimbursement to the City for expenditures of            Twenty-foot     Equivalent     Unit    is     an
  local funds for Lake Merritt tideland trust              international standard of measurement for
  purposes and payable upon the Port’s                     the volume of business that moves through a
  declaration of surplus funds.                            container port. Containers vary in length,
Payments to the City, Special Services —                   from 20 feet to 53 feet with the majority of the
  Reimbursement to the City for services, such             containers being 40 feet. One forty-foot
  as City Clerk personnel, City Treasury, and              container is equal to two TEUs.
  special police services.
Personnel services — Expenditures related to
  employee compensation including wages and
  fringe benefits such as medical, dental and
  retirement.
Post-panamax vessels — Those vessels that
  are more than 13 containers but less than 18
  containers wide. See Panamax and Super
  post-panamax vessels




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                                      STRATEGY & POLICY Tab 4



                  STRATEGY & POLICY
This segment of the meeting is reserved for action or
discussion on Strategy and Policy Issues.




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                                                          BOARD MTG. DATE: 6/30/11



                               AGENDA REPORT
TITLE:            Authorization for the Port of Oakland to Implement a Vesting Schedule
                  for Employees in Unit C (Western Council of Engineers); I, K, L (Local
                  21); H (Senior Management); J (Professionals/Attorneys) and M (Labor
                  Relations Staff) hired on or after the effective date of the ordinance

AMOUNT:           Anticipated Savings of $7,381,000 over a 10 year period

PARTIES INVOLVED:

                  Corporate Name/Principal                Location
                  International Federation of
                  Professional and Technical
                  Engineers, Local 21
                  Western Council of Engineers

TYPE OF ACTION:                       Ordinance

SUBMITTED BY:                         Denyce Holsey, Director of Administration

APPROVED BY:                          Omar R. Benjamin, Executive Director

FACTUAL BACKGROUND

Medical benefits for the Port of Oakland employees and retirees are provided through the
California Public Employees’ Retirement System (CalPERS) under the contract between
CalPERS and the City of Oakland. CalPERS is funded by contributions from both the
employer (Port of Oakland) and the participating employees/retirees.

On June 3, 2010, the Port was successful in reaching an agreement with Western Council
of Engineers (“WCE”) and International Federation of Professional and Technical
Engineers, Local 21 (“Local 21”), with respect to retiree medical benefits, as follows:

   With respect to employees hired by the Port on or after the effective date of the
   adoption of this ordinance (herein referred to as the “Retirees”), the Port shall pay a
   percentage of employer contributions for retiree medical coverage for a Retiree and his
   or her eligible dependents based on the provisions of Section 22893 of the California
   Government Code. Under these rules, a Retiree must have at least 10 years of credited
   service with a CalPERS agency, at least five of which are with the City/Port. Except as
   otherwise required by Section 22893(b) of the California Government Code (providing
   for 100% of employer contributions for a Retiree who retired for disability or retired for
   service with 20 or more years of service credit), if the Retiree meets such requirements,
   the Port will pay a percentage of employer contributions for the Retiree based on the
   following:



                                             1




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                                                           BOARD MTG. DATE: 6/30/11



      Years of Credited Service                        % of Employer Contributions
      (at least 5 of which are with the City/Port)
             10                                                      50%
             11                                                      55%
             12                                                      60%
             13                                                      65%
             14                                                      70%
             15                                                      75%
             16                                                      80%
             17                                                      85%
             18                                                      90%
             19                                                      95%
             20                                                      100%

The employer contribution will be adjusted by the Port each year but cannot be less than
the amount required by California Government Code Section 22892(b) plus Administrative
fees and Contingency Reserve Fund assessments.

In addition, it was also agreed that employees hired on or after October 1, 2009, will no
longer qualify for dental, vision or employee assistance program benefits upon ceasing to
be an eligible employee of the Port except to the extent required under the Consolidated
Omnibus Budget Reconciliation Act (“COBRA”).

The parties have met and conferred and memorialized the terms and conditions of the
agreement into a Letter of Understanding between the Port and WCE and the Port and
Local 21. However, the Port acknowledges and agrees that the same terms and conditions
of the agreement will be applied to all unrepresented employees. The Board approved the
Letters of Understanding at the July 6, 2010 Board meeting.

ANALYSIS

In order for the new vesting period for retiree medical coverage to be effective, as agreed to
by the Port, Local 21 and WCE, the Board must be provided an actuarial study calculating
the cost (and in this case, benefit) in advance of implementing this change. An actuarial
study was conducted by Milliman and completed May 2011, using data as of January 1,
2011, (see Attachment A). The actuarial study estimates that the Port can save $7,381,000
over the next 10 years by implementing the new vesting period for retiree medical coverage
for Local 21, WCE and unrepresented employees.

The change in retiree benefits related to vision, dental and employee assistance program
for new employees hired as of October 1, 2009 as approved by the Board on June 3, 2010
and is already in effect and therefore does not require any additional Board action.




                                               2




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                                                             STRATEGY & POLICY Tab 4.1


                                                                  BOARD MTG. DATE: 6/30/11


STRATEGIC PLAN

Adopting the vesting schedule supports the following goal and objective of the Port’s FY
2011-2015 Strategic Plan:

Strategic Priority Area: Port Workforce and Operations
 Strategic Priority                                                        How the Adoption
                               Goal                   Objective
       Area                                                                  Implements
                      Goal D:                2. Minimize               The adoption of the Vesting
                      Improve the Port’s     expenditures and          Schedule:
    Sustainable       financial position.    focus on core             • Helps reduce retiree
   Economic and                              services.                   medical cost by an
     Business                                                            estimated $7,381,000 over
   Development                                                           the next 10 year period.
                                                                       • Provides parity with other
                                                                         public agencies.




BUDGET & FINANCIAL IMPACT

Based on the actuarial study by Milliman (see Attachment A), this new vesting period for
retiree medical coverage for Local 21, WCE and all unrepresented new employees hired on
or after the effective date of the board ordinance, would result in estimated savings of
approximately $7,381,000 over the next 10 year period compared to the current retiree
medical plan vesting schedule.

STAFFING IMPACT
There is no staffing impact.

SUSTAINABILITY

No sustainability opportunities are identified.

ENVIRONMENTAL

The approval of the setting of certain benefits for employees in Units C, H, I, J, K, L and M
is not a project under the California Environmental Quality Act Guidelines, and no
environmental review is required.

MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)

The matters contained in this Agenda Sheet do not fall within the scope of the Port of
Oakland Maritime and Aviation Project Labor Agreement (MAPLA) and the provisions of
the MAPLA do not apply.


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                                                          BOARD MTG. DATE: 6/30/11


OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

N/A

GENERAL PLAN

This action does not meet the definition of “project” under the City of Oakland General Plan,
and no conformity determination is required.

LIVING WAGE

Neither the Port’s Living Wage Ordinance (Port Ordinance No. 3666) nor the living wage
requirements set forth in Section 728 of the Charter of the City of Oakland apply to this
Section because the action requested is not for a “Port Contact” as defined by the Port
Ordinance No. 3666 and Charter 728.

OPTIONS

1. Adopt an ordinance implementing a retiree medical coverage vesting schedule for
   employees represented by WCE and Local 21 as well as the unrepresented employees
   of the Port of Oakland pursuant to the Letters of Understanding agreed to between the
   Port and WCE and the Port and Local 21.

2. Not adopt an ordinance implementing a retiree medical coverage vesting schedule for
   employees represented by WCE and Local 21 as well as the unrepresented employees
   of the Port of Oakland pursuant to the Letters of Understanding agreed to between the
   Port and WCE and the Port and Local 21.

RECOMMENDATION

It is recommended that the Board of Port Commissioners adopt an ordinance authorizing
the retiree medical coverage vesting schedule to be implemented for employees
represented by WCE and Local 21 as well as the unrepresented employees of the Port of
Oakland pursuant to the Letters of Understanding agreed to between the Port and WCE
and the Port and Local 21.

Attachment: Actuarial Report




                                              4




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                                                                         650 California Street, 17th Floor
                                                                         San Francisco, CA 94108-2702
                                                                         USA

                                                                         Tel +1 415 403 1333
                                                                         Fax +1 415 403 1334

                                                                         milliman.com




                                              May 20, 2011


Sent via e-mail

Ms. Sara Lee
Chief Financial Officer
Port of Oakland
530 Water Street
Oakland, California 94607

Port of Oakland – 10 Year Projections of Health Plan Costs

Dear Ms. Lee:

As requested, we have estimated the cost to the Port for the next 10 years under the
existing plan design and under the following proposed plan design changes for new non-
SEIU and non-IBEW employees hired on or after the effective date of a board resolution to
change the benefits. For purposes of this study, we have assumed an effective date of
January 1, 2011 (the date of the last actuarial valuation).

    For new employees hired on or after the effective date of the board resolution
     (excluding SEIU and IBEW new hires), the Port will pay for their medical premiums
     during retirement up to an amount equal to the basic (non-Medicare) Northern
     California Kaiser Family Plan rate. The Port’s contribution is subject to a 20 year
     vesting schedule shown in the table below. The Port will also reimburse retirees with
     at least 10 years of Port service for Medicare Part B premiums. The graded vesting
     schedule shown below does not apply to Medicare Part B premium reimbursements.
      The Port will not pay for retiree dental and vision coverage for non-SEIU and non-
     IBEW new hires on or after the effective date of the board resolution.

                            Year of Service      % Port’s Contribution
                             Less than 10                 0%
                                  10                     50%
                                  11                     55%
                                  12                     60%
                                  13                      65%
                                  14                      70%
                                  15                      75%
                                  16                      80%
                                  17                      85%
                                  18                      90%
                                  19                      95%
                                  20                     100%




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Ms. Sara Lee
May 20, 2011
Page 2



Our projections are based on the employee census and enrollment data provided to us for
the latest actuarial valuation (as of January 1, 2011) of retiree health benefits. We projected
the employee population assuming that employees would terminate employment and retire
with the Port at the same demographic rates as those described in our actuarial valuation.
As employees terminate or retire, new employees are assumed to be hired such that the
employee population increases to 454 employees in 2012, 459 employees in 2013, and 464
employees in 2014. Thereafter, new employees are assumed to be hired at a rate such that
terminating and retiring employees are replaced and the employee population remains at
464 in 2014 and beyond. The age and gender distribution of new employees is assumed to
be approximately the same as that of current Port employees hired between January 1,
2008 and December 31, 2010. If actual employee turnover and retirement patterns are
different than assumed, then our projections may differ significantly as well.

Our projections also based on a 7.61% discount rate, the expected long term rate of return
assumed by CalPERS for assets invested in the CERBT, and based on the Port’s intention
to fully fund the Annual Required Contribution (ARC) for its OPEB liability.

We have assumed medical costs will increase in accordance with the medical trend
assumption stated in our latest actuarial valuation report. Actual increases will be different
and may vary significantly from our assumed increases. An analysis of the impact of the
potential variation in future health trend and future employee turnover on projected costs
was beyond the scope of this report. At your request, we would be happy to prepare such
an analysis for you.

The results contained in this letter are estimates only. Except as otherwise described in this
letter, they are based on the plan provisions, actuarial assumptions, and cost methods
stated in our GASB 45 Actuarial Valuation for the Port as of January 1, 2011. All costs,
liabilities, rates of interest, and other factors under the Plan have been determined on the
basis of actuarial assumptions and methods which are reasonable and consistent with our
understanding of GASB 45. All assumptions should represent a best estimate of anticipated
experience under the Plan. Nevertheless, the emerging costs will vary from those
presented in this report to the extent that actual experience differs from that projected by the
actuarial assumptions. Some plan changes may also impact future assumptions and
experience. For instance, a significant reduction in the Port’s contribution toward health
premiums could affect retiree coverage elections. An analysis of the potential impact of plan
design changes on future assumptions was beyond the scope of this analysis.

Our results are based on financial and census data provided to us by the Port for the
January 1, 2011 GASB 45 Actuarial Valuation Report. While Milliman has not audited the
financial and census data, they have been reviewed for reasonableness and are, in our
opinion, sufficient and reliable for the purposes of our estimates. If any of this information
provided to us is inaccurate or incomplete, the results shown could be materially affected
and this report may need to be revised. The results shown in this report are estimates only
for purposes of comparing the relative cost changes due to alternative plan designs. They
do not reflect any plan experience such as changes in demographics or asset fund values
since the last valuation date. Therefore, they should not be used for reporting of GASB 45
liabilities and costs on the Port’s financial statements.




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                                                            STRATEGY & POLICY Tab 4.1




Ms. Sara Lee
May 20, 2011
Page 3



The analysis is intended to be used only by the Port of Oakland for the specific purposes
described herein. Milliman’s work is prepared solely for Port of Oakland’s internal business
use. To the extent that Milliman's work is not subject to disclosure under applicable public
records laws, Milliman’s work may not be provided to third parties without Milliman's prior
written consent. Milliman does not intend to benefit or create a legal duty to any third party
recipient of its work product. Milliman’s consent to release its work product to any third party
may be conditioned on the third party signing a Release, subject to the following exceptions:

    (a) Port of Oakland may provide a copy of Milliman’s work, in its entirety, to Port of
        Oakland’s professional service advisors who are subject to a duty of confidentiality
        and who agree to not use Milliman’s work for any purpose other than to benefit the
        Port of Oakland.

    (b) Port of Oakland may provide a copy of Milliman’s work, in its entirety, to other
        governmental entities, as required by law.

No third party recipient of Milliman's work product should rely upon Milliman's work product.
Such recipients should engage qualified professionals for advice appropriate to their own
specific needs. Reliance on information contained in this report by anyone for anything other
than the intended purpose puts the relying entity at risk of being misled.

On the basis of the foregoing, we hereby certify that, to the best of our knowledge and
belief, the report is complete and accurate and has been prepared in accordance with
generally recognized and accepted actuarial principles and practices which are consistent
with the applicable Actuarial Standards of Practice of the American Academy of Actuaries.
The undersigned is a member of the American Academy of Actuaries and meets the
Qualification Standards of the American Academy of Actuaries to render the actuarial
opinion contained herein.

We have not explored any legal issues with respect to the proposed plan changes. We are
not attorneys and cannot give legal advice on such issues. We suggest that you review the
proposal with Port’s counsel. If you have any questions or wish to discuss the report with
me, please give me a call at (415) 394-3740.

                                              Sincerely,



                                              John R. Botsford, FSA, MAAA
JRB:tah
enc.
cc: Oliviér Flewellen
     David Kikugawa
     Stacie Chestnut
n:\poo\corr\2011\poo2011_projection1.doc




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                      Port of Oakland – 10 Year Projections of Health Plan Costs

The following table contains a 10 year projection of the Port’s GASB 45 Actuarial Accrued Liability
(AAL) and Annual Required Contribution (ARC) based on the current plan and proposed plan
changes for non-SEIU and non-IBEW new employees hired on or after the effective date of a
board resolution to change the benefits (assumed to be January 1, 2011 for purposes of this
study). The projections assume that the ARC will be contributed to the OPEB Trust each year,
and the Trust assets will earn the assumed rate of return in the CERBT (7.61%) each year.

For new employees hired on or after the effective date of the board resolution (excluding SEIU
and IBEW employees), the Port will pay for their medical premiums during retirement up to an
amount equal to the non-Medicare Kaiser Family Plan rate. The Port’s contribution is subject to
the following vesting schedule: 0% with less than 10 years, 50% with 10 years of service, and
increasing in 5% increments up to 100% at 20 years of service. The Port will also reimburse
retirees with at least 10 years of Port service for Medicare Part B premiums. The 20 year
graded vesting schedule does not apply to Medicare Part B premium reimbursements. The Port
will not pay for retiree dental and vision coverage for non-SEIU and non-IBEW new hires on or
after the effective date of the board resolution.

      As of                     Current Plan                           Proposed Plan                               Savings
   January 1                AAL                 ARC                 AAL                ARC                 AAL                 ARC

       2011            $131,327,000         $10,994,000        $131,327,000         $10,994,000                    $0                  $0
       2012              139,562,000          11,382,000        139,562,000           11,281,000                    0           (101,000)
       2013              148,067,000          11,712,000        147,962,000           11,498,000            (105,000)           (214,000)
       2014              156,714,000          12,058,000        156,395,000           11,712,000            (319,000)           (346,000)
       2015              165,514,000          12,420,000        164,843,000           11,931,000            (671,000)           (489,000)
       2016              174,472,000          12,832,000        173,294,000           12,183,000          (1,178,000)           (649,000)
       2017              183,645,000          13,288,000        181,774,000           12,468,000          (1,871,000)           (820,000)
       2018              193,038,000          13,762,000        190,405,000           12,782,000          (2,633,000)           (980,000)
       2019              202,699,000          14,257,000        199,219,000           13,127,000          (3,480,000)         (1,130,000)
       2020              212,625,000          14,783,000        208,255,000           13,515,000          (4,370,000)         (1,268,000)
       2021              222,789,000          15,339,000        217,537,000           13,955,000          (5,252,000)         (1,384,000)




      This work product was prepared solely for the Port of Oakland for the purposes described herein and may not be appropriate
  to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
                                                              MILLIMAN



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                                          CONSENT ITEMS Tab 5



                     CONSENT ITEMS
Action by the Board under “Consent Items” means that all
matters listed below have been summarized, and are
considered to be perfunctory in nature, and will be adopted
by one motion and appropriate vote. Consent Items may be
removed for further discussion by the Board at the request of
any member of the Board.




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                                                                              CONSENT ITEMS Tab 5.1



                             PORT OF OAKLAND
                                                                                        JAMES W. HEAD
OMAR BENJAMIN                                                                                 President
Executive Director            BOARD OF PORT COMMISSIONERS                           PAMELA CALLOWAY
                               530 Water Street  Oakland, California 94607           First Vice-President
DAVID L. ALEXANDER                                                                    GILDA GONZALES
Port Attorney                           Telephone: (510) 627-1100                   Second Vice-President
                                        Facsimile: (510) 451-5914                   MARGARET GORDON
                                            TDD/TTY – Dial 711                           Commissioner
ARNEL ATIENZA
Port Auditor                                                                          MICHAEL LIGHTY
                                   E-Mail:board@portoakland.com                          Commissioner
                             Website:   www.portofoakland.com                              VICTOR UNO
JOHN T. BETTERTON
                                                                                           Commissioner
Secretary of the Board
                                                                                           ALAN S. YEE
                                             MINUTES                                       Commissioner




                         Meeting of the Board of Port Commissioners
                             Thursday June 16, 2011 – 3:00 p.m.
                                        Board Room – 2nd Floor

ROLL CALL

           President Head called the Regular Meeting of the Board to order at 3:03 p.m., and the
           following Commissioners were in attendance:

           2nd Vice-President Gonzales, Commissioner Gordon, Commissioner Uno,
           Commissioner Yee and President Head.

           1st Vice President Calloway and Commissioner Lighty were excused.

1. CLOSED SESSION (3:00 p.m.)

           President Head convened the Board in Closed Session at 3:05 p.m. to hear the
           following:

1.1        CONFERENCE WITH LEGAL COUNSEL - ANTICIPATED LITIGATION. Significant
           exposure to litigation pursuant to subdivision (b) of Section 54956.9: 2 matter(s)

1.2        CONFERENCE WITH REAL PROPERTY NEGOTIATOR - As provided under California
           Government Code Section 54956.8:

                         Property:       Former Oakland Army Base and Adjacent Properties
               Negotiating Parties:      Port of Oakland, AMB Properties and California Capital Group
               Agency Negotiator:        Director of Maritime, James Kwon
                Under Negotiation:       Price and Terms of Payment

1.3       CONFERENCE WITH LABOR NEGOTIATORS - Pursuant to Subdivision (f) of Section
          54957.6.




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                                                               CONSENT ITEMS Tab 5.1



                  Employee International Brotherhood of Electrical Workers (IBEW Local
              Organizations: 1245), International Federation of Professional and Technical
                             Engineers (IFPTE Local 21), Service Employees International
                             Union (SEIU Local 1021), and Western Council of Engineers
                             (WCE)


ROLL CALL/OPEN SESSION

      President Head reconvened the Regular Meeting of the Board in Open Session at 5:00
      p.m., and the following Commissioners were in attendance:

      2nd Vice-President Gonzales, Commissioner Gordon, Commissioner Uno,
      Commissioner Yee and President Head.

      1st Vice President Calloway and Commissioner Lighty were excused.

CLOSED SESSION REPORT

      The Board Secretary reported that the Board had unanimously approved (5 Ayes, 2
      Excused: Calloway & Lighty) in Closed Session the following Resolution:

      Resolution Authorizing and Approving Retention Of Special Counsel, Wendel Rosen
      Black & Dean LLP, in connection with the Katrina French matter.

2. MAJOR PROJECTS

      Maritime Director, James Kwon, reported on Items 2.1 and 2.2.

      A Motion to approve Item 2.1 was made by Vice-President Gonzales and seconded by
      Commissioner Uno.

2.1   Authorization to Execute Right of Entry Agreement with San Francisco Bay Area Rapid
      Transit District (BART) for Seismic Retrofit improvements to the BART Column Structure
      at 7th and Maritime Streets (Maritime)

      The Motion to approve 2.1 passed by the following votes: (5) Ayes: 2nd Vice-President
      Gonzales, Commissioner Gordon, Commissioner Uno; Commissioner Yee and
      President Head; (2) Excused: 1st Vice President Calloway and Commissioner Lighty

      A Motion to approve Item 2.2 was made by Commissioner Uno and seconded by
      Commissioner Yee.

2.2   Authorization to Waive Standard Bidding Procedures and Execute a Supplemental
      Agreement to Extend Contract with Halcrow, Inc. for Strategic Security Planning Services
      (Maritime)




                                             2



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                                                                 CONSENT ITEMS Tab 5.1




      The Motion to approve 2.2 passed by the following votes: (5) Ayes: 2nd Vice-President
      Gonzales, Commissioner Gordon, Commissioner Uno; Commissioner Yee and
      President Head; (2) Excused: 1st Vice President Calloway and Commissioner Lighty

3. BUDGET & FINANCE

      The Chief Financial Officer, Sara Lee, reported on items 3.1 and 3.2.

3.1   FY 2011-2012 Budget Update

      Sanjiv Handa addressed the Board on Item 3.1

      A Motion to approve Item 3.2 was made by Commissioner Yee and seconded by
      Commissioner Gordon.

3.2   Authorize, Pursuant to the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”),
      and in Connection with the Potential Refinancing of Existing Obligations and Potential
      Financing of Certain Projects: (1) Publishing the Notice of Public Hearing, (2) Holding the
      Public Hearing and (3) Appointing Staff to Conduct the Hearing

      The Motion to approve 3.2 passed by the following votes: (5) Ayes: 2nd Vice-President
      Gonzales, Commissioner Gordon, Commissioner Uno; Commissioner Yee and
      President Head; (2) Excused: 1st Vice President Calloway and Commissioner Lighty

4. STRATEGY & POLICY

      Item 4.1 was pulled on the recommendation of staff.

      Sanjiv Handa addressed the Board on Item 4.1.

4.1   PULLED Adopt Amendments to Port Personnel Rules for Layoff Procedures to
      Correspond with Negotiated Amendments to Civil Service Rules at the City of Oakland
      (Labor/Administration)

      Commissioner Uno left the meeting at 5:32 pm.

5. CONSENT ITEMS

      A Motion to approve the Consent Items was made by Vice-President Gonzales
      seconded by Commissioner Gordon.

5.1   Approval of the Minutes of the Special Meetings of April 29, 2011, May 26, 2011 and the
      Regular Meeting of June 2, 2011. (Board Secretary)




                                              3



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                                                                   CONSENT ITEMS Tab 5.1




5.2   Building Permit Application: Southwest Airlines - Installation of a steel, fall protection
      platform $25,000 (Engineering)

      Sanjiv Handa addressed the Board on Item 5.3.

5.3   Ordinance No. 4156 2nd Reading of an ordinance approving the terms and conditions
      and authorizing the execution of a twenty year lease for the Clay Street Ferry Terminal
      with the Water Emergency Transportation Authority and the transfer of ownership of the
      Ferry Vessels “MV Encinal” and “Peralta”. (CRE)

5.4   Ordinance No. 4157 2nd Reading of an ordinance authorizing the implementation of the
      Airline Service-Parking Marketing Program and amending Port Ordinance 2613 to
      establish rates for the premier lot. (Aviation)

      The Motion to approve the Consent Items passed by the following votes: (4) Ayes: 2nd
      Vice-President Gonzales, Commissioner Gordon, Commissioner Yee and President
      Head; (3) Excused: 1st Vice President Calloway, Commissioner Uno and Commissioner
      Lighty.

6. REMAINING ACTION ITEMS

      Denyce Holsey, Director of Administrative Services, presented Item 6.1.

      A Motion to approve Item 6.1 was made by Commissioner Gordon and seconded by
      Vice-President Gonzales.

6.1   Approval of Employee’s (ID Number 384891) Participation in the Permanent Employees
      on Temporary Assignment (PETA) Program; and the Temporary Addition of One (1)
      Position of Youth Aide, Class BB (PETA) Classification in the Aviation Department.
      (Administration)

      The Motion to approve Item 6.1 passed by the following votes: (4) Ayes: 2nd Vice-
      President Gonzales, Commissioner Gordon, Commissioner Yee and President Head;
      (3) Excused: 1st Vice President Calloway, Commissioner Uno and Commissioner
      Lighty.

7. UPDATES/ANNOUNCEMENTS

      Executive Director Omar Benjamin and Aviation Director, Deborah Ale-Flint, reported on
      the “State of the Airport” event held earlier in the day.

8. SCHEDULING

      President Head reported on Item 8.1.

8.1   There will be a Special Meeting of The Board of Port Commissioners on June 30th to
      adopt the FY 2011-2012 Budget.


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OPEN FORUM

     The following individuals addressed the Board in Open Forum: Ehab Elsayed (for Ajmer
     Singh, Amarit Singh and Kulwinder Singh), Sanjiv Handa and Steve Fagalde.

ADJOURNMENT

     There being no additional business the Board adjourned at 5:50 pm




     _______________________________                                     _____________
     John Betterton, Secretary                                               Date




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                                REMAINING ACTION ITEMS Tab 6



              REMAINING ACTION ITEMS
Remaining Action Items are items not previously addressed
in this Agenda that may require staff presentation and/or
discussion and information prior to action by the Board.




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                                                          BOARD MTG. DATE: 6/30/11



                               AGENDA REPORT
TITLE:            Increase FY 2010-11 Spending Authorization for Bus Fleet Maintenance
                  Services with Penske Truck Leasing Company; and Authorize Extension
                  of the Fleet Maintenance Service Agreements with Penske Truck
                  Leasing Company., L.P.; and with Kelly’s Truck Repair for an additional
                  six months

AMOUNT:           $575,000

PARTIES INVOLVED:

                   Corporate Name/Principal               Location
                   Penske Truck Leasing                   10755 Bigge Street
                   Company, L.P.                          Oakland, CA 94577-1011
                   Kelly’s Truck Repair                   495 Hester Street
                                                          Oakland, CA 94577-1011

TYPE OF ACTION:                       Resolution

SUBMITTED BY:                         Deborah Ale Flint, Director of Aviation

APPROVED BY:                          Omar Benjamin, Executive Director


SUMMARY

This request is to authorize the extension of two maintenance service agreements for the
Airport bus fleet, which cover both preventative and non-scheduled maintenance. It is an
interim measure as there will be a competitive process to solicit new contractors before the
end of CY 2011.

FACTUAL BACKGROUND

Penske Truck Leasing Company
Penske Truck Leasing Company, L.P. (“Penske”) has provided maintenance service for the
Airport’s ten diesel transit buses since they were purchased in 1998. The buses are used
for shuttle services in the airport parking lots. The initial agreement with Penske was for a
period of seven years through April 2006, and was extended through January 2007. An
addendum to the initial service agreement for one year commenced April 1, 2007 and the
Port executed a second one-year addendum in May 2008 which included an option to
extend the agreement on a month-to-month basis through FY 2009-10. The Port executed
a third one-year addendum which included an option to extend the agreement on a month-
to-month basis through FY 2010-11.



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Kelly’s Truck Repair
Kelly’s Truck Repair (“Kelly’s”) has provided maintenance service for the Airport’s fleet of
thirteen 25-foot, CNG-powered mini-buses since they were placed into service in 2005.
These provide shuttle service between the airline terminals and the on-Airport public and
employee (permit) parking lots. In addition, five new low-floor, 40-ft. long CNG-powered
buses manufactured by El Dorado Bus were added to this maintenance agreement in
January 2010. The existing agreement runs through the end of FY 2010-11. These
provide the AirBART service linking the terminals and Coliseum Bart Station.

ANALYSIS

Penske
The FY 2010-11 budget for maintenance of the Airport’s diesel bus fleet is $456,000, but
Board-authorized spending under the Penske contract is $256,200. Actual FY 2010-11
expense is anticipated to be about $330,000 due to $116,000 in unforeseen maintenance:

          TASK                                                           COST
          Replace/repair state-mandated pollution control devices       47,000
          Fuel system repairs (10 buses)                                36,400
          Rebuild transmissions (2 buses)                               15,600

          TOTAL                                                       $ 99,000

Staff therefore request authorization to:
           1. Increase the currently authorized FY 2010-11 expenditure amount for Penske
              by $75,000 to cover these and other unforeseen items. These funds were
              included in the FY 2010-11 budget. Spending under this contract would total
              $331,200 and be about $125,000 under budget for the year.
           2. Extend the Penske maintenance agreement by six months to December 31,
              2011, for an amount not to exceed $175,000. These funds will be included n
              the FY 2011-12 budget.

Kelly’s
The FY 2010-11 budget for maintenance of the Airport’s CNG bus fleet is $168,000, but the
authorized, not-to-exceed amount for the Kelly’s maintenance contract for FY 2010-11 is
$150,000. FY 2010-11 expense is anticipated to be about $208,000 by the end of the fiscal
year because:
    The average maintenance cost of the five new AirBart buses has exceeded prior
        estimates. That cost is averaging $1,334 per vehicle per month and will likely total
        $80,000 by the end of the year. This cost increased due to service advisories issued
        by the engine and frame manufacturers during the year, specifying more frequent
        service intervals for filters, engine components and fuel tanks; and inspections. In
        addition, the AirBart manufacturers warranty expired in January and certain
        maintenance procedures that were previously performed under warranty are no
        longer covered.
    The average monthly maintenance cost of the 13 CNG-powered mini-buses is on
        budget, even though they have been used more frequently, to minimize use of the
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         diesel buses which are more costly to maintain and fuel. Maintenance cost of these
         vehicles is averaging $820 per vehicle per month, and will likely total $128,000 by
         the end of the fiscal year.

              CNG Buses         Budgeted                       Actual
              CNG Buses         Maintenance Annualized         Maintenance       Resulting Annualized
              Maintained        Cost / Month* Budget           Cost / Month*     Maintenance Cost
              AirBart buses (5)    $667         $40,000           $1,334             $80,000
              Mini-buses (13)      $820        $128,000             $820           $128,000
              Totals                           $168,000                            $208,000

              * Average cost per vehicle


  Staff therefore requests authorization to:
             1. Increase the currently authorized FY 2010-11 expenditure amount for Kelly’s
                by $58,000 to cover anticipated maintenance expense incurred during this
                fiscal year.
             2. Extend the existing agreement with Kelly’s by six months to December 31,
                2011, for an amount not-to-exceed $165,000. This request is an increase
                over the current maintenance expense rate of $104,000 per six months, to
                allow sufficient spending authority, which will also be included in the FY 11-12
                budget.


  These requests are summarized below.
                                                              Requested
Fleet                                         Current         Additional       Anticipated    Requested FY12
Maintenance   Fleet               FY11        FY11            FY11             FY11           Authorization
Contractor    Maintained          Budget      Authorization   Authorization    Spending       (7/1/11-12/31/11)
Penske        Diesel buses (10)   $ 456,000   $ 256,200       $ 75,000         $ 331,200       $ 175,000
Kellys        CNG buses (18)      $ 168,000   $ 150,000       $ 58,000         $ 208,000       $ 165,000
TOTALS                            $ 624,000   $ 406,200       $125,000         $ 539,200       $ 340,000



  RATIONALE

  The Airport currently retains two contractors for fleet maintenance and one contractor for
  fleet operations, and has determined that there is potential for further savings and
  operational improvements by combining the fleet operations and maintenance functions
  into one contract. Since the fleet operations contract expires at the end of CY 2011, staff
  recommends extending the current fleet maintenance contracts by six months to coincide
  with that timeframe, and facilitate a joint fleet operations-maintenance RFP.


  BUDGET & FINANCIAL IMPACT

  Penske and Kelly’s agreed to extend the current service agreement with no change in
  rates, terms and conditions through CY 2010-11. The extended agreements would be
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                                                               BOARD MTG. DATE: 6/30/11


cancellable on 30-days notice. Total fleet maintenance expense for FY 2011 would be
within the approved total budget, even with the requested additional authorization.

STAFFING IMPACT

There will be no change in Port staffing as a result of extending these agreements.

SUSTAINABILITY

There are no obvious environmental opportunities involved in extending these agreements.

ENVIRONMENTAL

CEQA Determination
The California Environmental Quality Act (CEQA) Guidelines, Section 15061(b)(3) ("the
general rule") states that CEQA applies only to projects that have the potential for causing
a significant effect on the environment. Extending the maintenance service agreements will
not have a significant effect on the environment, and therefore, is not a project under CEQA
and no environmental review is required.

Maintenance activities performed by Penske and Kelly’s are categorically exempt from
requirements of the California Environmental Quality Act (CEQA) Guidelines pursuant to
Section 15301, Existing Facilities, which exempts the operation, repair, maintenance,
permitting, leasing, licensing, or minor alteration of existing public or private structures,
facilities, mechanical equipment or topographical features, involving negligible or no
expansion of use beyond that existing at the time of the lead agency’s determination.


Environmental Compliance
Maintenance activities may involve handling of waste, chemicals and/or other hazardous or
regulated materials. Penske and Kelly’s will properly store, handle, and/or dispose of
materials as required by local, state, and federal regulations.

Maintenance activities will not disturb soil or groundwater.

Mitigation
No construction activities will occur. This amendment will not have any significant impacts
to the environment; therefore, no mitigation measures are required.

Related Plans and Policies
This amendment will not require mitigation measures; therefore, there are no related or
adopted plans for this project.

MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)




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                                                        BOARD MTG. DATE: 6/30/11


The matters contained in this Agenda Report do not fall within the scope of the Port of
Oakland Maritime and Aviation Project Labor Agreement (MAPLA) and the provisions of
the MAPLA do not apply.

OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

The Owner Controlled Insurance Program (OCIP), coverage does not apply to this
agreement,

GENERAL PLAN

This action does not meet the definition of "project" under the City of Oakland General
Plan, and no conformity determination is required.

LIVING WAGE

Living wage requirements, in accordance with the Port’s Rules and Regulations for the
Implementation and Enforcement of the Port of Oakland Living Wage Requirements (the
“Living Wage Regulations”), apply to this agreement as the service provider employs 21 or
more employees working on Port-related work, the service provider is principally providing
services related to maritime or aviation business, and the contract value is greater than
$50,000.

STRATEGIC PLAN

The Strategic Plan was adopted by the Board on October 5, 2010. One of the guiding
principles the Board identified and adopted as part of the Strategic Plan is “to create
sustainable economic growth for the Port and beyond”. Authorizing the proposed extension
of these maintenance contracts, followed by a competitive bid process for operations and
maintenance services, reflects the Port’s commitment to sustainable economic growth, and
directly relate to the following Port Strategic Plan goals and objectives, as adopted on
October 5, 2010.

 STRATEGIC
  PRIORITY          GOAL                 OBJECTIVE                  IMPLEMENTATION
   AREAS
                Goal A:      1.     Maximize the use of The proposed contract
                Create         existing assets.            extensions will:
                Sustainable  2.     Affirm Port identity
Sustainable     Economic       as a public enterprise.     1.    help minimize
Economic and    Growth For   3.     Increase revenue, job    airport operating
Business        The Port And   creation     and      small   expense
Development     Beyond         business growth.
                             4.     Pursue       strategic 2.     keep the Airport
                               partnerships at all levels:   bus fleet in a state of
                               local, regional, national     good repair

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                                                             BOARD MTG. DATE: 6/30/11


                                and international.
                Goal C:       1.     Conduct                      3.    maintain a high
                Promote         comprehensive                       level of service to
                equitable       communication and                   airport customers
                community       outreach to stakeholders
                access to       and strategic partners to
                employment      improve workforce and
                and business    small business
                opportunities   opportunities.
                              2.     Integrate workforce
                                mandates into all Port
                                agreements, policies and
                                processes at the front
                                end.
                Goal D:            3: Maximize return on
                Improve the        investments (vehicle fleet)
                Port’s financial
                position


ALTERNATIVES

   1. Authorize staff to increase the authorized amount under the current agreement with
      Penske Truck Leasing Co., L.P. for diesel bus fleet maintenance, for a total not to
      exceed $75,000 for the remainder of FY 2010-11; and authorize a six month
      extension of the current agreement from July 1, 2011 to December 31, 2011 for an
      amount not to exceed $175,000.

      Authorize staff to increase the authorized amount under the current agreement with
      Kelly’s Truck Repair for CNG bus fleet maintenance, for a total not to exceed
      $58,000 for the remainder of FY 2010-11; and authorize a six-month extension of
      the current agreement from July 1, 2011 to December 31, 2011 for an amount not to
      exceed $165,000.

   2. Do not authorized staff to extend the agreements with Penske Truck Leasing Co.
      L.P and Kelly’s Truck Repair. Direct staff to solicit fleet maintenance services from
      other vendors on an interim basis until the planned formal solicitation results in
      execution of a new fleet maintenance agreement.

RECOMMENDATION

Staff recommends that the Board approve Option 1: authorize an increase of $75,000 in
the Penske budget and an increase of $58,000 in the Kelly’s budget for the remainder of
FY 2010-11. Extend the Port’s current agreement with Penske Truck Leasing Co. LLP
from July 1, 2011 through December 31, 2011 for an amount not to exceed $175,000;

                                                6




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                                                      BOARD MTG. DATE: 6/30/11


extend the agreement with Kelly’s Truck Repair from July 1, 2011 through December 31,
2011, for an amount not to exceed $165,000.




                                          7




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                                   BOARD MTG. DATE: 6/30/11




                  Figure 1
               Airport Buses




     1999 Gillig 1999 Diesel Phantom (35’)




2003 El Dorado CNG Aerotech “Cut-away” (25’)




     2009 El Dorado CNG “AXESS” (40’)
                      8




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                                   BOARD MTG. DATE: 6/30/11


                     Figure 2
Map of Airport Terminal Complex and Parking Areas




                        9




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                             UPDATES & ANNOUNCEMENTS Tab 7



            UPDATES & ANNOUNCEMENTS
The President and / or Executive Director will report on
noteworthy events occurring since the last Board Meeting.




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                                            SCHEDULING Tab 8



                      SCHEDULING
This segment of the meeting is reserved for scheduling
items for future Agendas and/or scheduling Special
Meetings.




                                                         218 of 218

				
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