AGENDA

J. CHRISTOPHER LYTLE CESTRA BUTNER Executive Director PORT OF OAKLAND President ALAN S. YEE BOARD OF PORT COMMISSIONERS First Vice-President DANNY WAN 530 Water Street 1 Oakland, California 94607 EARL HAMLIN Port Attorney (510) 627-1696(w)1(510) 839-5104(f)1TDD/TTY 711 Second Vice-President MICHAEL COLBRUNO ARNEL ATIENZA Commissioner Port Auditor E-Mail: [email protected] JAMES W. HEAD Website: www.portofoakland.com Commissioner JOHN T. BETTERTON BRYAN R. PARKER Secretary of the Board Commissioner AGENDA VICTOR UNO Commissioner

Meeting of the Board of Port Commissioners December 12, 2013 – 1:00 p.m. Board Room – 2nd Floor

ROLL CALL

Commissioner Colbruno, Commissioner Head, Commissioner Parker, Commissioner Uno, 2nd Vice-President Hamlin, 1st Vice President Yee and President Butner.

1. CLOSED SESSION

Closed Session discussions and materials may not be disclosed to a person not entitled to receive it, unless the Board authorizes disclosure of that confidential information.

1.1 CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED LITIGATION (Significant Exposure to Litigation Pursuant to Paragraph (2) of Subdivision (d) of California Government Code Section 54956.9 4 Matters

1.2 CONFERENCE WITH REAL PROPERTY NEGOTIATORS – (Pursuant to California Government Code Section 54956.8):

Property: Berths 25-26 Negotiating Parties: Port of Oakland and Ports America Outer Harbor Terminal Agency Negotiator: Executive Director, J. Christopher Lytle; Acting Director of Maritime, Jean Banker and Port Attorney, Danny Wan Under Negotiation: Price and Terms of Tenancy

1.3 PUBLIC EMPLOYEE PERFORMANCE EVALUATION – (Pursuant to California Government Code Section 54957):

Title: Port Attorney

1 AGENDA

1.4 CONFERENCE WITH LABOR NEGOTIATORS– (Pursuant to California Government Code Section 54957.6):

Employee International Federation Of Professional And Technical Organization: Engineers, Local 21 (“Local 21 IFPTE”)

ROLL CALL/OPEN SESSION (Approximately 3:00 p.m.)

Commissioner Colbruno, Commissioner Head, Commissioner Parker, Commissioner Uno, 2nd Vice-President Hamlin, 1st Vice President Yee and President Butner.

CLOSED SESSION REPORT

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

2. 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.

2.1 Ordinance: Extension Of Month-To-Month Space Assignment Agreements That Have Been In Effect For More Than One Year As Of December 12, 2013 (Maritime)

2.2 Resolution: Authorize Executive Director To Negotiate And Execute A Supplemental Agreement And End User License Agreement For Radar Data Access At The Oakland International Airport And Other Associated Actions. (Aviation)

2.3 Resolution: Adoption Of A Resolution Approving A Second Amendment To Sublease And Operating Agreement Between Oakland Golf, LLC And The City Of Oakland Resulting In Estimated Review Of Approximately $149,176 (Metropolitan Golf Links At 10051 Doolittle Drive) (Aviation)

2.4 Resolution: Increase in Maximum Compensation for Agreement with American Maritime Group (Maritime)

2.5 Ordinance: 2nd Reading Of An Ordinance Approving And Adopting The Port Of Oakland Sunshine Ordinance Establishing Requirements For Noticing, Agendizing And Posting Of Agenda-Related Materials For Board Of Port Commissioners Meetings (Port Attorney)

2.6 Minutes: Approval Of The Minutes For The Regular Meetings Of October 24, 2013 And November 14, 2013. (Board Secretary)

2.7 Report: Executive Director Awards of Recent Public Works and Professional Services Contracts for the Period from May 2013 through October 2013 (Engineering)

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3. MAJOR PROJECTS

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

3.1 Report: Shore Power Update (Maritime)

3.2 Report: Energy Innovation Study (Environmental/External Affairs)

4. BUDGET & FINANCE

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

4.1 Resolution: Authorization To Renew The Owner Controlled Insurance Program (“OCIP”) For Three Years Beginning As Soon As Possible (Approximately February 1, 2014), And Related Actions.

4.2 Report: Comprehensive Annual Financial Report For Year Ended June 30, 2013

4.3 Report: Management Letter For Year Ended June 30, 2013

5. STRATEGY & POLICY

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

5.1 Report: Renewable Energy Procurement Update (Engineering)

5.2 Resolution: Adoption Of First Amended And Restated Renewable Energy Resource Procurement Plan (Engineering)

5.3 Resolution: Authorization To Execute Renewable Energy Certificate Transfer Agreement With Northern California Power Agency (Engineering)

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 Resolution: Authorization To Upgrade The Audio System For The Board Room Located At 530 Water Street, Oakland, California (Board Secretary/CRE/IT)

6.2 Ordinance: Authorization To Extend Lease With Ports America Outer Harbor Terminal, LLC For The Berths 25/26 Marine Terminal For Six Months, Through June 30, 2014 (Maritime)

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3 AGENDA

6.3 Ordinance: Five-Year Extension Of License And Concession Agreement With Piedmont Hawthorne Aviation, LLC D/B/A Landmark Aviation (Aviation)

6.4 Ordinance: Approval Of A Second Amendment To Lease Of The Lease Between Port Of Oakland And Southwest Airlines Co. Dated February 1, 2014 (501 Alan Shepard Way) (Aviation)

6.5 Ordinance: Authorization To Amend Port Ordinance 3634 To Adjust Certain North Field Rates And To Adopt An Ordinance To Authorize A Five-Year Extension Of Multiple Agreements With General Aviation Tenants (Aviation)

6.6 Ordinance: First Reading Of An Ordinance Approving A Space/Use Permit For Non- Exclusive Retain And Duty Free Concession Privileges With World Duty Free Group North America And Adoption Of A Resolution Approving An Amendment To The Space/Use Permit For Non-Exclusive Food, Beverage, Retain And Duty Free Concession Privileges With Host International, Inc. (Aviation)

7. UPDATES/ANNOUNCEMENTS

The President, Members of the Board and the 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

8.1 Resolution: Resolution Adopting A Schedule For Regular Meetings Of The Board Of Port Commissioners For The Calendar Year 2014 (Board)

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 January 23, 2014

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4 AGENDA

PUBLIC PARTICIPATION

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.

To Receive Agendas & 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: [email protected]

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 [email protected] (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 Assistant Secretary of the Board no later than five working days prior to the scheduled meeting date.

Daria Edgerly, Assistant Secretary of the Board 530 Water Street, Oakland, CA 94607 [email protected] (510) 627-1337

Scented Products Please refrain from wearing scented products to this meeting so attendees who experience chemical sensitivities may attend.

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Commissioner’s Statement of Intention

We are a governing Board whose authority lies with the entirety of the Board.

We govern in accordance with our fiduciary duty to the Port of Oakland.

We conduct ourselves with clarity and transparency, grounded in the principles of integrity, trust and respect.

We reach our decisions through candid, open and deliberative debate and hold both staff and ourselves accountable for implementing them.

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6 CONSENT ITEMS Tab 2

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.

7 CONSENT ITEMS Tab 2.1

BOARD MTG. DATE: 12/12/13

AGENDA REPORT

TITLE: Extension of Month-to-Month Space Assignment Agreements That Have Been in Effect for More than One Year as of December 12, 2013

AMOUNT: $3.32 million annually

PARTIES INVOLVED:

Corporate Name/Principal Location Various

TYPE OF ACTION: Ordinance

SUBMITTED BY: Jean Banker, Director of Maritime (Acting)

APPROVED BY: J. Christopher Lytle, Executive Director

SUMMARY

The Port of Oakland’s (Port’s) Maritime Division currently has 48 month-to-month Space Assignment Agreements with tenants that have been active for more than one year. Per the new Board of Port Commissioner By-Laws instituted by the Board in July 2013, the Executive Director must seek the Board’s authorization for these Agreements to continue on a month-to-month basis. It is the Maritime Division’s intention to annually request the Board’s authorization to continue all Agreements in excess of one year.

FACTUAL BACKGROUND

The Maritime Division has 60 current Space Assignment Agreements, 48 of which have been active for more than one year. Space Assignment Agreements are month-to-month agreements that can be terminated by either party on a 30-day notice (by the tenant) or a 3-day notice (by the Port). These Agreements are at rates that have been predetermined by the Board as set forth in Tariff 2-A, and are for Maritime tenants who are using property that is not currently leased on a long term basis. In many cases, the Port does not have immediate plans to use the property, so the Agreements allow the Port to earn revenue from the property while still keeping the land available for future development.

The types of uses authorized under the Agreements are varied, including trucking companies, warehouse operators, cross-docking, tugboat operations, truck scales, office spaces for trucking companies, trucking and container depots and food vendors.

While the Space Assignment Agreement tenancy is only month-to-month, the overall term of the Agreements has varied, some ranging from just one day (e.g., for a vessel to tie up while making repairs) to some that have been in effect for over 10 years.

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8 CONSENT ITEMS Tab 2.1

BOARD MTG. DATE: 12/12/13

ANALYSIS

The 48 Agreements cover 37 different tenants, some of which have more than one Agreement. The Agreements which have had continued occupancy in excess of one year are as follows:

Company Agreement Type of use Rent A.V. Trucking Company 1334MMJ5 Trucking ops $9,464.00/month Academy of Truck Driving 1182MMJ1 Parking of training vehicles $422.50/month Academy of Truck Driving 1185MMJ1 Office and training space $883.30/month Amnav Maritime Services 1172MMJ1 Tug boat operations $6,648.98/month Bridgeport Transportation OHQ1028 Office space $759.00/month Bridgeport Transportation 1219MMJ1 Trucking ops $2,519.40/month Bridgeport Transportation 1264MMJ1 Trucking ops $8,805.45/month Bridgeport Transportation 1286MMJ1 Office space $1,051.60/month California Freight 1318MMJ1 Office space and trucking ops $9,029.75/month California Multimodal 1195MMJ5 Office space and trucking ops $38,561.86/month CP Carrier 1138MMJ1 Office space and trucking ops $1,127.13/month CP Carrier 1264MMJ1 Trucking ops $2,011.10/month Crowley Marine Services 1170MMJ1 Tug boat operations $3,284.00/month Delicias De Acapulco 1262MMJ1 Food vendor $110/month Digital Realty Trust 1280MMJ3 Storage and auto parking $2,331.00/month El Patron Lonchera 1229MMJ3 Food vendor $110/month Fundis Company OHQ932 Truck scale $4,086.00/month Fundis Company 1245MMJ1 Trucking ops $11,492.00/month J. Broussard Construction 1295MMJ3 Equipment storage $845.00/month La Cabana Tacos 1323MMJ1 Food vendor $110/month La Chole MHQ1031 Food vender $110/month Legner & Sons Express 1173MMJ1 Office and trucking ops $8,725.05/month Maritech Equipment 1089MMJ1 Office space and repair shop $3,502.10/month MC&PL Tire and Road Service 1105MMJ5 Truck tire repair $358.28/month MDI Forest Products 1298MMJ1 Log export ops $21,220.50/month MDI Forest Products 1321MMJ1 Log export ops $16,437.08/month Metritech LLC 1268MMJ1 RFID center $85.84/month Nelson Francia Trucking 1239MMJ5 Trucking ops $1,690.00/month North Central Truck Supply 1311MMJ1 Truck parts $1,290.48/month PCC Logistics 1327MMJ1 Trucking ops $36,808.20/month Port Transfer 1177MMJ1 Trans-loading operations $4,720.32/month Progressive Transportation OHQ984 Office space $1,633.50/month

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9 CONSENT ITEMS Tab 2.1

BOARD MTG. DATE: 12/12/13

Progressive Transportation 1233MMJ5 Trucking ops $2,695.55/month Schnitzer Steel 1221MMJ3 Steel export ops $2,052.00/month Schnitzer Steel 1231MMJ3 Steel export ops $2,872.80/month Schnitzer Steel 1284MMJ3 Steel export ops $1,425.00/month Shippers Transport Express 1243MMJ5 Office space $1,209.60/month Sincere Hardware 1241MMJ4 Product storage $2,078.70/month Tacos Los Cuates 1253MMJ4 Food vendor $110/month Taso Zografos 1319MMJ1 TWIC card office $110/month The Container Traders 1324MMJ1 Container repairs/sales $3,070.98/month Tran Kim Muoi 1333MMJ2 Food vender $110/month United Intermodal Services 1225MMJ5 Container depot $19,380.00/month United Intermodal Services 1236MMJ1 Container depot $26,973.75/month Valencia Food MHQ1015 Food Vendor $110/month Villegas Trucking 1320MMJ1 Truck tractor repair $1,782.14/month Westar Marine Services 1165MMJ1 Water taxi services $591.50/month Wings Century Trucking 1307MMJ1 Trucking ops $11,846.90/month

Most of these tenants provide services directly to or in support of maritime activity at the marine terminals and rail yards located in the heart of the seaport, with the exception of Digital Realty Trust and Sincere Hardware, who are tenants located at the former Harbor Facilities parking lot on Brush Street, approximately 5 blocks from the Port headquarter offices. This space has not been successfully leased to a Maritime operator due to its location, small size, and accessibility. Staff recommends the continuation of the afore- listed Agreements because they are critical to continuity of maritime revenue and contribute to overall maritime operations.

STRATEGIC PLAN

Strategic Goal Objective How + When Priority Area Implemented Sustainable Goal A: Create 1. Maximize the use of By extending these Economic and Sustainable existing assets Space Assignments, the Business Economic Port is able to retain and Development Growth For The increase revenue from Port And Maritime properties. Beyond. Sustainable Goal B: Maintain 1. Retain existing By extending these Economic and And customers and Space Assignments, the Business Aggressively tenants. Port is able to retain Development Grow Core existing businesses Businesses supporting cargo activity through the Port.

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10 CONSENT ITEMS Tab 2.1

BOARD MTG. DATE: 12/12/13

BUDGET & FINANCIAL IMPACT

The Space Assignment Agreements in excess of one year represent monthly revenue of approximately $276,650, and annual revenue of $3.32 million. This revenue was included in the FY 2013-14 Maritime Division operating budget.

STAFFING IMPACT

The proposed action is not expected to have an impact on staffing.

SUSTAINABILITY

This ordinance will allow existing Space Assignment tenants to efficiently continue augmenting Maritime Operations at the Port of Oakland and support sound local and regional economic development through the retention of direct or indirect job opportunities. If these tenants were not on Port property they would have to relocate these services outside the Port boundary resulting in increased traffic and truck trips.

ENVIRONMENTAL

The proposed extension of space assignments with maritime area tenants is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to the Port CEQA Guidelines, Section 15301(p), which exempts renewals, extensions or amendments to leases or license and concession agreements where the premises or licensed activity was previously leased or licensed to the same or another person, and involving negligible or no expansion of use beyond that previously existing. Extending the space assignments with existing tenants to continue their current business operations meets the criteria for this exemption.

Some of the space assignment premises are under regulatory agency oversight with deed restrictions on the property: ∑ Approximately one-third of the month-to-month agreements are on the former Oakland Army Base (OAB), which is under the oversight of the State of California’s Department of Toxic Substances Control (DTSC) (EnviroStor site 01970016) due to a variety of historic contaminants in soil and groundwater, remaining from the OAB’s former use as a military installation. Most of the sites have been remediated. Two deed restrictions1 on the OAB prohibit certain land uses and activities, such as groundwater extraction and excavation or soil disturbance without DTSC review and approval, and compliance with the final Remedial Action Plan and Risk Management Plan, among other conditions. Furthermore, interim leasing of property at the former OAB was described and analyzed in the 2002 Oakland Army Base (OAB) Area Redevelopment Plan Environmental Impact Report (EIR) and the 2012 OAB Project

1 http://www.envirostor.dtsc.ca.gov/regulators/deliverable_documents/7657270133/Land%20Use%20Covenant.pdf http://www.envirostor.dtsc.ca.gov/regulators/deliverable_documents/1262481510/P181921%20Land%20Use%20Covenant%20%5BRecorded%2 06-29-07%5D.pdf 4

11 CONSENT ITEMS Tab 2.1

BOARD MTG. DATE: 12/12/13

Initial Study/Addendum (IS/Addendum), which were previously considered by the Board. ∑ One space assignment (Shippers Transport Express) is on the former U.S. Navy Fleet and Industrial Supply Center Oakland site that is under the oversight of the DTSC (EnviroStor site CA4170090027) due to volatile organic compounds in shallow groundwater, remaining from its former use as a military installation. A deed restriction2 on that portion of the site prohibits constructing wells and extracting groundwater. DTSC considers this site closed. ∑ Six space assignments (J. Broussard Construction, La Cabana Tacos, La Chole, and three for Schnitzer Steel) are on the former Union Pacific Railroad Roundhouse property that is under the oversight of the Regional Water Quality Control Board (RWQCB) (Geotracker site SL18339759) due to petroleum products in soil and groundwater, remaining from the site’s former use by Western Pacific and Union Pacific Railroads. A deed restriction3 on the Roundhouse site prohibits certain land uses and activities, such as groundwater extraction and excavation or soil disturbance without RWQCB review and approval, requires compliance with a Site Management Plan, and requires surface covers, among other conditions. The RWQCB considers this site closed.

Continued use of these deed-restricted sites for maritime support purposes is not subject to CEQA under Section 15061(b)(3) of the CEQA Guidelines, which 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 extending the existing space assignments with existing tenants for the same uses on these sites will result in a physical change in the environment, and therefore this action is not subject to CEQA.

MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)

The action to authorize the extension of month-to-month Space Assignment Agreements does 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. However, if in the future, there is tenant construction work performed under these agreements that exceeds the thresholds required for coverage under the MAPLA, the provisions of MAPLA will apply when the Port Permits are requested for said future construction work.

OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

Extending the terms of Space Assignments are not subject to OCIP as they are not capital improvement construction contracts. The tenants will be required to comply with the insurance clauses contained in the Space Assignments.

2 http://www.envirostor.dtsc.ca.gov/regulators/deliverable_documents/4256138443/Land%20Use%20Covenant%20%5Brecorded%202-22- 01%5D.pdf 3 https://geotracker.waterboards.ca.gov/regulators/deliverable_documents/7523511588/UPRR%20Roundhouse%20deed%20restriction.pdf 5

12 CONSENT ITEMS Tab 2.1

BOARD MTG. DATE: 12/12/13

GENERAL PLAN

This action does not change the use of any existing facility or create new facilities, and therefore does not require a General Plan conformity determination pursuant to Section 727 of the City of Oakland Charter.

LIVING WAGE

Living wage requirements will apply to these lease agreements if the tenants employ 21 or more employees working on Port-related work and the tenancy agreements generate more than $50,000 annually.

OPTIONS

1. Authorize the Executive Director to extend month-to-month Space Assignment Agreements that have been in effect for more than one year, as of December 12, 2013.

2. Do not authorize the Executive Director to extend month-to-month Space Assignment Agreements that have been in effect for more than one year. Under this option, staff will immediately terminate the Space Assignment Agreements.

RECOMMENDATION

Authorize the Executive Director to extend month-to-month Space Assignment Agreements that have been in effect for more than one year, as of December 12, 2013.

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13 CONSENT ITEMS Tab 2.1

21

BOARD OF PORT COMMISSIONERS CITY OF OAKLAND

ORDINANCE AUTHORIZING AND APPROVING THE EXTENSION OF MONTH-TO-MONTH SPACE ASSIGNMENT AGREEMENTS THAT HAVE BEEN IN EFFECT FOR MORE THAN ONE YEAR AS OF DECEMBER 12, 2013.

\ \ WHEREAS the Board of Port Commissioners of theXCity of Oakland ("Board") has reviewed and evaluated the proposed extension\pf\ the month-to- month space assignment agreements in the Port of Oakland's (^PoEt") Maritime Area as set forth in the Agenda Report for Agenda Item 2.1, dated December 12, 2013 (the "Agenda Report") and related agenda materials, has received the expert testimony of Port staff, and has provided opportunities for and taken public comment; and

WHEREAS, a list of the month to month space assignment agreements referenced in the Agenda Report are listed in Attachment A to this Ordinance; now, therefore

BE IT ORDAINED by the Board of Port Commissioners of the City of Oakland as follows: . / J J \ \

Section 1. In acting upon this matter, the Board has exercised its independent judgment based on substantial evidence in the record and adopts and relies upon the facts, data, analysis, and findings set forth in the Agenda Report and in related agenda materials and in testimony received.

Section 2. The Board hereby finds and determines as follows:

A. The continued use of the subject properties for maritime support purposes is not subject to CEQA under Section 15061(b)(3) of the CEQA Guidelines, which 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 extending the existing space assignment agreements with existing tenants for the same uses on these sites, where no subsurface disturbance is permitted, will result in a physical change in the environment, and therefore this action is not subject to CEQA.

B. In addition, the proposed extension of space assignment agreements with maritime area tenants is categorically exempt from the California Environmental Quality Act ("CEQA") pursuant to the Port CEQA Guidelines, Section 15301(p), which exempts renewals, extensions or amendments to leases or license and concession agreements where the premises or licensed activity was previously leased or licensed to the same or another person, and involving negligible or no expansion of use beyond that previously existing.

Page 1 of 4 298961

14 CONSENT ITEMS Tab 2.1

Extending the space assignment agreements with existing tenants to continue their current business operations meets the criteria for this exemption.

Section 3. The Board approves and authorizes the Executive Director to execute modifications to the month-to-month space assignment agreements listed in Attachment A to this Ordinance to extend such space assignment agreements on a month-to-month basis under the same terms and conditions and at such rates as are set forth in Port Tariff 2-A, as the same may be amended from time to time by the Board. Each of the month-to-month space assignment agreements herein authorized shall be subject to further Board review and approval in the event that any such Space Assignment Agreements continue for more than one (1) additional year.

Section 4. This ordinance is not evidence of\and does not create or constitute (a) a contract, agreement, lease or phe/grant of any right, entitlement or property interest, or (b) any obliga'tidn or liability on the part of the Board or any officer or employee of tfie /Boa\d. . Unless and until separate written agreement(s) are duly executed\pri behalf of the Board as authorized by this ordinance, is signed and approved as to^fobm and legality by the Port Attorney, and is delivered to the ot/h^r//contracting\parNty, there shall be no valid or effective agreement(s). / / \ \ Section 5. This ordinance shall\ be/ effective immediately upon adoption by the Board \

\\ \ \\\\/ ' X \ \/ / / \/ / / ' X \ // "") ) \\ < / 1 \\

\\ \ \ President ^x \ / I

\\

Attest: Secretary.

Approved as to form and legality:

Port Attorney

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15 CONSENT ITEMS Tab 2.1

ATTACHMENT A

December 12,2013 Agenda Item 2.1: ListofSpace Assignment Agreements

Company Agreement Type of use Rent

A.V. Trucking Company 1334MMJ5 Trucking ops $9,464.00/month

Academy of Truck Driving 1182MMJ1 Parking of training vehicles $422.50/month

Academy of Truck Driving 1185MMJ1 Office and training space $883.30/month

Amnav Maritime Services 1172MMJ1 Tug boat operations . $6,648.98/month

Bridgeport Transportation OHQ1028 Office space / / $759.00/month

Bridgeport Transportation 1219MMJ1 Trucking ops / <^ $2,519.40/month / /\ \ Bridgeport Transportation 1264MMJ1 Trucking ops (/ \\ $8,805.45/month Bridgeport Transportation 1286MMJ1 Office spade > \ \ $1,051.60/month

California Freight 1318MMJ1 Office-Space and trucking ops\ ^9,029.75/month California Multimodal 1195MMJ5 Officespace ana* trucking ops \$38,561.86/month CP Carrier 1138MMJ1 Office spacey^nd trucking ops $1,127.13/month CP Carrier 1264MMJ1 / Trucking dps V $2,011.10/month Crowley Marine Services 1170MMJ1 \\ Tug boat operations $3,284.00/month Delicias De Acapulco 1262MMJ1 \ "food vendor \/> $110/month Digital Realty Trust t280MM^3 .Storage and auto^arking $2,331.00/month El Patron Lonchera / 1229MM^J3 F\ood vendor $110/month Fundis Company < < OHQ93? / Trucftscale $4,086.00/month \\ Fundis Company 1245MMJ1 Trucking ops $11,492.00/month J. Broussard Construction 1295I^MJ3 Equipment storage $845.00/month

La Cabana Tacos / \1323iyiMJl1 Food vendor $110/month // \ LaChole \\ NyiHQ103\J> Food vender $110/month Legner & Sons Express, 1173MMJ1 Office and trucking ops $8,725.05/month Maritech Equipment \\ /T089MMJ1 Office space and repair shop $3,502.10/month MC&PL Tire and Road SeryicW ;405MMJ5 Truck tire repair $358.28/month

MDI Forest Products \/ 1298MMJ1 Log export ops $21,220.50/month MDI Forest Products 1321MMJ1 Log export ops $16,437.08/month

Metritech LLC 1268MMJ1 RFID center $85.84/month

Nelson Francia Trucking 1239MMJ5 Trucking ops $1,690.00/month North Central Truck Supply 1311MMJ1 Truck parts $1,290.48/month PCC Logistics 1327MMJ1 Trucking ops $36,808.20/month Port Transfer 1177MMJ1 Trans-loading operations $4,720.32/month Progressive Transportation OHQ984 Office space $1,633.50/month Progressive Transportation 1233MMJ5 Trucking ops $2,695.55/month

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16 CONSENT ITEMS Tab 2.1

Schnitzer Steel 1221MMJ3 Steel export ops $2,052.00/month

Schnitzer Steel 1231MMJ3 Steel export ops $2,872.80/month

Schnitzer Steel 1284MMJ3 Steel export ops $1,425.00/month

Shippers Transport Express 1243MMJ5 Office space $1,209.60/month

Sincere Hardware 1241MMJ4 Product storage $2,078.70/month

Tacos Los Cuates 1253MMJ4 Food vendor $110/month

Taso Zografos 1319MMJ1 TWIC card office $110/month

The Container Traders 1324MMJ1 Container repairs/sales $3,070.98/month

Tran Kim Muoi 1333MMJ2 Food vender $110/month

United Intermodal Services 1225MMJ5 Container depot / / $19,380.00/month

United Intermodal Services 1236MMJ1 Container depot/ < $26,973.75/month Valencia Food MHQ1015 Food Vendor / / \ \ $110/month Villegas Trucking 1320MMJ1 Truck tractbrtepair \ \ $1,782.14/month Westar Marine Services 1165MMJ1 Wateptaxj Services \ "\S591.50/month Wings Century Trucking 1307MMJ1 Trucking ops /\ \%l>1,846.90/month

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17 CONSENT ITEMS Tab 2.2

BOARD MTG. DATE: 12/12/13

AGENDA REPORT

TITLE: Authorize Executive Director to Negotiate and Execute a Supplemental Agreement and End User License Agreement for radar data access at the Oakland International Airport and other associated actions

AMOUNT: Not to exceed an additional $191,616 for the remaining initial four year term of the agreement from FY 2012/13 through FY 2015/16, and five one-year options from FY 2016/17 through FY 2020/21.

PARTIES INVOLVED:

Corporate Name/Principal Location Brϋel and Kjær EMS, Inc., 1050 Fulton Avenue Robert Brodecky Suite #213 Sacramento, CA 95825

TYPE OF ACTION: Resolution

SUBMITTED BY: Deborah Ale Flint, Aviation Director

APPROVED BY: Chris Lytle, Executive Director

SUMMARY

With this action, Port staff is seeking the Board’s approval for the following two actions in relation to the airport’s noise monitoring system maintenance support services:

1. Approve and authorize the Executive Director to negotiate and enter into a Supplemental Agreement to the Maintenance and Support Services Agreement with Brϋel and Kjær EMS to (a) include fees for radar data access as required by the Federal Aviation Administration for the Airport Noise and Operations Monitoring System (ANOMSTM) at the Oakland International Airport and (b) adjust fee payment schedule to add costs for radar data and adjust one calendar quarter (April 1, 2016 to June 30, 2016) fee payment to the professional services contract terms. 2. Authorize Executive Director to negotiate and execute an End User License Agreement for Radar Data with Brϋel and Kjær EMS.

FACTUAL BACKGROUND

The Federal Aviation Administration (FAA) has notified all U.S. airport operators including the Port of Oakland that they will be rescinding our Memorandum of Agreement (MOA) for the release and use of radar data. Consequently the Port’s normal access to radar data

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18 CONSENT ITEMS Tab 2.2

BOARD MTG. DATE: 12/12/2013 from the Northern California Terminal Radar Approach Control (TRACON) facility could be cut off as early as December 31, 2013. Under a directive from the U.S. Department of Transportation Inspector General, the FAA has changed their policy on the release of radar data to centralize distribution through one vendor, Exelis, Inc., as the sole purveyor of this data. To accommodate this change in FAA policy, the Port’s vendor, Brϋel and Kjær EMS, has entered into agreements with Exelis, Inc. and PASSUR Aerospace so that Oakland International Airport can maintain its radar data access for its noise program needs.

On September 15, 2011, the Board of Port Commissioners approved a professional services agreement to continue to provide ANOMS Maintenance and Support Services with Bruel and Kjaer EMS, at the Oakland International Airport for four years and nine months in an amount not to exceed $799,222. The agreement was approved with a waiver of competitive bidding, due to recognized proprietary software license restrictions. In addition the Board authorized funding an amount not to exceed $1,183,156, ($236,631 per year average) for five annual extensions. The proposed Supplemental Agreement is requesting $191,616 in additional funding to provide for radar data fees and a contract payment adjustment for FY 2016/17.

The Port of Oakland’s Airport Noise & Operations Monitoring System or ANOMSTM has served as the heart of the airport’s noise abatement program and has become increasingly sophisticated in its technology and components. The system allows the noise office to provide customer service on community complaints, measure airport noise impact areas and to monitor aircraft compliance with noise abatement procedures. These noise program functions are provided as part of various settlement agreements which the Port has entered into with the City of Alameda, City of San Leandro, Keep the Jets Over the Bay (KJOB) and Citizens League for Airport Safety and Serenity (CLASS).

ANALYSIS

The FAA radar data is an integral element of the ANOMSTM operation, which allows the Port to monitor compliance with airport noise abatement procedures and programs. In December 2012, the FAA entered into an agreement with Exelis, Inc to supply access to radar data to third parties such as airport noise offices. Exelis, Inc. has established a third party agreement with Brϋel and Kjær EMS to provide radar data to airports, as well as with PASSUR Aerospace. Consequently the Aviation Division is seeking Board approval to amend its systems maintenance support agreement with Brϋel and Kjær EMS, to maintain needed radar data for noise monitoring purposes. The loss of radar data will render the airport incapable of processing flight tracks that are required in Noise Reports under the various Port agreements.

STRATEGIC PLAN

The Strategic Plan was adopted by the Board on October 5, 2010. Following is staff’s assessment of how the authorization for this funding supports the strategic priority areas,

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19 CONSENT ITEMS Tab 2.2

BOARD MTG. DATE: 12/12/2013 goals and objectives of the Strategic Plan. The funding supports key objectives within Goals A, B, G, H and K as summarized below.

STRATEGIC HOW PROJECTS GOAL OBJECTIVE PRIORITY AREA IMPLEMENT + WHEN

Sustainable Goal A: Create 1. Maximize the use Continued ANOMSTM Economic and sustainable of existing assets. support services provides Business economic growth an effective opportunity to Development for the Port and ensure reliability and beyond. make the best use of the Port’s investment in this existing technology, which has been provided over the past 20 years.

Goal B: Maintain 4. Promote effective Continued ANOMSTM and aggressively strategic support services provides grow core communication with the technology necessary businesses. Port customers. to provide factual details expeditiously to aircraft operators and the community in regards to noise compliance programs and reporting. Ongoing.

Goal B: Maintain 5. Enhance customer Continued ANOMSTM and aggressively services (i.e. market support services provides grow core intelligence, technical the technology necessary businesses. knowledge, strategic to effectively evaluate advice and problem aircraft noise impacts, solving). noise reduction options, and affects of these options. As necessary and ongoing.

Stewardship and Goal G: Sustain 1. Ensure effective Continued ANOMSTM Accountability healthy communication and support services ensures communities education regarding that accurate and through leading environmental and appropriate analytical data edge safety standards with is provided to aircraft environmental business partners operators and the stewardship. and community. community in regards to noise and air quality compliance programs and reporting.

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20 CONSENT ITEMS Tab 2.2

BOARD MTG. DATE: 12/12/2013

STRATEGIC HOW PROJECTS GOAL OBJECTIVE PRIORITY AREA IMPLEMENT + WHEN

Goal G: Sustain 5. Develop effective Continued ANOMSTM healthy relationships with support services provides communities regulatory and the technological tools for through leading resource agencies. accurate and reliable data edge analysis required to environmental maintain effective stewardship. relationships with the FAA and the State of California Department of Aeronautics and Alameda County. Ongoing.

Port Workforce Goal H: Develop 2. Conduct targeted Continued ANOMSTM and Operations and maintain a training. support maintains the high performing ability to acquire important workforce. technical training on this unique system.

Communications Goal K: Promote 1. Develop a strategic Continued ANOMSTM and Information a proactive and and comprehensive support helps the Port to responsive communications plan utilize this leading edge communications which reaches out to technology to effectively model. a wide range of and productively develop internal and external and maintain a Noise stakeholders and Abatement Compliance incorporates state-of- Plan required by the-art practices and settlement agreements technology. with various stakeholders and community interests, and communicate this information to stakeholders via the Airport website, e-mail, etc.

BUDGET & FINANCIAL IMPACT

The Adopted FY 2013/14 Aviation budget for ANOMSTM systems maintenance support services included the additional $24,825 for the radar data setup services fee and for the first partial year subscription from October 1, 2013 to June 30, 2014.

In addition, the current system maintenance agreement with Brϋel and Kjær EMS, Inc., authorized by the Board in Resolution 11-113, requires an adjustment to the maximum compensation amount to include $54,091 for the last quarterly service fee payment from April 1, 2016 to June 30, 2016. There was a discrepancy between the original Agenda Report and the contract terms when the quarterly fee payment schedule was realigned to 4

21 CONSENT ITEMS Tab 2.2

BOARD MTG. DATE: 12/12/2013 match the Port’s fiscal year schedule. The last fiscal quarterly service fee payment due in FY 2015/16 was not included in the calculation of the 4 year, 9 month initial term of the agreement.

• The total increase in spending authorization requested for the Supplemental Agreement is $191,616 comprised of $137,525 for radar access fees plus $54,091 for a one time contract payment adjustment. These increased costs will be included in subsequent budgets.

A detailed fiscal year cost schedule is provided in the following table.

Existing Contract Additional Funds Schedule Total FY Costs Terms Required F/Y 13/14 $ 146,390.75 $ 24,825.00 $ 171,215.75

F/Y 14/15 $ 191,525.50 $ 16,100.00 $ 207,625.50

F/Y 15/16 $ 160,696.00 $ 70,191.00 $ 230,887.00

F/Y 16/17 $ 214,786.50 $ 16,100.00 $ 230,886.50

F/Y 17/18 $ 221,230.00 $ 16,100.00 $ 237,330.00

F/Y 18/19 $ 227,867.00 $ 16,100.00 $ 243,967.00

F/Y 19/20 $ 234,703.00 $ 16,100.00 $ 250,803.00

F/Y 20/21 $ 241,744.00 $ 16,100.00 $ 257,844.00

Supplemental Agreement $ 191,616.00

Costs for the subscription and related service fee contained in this Agenda Report are fair and reasonable based upon market conditions and on comparable costs for similar services at Los Angeles, San Diego and San Francisco International airports.

STAFFING IMPACT

The proposed Board action will have no impact on existing staffing needs.

SUSTAINABILITY

The ANOMSTM technology facilitates an increased efficiency and continued reliability of the utilization of current airport systems.

ENVIRONMENTAL

CEQA Determination

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22 CONSENT ITEMS Tab 2.2

BOARD MTG. DATE: 12/12/2013

The proposal to approve a professional services agreement for continued ANOMSTM systems maintenance support services at the Oakland Airport 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 executing this professional services contract will not result in a physical change in the environment; therefore, this action is not a project under CEQA.

MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)

This contract is for professional services that do not include construction testing and inspection. Therefore the provisions of the Port of Oakland Maritime and Aviation Project labor Agreement (MAPLA) do not apply to this work.

OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

This project does not fall within the OCIP program.

GENERAL PLAN

The project is limited to maintenance of existing equipment / facilities that conform to the provisions of the Oakland General Plan, and will not change the existing use(s) of any facility(s).

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 to this agreement as the service provider does not employ 21 or more employees working on Port-related work. However, the service provider will be required to certify that should living wage obligations become applicable, the service provider shall comply with the Living Wage Regulations.

OPTIONS

1. Authorize the Executive Director to enter into a Supplemental Agreement with Brϋel and Kjær EMS, Inc. to provide ANOMSTM radar data feed and maintenance services at the Oakland International Airport. Authorize Executive Director to execute an End User License Agreement for Radar Data.

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BOARD MTG. DATE: 12/12/2013

2. Do not authorize funding. If not authorized, the airport noise and operations monitoring system (ANOMSTM) would not include access to radar track data and the Port would be unable to meet its legal obligations to maintain its airport noise program functions and services to its surrounding communities.

RECOMMENDATION

Authorize funding and delegate to the Executive Director to enter into a Supplemental Agreement with Brϋel and Kjær EMS, Inc. to provide ANOMSTM radar data feed and maintenance services at the Oakland International Airport. Authorize funding not to exceed $191,616, which includes funds for radar access fees and a one time contract payment adjustment and authorize Executive Director to execute an End User License Agreement for Radar Data.

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24 CONSENT ITEMS Tab 2.2

Oakland International Airport

Noise Monitors

1. Oro Loma Sanitary District

2. San Leandro Marina

3. East Shore Drive

4. Godfrey Park at Seminary

5. Garden Isle Homeowners

6. 3219 Wake Lane

7. 2595 MeCartney Road

8. Earhart Elementary School

9. 888 Doolittle Drive

10. 597 Tudor Court

11. John Muir School

12. Garfield School

13. 14735 Juniper Street

14. Farrelly Pool

15. 361 Beach Road

16. GRE Microphone

25 CONSENT ITEMS Tab 2.2

December 12, 2013 Item No.: 2.2 "cmrjjp

BOARD OF PORT COMMISSIONERS ^ CITY OF OAKLAND

RESOLUTION AUTHORIZING FINDING AND DETERMINING THAT A PROPOSED SUPPLEMENTAL AGREEMENT WITH BRUEL KJAER EMS, INC. FOR AN ADDITIONAL MAXIMUM COMPENSATIOl $191,616 IS FOR CONSULTING SERVICES CONSTITUTING PROFEj iNAL, TECHNICAL AND SPECIALIZED SERVICES THAT ARE Y IN NATURE, WAIVING COMPETITIVE BIDDING; AUTHORIZ: ION OF SAID SUPPLEMENTAL AGREEMENT AND AUTH< EXECUTIVE DIRECTOR TO NEGOTIATE AND EXECUTE/AN END LICENSE AGREEMENT WITH BRUEL AND KJAER EMS^/INC.

WHEREAS, the Board o Commissioners ("the Board") previously authorized an Agreement, dated Septe 1 Wi^h BRUEL AND KJAER EMS, INC. for Airport Noise and Operations Monito ANOMS") Maintenance and Support Services at the Oakland Interjoaiional

WHEREAS, the and evaluated the Agenda Report Item No. 2.2 dated December eport")and related agenda materials, has received the expert t

WHE acting upon this matter, the Board has exercised its independent j substantial evidence in the record and adopts and relies upon analysis, and findings set forth in the Agenda Report and in rela .als and in testimony received;

BE IT RESOLVED AS FOLLOWS: SECTlONvlYyBased upon the information contained in the Agenda Report and testimony received7; the Board hereby finds and determines that the Supplemental Agreement with BRUEL AND KJAER EMS, INC. will constitute an agreement for obtaining professional, technical and specialized services that are temporary in nature and that it is in the best interest of the Port to secure such services from BRUEL AND KJAER EMS, INC. without competitive bidding.

298952.v2

26 CONSENT ITEMS Tab 2.2

SECTION 2 The Board authorizes the Executive Director to:

A. Execute a Supplemental Agreement with BRUEL AND KJAER EMS, INC. to provide (a) radar data access as required by the Federal Aviation Administration for the ANOMS and (b) a one-time contract payment adjustment for an amount not to exceed $191,616, and subject to additional material terms and conditions as further described in the Agenda Report; and

B. Negotiate and execute on behalf of tl foard an End User License Agreement for Radar Data with BRUEL AND KJAER EMS, II

SECTION 3. This resolution is not e^6encev df and does not create or constitute (a) a contract, or the grant of A right ,\entitlement or property interest, or (b) any obligation or liability on £ne part of\.he\Board or any officer or employee of the Board. Unless and until A separate wriute)i agreement is duly executed on behalf of the Board as autlv^r^zed by\his resolution, is signed as approved as to form and legality by the Ports. Attorney, and is delivered to other contracting party, there shall be no valid or\effWtive agreement.

SECTION 4 This resoli x>n sha e effective immediately upon adoption by the Board.

298952.v2

27 CONSENT ITEMS Tab 2.3

BOARD MTG. DATE: 12/12/13

AGENDA REPORT

TITLE: Adoption of a Resolution Approving a Second Amendment to Sublease and Operating Agreement between Oakland Golf, LLC and the City of Oakland Resulting in Estimated Revenue of Approximately $149,176 (Metropolitan Golf Links at 10051 Doolittle Drive) (Aviation)

AMOUNT: $149,176 in FY 2014 (No Change or Additional Revenue by This Action)

PARTIES INVOLVED:

Corporate Name/Principal Location City of Oakland (Lessee) Oakland, California Office of Parks and Recreation Audree V. Jones-Taylor, Director Oakland Golf, LLC (Sublessee) Oakland, California CourseCo, Inc. – General Partner Napa, California Tom Isaak, President – CourseCo, Inc.

TYPE OF ACTION: Resolution

SUBMITTED BY: Deborah Ale Flint, Director of Aviation

APPROVED BY: J. Christopher Lytle, Executive Director

This action would adopt a Resolution approving the terms of, and authorizing the Executive Director to execute, a Second Amendment to Sublease and Operating Agreement (“2nd Amendment”) related to the Metropolitan Golf Links by extending the period of time for rent relief for one additional year while the parties develop a long-term solution to on-going golf course revenue shortfalls. Entering into the 2nd Amendment would result in estimated revenues of $149,179 to the Port over a twelve (12) month period from July 1, 2013 to June 30, 2014 (the Port’s FY 2013-14 Budget included revenues of $147,470). On November 5, 2013, the Oakland City Council adopted Resolution No. 84678 authorizing the requested twelve (12) month period for additional rent relief, and to execute the 2nd Amendment.

FACTUAL BACKGROUND

The Metropolitan Golf Links is an 18-hole course, located at the northeast corner of Oakland International Airport. The golf course is leased by the Port, to the City of Oakland, as documented in the Amended and Restated Lease dated March 16, 1999 (the Lease) administered through the City’s Office of Parks and Recreation. The City of Oakland subleases the golf course to Oakland Golf, LLC, pursuant to a Sublease and Operating Agreement (the Sublease) dated August 24, 2001. The Sublease is for a 25 year term, commencing May 23, 2003, with options to extend the term (unilateral options in favor of Oakland Golf, LLC) for three additional five (5) year periods.

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BOARD MTG. DATE: 12/12/13

Rental under the Sublease is a combination of Minimum Annual Rent (“MAG”) plus percentage of gross revenues from golf (green fees, carts, range and instruction); merchandise, food and beverage sales; and ancillary services (“Percentage Rental”). Pursuant to the Lease, “the Port shall collect all Golf Course Revenue derived under the [Sublease] and shall forward fifty percent (50%) of such revenue to the City…” As of July 1, 2013, the MAG (undiscounted) should be $596,704.

Oakland Golf, LLC retains CourseCo, a professional golf course management company, to operate, manage and maintain the golf course. CourseCo reports that Metropolitan Golf Links is losing between $400,000 to $500,000 annually on a cash flow basis, due in large part to Oakland Golf LLC’s unrealized, projected revenue growth, increasing capital improvement requirements, higher operating expenses, and a soft Bay Area regional golf market. In addition, the required principal pay-down of invested capital is a further drain on cash flow.

Oakland Golf, LLC, states that it cannot continue to operate Metropolitan Golf Links at a financial loss for an indefinite, sustained period. In 2008, Oakland Golf, LLC approached the City to request modifying the terms of the Sublease for temporary and partial rent relief with the anticipation that with an improving global economy, the financial fortunes of Oakland and Metropolitan Golf Links would also improve. On May 6, 2008, the City of Oakland adopted Resolution No. 81274 C.M.S. approving a twelve (12) month Rent Relief period with the MAG to be reduced by fifty percent (50%). The Council directed City staff to come back each year of the maximum five-year Rent Relief period to review the financial condition of Oakland Golf, LLC, and determine if an additional twelve month (12) period of rent relief was necessary.

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BOARD MTG. DATE: 12/12/13

As a follow-on to the City’s action, on July 15, 2008, the Board adopted Resolution 08177 which authorized the execution of a First Amendment to Sublease and Operating Agreement (1st Amendment) between Oakland Golf, LLC and the City of Oakland which provided for a 12- month partial rent relief period commencing on July 1, 2008, and expiring on June 30, 2009, subject to Oakland City Council approval of additional 12 month Rent Relief periods, not to exceed 48 months which would expire on June 30, 2013.

Commencing July 2009, and annually thereafter, the Oakland City Council approved four additional twelve (12) month Rent Relief periods, with the fifth (5th) and final Rent Relief period expiring on June 30, 2013. The Port has provided concurrent annual Rent Relief.

In May 2013, Oakland Golf, LLC received from Pro Forma Advisors, LLC, a nationally recognized golf course consultant, a report titled, Summary Report: Evaluation of Rent Structure Metropolitan Golf Links – Oakland, California (Attachment A). The Summary Report discusses findings of current Bay Area golf market conditions, historical and projected performance of Metropolitan Golf Links, with recommendations for a supportable and sustainable rent structure.

Based upon the findings as discussed in Attachment A, Oakland Golf, LLC is requesting an additional Rent Relief period of 12 months, commencing July 1, 2013, and expiring on June 30, 2014. During the requested additional Rent Relief period, Oakland Golf, LLC will work with Port and City staff to negotiate economic terms and conditions reflecting an achievable and sustainable rent structure to be documented in a subsequent Amendment. Port and City staff expect that some level of rent relief would continue for the remaining term of the Sublease and Operating Agreement; however, staff anticipates that the subsequent Amendment would include a provision requiring rent relief to be reduced or sunset should golfing revenue stage a significant rebound during the balance of the term.

ANALYSIS

On June 18, 2013, Oakland Golf, LLC was notified by Port staff that the five-year rent relief period from the 1st Amendment would expire at the end of June 2013, and that the full MAG (with current CPI adjustment) would be $596,704 and payable to the Port (and shared 50/50 with the City), effective July 1, 2013. As noted above, Oakland Golf, LLC contends it cannot operate with the contractual rental obligation and is requesting another year of Rent Relief. The proposed 2nd Amendment would retain the modified economic terms and conditions from the approved 1st Amendment, with additional Rent Relief, as detailed below:

1. Rent Relief: Oakland Golf, LLC and staff from the City and Port have negotiated a 12 month extension of the Rent Relief period that will expire on June 30, 2014. Under the terms of the proposed 2nd Amendment, and for a twelve (12) month period commencing July 1, 2013 (2nd rent relief period), the MAG would again be reduced to fifty percent (50%) of the full MAG that would otherwise be payable.

Under the proposed 2nd Amendment, the requested rent relief MAG would be $298,352 (50% of $596,704), with the Port’s 50% share at $149,176 (plus its 50%

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30 CONSENT ITEMS Tab 2.3

BOARD MTG. DATE: 12/12/13

share of any Percentage Rental). The 2nd Rent Relief period would commence on July 1, 2013 and expire on June 30, 2014. During the 2nd Rent Relief period, Oakland Golf, LLC, and staff from the Port and the City will negotiate economic terms and conditions that are both (i) sustainable for Oakland Golf, LLC and (ii) adequately compensate the City and the Port. The revised terms and conditions will be documented in a long term amendment to the Sublease and presented to the City Counsel and the Board for review and approval.

2. Percentage Rentals: Assessed for golf-related, retail, food and beverage sales:

• 20% of Gross revenues derived from golf-related activities including Green Fees, Pull Carts, Power Pull Carts, and Driving Range.

• 4% of Gross revenues derived from food and beverage sales and ancillary services (e.g., Banquet room) and retail sales and services (e.g., pro shop, instruction, equipment rentals, pay phones, newspaper racks, and other income derived from the operations at Metropolitan Golf Links).

STRATEGIC PLAN

Approving the proposed actions, supports the goals of the Port’s 2011-2015 Strategic Plan:

Strategic Priority Areas Goal Objective Result

Sustainable Goal A: Created Maximize use of Metropolitan Golf Links will Economic and sustainable existing assets. remain as a local and regional Business Economic Growth asset and amenity. Development for the Port and Beyond.

Sustainable Goal B: Maintain Retain existing Metropolitan Golf Links can Economic and and Aggressively customers and reposition itself to produce Business Grow Core tenants. sustainable revenues to the Port. Development Businesses

BUDGET & FINANCIAL IMPACT

Approval of the 2nd Amendment will establish the Port’s 50% share of the MAG revenue in FY13-14 at $149,176. The Port’s approved Operating Budget for FY13-14 anticipated the Board’s approval of the one-year extension of the rent relief in the Sublease, and included $147,470 in land rental revenue. There is no Percentage Rent expected during FY13-14.

STAFFING IMPACT

There will be no staffing impact as the result of approving the 2nd Amendment.

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31 CONSENT ITEMS Tab 2.3

BOARD MTG. DATE: 12/12/13

SUSTAINABILITY

There are no obvious environmental opportunities with the proposed 2nd Amendment.

ENVIRONMENTAL

CEQA Determination: This action is categorically exempt from requirements of the California Environmental Quality Act (CEQA) Guidelines pursuant to Section 15300.4 and the Port CEQA Guidelines, Section 15301(p), which exempts renewals, extensions or amendments to leases or license and concession agreements where the premises or licensed activity was previously leased or licensed to the same or another person, and involving negligible or no expansion of use beyond that previously existing.

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). Work undertaken by state, county, city or other governmental bodies under a lease agreement is specifically excluded from the scope of the MAPLA and the provisions of the MAPLA do not apply.

OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

The proposed 2nd Amendment is not within the scope of the Port of Oakland’s Owner Controlled Insurance Program.

GENERAL PLAN

Pursuant to Section 727 of the City of Oakland Charter, the 2nd Amendment has been determined to conform to the policies for the transportation designation of Oakland’s General Plan.

LIVING WAGE

Living wage requirements, per 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 tenant employs 21 or more employees working on Port-related work and the tenancy agreement is greater than $50,000.

OPTIONS

1. Approve the Second Amendment to Sublease and Operating Agreement between Oakland Golf, LLC and the City of Oakland, as outlined above, which is the staff recommendation.

2. Do not approve the Second Amendment to Sublease and Operating Agreement with Oakland Golf, LLC and the City of Oakland which could result in: (i) the financial failure of

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32 CONSENT ITEMS Tab 2.3

BOARD MTG. DATE: 12/12/13

Oakland Golf, LLC and the reversion of Metropolitan Golf Links daily operations to the City and/or Oakland Golf, LLC’s creditors, and (ii) potentially even less revenue to the Port if the City negotiates a less-favorable operating agreement with a new operator.

3. Approve the Second Amendment to Sublease and Operating Agreement with Oakland Golf, LLC and the City of Oakland, under different terms and conditions.

RECOMMENDATION

It is recommended that the Board adopt a Resolution approving the terms and conditions set forth in this Agenda Report for a Second Amendment to Sublease and Operating Agreement with Oakland Golf, LLC and the City of Oakland that would lower the Oakland Golf, LLC’s minimum annual guarantee to $298,352, for a period commencing on July 1, 2013 and expiring on June 30, 2014, and authorizing the Executive Director to execute the Second Amendment, subject to the Port Attorney’s review and approval as to form and legality.

\\10.1.7.107\HOME\bmark\My Documents\Oakland Golf\Oakland Golf-Agenda Report-Rent Relief.F2 (2013-12-12).DOC

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33 CONSENT ITEMS Tab 2.3

12/12/13 Tab No. 2.3' M JS/lhr //*

BOARD OF PORT COMMISSIONERS CITY OF OAKLAND

RESOLUTION ADOPTING AND APPROVING A SECOND AMENDMENT TO SUBLEASE AND OPERATING AGREEMENT BETWEEN OAKLAND GOLF, LLC AND THE CITY OF OAKLAND LOWERING OAKLAND GOLF, LLC'S MINIMUM ANNUAL GUARANTEE /fe^ 50% TO $298,352 FOR ONE YEAR.

WHEREAS, the Board of Por£< ComMssi oners)/(xx Board") has reviewed and evaluated the Agenda RejrorxtNIt&fer^.3 dated December 12, 2013 ("Agenda Report") and related agendax materials, has received the expert testimony of Port of Oakland ("Porusomment; now^^therefore be it

RESOLVED, that in actii .s matter, the Board has exercised its independent judgment rased^/6n substantial evidence in the record and adopts antr~r«lies u\ >n the facts, data, analysis, and findings set forth JwC the) Agend< Report and in related agenda materials and in testimony rkceived; id be it

FURTHER—RESOLVED^ that the Board approves the terms and conditions set/^ort^rn theN&oenda Report for a Second Amendment to Sublease and/6perating. Agreement with Oakland Golf, LLC and the City of Oakland^e necessary and appropriate to consummate this transaction, subject to the Port attorney's approval as to form and legality; and be it

RESOLVED, that the Board determines and finds that this Resolution is categorically exempt from requirements of the California Environmental Quality Act ("CEQA") Guidelines pursuant to Section 15300.4 and the Port CEQA Guidelines, Section 15301(p), which exempts renewals, extensions or amendment to leases or license and concession agreements where the premises or licenses activity was previously leased or licensed to the same or another person, and involving negligible or no expansion of use beyond that previously existing; and be it

298987

34 CONSENT ITEMS Tab 2.3

FURTHER RESOLVED, that this Resolution is not evidence of and does not create or constitute (a) a contract (s), or the grant of any right, entitlement or property interest, or (b) any obligation or liability on the part of the Board or any officer or employee of the Board. Unless and until a separate written contract is duly executed on behalf of the Board as authorized by this resolution, is signed as approved as to form and legality by the Port Attorney, and is delivered to other contracting party, there shall be no valid or effective change order.

298987

35 CONSENT ITEMS Tab 2.4

BOARD MTG. DATE: 12/12/13

AGENDA REPORT

TITLE: Increase in Maximum Compensation for Agreement with American Maritime Group

AMOUNT: $200,000 increase (total maximum compensation $325,000 FY2013-14)

PARTIES INVOLVED:

Corporate Name/Principal Location American Maritime Group, LLC/ John Bowe Moraga, CA

TYPE OF ACTION: Resolution

SUBMITTED BY: Jean Banker, Maritime Director (Acting)

APPROVED BY: J. Christopher Lytle, Executive Director

SUMMARY

This Agenda Report seeks the Board’s authorization to increase compensation for the professional services agreement with American Maritime Group for the Special Advisor to the Executive Director. The current agreement provides for services through June 30, 2014, for a total maximum compensation of $125,000 in Fiscal Year (FY) 2013-14. The Special Advisor has been requested to work on additional assignments and, therefore, staff is recommending an increase of $200,000, for a new maximum compensation of $325,000 in FY 2013-14.

FACTUAL BACKGROUND

At the direction of the Executive Director and as a result of an informal Request for Qualifications, Boyden (an executive search firm) was selected in January 2013 to recruit a Special Advisor to the Executive Director on maritime issues. After performing an extensive search and interviewing candidates, Mr. John Bowe of American Maritime Group was recommended. In January 2013, the Port (Maritime Division) entered into a professional services agreement with American Maritime Group to retain the consulting services of Mr. Bowe for a term of five months from January 30, 2013 through June 30, 2013, with a total maximum compensation of $150,000. In June 2013, the Board authorized an extension to the agreement through June 30, 2014, combined with an increase of $125,000 in maximum compensation.

36 CONSENT ITEMS Tab 2.4

BOARD MTG. DATE: 12/12/13

ANALYSIS

At the direction of and as Special Advisor to the Executive Director and/or the Deputy Executive Director/Acting Director of Maritime, American Maritime Group provides the following services:

∑ Develops and implements strategies designed to improve the Port’s competitive position as an international maritime container port on the United States West Coast;

∑ Develops and implements marketing strategies to promote the Port;

∑ Improves and increases the Port’s international container traffic and intermodal service;

∑ Retains and increases maritime tenants at the Port;

∑ Promotes regional, national, and international container traffic handled at the Port;

∑ Represents the Port before a variety of constituencies, including without limitation, elected and appointed officials;

∑ Advises the Port’s Executive Director or his/her designee as to the management and marketing of the Port’s current maritime container terminals; and

∑ Improves and develops infrastructure to facilitate the flow and efficient handling of international maritime container traffic at the Port.

Since execution of the extension to the agreement with American Maritime Group through June 30, 2014, workload has increased significantly on several key maritime projects/initiatives, including the Oakland Army Base “Phase 2” development, Howard Terminal leasing, and new opportunities for cold storage facility development in the seaport. At the same time, the positions of Director of Maritime and Manager of Business Development and International Marketing remain vacant. These key staffing vacancies, combined with the need to execute top maritime priorities, have required Mr. Bowe to increase his hours billed under the Port’s agreement with American Maritime Group. As a result, the maximum compensation of $125,000 authorized for FY 2013-14 was spent as of November 2013, well in advance of the FY end.

The request for additional compensation of $200,000 for FY 2013-14 is intended to pay for work performed in the period November 2013 through June 2014. Because it is anticipated that the key Maritime vacancies (above) will be filled in the first quarter of calendar year 2014, staff expects that Mr. Bowe’s billed hours will be high through approximately February 2014 and taper thereafter through the end of Fiscal Year 2014. The maximum billing rate of $2,000 per day plus pre-approved reimbursable travel expenses remains unchanged from the current agreement. A time extension is not being requested for the agreement.

37 CONSENT ITEMS Tab 2.4

BOARD MTG. DATE: 12/12/13

Strategic Goal Objective Implementation Priority Area Goal I: 3. Align Extending the agreement Align the Port’s responsibilities, with American Maritime workforce, authorities and Group for advisory organizational incentives to services to the Executive structure and ensure Director and/or his personnel accountability and designee on maritime management transparency in issues during the Port Workforce practices for achieving the Port’s recruitment, selection and and optimal strategic goals. transitions for the new Operations performance of the Maritime Director will Port. allow the organization to maintain operational continuity and proceed with advancing the strategic goals and objectives through effective organizational leadership.

BUDGET & FINANCIAL IMPACT

The additional $200,000 being requested for American Maritime Group in FY 2013-14 is expected to be offset by savings resulting from the vacancy of the Maritime Director and Manager, International Marketing and Business Development positions in the Maritime Division.

STAFFING IMPACT

The proposed action has no staffing impact.

SUSTAINABILITY

The proposed action does not provide opportunities for sustainability.

ENVIRONMENTAL

The California Environmental Quality Act (CEQA) Guidelines, Section 15061(b)(3) (“the general rule”) states that CEQA applies only to projects that have a potential for causing a significant effect on the environment. It can be seen with certainty that increasing compensation for a professional services agreement will not have a significant effect on the environment, and therefore is not subject to CEQA, and no further environmental review is required.

38 CONSENT ITEMS Tab 2.4

BOARD MTG. DATE: 12/12/13

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 the provisions of the MAPLA do not apply.

OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

OCIP does not apply.

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 Contract" as defined by the Port Ordinance No. 3666 and Charter 728.

OPTIONS

1. It is recommended that the Board of Port Commissioners authorize the Executive Director to execute an amendment to the Professional Services Agreement with American Maritime Group to increase maximum compensation by $200,000, at a rate of $2,000 per day plus pre-approved reimbursable travel expenses, for a total maximum compensation of $325,000 in FY 2013-14.

2. Authorize a different increase in maximum compensation for the Port’s Professional Services Agreement with American Maritime Group.

3. Do not authorize an increase to the maximum compensation for the Port’s Professional Services Agreement with American Maritime Group.

RECOMMENDATION

It is recommended that the Board of Port Commissioners authorize the Executive Director to execute an amendment to the Professional Services Agreement with American Maritime Group to increase maximum compensation by $200,000, at a rate of $2,000 per day plus pre-approved reimbursable travel expenses, for a total maximum compensation of $325,000 in FY 2013-14.

39 CONSENT ITEMS Tab 2.4

December IterrCNo DSC/jev /\fc

BOARD OF PORT COMMISSIONERS CITY OF OAKLAND

RESOLUTION FINDING AND DETERMINING THAT AN AMENDMENT TO THE PROFESSIONAL SERVICES AGREEMENT WITH AMERICAN MARITIME GROUP, LLC FOR AN INCREASE IN MAXIMUM COMPENSATION OF $200,000, WHICH AMOUNT CONSISTS OF A MAXIMu6>BILLING RATE OF $2,000 PER DAY PLUS PRE-APPROVED REIMBURSABLE TRAVEL EXPENSES, FOR A TOTAL MAXIMUM COMPENSATlON\OF $325,000 IN rhcH CONSTITUTE PROFESSIONAL, TECHNICAL AND SPECIALIZED' SERVICES THAT ARE TEMPORARY IN NATURE AND WARRANT A^WAIVER OF\ COMPETITIVE BIDDING AND AUTHORIZING EXECUTION/oVsAID AMEND*

WHEREAS, the Board ioners ("Board") previously authorized a Professional Services January 30, 2013 with AMERICAN MARITIME GROUP, LLC, as amended by ental Agreement dated July 1, 2013 (collectively "Agreement rvices provided by a special advisor to the Executive Dire.c_t.or imum compensation of $125,000 for FY 2013-14; and

WHEREAS, th4 /B'oard Ala's reviewed and evaluated the Agenda Report Item No. 2.4 dated December 4,2, 2/P13MJi&gsnW Report") and related agenda materials, has received the expert fces4^»ony--ci£^^rt staff, and has provided opportunities for and taken public comment ;/and n\acting upon this matter, the Board has exercised its independent- on\substantial evidence in the record and adopts and relies upon analysis, and findings set forth in the Agenda Report and in relat als and in testimony received;

NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:

SECTION X/ The Board hereby finds that based upon the information contained in the Agenda Report and testimony received, the Amendment to the Agreement with AMERICAN MARITIME GROUP, LLC constitutes an agreement for obtaining professional, technical and specialized services that are temporary in nature and that it is in the best interest of the Port to secure such services from AMERICAN MARITIME GROUP, LLC without competitive bidding.

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SECTION 2. The Board hereby approves and authorizes the Executive Director to execute on behalf of the Board an Amendment to the Agreement with AMERICAN MARITIME GROUP, LLC for an increase in maximum compensation by $200,000, which amount consists of a maximum billing rate of $2,000 per day plus pre-approved reimbursable travel expenses, for a total maximum compensation of $325,000 in FY 2013-14 for such work performed under said Agreement, as amended by the Amendment and subject to additional material terms and conditions as further described in the Agenda Report.

SECTION 3. This resolution is not evidej of and does not create or constitute (a) a contract, or the grant of any entitlement or property interest, or (b) any obligation or liability on the/ the Board or any officer or employee of the Board. Unless and until a s^pa'rat* itten agreement is duly executed on behalf of the Board as authorized^^by this lution, is signed as approved as to form and legality by the Portr Attorney, anisl i>s delivered to other contracting party, there shall be no valid o fective agreeme

SECTION 4 This resolution^ )e effective immediately upon adoption by the Board.

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PORT ORDINANCE NO. 4265

ORDINANCE APPROVING AND ADOPTING RULES AND REQUIREMENTS FOR NOTICING, AGENDIZING AND POSTING OF BOARD OF PORT COMMISSIONERS MEETINGS, ASSURING PUBLIC ACCESS AND PARTICIPATION AND PROVIDING CURE AND CORRECTION OF NON- COMPLIANCE WITH OPEN MEETING LAWS.

WHEREAS, the Board of Port Commissioners (“Board”) has reviewed and evaluated Agenda Report Item 5.1 dated December 2, 2013 and related agenda materials (“Agenda Report”), has received the expert testimony of Port of Oakland (“Port”) staff, and has provided opportunities for and taken public comment;

WHEREAS, that in acting upon this matter, the Board has exercised its independent judgment based on substantial evidence in the record and adopts and relies upon the facts, data, analysis, and findings set forth in the Agenda Report, and in related agenda materials and in testimony received;

WHEREAS, Oakland City Charter Section 706(6) grants the Board the complete and exclusive power to exercise all the powers which are conferred upon the City in respect to the management and government of the Port. Under the Charter, the Port has the power and obligation to “adopt and enforce such ordinances, orders, regulations and practices as are necessary for the proper administration and discharge of its duties and powers, or for the management and government of the Port and its facilities”;

WHEREAS, adopting and enforcing an ordinance to assure public access to and information of Board meetings and transparent public notice, information and input are essential for the proper administration and discharge of the Board’s duties and powers and for the management and government of the Port and facilities’;

BE IT ORDAINED by the Board of Port Commissioners of the City of Oakland as follows:

SECTION 1. Based upon the information contained in the Agenda Report, and testimony received, the Board finds that:

A. The recitals above are true and hereby incorporated into this ordinance;

B. Requiring the noticing and posting of Board meetings beyond the requirements of the Brown Act provides for more time for the public and Board members to obtain and study the items on the Board’s agenda, enhances understanding of the issues and encourages public input to and participation in the Board’s decision-making; and

C. To enhance the trust and confidence of the public in the Port’s meeting procedures and to provide a mechanism to cure and

42 CONSENT ITEMS Tab 2.5

correct any violation of law or rules, a procedure for the filing by members of the public of requests to the Port for cure and correction is highly desirable. A cure and corrections procedure would provide the Port the opportunity to learn of possible violations, to investigate, to correct any violations and to hold itself accountable for compliance with provisions of Brown Act, this ordinance, any rules for public participation adopted by the Board and the California Public Records Act.

SECTION 2. The “Port of Oakland Rules and Requirements for Noticing, Agendizing, and Posting of Board of Port Commissioners Meetings, Assuring Public Access and Participation and Providing Cure and Correction of Non- Compliance with Open Meeting Laws”, as shown in Exhibit A to this ordinance is hereby approved and adopted. The ordinance shall be referred to as the “Port of Oakland Sunshine Ordinance”.

SECTION 3. The Board hereby directs and authorizes the Executive Director to:

A. review the Port “Rules for Public Participation at Meetings of the Board of Port Commissioners and Standing Commissions” (Port Ordinance No. 4127) in order to propose changes to such rules, if any, to conform to the requirements of this ordinance and to implement provisions of this ordinance; and B. adopt such administrative policies consistent with the provisions and requirements of this ordinance to implement this ordinance.

SECTION 4. The action is exempt from CEQA under CEQA Guidelines Section 15061(b)(3), in that there is no possibility that approval and adoption of the Port of Oakland Sunshine Ordinance may have a significant effect on the environment.

SECTION 5. This Ordinance shall be effective January 1, 2014.

The Board of Port Commissioners, Oakland, California, December 2, 2013. Passed to print for one day by the following vote: Ayes: Commissioners Colbruno, Hamlin, Parker, Uno, Yee and President Butner – 6. Excused: Commissioner Head -1. Noes: 0.

John T. Betterton Secretary of the Board

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EXHIBIT A TO PORT ORDINANCE NO. ______4265

PORT OF OAKLAND RULES AND REQUIREMENTS FOR NOTICING, AGENDIZING AND POSTING OF BOARD OF PORT OF COMMISSIONERS MEETINGS, ASSURING PUBLIC ACCESS AND PARTICIPATION AND PROVIDING CURE AND CORRECTION OF NON- COMPLIANCE WITH OPEN MEETING LAWS

I. Definitions.

This ordinance shall be referred to as the “Port of Oakland Sunshine Ordinance”. Words or phrases in this ordinance shall be defined pursuant to the Ralph M. Brown Act, Government Code Section 54950 et seq. and the Public Records Act, Government Section 6250 et seq., unless otherwise specified as follows:

A. "Agenda-related materials" means the agenda, all reports, correspondence and any other document prepared and forwarded by staff to the Board, and other documents forwarded to the Board, which provide background information or recommendations concerning the subject matter of any agenda item. Notwithstanding the foregoing, agenda related materials shall not include and the requirements for submission of agenda-related materials shall not apply to:

1. The written text or visual aids for any oral presentation so long as such text or aids are not substituted for, or submitted in lieu of, a written report that would otherwise be required to meet the filing deadlines of this ordinance;

2. Written amendments or recommendations from a member of the Board pertaining to an item contained in agenda related materials previously filed pursuant to section IV or V of this ordinance;

B. Agenda subscriber" means any person or organization who requests in writing, on an annual basis, the receipt of an agenda or agenda-related materials as specified in section VIII of this ordinance.

C. "Board” means the Board of Port Commissioners and any standing committee of the Board, but not including any ad hoc committee or any congregation or gathering which consists solely of employees of the Port of Oakland.

D. “Brown Act” means the Ralph M. Brown Act, Government Code Section 54950 et seq.

E. “City" means the City of Oakland.

F. "Notice" means the posting of an agenda in a location that is freely accessible to the public as additionally specified in

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sections IV and IV of this ordinance. Where there are additional requirements for the delivery or the posting of the agenda, such delivery may be satisfied by the delivery through emails to the email address supplied by the intended recipient and such posting may be satisfied by the posting online. The failure to timely post a copy of the agenda online because of software or hardware impairment, as defined below, shall not constitute a defect in the notice for meeting, if the Port complies with all other posting and noticing requirements.

G. "Online" means accessible by computer or other electronic communication device without charge to the user; provided that the posting on the Port’s website which is accessible to the public by computer or other electronic communication device shall satisfy any requirement for posting online.

H. “Port” means the City of Oakland, acting by and through its Board of Port Commissioners.

I. "Software or hardware impairment" means the Port is unable to utilize computer software, hardware and/or network services to produce agendas, agenda related material or to post agendas online due to inoperability of software or hardware caused by the introduction of a malicious program (including, but not limited to, a computer virus), electrical outage affecting the Port's computer network, or unanticipated system or equipment failure. "Software or hardware impairment" may also include situations when the Port is unable to access the internet due to required or necessary maintenance or the installation of system upgrades that necessitate deactivating the system network; however, the Port shall make reasonable efforts to avoid a delay in the preparation, distribution, or posting of agendas and agenda related material as a result of required or necessary maintenance or installation of system upgrades.

J. "Standing committee" means such standing committees of the Board established under the By-Laws and Administrative Rules of the Board.

II. Meetings to be Open and Public: Application of Brown Act.

All meetings of the Board shall be open and public, to the same extent as if that body were governed by the provisions of the Brown Act, unless greater public access is required by this ordinance, in which case this ordinance shall be applicable.

III. Agenda Requirement.

The agenda shall meet the requirements of Government Code Section 54954.2. For closed sessions, the agenda shall meet the requirements set forth in the Brown Act, (Government Code Section 54954.5) The agenda shall contain a brief, general description of each item of business to be transacted or discussed during the meeting and shall avoid the use of abbreviations or acronyms not in common usage and

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terms whose meaning is not known to the general public. The agenda may refer to explanatory documents, including but not limited to, correspondence or reports, in the agenda-related material. A description of an item on the agenda is adequate if it is sufficiently clear and specific to alert a person of average intelligence and education whose interests are affected by the item that he or she may have reason to attend the meeting or seek more information on the item.

IV. Notice and Agenda Requirements: Special Meetings.

A. Special meetings of the Board may be called at any time pursuant the By-Laws and Administrative Rules of the Board by:

1. Posting a copy of the agenda in a location freely accessible to the public at least forty-eight (48) hours (excluding Saturdays, Sundays and holidays) before the time of the meeting set forth in the agenda;

2. Filing a copy of the agenda and copies of all agenda- related material in the Office of the Secretary to the Board at least forty-eight (48) hours (excluding Saturdays, Sundays and holidays) before the time of the meeting set forth in the agenda; and,

3. Delivering a copy of the agenda to each member of the Board, to each local newspaper of general circulation, to each agenda subscriber, and to each media organization which has previously requested notice in writing, so that a copy of the agenda is received at least forty-eight (48) hours (excluding Saturdays, Sundays and holidays) before the time of the meeting set forth in the agenda. Receipt of the agenda shall be presumed upon reasonable proof that delivery was made, including delivery by email to an email address supplied by the intended recipient.

B. In addition to the noticing requirements of this section, a copy of the agenda for any special meeting shall be posted online at the Board's website at least forty-eight (48) hours (excluding Saturdays, Sundays and holidays) before the time of the meeting set forth in the agenda. Failure to timely post a copy of the agenda online because of software or hardware impairment shall not constitute a defect in the notice for a special meeting if the Board complies with all other posting and noticing requirements.

C. Notwithstanding the requirements of subsections (A) and (B) of this section, if a special meeting is called for a Monday, notice shall be deemed timely made only if the filing, posting and distribution requirements of subsections (A) and (B) are made no later than 12:00 p.m. (noon) on the preceding Friday.

D. No business other than that set forth in the agenda shall be considered at a special meeting. Each special meeting shall be held at the regular meeting place of the Board except that the Board may designate an alternative meeting location provided that such

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alternative location is specified in the agenda and that notice pursuant to this section for the special meeting at the alternative location is given at least ten days prior to the special meeting. This ten day notice requirement shall not apply if the alternative location is within the same building at which regular meetings of the Board occur.

E. To the extent practicable, the President (or the presiding office) or the majority of members of the Board may cancel a special meeting by delivering notice of cancellation in the same manner and to the same persons as required for the notice of such meeting.

F. Special meeting noticed to be held on the same day as a previously scheduled regular meeting shall not include any agenda item that has been included in the agenda for such regular meeting.

V. Notice and Agenda Requirements: Regular Meetings.

A. Ten Day Advance Notice Requirement for Regular Meetings. The Board shall provide notice before any regular meeting by:

1. Posting a copy of the agenda in a location freely accessible to the public twenty-four (24) hours a day no later than ten days before the date of the meeting;

2. Filing a copy of the agenda and all agenda-related material with the Office of the Secretary to the Board and the Oakland main library no later than ten days before the date of the meeting; and,

3. Posting a copy of the agenda on-line at the Board's website no later than ten days before the date of the meeting.

VI. Agenda-Related Materials – Submissions and Supplements.

A. Notwithstanding the notice provisions of sections IV and V, the Board and staff may amend or supplement a posted agenda or agenda- related materials no later than seventy-two (72) hours before a regular meeting or no later than twenty-four (24) hours before a special meeting, and only for the following reasons:

1. To add an item due to an emergency or urgency, provided the Board determines to take action pursuant to the requirements of the Brown Act for emergency and urgency items (Government Code Section 54954.2(b));

2. To delete or withdraw any item from a posted agenda; however, nothing herein shall limit the ability of the Board to delete or withdraw an item during the meeting as long as the Board permits members of the public to address the deleted or withdrawn item;

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3. To provide additional information to supplement the agenda-related material previously filed with the Office of the Secretary to the Board provided that the accompanying the Agenda at the time of the posting contained a substantial description of the Item and action to be considered by the Board; the cause for the delay and the date for publication of the supplemental material; or that the additional information was not known to the Executive Director or staff or considered to be relevant at the time the agenda-related materials were filed. Examples of supplemental material permitted by this section are reports responding to questions or requests raised by members of the Board after posting and filing of the ten day agenda and materials, and analyses or opinions of the item by the Office of the Port Attorney, the Auditor, or any member of the Board;

4. To correct errors or omissions, or to change a stated financial amount, or to clarify or conform the agenda title to accurately reflect the nature of the action to be taken on the agenda item;

5. To consider the recommendations, referrals, minutes, modifications of or actions taken on any item heard by a standing committee of the Board provided that the item has not been materially changed after the committee considered the item;

6. To continue an agendized item to the next regular meeting of the Board so long as members of the public are given an opportunity to address the Board on the item at the meeting from which the item is continued; or

7. To publish form of ordinance or resolution reflecting the proposed action relating to the agenda item, as supplemented.

B. Submission of any supplemental agenda-related materials later than 72 hours prior to the time of a regular meeting or later than 24 hours prior to the time of a special meeting may be accepted only under subsection (A) of section VI. . Copies of such documents shall be made available to the public at the meeting.

C. This ordinance shall not apply to the Port Auditor, and the Board may consider reports from the Port Auditor that are presented to the Board after the deadlines specified in this ordinance.

D. Nothing in this section or in any other provision of this ordinance shall be interpreted to require that the Executive Director, the Port Attorney or Port Auditor to submit to the Secretary to the Board any documents that are not public records.

VII. Excuse of Sunshine Notice Requirements; Emergency and Urgency Items.

A. If an item appears on an agenda but the Board fails to meet any of the additional notice requirements under sections IV, V or VI.

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the Board may supplement agenda related materials or may take action only if:

1. The minimum notice requirements of the Brown Act have been met; and,

2. The Board, by a two-thirds vote of those members present, adopts a motion determining that, upon consideration of the facts and circumstances, it was not reasonably possible to meet the additional notice requirements under this ordinance and any one of the following exists:

a. There is a need to supplement the agenda related materials or take immediate action on the item during the meeting;

b. The item relates to a purely ceremonial or commendatory action;

c. The additional noticing requirements under this section were not met due to a software or hardware impairment.

B. Notwithstanding subsection (A) of this section, the Board may take action on items not appearing on a posted agenda only if the Board determines to take action pursuant to the requirements of the Brown Act for emergency and urgency items (Government Code Section 54954.2(b) or its successor statute).

C. Nothing in this section shall prohibit the Board from taking action to schedule items for a future meeting to which regular or special meeting notice requirements will apply, or to distribute agenda-related materials relating to items added pursuant to subsection (B) of this section before or during a meeting.

D. Nothing in this section or this ordinance shall prohibit the Office of the Port Attorney from conforming a document or a form of a resolution or ordinance to comply with technical requirements as to form and legality, to correct an typographical or clerical error, or to conform with the Board’s action taken at the meeting or with any supplemental agenda-related materials.

VIII. Agenda-Related Materials as Public Records: Agenda Subscribers.

In addition to providing access to all records which are public records pursuant to the California Public Records Act (Government Code 6250 et seq.) and this ordinance, the Secretary of the Board shall make available for immediate public inspection and copying all agendas and agenda-related materials.

A. The Port may charge a fee to agenda subscribers and media organizations to cover reasonable mailing costs of the agenda and agenda-related materials. Neither this section nor the California

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Public Records Act shall be construed to limit or delay the public's right to inspect any record required to be disclosed by that act or this ordinance.

B. The Secretary of the Board shall make available for immediate public inspection and copying all agenda-related materials that have been distributed to a majority of the Board. The right to immediate public inspection and copying provided in this section shall not include any material exempt from public disclosure under this ordinance or under state or federal law.

C. All requests by agenda subscribers to receive agendas or agenda-related materials by mail or by email shall be made in writing and delivered to the Secretary of the Board by mail or by email. Any written request shall be valid for the calendar year in which it is filed, and must be renewed after January 1 of each year.

D. Notwithstanding any other provision of this ordinance, the failure of an agenda subscriber to timely receive the agenda or agenda-related material pursuant to this section shall not constitute grounds for invalidation of the actions of the Board taken at the meeting for which the agenda or the agenda-related material was not timely received.

IX. Barriers to Attendance Prohibited.

A. The Board shall not conduct any meeting, conference or other function in any facility which is inaccessible to persons with physical disabilities, or where members of the public may not be present without making a payment or purchase. Whenever the Board anticipates that the number of persons attending the meeting may exceed the legal capacity of the room, a public address system shall be used to permit the overflow audience to listen to the proceedings, unless the speakers would disrupt the operation of the Port or the Board meeting.

B. Any person attending an open meeting of the Board shall have the right to record, photograph or broadcast the proceedings unless such activities constitute a persistent disruption of the proceedings.

X. Public Testimony at Regular and Special Meetings.

A. Every agenda for every regular or special meeting shall provide an opportunity for members of the public to directly address the Board on items of interest to the public that are within the Board's subject matter jurisdiction, provided that no action shall be taken on any item not appearing on the agenda unless the action is otherwise authorized by the Brown Act (Government Code Section 54954.2(b)). The agenda of local bodies need not provide an opportunity for members of the public to address the Board on any item that has already been considered by the Board or a standing committee

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composed exclusively of members of the Board, at a meeting in which members of the public were afforded the opportunity to address the Board or standing committee before or during the Board’s or standing committee's consideration of the item, unless the item has been substantially changed since the Board or the standing committee heard the item, as determined by the Board.

B. Every agenda for regular or special meetings at which action is proposed to be taken on an item shall provide an opportunity for each member of the public to directly address the Board concerning that item before taking action. The President of the Board or presiding officer may request speakers representing similar views to designate a spokesperson in the interest of time. Nothing shall prohibit the Board from adopting rules for allocating additional time to a speaker who desires to speak on multiple agenda items so that the speaker shall address all items at one time before the Board's consideration of those items.

C. The Board shall provide that each person wishing to speak on an item shall be permitted to speak once based upon previously adopted time constraints which are reasonable and uniformly applied. It shall be the policy of the Board that all speakers be entitled to a minimum of two minutes of speaking time per agenda item, subject to the discretion of the presiding officer of the Board or meeting. The Board president or presiding officer shall announce publicly all reasons justifying any reduction in speaker time. The stated reasons shall be based at least on a consideration of the time allocated or anticipated for the meeting, the number and complexity of agenda items, and the number of persons wishing to address the Board.

D. The Board shall not abridge or prohibit public criticism of the policies, procedures, programs or services of the Board or Port, or of any other aspect of its proposals or activities, or of the acts or omissions of the Board, even if the criticism implicates the performance of one or more public employees. Nothing in this subsection shall confer any privilege or protection beyond that which is otherwise provided by law.

E. Members of the public may also submit written comments concerning any item on the agenda for any regular or special meeting of the Board by sending mail or email to the Secretary of the Board , which comments shall be provided to each member of the Board prior to the consideration of the item. Nothing shall prohibit the Board from adopting rules for establishing deadlines by which such written comments must be submitted. Subject to the Board’s allocation of a budget and availability of technology feasible for Port implementation, the Board may adopt at its discretion procedures in compliance with law (including the Brown Act) to allow members of the public to submit comments through other alternative specified online media or channels, such as social media or blog sites.

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F. The Board has and may adopt further rules of public participation. In case of conflict between this ordinance and any such further rules of public participation adopted by the Board, the more specific rule shall govern.

XI. Minutes and Recordings.

A. The Board shall record the minutes for each regular and special open meeting convened under the provisions of this ordinance. At a minimum, the minutes shall state the time the meeting was called to order, the names of the members attending the meeting, a one- sentence summary of, and the roll call vote on, each matter considered at the meeting, the time the Board began and ended any closed session, those members of the public who spoke on each matter if the speakers identified themselves, and the time the meeting was adjourned. The draft minutes of each open meeting shall be available for inspection and copying upon request no later than ten business days after the meeting. The officially adopted minutes shall be available for inspection and copying upon request no later than five business days after the meeting at which the minutes are adopted.

B. The Board shall make a visual and audio recording of every open meeting. The Board shall audio tape each regular and special open meeting and may make a visual recording of any meeting. Any recording of any open meeting shall be a public record subject to inspection and copying and shall not be erased, deleted or destroyed for at least four years, provided that if during that four-year period a written request for inspection or copying of any recording is made, the recording shall not be erased, deleted or destroyed until the requested inspection or copying has been accomplished. Inspection of any such recording shall be provided without charge on a player or computer made available by the Board. Notwithstanding any other provision of law, the Board shall permanently maintain all recordings of all its meetings.

C. Subject to the Board’s allocation of a budget and availability of technology feasible for Port implementation, the Board may adopt at its discretion procedures in compliance with law (including the Brown Act) to broadcast live or recordings of its open meetings, including television broadcasts, streaming online or other broadcast media or channels. Subject to the requirements of law (including the Brown Act), the availability of the recording online and the referral to available online streaming or broadcasting of any recording of an open meeting shall be deemed responsive to any request for inspection of such recording of open meetings.

XII. Online Transparency and Disclosures.

A. In addition to other online posting requirements set forth in this ordinance, the following documents shall be available online to members of the public:

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1. This ordinance.

2. Any rules of public participation adopted by the Board.

3. Procedures for submission of public comments on agenda items through the email or other online media or channels as adopted by the Board.

4. Procedures for submissions and response to public records requests under the California Public Records Act.

5. Board or Port administrative policies relating to expenditures relating to travel and hosting.

6. Board or Port administrative policies relating to conflict of interest or incompatible activities of public officials.

7. Salaries and compensation of Port employees displaying the amount of total compensation paid for each Port employee identified only by his or her job title.

B. Subject to the Board’s allocation of a budget and availability of technology feasible for Port implementation, there shall be available online system of public records requests and tracking of the response to such requests.

XIII. Enforcement of Open Meeting Laws

A. Where a member of the public alleges that the Port has failed to comply with the Brown Act, this ordinance, any rules for public participation adopted by the Board, or any other applicable laws that may regulate the noticing and conduct of Board and standing committee meetings or public access to the Port, including the Public Records Act (the “Open Meeting Laws”), such member of the public must comply with the cure and correction procedures set forth in this ordinance. The Port Attorney shall be charged with investigating and responding to any such allegations.

B. Any person alleging Port noncompliance with the Open Meeting Laws shall submit a written request for cure and correction to the Secretary of the Board clearly describing the nature of the alleged noncompliance, including the facts and circumstances of the alleged noncompliance, any legal theories supporting the allegation, and the nature of the corrective action requested. Generalized concerns or conclusory arguments, unsupported by specific factual or legal arguments against the challenged actions, are not sufficient. Oral comments made to Port staff or at meetings shall not be accepted in lieu of a request for cure and correction.

C. When the alleged noncompliance was the failure to adequately provide notice on the agenda of an action taken in open session of a Board or standing committee meeting, the request for cure

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and correction must be made within thirty (30) days of that action. In all other cases, the deadline is ninety (90) days from the time the action was taken.

D. Upon receipt of the request for cure and correction, the Port Attorney shall investigate the alleged noncompliance and shall respond to the requestor within thirty (30) days of receipt by the Secretary of the Board. The Port Attorney’s response shall indicate whether the request was found to have merit. If the Request is found to be without merit, it shall be dismissed by the Port and the Port shall take no further action. If the request is found to have merit, the Port Attorney shall indicate either that a cure or correction has been made, or that none will be made.

E. Any requestor who files three requests for cure and correction found to be without merit by the Port Attorney, shall be deemed a vexatious requestor for one (1) year from the date of his or her third meritless request. Further requests submitted by a vexatious requestor shall be accompanied by a $300.00 deposit. Should any request submitted by the vexatious requestor be found to have merit by the Port Attorney, the $300.00 shall be refunded to the vexatious requestor. Otherwise, deposits shall be nonrefundable.

F. Requestors submitting requests for cure and correction are advised that any action to seek judicial review of the Port Attorney’s response to a request may be time barred under the Brown Act if such action is filed more than 15 days after the requestor’s receipt of the Port Attorney’s response.

FG. The Port has a compelling interest in complying with the Open Meeting Laws. The Port is entitled to learn of any allegations of noncompliance with the Open Meeting Laws and shall be provided the opportunity to cure and correct any such noncompliance prior to institution of any other administrative action concerning the Port or the institution of litigation. For these reasons, the request for cure and correction procedures set forth in these Rules have been established as the Port’s one and only system for receiving allegations of noncompliance with the Open Meeting Laws and for investigating and responding to such allegations. In any lawsuit alleging noncompliance with the Open Meeting Laws that may be filed against a Port action, the issues and evidence shall be limited to those raised in a timely request for cure and correction. Failure to file a timely request for cure and correction shall be an absolute bar to further administrative and judicial review of the alleged noncompliance with the Open Meeting Laws. Where, as here, administrative machinery exists for the resolution of Open Meeting Law complaints, the courts will not act until such administrative procedures are fully utilized and exhausted. The Port Attorney shall be granted substantial deference in reasonably interpreting this ordinance and any rules for public participation adopted by the Board. Litigants whose claims under this ordinance or any rules for public participation adopted by the Board are found to be without probable

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cause shall be required to reimburse the Port for its reasonable attorneys’ fees and costs, including an amount attributable to Port Attorney time.

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J. CHRISTOPHER LYTLE CESTRA BUTNER Executive Director PORT OF OAKLAND President ALAN S. YEE BOARD OF PORT COMMISSIONERS First Vice-President DANNY WAN 530 Water Street 1 Oakland, California 94607 EARL HAMLIN Port Attorney (510) 627-1696(w)1(510) 839-5104(f)1TDD/TTY 711 Second Vice-President MICHAEL COLBRUNO ARNEL ATIENZA Commissioner Port Auditor E-Mail: [email protected] JAMES W. HEAD Website: www.portofoakland.com Commissioner JOHN T. BETTERTON BRYAN R. PARKER Secretary of the Board Commissioner MINUTES VICTOR UNO Commissioner

Regular Meeting of the Board of Port Commissioners Thursday October 24, 2013 – 1:00 p.m. Board Room – 2nd Floor

ROLL CALL

President Butner called the Regular Meeting of the Board for October 24, 2013 to order at the hour of 1:06 pm. And the following Commissioners were in attendance

Commissioner Colbruno, Commissioner Parker, Commissioner Uno, 2nd Vice-President Hamlin, 1st Vice President Yee and President Butner.

Commissioner Head joined the Closed Session at 2:00 p.m.

1. CLOSED SESSION

President Butner convened the board in Closed Session at the hour of 1:07 p.m. to hear the following Closed Session Items:

1.1 CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION (Pursuant to Paragraph (1) of Subdivision (d) of California Code Section 54956.9):

CMC Food Services LLC And NNF Grewal, Inc., V. Port Of Oakland, Et Al.; Alameda County Superior Court Case No.: RG13685134

1.2 CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED LITIGATION (Significant Exposure to Litigation Pursuant to Paragraph (2) of Subdivision (d) of California Government Code Section 54956.9 2 matter(s)

1.3 THREAT TO PUBLIC SERVICES OR FACILITIES – (Pursuant to California Government Code Section 54957).

Consultation with: TSA Federal Security Director

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1.4 CONFERENCE WITH REAL PROPERTY NEGOTIATORS – (Pursuant to California Government Code Section 54956.8):

Property: Berth 25-26 Negotiating Parties: Port of Oakland and Ports America Outer Harbor Terminal Agency Negotiator: Executive Director Chris Lytle, Acting Maritime Director Jean Banker, Port Attorney Danny Wan Under Negotiation: Price and Terms of Tenancy

ROLL CALL/OPEN SESSION

President Butner reconvened the Open Session of the Regular Meeting of the Board at 3:20 p.m., and the following Commissioners were in attendance:

Commissioner Colbruno, Commissioner Head, Commissioner Parker, Commissioner Uno, 2nd Vice-President Hamlin, 1st Vice President Yee and President Butner.

CLOSED SESSION REPORT

The Port Attorney reported that no final actions had been taken in Closed Session.

2. CONSENT ITEMS

The Board Secretary introduced the Consent Items.

Item 2.5 was pulled on the recommendation of staff.

A Motion to approve Consent Items 2.1 through 2.11, exclusive of 2.5 was made by Commissioner Uno and seconded by. Commissioner Colbruno.

2.1 Resolution: Building Permit Application: Hertz QTA Site, 8000 Earhart Rd. – Modifications To Fuel Dispensers (Engineering)

2.2 Resolution: Building Permit Application: Aviation Institute Of Maintenance – Installation Of Identification Sign (Engineering)

2.3 Resolution: Approval Of A Second Supplemental Agreement To Right Of Way Use Permit Agreement (Onshore) With SFPP, L.P. (Kinder Morgan Energy Partners) For Petroleum Products Pipelines And Facilities At Oakland International Airport (Aviation)

2.4 Resolution: Deletion of One (1) Position of Airport Terminal Maintenance Coordinator and the Addition of One (1) Position of Aviation Project Coordinator in the Aviation Facilities Department (Administration)

2.5 PULLED Resolution: Building Permit Application: Clear Channel Outdoor - Relocate Billboard to reflect new freeway alignment, Bay Bridge Toll Plaza (Engineering)

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Mary Elizabeth Steiner spoke on Item 2.6.

2.6 Resolution: Resolution Honoring The East Bay – United Nations Association And The UN Flag Raising Ceremony on October 26, 2013.

2.7 Ordinance No. 4256, 2nd Reading Of An Ordinance Approving And Authorizing Execution Of License And Concession Agreement With The French Artist Club For Premises Located At 2400 Embarcadero Road.

2.8 Ordinance No. 4257, 2nd Reading Of An Ordinance Approving And Authorizing The Executive Director To Execute An Amendment To The Lease With Shippers Transport Express, Inc. To Extend The Term For One Year.

2.9 Minutes: Approval Of The Minutes For The Regular Meeting Of September 26, 2013. (Board Secretary)

2.10 Report: Report Of Appointments, Separations And Leaves Of Absence For FY 2013-14 First Quarter (July 1, 2013 – September 30, 2014) (Administration)

2.11 Ordinance No. 4258, 2nd Reading Of An Ordinance Adopting And Approving The Execution Of A Temporary Rental Agreement With Hertz Corporation.

The Motion to approve the Consent Items passed by the following votes: (7) Ayes: Commissioner Colbruno, Commissioner Head, Commissioner Parker, Commissioner Uno, 2nd Vice-President Hamlin, 1st Vice President Yee and President Butner.

3. MAJOR PROJECTS

Aviation Director, Deborah Ale-Flint, introduced Tom Dunscombe, BART Group Manager of the Oakland Airport Connector, to report on Item 3.1.

3.1 Report: Major Project Update - Bart Connector (Aviation)

Social Responsibility Director, Amy Tharpe, reported on Item 3.2.

3.2 Report: OAB Project Status Update (Maritime)

4. BUDGET & FINANCE

Chief Financial Officer, Sara Lee, reported on the Budget & Finance Items.

4.1 Report: Status of Outstanding City Payments

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A Motion to approve Item 4.2 was made by Commissioner Head, and seconded by Vice- President Hamlin.

4.2 Resolution: Authorization (i) to Reimburse the City of Oakland for Certain Special Services that occurred in FY 2002 through FY 2013 and (ii) for the Executive Director to Negotiate and Execute a Supplemental MOU with the City of Oakland for Certain Special Services Effective FY 2014

The Motion to approve Item 4.2 passed by the following votes: (7) Ayes: Commissioner Colbruno, Commissioner Head, Commissioner Parker, Commissioner Uno, 2nd Vice- President Hamlin, 1st Vice President Yee and President Butner.

5. STRATEGY & POLICY

There were no Strategy & Policy items agendized.

6. REMAINING ACTION ITEMS

Commercial Real Estate Director, Pam Kershaw, introduced Item 6.1

A Motion to approve Item 6.1 was made by Commissioner Uno, and seconded by Vice- President Yee.

6.1 Ordinance: Approval Of A Release Of The Deed Of Trust And Amendments To The Restrictive Covenant And Other Related Agreements For Certain Parcels In The Oak To Ninth District Project Area (CRE)

The Motion to approve Item 6.1 passed by the following votes: (7) Ayes: Commissioner Colbruno, Commissioner Head, Commissioner Parker, Commissioner Uno, 2nd Vice- President Hamlin, 1st Vice President Yee and President Butner.

Senior Maritime Projects Administrator, Delphine Prevost, introduced Item 6.2.

A Motion to approve Item 6.2 was made by Vice-President Yee, and seconded by Vice- President Hamlin.

6.2 Ordinance: Amendments To Port Tariff 2-A And Port Ordinance 3439 To Incorporate Various Procedures And Requirements For Use Of The Shore Power System (Maritime)

The Motion to approve Item 6.1 passed by the following votes: (7) Ayes: Commissioner Colbruno, Commissioner Head, Commissioner Parker, Commissioner Uno, 2nd Vice- President Hamlin, 1st Vice President Yee and President Butner.

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Deputy Executive Director, Jean Banker, introduced Item 6.3.

A Motion to approve Item 6.3 was made by Commissioner Parker, and seconded by Commissioner Yee.

6.3 Ordinance: Extension To The Agreement With Evergreen Marine Corporation (Taiwan) Ltd. For Approximately 15 Acres Of Land At Berth 34 Through June 30, 2018 (Maritime)

The Motion to approve Item 6.3 passed by the following votes: (7) Ayes: Commissioner Colbruno, Commissioner Head, Commissioner Parker, Commissioner Uno, 2nd Vice- President Hamlin, 1st Vice President Yee and President Butner.

7. UPDATES/ANNOUNCEMENTS

Executive Director, Chris Lytle, reported on Item 7.1.

7.1 Announcement: California Association Of Port Authorities Recognizes The California Lesbian , Gay, Bisexual And Transgender Ports Diversity Group (Executive)

8. SCHEDULING

There were no scheduling items discussed.

OPEN FORUM

Patrick Kim and Monica Guzman spoke in Open Forum.

ADJOURNMENT

There being no additional business the Board adjourned at 5:04 p.m.

______John Betterton, Secretary Date Board of Port Commissioners

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J. CHRISTOPHER LYTLE CESTRA BUTNER Executive Director PORT OF OAKLAND President ALAN S. YEE BOARD OF PORT COMMISSIONERS First Vice-President DANNY WAN 530 Water Street 1 Oakland, California 94607 EARL HAMLIN Port Attorney (510) 627-1696(w)1(510) 839-5104(f)1TDD/TTY 711 Second Vice-President MICHAEL COLBRUNO ARNEL ATIENZA Commissioner Port Auditor E-Mail: [email protected] JAMES W. HEAD Website: www.portofoakland.com Commissioner JOHN T. BETTERTON BRYAN R. PARKER Secretary of the Board Commissioner MINUTES VICTOR UNO Commissioner

Regular Meeting of the Board of Port Commissioners Thursday November 14, 2013 – 1:00 p.m. Board Room – 2nd Floor

ROLL CALL

President Butner called the Regular Meeting of the Board for November 14, 2013 to order at the hour of 1:02pm. And the following Commissioners were in attendance

Commissioner Colbruno, Commissioner Head, Commissioner Parker, 2nd Vice- President Hamlin, 1st Vice President Yee and President Butner.

Commissioner Uno was excused.

1. CLOSED SESSION

President Butner convened the board in Closed Session at the hour of 1:04 p.m. to hear the following Closed Session Items:

1.1 CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION (Pursuant to Paragraph (1) of Subdivision (d) of California Code Section 54956.9):

CMC Food Services LLC And NNF Grewal, Inc., V. Port Of Oakland, Et Al.; Alameda County Superior Court Case No.: RG13685134

1.2 CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED LITIGATION (Significant Exposure to Litigation Pursuant to Paragraph (2) of Subdivision (d) of California Government Code Section 54956.9 2 matter(s)

1.3 THREAT TO PUBLIC SERVICES OR FACILITIES – (Pursuant to California Government Code Section 54957).

Consultation with: Aviation Security Superintendent

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1.4 CONFERENCE WITH REAL PROPERTY NEGOTIATORS – (Pursuant to California Government Code Section 54956.8):

Property: Joint Intermodal Terminal Negotiating Parties: Port of Oakland and BNSF Railway Company Agency Negotiator: Executive Director, J. Christopher Lytle; Acting Director of Maritime, Jean Banker and Port Attorney, Danny Wan Under Negotiation: Price and Terms of Tenancy

Property: Berths 55-56 and berths 60-63 Negotiating Parties: Port of Oakland, SSA Terminals LLC and SSA Terminals (Oakland) LLC Agency Negotiator: Executive Director, J. Christopher Lytle; Acting Director of Maritime, Jean Banker; and Port Attorney, Danny Wan Under Negotiation: Price and Terms of Tenancy

1.5 CONFERENCE WITH LABOR NEGOTIATORS– (Pursuant to California Government Code Section 54957.6):

Employee Service Employees International Union Local 1021 (“SEIU Organization: Local 1021”)

Employee International Federation of Professional and Technical Organization: Engineers, Local 21 (“Local 21 IFPTE”)

ROLL CALL/OPEN SESSION

President Butner reconvened the Open Session of the Regular Meeting of the Board at 3:03 p.m., and the following Commissioners were in attendance:

Commissioner Colbruno, Commissioner Head, Commissioner Parker, 2nd Vice- President Hamlin, 1st Vice President Yee and President Butner.

Commissioner Uno was excused.

CLOSED SESSION REPORT

The Port Attorney reported that no final actions had been taken in Closed Session.

2. CONSENT ITEMS

The Board Secretary introduced the Consent Items.

A Motion to approve Consent Items 2.1 through 2.9 was made by Commissioner Colbruno and seconded by. Commissioner Parker.

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2.1 Resolution: For Joint City-Port Domain Awareness Center Staffing: Accept FY13 Department of Homeland Security/Federal Emergency Management Agency Port Security Grant Program Funding, Implement Approved Security Projects, and Sub-grant funds to the City of Oakland (Maritime)

2.2 Resolution: Authorization for the Executive Director to Enter into a Two Year Agreement with IBM for Disaster Recovery Services (IT)

2.3 Building Permit Application: Alaska Airlines - Remodel space in air cargo building (M112) to serve as parts storage (Engineering)

2.4 Building Permit Application: PCC - Install service pit and rail at Army Base site, 2498 W. 16th Street (Engineering)

2.5 Ordinance No. 4259, 2nd Reading Of An Ordinance Approving The Release Of The Deed Of Trust And Authorizing Amendments To The Restrictive Covenant For Parcels In The Oak To Ninth District Project Area.

2.6 Ordinance No. 4260, 2nd Reading Of An Ordinance Amending Port Ordinance 3439 Restructuring Of And Establishing Shore Power Rates For Provision Of Power Provided To Vessels Berthing At The Port Of Oakland

2.7 Ordinance No. 4261, 2nd Reading Of An Ordinance Amending Port Ordinance 2833 And Approving The Amendment Of Tariff 2a Establishing The General Rules Relating To The Implementation Of The Shore Power System.

2.8 Ordinance No. 4262, 2nd Reading Of An Ordinance Approving And Authorizing The Executive Director To Extend The Agreement With Evergreen Marine Corporation (Taiwan) Ltd For The Berth 34 Backland Through June 30, 2013 2018.

2.9 Minutes: Approval Of The Minutes For The Regular Meeting Of October 10, 2013. (Board Secretary)

2.10 Report: Informational Report: Quarterly Report of Construction Change Orders for 1st Quarter FY 13/14 (Engineering)

The Motion to approve the Consent Items passed by the following votes: (6) Ayes: Commissioner Colbruno, Commissioner Head, Commissioner Parker, 2nd Vice- President Hamlin, 1st Vice President Yee and President Butner; (1) Excused: Commissioner Uno.

3. MAJOR PROJECTS

Senior Aviation Project Manager, Joan Zapotek, reported on Item 3.1.

3.1 Report: Major Project Update--Terminal 1 Renovation and Retrofit. (Aviation)

Aviation Director, Deborah Ale-Flint, reported on Items 3.2 and 3.3.

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A Motion to approve Item 3.2 was made by Vice-President Yee, and seconded by Commissioner Head.

Len Turner, Darrel Carey and Terry Johnson spoke in favor Items 3.2 and 3.3.

3.2 Resolution: Authorize The Director Of Engineering To Approve Plans And Specifications For The Demolition Of The Decommissioned South Field Airport Traffic Control Tower And Certify The Final Environmental Impact Report, And Adopt Findings Concerning Significant Effects, Mitigation Measures, And Statement Of Overriding Considerations (Aviation)

The Motion to approve Item3.2 passed by the following votes: (6) Ayes: Commissioner Colbruno, Commissioner Head, Commissioner Parker, 2nd Vice-President Hamlin, 1st Vice President Yee and President Butner; (1) Excused: Commissioner Uno.

A Motion to approve Item 3.3 was made by Vice-President Yee, and seconded by Commissioner Head.

3.3 Resolution: Budget Authorization and Related Approvals to Construct Terminal 1 M102 Renovation and Retrofit Construction Related to the Terminal 1 Renovation (T1R) Program, OAK. (Aviation)

The Motion to approve Item3.3 passed by the following votes: (6) Ayes: Commissioner Colbruno, Commissioner Head, Commissioner Parker, 2nd Vice-President Hamlin, 1st Vice President Yee and President Butner; (1) Excused: Commissioner Uno.

4. BUDGET & FINANCE

Chief Financial Officer, Sara Lee, reported on Items 4.1 and 4.2.

4.1 Report: Unaudited financials for 3 months ended September 30, 2013

A Motion to approve Item 4.2 was made by Vice-President Yee, and seconded by Vice- President Hamlin.

4.2 Resolution: Approval to Reimburse the City of Oakland for General Services and Lake Merritt Trust Services Rendered in Fiscal Year 2012-13.

The Motion to approve Item 4.2 passed by the following votes: (6) Ayes: Commissioner Colbruno, Commissioner Head, Commissioner Parker, 2nd Vice-President Hamlin, 1st Vice President Yee and President Butner; (1) Excused: Commissioner Uno.

Chief Financial Officer, Sara Lee, Director of Social Responsibility, Amy Tharpe and Manager of Port Purchasing, John Banisadr reported on item 4.3.

4.3 Report: Information Report: Overview of Port Purchasing Procedures

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Chief Financial Officer, Sara Lee, Introduced Item 4.4.

A Motion to approve Item 4.4 was made by Commissioner Colbruno, and seconded by Commissioner Parker.

4.4 Resolution: Authorization to Establish for FY 2013-14 Contract Purchase Agreements with Selected Suppliers for Amounts that Will Exceed $50,000 and Related Actions

The Motion to approve Item 4.4 passed by the following votes: (6) Ayes: Commissioner Colbruno, Commissioner Head, Commissioner Parker, 2nd Vice-President Hamlin, 1st Vice President Yee and President Butner; (1) Excused: Commissioner Uno.

5. STRATEGY & POLICY

Port Attorney, Danny Wan, reported on Item 5.1.

5.1 Report: Proposal for Port Sunshine Ordinance to Assure Transparency and Public Notice of Port Commission Meetings (Port Attorney)

6. REMAINING ACTION ITEMS

Aviation Director, Deborah Ale-Flint, introduced Item 6.1.

A Motion to approve Item 6.1 was made by Commissioner Head, and seconded by Vice- President Yee.

6.1 Resolution: Budget Authorizations and Other Associated Actions Relating to Contracts for Security Systems Maintenance, Video Surveillance System (VSS) Head-end Upgrade, and Camera Installation at the Oakland Airport, OAK (Aviation/Engineering)

The Motion to approve Item 6.1 passed by the following votes: (6) Ayes: Commissioner Colbruno, Commissioner Head, Commissioner Parker, 2nd Vice-President Hamlin, 1st Vice President Yee and President Butner; (1) Excused: Commissioner Uno.

Aviation Director, Deborah Ale-Flint, reported on Item 6.2.

A Motion to approve Item 6.2 was made by Commissioner Colbruno, and seconded by Vice-President Yee.

6.2 Resolution: Authorization for the Executive Director to Enter into Five Year Contract with Alert Enterprise to Install and Maintain Airport Security Analytics System. (Aviation)

The Motion to approve Item 6.2 passed by the following votes: (6) Ayes: Commissioner Colbruno, Commissioner Head, Commissioner Parker, 2nd Vice-President Hamlin, 1st Vice President Yee and President Butner; (1) Excused: Commissioner Uno.

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Acting Director of Maritime, Jean Banker, introduced Item 6.3.

A Motion to approve Item 6.3 was made by Commissioner Head, and seconded by Vice- President Hamlin.

6.3 Ordinance: Authorize the Executive Director to Renew the Lease with BNSF Railway Company for the Joint Intermodal Terminal (Maritime)

The Motion to approve Item 6.3 passed by the following votes: (6) Ayes: Commissioner Colbruno, Commissioner Head, Commissioner Parker, 2nd Vice-President Hamlin, 1st Vice President Yee and President Butner; (1) Excused: Commissioner Uno.

Maritime Services Coordinator, Ramona Dixon, introduced Item 6.4.

A Motion to approve Item 6.4 was made by Vice-President Hamlin, and seconded by Commissioner Parker.

6.4 Resolution: Authorization to Award Security Services Contract for Middle Harbor Shoreline Park (Maritime)

The Motion to approve Item 6.4 passed by the following votes: (5) Ayes: Commissioner Head, Commissioner Parker, 2nd Vice-President Hamlin, 1st Vice President Yee and President Butner; (1) No: Commissioner Colbruno; (1) Excused: Commissioner Uno.

Senior Maritime Projects Administrator, Delphine Prevost, introduced Item 6.5.

A Motion to approve Item 6.5 was made by Vice-President Hamlin, and seconded by Vice-President Yee.

6.5 Ordinance & Resolution: Authorize the Executive Director To (a) Permit the Construction of Certain Improvements by SSA Terminals, LLC, (b) Amend the Berths 60- 63 Marine Terminal Non-Exclusive Preferential Assignment Agreement with SSA Terminals, LLC, to Incorporate the Proposed Improvements; and (c) Execute a Clarifying Amendment to the Berths 55-56 Non-Exclusive Preferential Assignment Agreements with SSA Terminals (Oakland), LLC (Maritime)

The Motion to approve Item 6.5 passed by the following votes: (6) Ayes: Commissioner Colbruno, Commissioner Head, Commissioner Parker, 2nd Vice-President Hamlin, 1st Vice President Yee and President Butner; (1) Excused: Commissioner Uno.

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Acting Director of Maritime, Jean Banker, introduced Item 6.6.

A Motion to approve Item 6.6 was made by Commissioner Colbruno, and seconded by Vice-President Hamlin.

6.6 Resolution: Authorization to Purchase Replacement Trucks for the Facilities Departments of the Aviation and Maritime Divisions, and to Dispose of Existing Trucks (Maritime)

The Motion to approve Item 6.6 passed by the following votes: (6) Ayes: Commissioner Colbruno, Commissioner Head, Commissioner Parker, 2nd Vice-President Hamlin, 1st Vice President Yee and President Butner; (1) Excused: Commissioner Uno.

7. UPDATES/ANNOUNCEMENTS

Vice-President Yee reported that due to President Butner’s recusal on the issue, he had appointed himself and Commissioners Head and Uno to the Oakland Airport Concessions Litigation Ad Hoc Committee. He read the following language describing the Committee’s purpose:

Given the complexity of and the various policy implications raised in the litigation in the case of CMS Food Services LLC and NNF Grewal v. Port of Oakland et. al. ("CMS Litigation"), the Ad Hoc CMS Litigation will receive regular legal briefings from the Port Attorney relating to the developments in the CMS Litigation and study the issues and facts raised in the litigation in order to make its report and recommendations, with the advice and counsel of the Port Attorney, to the full Board no later than January 31, 2013 on the litigation and/or resolution of the CMS Litigation. Given that the Ad Hoc committee will be receiving legal advice and conferring with its legal counsel regarding an existing litigation, all ad hoc meeting discussion and the recommendations of the committee and the Port Attorney are attorney-client privileged and confidential.

Vice-President Hamlin reported on the recent event celebrating the completion of the Shore Power project.

President Butner reported on the groundbreaking event at the former Oakland Army Base and the recent award to the Port celebrating 50 years of membership on the Bay Area Council.

8. SCHEDULING

There were no scheduling items discussed.

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OPEN FORUM

Marcia Voge and Hong Li addressed the Board in Open Forum.

ADJOURNMENT

There being no additional business the Board adjourned at 5:37 p.m.

______John Betterton, Secretary Date Board of Port Commissioners

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BOARD MTG. DATE: 12/12/2013

INFORMATIONAL REPORT (This Summary Item is for information only and no action is requested or required of the Board of Port Commissioners.)

TITLE: Executive Director Awards of Recent Public Works and Professional Services Contracts for the Period from May 2013 through October 2013

PARTIES INVOLVED: Executive Director Awards of Public Works Contracts:

On-Call Paving and Grading Contracts: Corporate Name/Principal Location Beliveau Engineering Contractors, Inc. Oakland, CA Larry Beliveau, President O. C. Jones & Sons, Inc. Oakland, CA Kelly Kolander, President & CEO Oliver DeSilva, Inc. Oakland, CA dba Gallagher & Burk, Inc. David DeSilva, President

On-Call Maintenance Dredging: Corporate Name/Principal Location Dutra Construction Co., Inc. San Rafael, CA Harry K. Stewart, President & COO

Furnish and Install PC Air Units on Passenger Boarding Bridges, T1: Corporate Name/Principal Location Angotti & Reilly, Inc. San Francisco, CA James P. Reilly, President

Design Build of Lift Station #5: Corporate Name/Principal Location McGuire and Hester, Inc. Oakland, CA Michael R. Hester, President

Water Pipeline and Sanitary Sewer Improvements, OIA: Corporate Name/Principal Location RGW Construction, Inc. Livermore, CA William S. Stewart, President

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BOARD MTG. DATE: 12/12/2013

Construction of Outer Harbor Intermodal Terminal Support Yard: Corporate Name/Principal Location Stacy & Witbeck, Inc. Alameda, CA George Fernanz, President

Replacement of Passenger Boarding Bridges, T1: Corporate Name/Principal Location John Bean Technologies Corporation Ogden, UT John Lee, Vice President

Executive Director Award of Professional Services Contracts:

(None during this reporting period.)

BOARD MEETING DATE: December 12. 2013

SUBMITTED BY: Chris Chan, Director of Engineering

APPROVED BY: J. Christopher Lytle, Executive Director

SUMMARY

This Informational Report consolidates information regarding seven recent public works contract awards. This report covers the period from May 2013 through October 2013. There were no professional service contract awards during this reporting period.

FACTUAL BACKGROUNDS:

Note that for the annual on-call contracts listed herein, the actual scope of work and associated cost for each such contract cannot be accurately defined at the time of bid. Therefore, bidders were instructed to submit a bid based either on estimated quantities of work (Maintenance Dredging contract) or on a combination of estimated quantities of work and direct labor markup percentage (Paving and Grading contracts). However, for payment purposes, the Contractors will be paid for the actual work performed, not to exceed the respective expenditure limit for each such contract. Additionally, instances of work under these on-call contracts will only be authorized if there is a corresponding approved operating or capital budget.

On-Call Paving and Grading Contracts

On September 6, 2012, by Resolution No. 12-110, the Board dispensed with standard bidding procedures for Furnishing Labor, Materials and Equipment for Paving, Grading and Associated General Contractor Services for Port of Oakland Facilities for the Period Commencing July 1, 2013 and Ending December 31, 2014, 2015, or 2016,

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BOARD MTG. DATE: 12/12/2013

Oakland, California and authorized the Executive Director to execute up to four contracts in a combined total amount not to exceed $4,375,000.00 for the maximum 3 ½ year term of the contracts.

The Board’s preference was to award one of the contracts, bid under Contract No. X2012- 09-S9, to a Port-certified SBE contractor. The contracts not subject to the provisions of the SBE program were bid under Contract No. X2012-09-S8.

Contract No. X2012-09-S9:

On May 22, 2013, the Chief Engineer received one informal bid for the above work under Contract No. X2012-09-S9 (SBE), from Beliveau Engineering Contractors, Inc.

Due to a mistake in filling out one of the unit prices on the Bid Form, Beliveau requested to withdraw its bid. Because Beliveau was the sole SBE bidder, the Port accepted the withdrawal of its original bid and negotiated a revised price that is comparable to the unit prices for this item submitted by the bidders on the concurrent non-SBE version of the contract. The Port has determined that Beliveau Engineering Contractors, Inc. is a Port- certified SBE firm, and its revised bid was determined to be responsible and responsive.

Accordingly, on June 18, 2013, the Executive Director approved the award of a contract for the above Work under Contract No. X2012-09-S9 to Beliveau Engineering Contractors, Inc., based on the line-item bid amounts and percentage markup of Direct Labor Costs contained in its revised bid.

Contract No. X2012-09-S8:

On May 22, 2013, the Chief Engineer received three informal bids under Contract No. X2012-09-S8 (non-SBE).

The lowest bid was submitted by Beliveau Engineering Contractors, and contained the same error as its bid for Contract No. X2012-09-S9. In this instance, the error was moot; per the provisions of the subject Project Manuals, Beliveau was awarded the SBE contract and was therefore precluded from simultaneously receiving a contract under Contract No. X2012-09-S8. The second and third lowest bidders on Contract No. X2012-09-S8 were Oliver DeSilva, Inc., dba Gallagher and Burk, Inc. and O. C. Jones & Sons, Inc.; both of these bids were determined to be responsible and responsive.

Accordingly, on June 13, 2013, the Executive Director approved the award of contracts for the above Work under Contract No. X2012-09-S8 to Oliver DeSilva, Inc., dba Gallagher and Burk, Inc. and O. C. Jones & Sons, Inc., based on the line-item bid amounts and percentage markups of Direct Labor Costs contained in their respective bids.

On-Call Maintenance Dredging

On September 6, 2012, by Resolution No. 12-113, the Board dispensed with standard bidding procedures for Maintenance Dredging and Furnishing Pile Driver Crew for Repairs to Docks and Waterfront Facilities for the Period Commencing July 1, 2013

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BOARD MTG. DATE: 12/12/2013 and Ending June 30, 2014, 2015, or 2016, Oakland, California and authorized the Executive Director to execute contract(s) in a combined total amount not to exceed $10,200,000.00 for the maximum 3 year term of the contracts. During the bid period, the bidding documents were amended to specify that a single contract would be awarded.

On May 8, 2013, the Chief Engineer received three informal bids for the above Work. The lowest responsible responsive bid was submitted by Dutra Construction Co., Inc.

Accordingly, on May 23, 2013, the Executive Director approved the award of a contract for the above Work to Dutra Construction Co., based on the line item bid amounts contained in their bid form.

Project location map is attached (Attachment A).

Furnish and Install PC Air Units on Passenger Boarding Bridges, T1

On November 1, 2012, by Resolution No. 12-140, the Board authorized the Executive Director to execute a contract for Furnish and Install Pre-Conditioned Air Units on Terminal 1 Passenger Boarding Bridges, South Field, Oakland International Airport, Oakland, California, A.I.P. 3-06-0170 (FUTURE) with the lowest responsible responsive bidder, based on formal sealed bids, in an amount not to exceed $2,000,000.00.

On February 20, 2013, the Secretary of the Board of Port Commissioners received six formal bids for the above Work. The low bid was submitted by Angotti & Reilly, Inc. However, its bid exceeded the award amount authorized by the Board.

Protests of Angotti & Reilly’s bid were received from the second and third low bidders. On May 15, 2013, in accordance with the provisions of Resolution 12-140, the Executive Director reviewed and adopted the Hearing Officer’s Report recommending that the bid protests be rejected as being without merit.

On July 25, 2013, the Board authorized an increase of $79,794.00 in the award amount and further authorized execution of a contract with the low bidder, Angotti & Reilly, Inc., in the revised amount, contingent on the Port’s receipt of Voluntary Airport Low Emissions (VALE) grant funding prior to the August 19, 2013 expiration date of the above bids. VALE grant funding and FAA authorization to award the contract were received prior to said deadline.

Accordingly, on August 15, 2013, the Executive Director approved the award of a contract for the above Work to Angotti & Reilly, Inc. for its bid amount of $2,079,794.00.

Project location map is attached (Attachment B).

Design Build of Lift Station #5

On December 20, 2012, by Resolution No. 12-163, the Board authorized the Executive Director to execute a contract for Design Build of Sanitary Sewer Lift Station #5, South

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Field, Oakland International Airport, Oakland, California with the lowest responsible responsive bidder, based on formal sealed bids, in an amount not to exceed $1,600,000.00.

On May 14, 2013, the Secretary of the Board of Port Commissioners received one formal bid for the above Work. The bid, received from McGuire and Hester, Inc., was determined to be responsible and responsive.

Accordingly, on May 28, 2013, the Executive Director approved the award of a contract for the above Work to McGuire and Hester, Inc. for its bid amount of $742,000.00.

Project location map is attached (Attachment C).

Water Pipeline and Sanitary Sewer Improvements, OIA

On December 20, 2012, by Resolution No. 12-165, the Board authorized the Executive Director to execute a contract for Water Pipeline and Phase 1 Sanitary Sewer Improvements, Oakland International Airport, Oakland, California with the lowest responsible responsive bidder, based on formal sealed bids, in an amount not to exceed $1,240,000.00.

On August 8, 2013, the Secretary of the Board of Port Commissioners received five formal bids for the above Work. The lowest responsible responsive bid was submitted by RGW Construction, Inc.

Accordingly, on August 21, 2013, the Executive Director approved the award of a contract for the above Work to RGW Construction, Inc. for its bid amount of $1,145,425.00.

Project location map is attached (Attachment D).

Construction of Outer Harbor Intermodal Terminal Support Yard

On June 13, 2013, by Resolution No. 13-58, the Board authorized the Executive Director to execute a contract for Construction of Outer Harbor Intermodal Terminal, Support Yard, Oakland, California MARAD FY12 TIGER GRANT NO. DTMA-91-G-2012-0005 with the lowest responsible responsive bidder, based on formal sealed bids, in an amount not to exceed $18,000,000.00.

On July 24, 2013, the Secretary of the Board of Port Commissioners received four formal bids for the above Work. The lowest responsible responsive bid was submitted by Stacy & Witbeck, Inc.

A protest of Stacy & Witbeck’s bid was received from the second low bidder. On September 6, 2013, in accordance with the provisions of Resolution 13-58, the Executive Director reviewed and adopted the Hearing Officer’s Report recommending that the bid protest be rejected as being without merit.

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Accordingly, on September 12, 2013, the Executive Director approved the award of a contract for the above Work to Stacy & Witbeck, Inc. for its bid amount of $16,499,102.00.

Project location map is attached (Attachment E).

Replacement of Passenger Boarding Bridges, T1

On July 25, 2013, by Resolution No. 13-88, the Board dispensed with standard bidding procedures for Replacement of Passenger Boarding Bridges (PBB) at Gates 5, 10, 12, 15 and 17, Terminal 1, Oakland International Airport, Oakland, California and authorized the Executive Director to execute a contract in an amount not to exceed the amount approved by the Board, based on negotiations with JBT AeroTech, or, in the event that no satisfactory contract could be negotiated with JBT AeroTech, to negotiate and execute a contract by soliciting informal proposals from other PBB providers or on the open market.

On August 13, 2013, the Chief Engineer received an informal proposal from John Bean Technologies Corporation, the parent company of JBT AeroTech. Said proposal was determined to be responsible and responsive, and was below the amount approved by the Board.

Accordingly, on August 21, 2013, the Executive Director approved the award of a contract for the above Work to John Bean Technologies Corporation for its bid amount of $3,769,445.00.

Project location map is attached (Attachment F).

CONCULSION:

This report is for information only and no action is requested or required of the Board of Port Commissioners.

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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 PROJECT UPDATE

Shore Power Program

December 12, 2013 (Previous update: September 26, 2013)

1. Background and Description of Project In 2008, the State of California Air Resources Board (CARB) put into effect new regulations, requiring reductions of air pollutants emitted from ships docked (at-berth) at most California ports. The key requirements of the regulation include emission reductions of 50% starting in 2014, 70% starting in 2017, and 80% starting in 2020. Grant funding awarded to the Port typically requires emission reductions additional to those required by the CARB regulation.

The Shore Power Program involves the design and construction of high voltage electrical infrastructure in the Port of Oakland (Port) Maritime area, so that ships can plug into the electric grid while docked. Connecting to the electric grid dramatically reduces emissions from docked vessels. The infrastructure generally runs from the Port’s main substations to on-terminal substations and, from there, to the terminal wharves. Power is extended down to the wharves, where vaults with electrical connections will provide the interface (outlets) for ocean going vessels (plugs).

2. Schedule The Port’s Program comprises 11 berths and is being constructed in three phases, as outlined below. Construction was completed in June 2013 and commissioning for Phases 1, 2A and 2B is scheduled for completion by December 31, 2013. The Port’s Program is on track to enable shipping line customers to use the shore power system starting January 1, 2014.

Some terminals are constructing shore power infrastructure independently of the Port. At the Berths 60-63 terminal, EMS/APL previously installed shore power capability at Berths 61 and 62; that infrastructure remains in place for use under the new lease executed with SSAT for the terminal. Ports America Outer Harbor Terminal shore power infrastructure for Berth 24 is scheduled for completion by December 31, 2013.

3. Construction

Phase 1 of the system was turned over to the tenant of Berths 56-58 in April 2013. Phase 2 construction began in June 2012 and was completed in June 2013. Load bank testing was successfully completed at all the Phase 2 berths by October 2013. Berth commissioning began in October 2013 and is scheduled for completion by mid-December 2013.

4. Procedures, Requirements, and Rates and Charges On October 24 and November 14, 2013, the Board adopted revised Ordinance 3439, which sets forth rates and charges for the use of shore power. The Board also adopted an amendment to Tariff 2-A, which sets forth operating requirements, including maintenance responsibilities and charges, as well as grant compliance.

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5. Press Conference The Port held a press conference November 8, 2013 to recognize the completion of construction of the Port's shore power infrastructure. Event attendees included officials from U.S. Maritime Administration, U.S. Environmental Protection Agency, California Air Resource Board, Bay Area Quality Management District, Metropolitan Transportation Commission, City of Oakland, Pacific Merchant Shipping Association, and West Oakland Neighbors. The event was covered by three local television stations along with multiple print outlets including the Bay Area News Group and the top two Chinese language papers in the Bay Area.

6. Other Items Staff will return to the Board with an update on grant funding reimbursements and an overview of shore power usage at the end of the first quarter of calendar year 2014, when more information on these items is available. Staff has been actively discussing with both CARB and the Bay Area Air Quality Management District the various operational issues that may arise in the first quarter of 2014 as shore power enters the “implementation” phase for both the Port and its shipping line customers, and how those issues may affect the achievement of regulatory and grant compliance requirements in the near term. Staff will continue to engage these agencies and our shipping line customers to manage or stay apprised of issues that may arise.

Below are select photographs of the shore power infrastructure that has been constructed.

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Ground work at the start of construction of the Shore Power Program.

On-terminal substation (1 per berth).

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Shore power outlet (multiple per berth).

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Infrastructure under the wharf.

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Berth and ship commissioning.

Plugging vessel into shore power outlet.

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Shore power plugs.

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INFORMATIONAL REPORT TO THE OAKLAND BOARD OF PORT COMMISSIONERS

REGARDING THE PORT ENERGY INNOVATION INITIATIVE DECEMBER 12, 2013

PURPOSE OF THE INFORMATIONAL REPORT TO THE BOARD OF PORT COMMISSIONERS (“BOARD”)

This Informational Report is to provide an update to the Board and public regarding the Port Energy Innovation Initiative, a comprehensive, cross-divisional initiative originally developed in 2011 in collaboration with the community to look at how the Port can increase its utilization of alternative and renewable forms of energy for the benefit of the Port and its many stakeholders.

BACKGROUND ON THE PORT’S ENERGY INNOVATION INITIATIVE

At the Port of Oakland (“Port”), energy procurement, provision and usage across all the Port’s business lines – maritime, aviation, real estate and utilities – are critical business, financial and operational concerns. Both internal and external factors are re-shaping the traditional energy landscape. For example, power demands from existing Port facilities are increasing due to on-going electrification projects at the Seaport and Airport; energy costs continue to rise as renewable sources become a larger part of the Port’s energy portfolio, and the energy market is subject to potential volatile price fluctuations.

Port stakeholders, especially local community members, have expressed a strong interest in the direction the Port is taking to address its energy needs to reflect the on-going and emerging issues of greenhouse gas reductions, climate change, renewable energy, energy resiliency, and sustainability.

In response, the Port engaged community stakeholders, environmental policy advocates, and other partners to identify a range of energy, environmental, climate and sustainability issues. The engagement resulted in the Port of Oakland Energy Innovation Initiative (“EII” or “Energy Initiative”) in March 2011.

In alignment with both the strategic plan and the funding source for the initial phase of the Energy Initiative, the final $100,000 of the approximately $9 million Vision 2000 Air Quality Mitigation Program settlement funds, Port staff identified the following seven objectives for the initiative:

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1. Healthier communities through reduced emissions - especially local criteria pollutants and diesel particulates; 2. Competitiveness through lower energy costs for the Port and our tenants, customers, and stakeholders; 3. Sustainability through stewardship of limited financial, capital, and natural resources related to energy; 4. New technologies to achieve emission reduction and environmental objectives; 5. Jobs created by implementation of programs and projects, especially by contributing to economic development, including potential clean tech-related employment; 6. Reduced carbon footprint through compliance with California’s leading greenhouse gas regulations; 7. Enhanced energy independence and resilience through energy efficiency, renewable energy, distributed generation, and utility infrastructure optimization - specifically greater security of adequate local supply of energy despite grid disruptions from natural or human-induced disasters.

The Energy Initiative has become a programmatic “umbrella” to guide a wide spectrum of innovative energy efficiency and renewable energy technologies and strategies across multiple divisions of the Port. Some of the specific efforts are already underway; many are yet to be identified, assessed, and potentially implemented. Currently, the Port does not have a central clearinghouse or framework to unify its energy efforts towards a set of policy and business objectives.

The Initiative builds on the Port’s solid track record of work to date toward its Strategic Plan goal to of “sustaining healthy communities through leading edge environmental stewardship” (Port of Oakland Strategic Plan, Goal G). Examples include: ∑ Reducing diesel particulate emissions reductions by 70% under the Maritime Air Quality Improvement Plan (MAQIP); ∑ Setting and advancing toward California’s leading renewable energy portfolio goals; ∑ Installation of photo-voltaic solar arrays; ∑ Pursuit of Leadership in Energy and Environmental Design (“LEED”) standards in building construction and Energy Star Certification of Port buildings; ∑ Implementation of alternative fuel policies and development of alternative fueling infrastructure including compressed natural gas and electric vehicle charging stations.

However, the changing legislative and regulatory landscapes, as well as concerns related to long-term energy resiliency and Port efforts to provide leadership in greenhouse gas reductions, are compelling factors driving Port staff to look ahead and prepare the Port for a new energy future. Energy is trending away from fossil-based transportation fuels to alternative renewable fuels and grid-based electricity, ideally from renewable and sustainable sources.

Port staff believe that the Port of Oakland is in a favorable position – with multiple business lines under one roof, located on the sunny-side of San Francisco Bay, and surrounded by

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an engaged community with a need for green tech jobs – to take meaningful steps towards crafting an energy vision – based upon Board policy direction – for a sustainable and resilient energy future for the Port of Oakland. The first step in crafting the Vision for the Port’s Energy Future is the Energy Innovation Study.

PORT OF OAKLAND ENERGY INNOVATION STUDY

The Energy Innovation Study continues the Port’s track record in outcomes-driven environmental stewardship and builds upon the foundation of previous air quality efforts. Specifically, on March 29, 2011, the Board of Port Commissioners adopted Resolution 11- 35, authorizing the reallocation of up to $100,000 of the mitigation funds for an Energy Innovation Study (“Study”) to: 1. Develop a long-term energy policy and vision and 2. Lay the groundwork for a long-term energy plan (“framework”) that drives outcomes through a series of short- and long-term action-oriented recommendations.

The Study will assess the Port’s long-term energy needs and develop a concept-level analysis of long-term energy sustainability issues and opportunities.

ACTIONS TO DATE: 2011-2012

After the initial authorization in early 2011, the Port began working with the community and other energy stakeholders to pull together a series of information sharing meetings, briefings, and site tours to educate and develop a common base of knowledge from which to work collaboratively toward the development of the initiative. These included briefings with the West Oakland Neighbors and West Oakland Environmental Indicators Project, as well as engagement of maritime and aviation businesses that had demonstrated leadership in the renewable energy arena, and finally outreach to the energy innovation and finance community, including venture capital and researchers.

In 2012, Port staff began negotiations with Lawrence Berkeley National Laboratory (LBNL) to conduct the Study. During this period, External Affairs and Environmental Programs & Planning worked with the Aviation Division to have the project management shifted from the External Affairs Division to an aviation environmental planner, Susan Fizzell, who had both the subject matter and process expertise to move the project forward. Due to a number of legal issues surrounding the ownership of the work product, the Port and LBNL were unable to enter into a contract. Nevertheless, the Port continued to conduct outreach and communication regarding the project, including the co-hosting with Jack London Square tenant Sungevity, of a provocative documentary about alternative energy, which brought together community and thought-leaders for continued discussion of these issues. To provide additional in-house staff support on the project, the Port hosted an Environmental Defense Fund graduate level summer intern with a background in both business and electrical engineering, who helped develop the common database of information regarding the Port’s energy utilization.

CURRENT STATUS

In August 2013, Port staff determined that the ideal form for moving forward in a robust and sustainable fashion would be through a formal competitive Request for Proposals (RFP) solicitation for qualified firms to submit proposals on the study. Port staff revised the scope

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of work and initiated a process to solicit proposals from qualified proposers to provide professional services for the development of the Study. In October 2013, staff reviewed thirteen proposals and invited the top five proposers for interviews. The evaluation committee included representatives from Engineering, Aviation, and Environmental Programs & Planning, along with four observers, two from External Affairs and Engineering, and two from the community, representing the West Oakland Neighbors and West Oakland Environmental Indicators Project.

On November 12, Port staff completed the evaluation process and ranked the firm Burns & McDonnell the top scoring proposer. Port staff intends to enter into a contract with Burns & McDonnell subject to agreement on the Port’s Professional Services Agreement (“Contract”) terms and conditions. Burns & McDonnell had the best combination of experience, knowledge, plan and approach, and community engagement. Port staff plans to immediately engage with Burns & McDonnell on this study as soon as the Contract is executed. The work is expected to begin as early as December 2013, with the next phase of community engagement happening as early as the first quarter of 2014, and take approximately six to twelve months to complete.

Burns & McDonnell has partnered with ENVIRON and 44 Energy Technologies to conduct the Study. ENVIRON will perform 20% of the work under the contract and is a Port-certified Local Impact Area firm, located in Emeryville. 44 Energy Technologies will be performing 5% of the work under the contract and are a Port-certifiable Very Small Business Enterprise and Local Impact Area business; they are eligible for Port certification in February 2014 when they will have been located in the Local Impact Area for one full year.

Since funds for this study have been allocated and budgeted and are within the budgetary authority of the Executive Director, no Board action is needed at this time. Staff proposes to provide regular updates to the Board and the public on the status of the Study. Once the Study is completed and reviewed by Port staff, Burns & McDonnell along with Port staff is expected to present the Study’s findings, seek Board input on the findings, and recommend actions as appropriate.

BOARD POLICY RECOMMENDATIONS

The Study will provide the basis for a recommendation and potential adoption of a comprehensive energy policy by the Board of Port Commissioners. The Study is built around three specific deliverables focused on a review of existing energy conditions at the Port, a regulatory and market assessment, and development of a policy recommendation and vision for the Port’s energy future. With Board direction, Port staff envision taking the next steps, including the possibility of developing an Energy Master Plan, including implementation measures and a funding plan to enable the Port to achieve its energy goals and regulatory compliance requirements.

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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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BOARD MTG. DATE: December 12, 2013

AGENDA REPORT

TITLE: Authorization to Renew the Owner Controlled Insurance Program (“OCIP”) For Three Years beginning as soon as possible (approximately February 1, 2014), and Related Actions.

AMOUNT: Not to exceed $5,500,000 over 3 years plus collateral posting (anticipated to be $1,000,000)

PARTIES INVOLVED:

Corporate Name/Principal Location California State Association of Counties – Folsom, CA Excess Insurance Authority (“CSAC-EIA”) (Broker & Administrator through Alliant) Alliant Insurance Services San Francisco, (Broker and Administrator) CA Old Republic Insurance Company Greensburg, PA (OCIP Primary Insurance Carrier) TBD n/a (OCIP Excess Insurance Carriers) American International Specialty Lines New York, NY Insurance Company (Contractor Pollution Liability (“CPL”) Insurance Carrier) Steadfast Insurance Company (owned by Dover, DE Zurich Insurance Group) (PLIP and OPPI Insurance Carrier as defined below)

TYPE OF ACTION: Resolution

SUBMITTED BY: Sara Lee, Chief Financial Officer

APPROVED BY: J. Christopher Lytle, Executive Director

SUMMARY

The Port of Oakland’s (“Port”) Owner Controlled Insurance Program (“OCIP”) provides insurance protection for the Port and enrolled contractors and sub-contractors involved in Port public works projects (“Construction Contractors”). The Port’s existing contracts with Construction Contractors require the Port to provide an OCIP. Because the OCIP is set to expire on July 14, 2014, Port staff investigated options to renew the OCIP program beyond July 14, 2014, and recommends moving the Port’s OCIP to the program structured by the

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California State Association of Counties – Excess Insurance Authority (“CSAC-EIA”) effective as soon as possible (approximately February 1, 2014), for an amount not to exceed $5.5 million for a 3 year period, plus collateral posting. As further explained below, having the new OCIP commence as soon as possible (approximately February 1, 2014), instead of July 14, 2014, will result in cost savings to the Port.

Port staff requests that the Board of Port Commissioners (“Board”) approve and authorize the Port’s Executive Director and other relevant staff, where appropriate, to: ß Enter into a broker and administrative services agreement with the CSAC-EIA in order to: - Renew the Port’s OCIP for three years beginning as soon as possible (approximately February 1, 2014). - Provide related administrative services for the Port’s OCIP including, but not limited to, enrolling and orienting each Construction Contractor, attending pre- bid and pre-construction meetings, performing annual OCIP cost allocations, providing safety services, performing monthly payroll tracking and closing-out contracts. This agreement will include broker fees to be paid by CSAC-EIA to the broker, Alliant Insurance Services (“Alliant”). - Provide administrative services for the Port’s related Professional Liability Insurance Policy (“PLIP”), Owners’ Protective Liability Insurance Policy (“OPPI”) and Contractor’s Pollution Liability Policy (“CPL”). ß Execute any incidental documents necessary to implement the CSAC-EIA OCIP and related insurance policies. This includes making any necessary Port payments to the applicable insurance carrier associated with audits associated with Port’s current OCIP and the proposed new CSAC-EIA OCIP. ß Provide collateral in the form of Port cash or letter of credit. The collateral requirement is anticipated to be approximately $1 million, but is subject to change based on the Port’s actual claims history. This includes authorizing the Executive Director to execute documents in connection with the letter of credit (such as a reimbursement agreement), subject to approval of the Port Attorney, as to form and legality. ß Pay the required audit premium associated with the expiration of the current OCIP in July 2014, estimated to be $0-$250,000.

FACTUAL BACKGROUND

The Port’s current OCIP provides insurance protection for the Port and enrolled Construction Contractors involved in Port public works projects. The OCIP provides the following general benefits to the Port: ß The cost of providing an OCIP is anticipated to be lower than the insurance costs that would otherwise be passed on to the Port by Construction Contractors if an OCIP were not provided. A lower cost is possible through an OCIP because

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Construction Contractors share the same OCIP insurance limit and all claims are processed through one insurance program. ß The Port’s exposure to construction risk is protected by higher liability limits than would generally be available if purchased separately by individual Construction Contractors. ß By providing the required insurance, small businesses have better access to Port construction projects.

The Port has purchased an OCIP since 1999. On July 6, 2010, the Board passed Resolution #10-94 which authorized the restructuring of a four-year OCIP, including administrative services. The Port’s current OCIP runs from July 14, 2010, through July 14, 2014. The Port’s current OCIP coverage includes: ß Workers’ Compensation - Provides statutory coverage for the employees of all Construction Contractors while working on the Port’s covered public works projects. ß General Liability ($2 million each occurrence/$4 million aggregate) - Provides third party liability protecting the Port and all Construction Contractors enrolled under the OCIP, including a ten year tail for products/completed operations. ß Umbrella/Excess Liability ($300 million each occurrence/$300 million aggregate) - Provides excess liability limits over General Liability, including a ten year tail for products/completed operations.

The insurance broker and administrator of the Port’s current OCIP is Aon Risk Insurance Services West, Inc. (“Aon”). The Port’s current primary OCIP insurance carrier is ACE American Insurance Company (“ACE”). As the lead OCIP insurance carrier (that is, underwriter of risk), ACE sets the OCIP program terms and conditions. Various other insurance carriers participate along with ACE in the umbrella/excess coverage that follows the ACE program. The cost of the current four-year OCIP is approximately $6.7 million.

In addition to the OCIP program described above, the Port also purchases the following companion policies1 to complement the OCIP program: 1.) Contractor’s Pollution Liability (“CPL”) – The CPL provides protection to the Construction Contractors in the event they accidently cause bodily injury or property damage during the construction phase of Port capital improvement projects. a. Limit is $20,000,000 each loss and aggregate. b. Deductible is $100,000 each loss/$500,000 aggregate ($0 deductible after the aggregate is reached).

1 The below is not an exhaustive list of all of the Port’s insurance coverage; it is the additional insurance coverage that is part of the OCIP program that generally applies to construction projects.

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c. Insurance carrier is American International Specialty Lines Insurance Company (which is a member company of American International Group – “AIG”). d. The policy term is July 14, 2009, to July 14, 2014. e. The premium is approximately $319,998. 2.) Professional Liability Insurance Policy (“PLIP”) – The PLIP provides protection to the enrolled design consultants for their services related to the design phase of Port capital improvement projects. a. Limit is $15,000,000 each claim and aggregate. b. Deductible/Self-Insured Retention is $50,000 for consultants with under $20,000,000 annual revenues and $1,000,000 for consultants with revenues over $20,000,000. c. Insurance carrier is Steadfast Insurance Company (which is owned by Zurich Insurance Group). d. The policy term is January 1, 2012, through January 1, 2017. e. The premium is $3,092,742. 3.) Owners’ Protective Liability Insurance Policy (“OPPI”) – The OPPI supplements the PLIP and provides protection to the Port only in the event a loss caused by the enrolled design consultant exceeds the $15,000,000 PLIP limit. a. Limit of $15,000,000 each claim and aggregate. b. Deductible/Self Insured Retention is $1,000,000. c. Insurance carrier is Steadfast Insurance Company (which is owned by Zurich Insurance Group). d. The policy term is January 1, 2012, through January 1, 2017. e. The premium is $1,010,221.

Under the terms of the above-described insurance policies, the premiums paid by the Port are subject to audit adjustments based on actual construction values and/or contractor payroll. Port staff anticipates that upon expiration of the current OCIP in July 2014, that approximately $0-$250,000 may be owed to the insurance companies by the Port.

ANALYSIS

The Port’s existing contracts with Construction Contractors involved in Port public works projects requires the Port to provide an OCIP. Because the OCIP is set to expire on July 14, 2014, Port staff investigated options to renew the OCIP program beyond July 14, 2014, and recommends moving the Port’s OCIP to the program structured by the California State Association of Counties – Excess Insurance Authority (“CSAC-EIA”) effective as soon as possible (approximately February 1, 2014), for an amount not to exceed $5.5 million for a 3 year period, plus collateral posting.

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CSAC-EIA The California State Association of Counties (“CSAC”) was established in 1895 and is a nonprofit corporation dedicated to meeting specific needs of its membership through advocacy and specialized programs and services. CSAC is governed by elected county supervisors. In 1979, CSAC-EIA, a joint powers authority was formed, for the sole purpose of finding cost effective insurance solutions and risk management services for CSAC members. Since then, membership has expanded to include 54 (out of 58) counties in California as well as numerous other public entities including cities, school districts, special districts and housing authorities. The Port became a member of CSAC-EIA in March 2013; this has allowed the Port to participate in CSAC-EIA’s dental program. CSAC-EIA’s innovative and successful approach to insurance as well as its ability to combine and leverage the purchasing powers of many public entities has significantly reduced insurance costs and administrative burden for its members.

CSAC-EIA OCIP In January 2013, CSAC-EIA launched a very cost effective OCIP for its members. The OCIP program available through CSAC-EIA is similar to the Port’s current OCIP program, providing workers’ compensation, general liability and excess/umbrella liability for all enrolled construction contractors and subcontractors. Through a competitive bid process, CSAC-EIA selected Alliant as the broker and administrator of the program and Old Republic Insurance Company (“Old Republic”) as the primary insurance carrier. As the primary carrier, Old Republic sets the coverage terms for the excess layers. CSAC-EIA, through their broker, Alliant, will place the umbrella/excess coverage that follows the Old Republic policy.

OCIP rates obtained by CSAC-EIA are about 13% below the current cost of the Port’s OCIP and approximately 16% below informal quotes obtained by the Port’s current OCIP broker/administrator. Entities who are utilizing CSAC-EIA’s OCIP program include San Diego County, Riverside County, Sacramento County Airport, and City of Oakland. The below table compares the terms and costs associated with the CSAC-EIA OCIP program to the Port’s current OCIP program.

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BOARD MTG. DATE: December 12, 2013

TABLE 1: COMPARISON OF OCIP Current Port OCIP (Adjusted for 3 Years)2 CSAC-EIA OCIP Broker Aon CSAC-EIA (through Alliant) Primary Insurance Carrier ACE Old Republic Expiration Date July 14, 2014 February 1, 2017 Term 3 Years 3 Years Workers’ Compensation Statutory Statutory General Liability $2 million each occurrence /$4 $2 million each occurrence /$4 million aggregate million aggregate Umbrella/Excess Liability $300 million each occurrence $300 million each occurrence /$300 million aggregate /$300 million aggregate Deductible per Occurrence3 $100,000 $250,000 Maximum Aggregate Claims Liability4 $1,439,019 $1,267,123 Collateral Posting $4 million $4 million for current OCIP plus $1million for CSAC-EIA OCIP Costs Primary Program Cost5 $2,427,205 $1,450,548 Excess/Umbrella Cost $1,106,492 $1,500,000 Broker Administration Cost6 $821,595 $596,350 Safety/Loss Control Cost $182,187 $331,707 Cost of Collateral7 $212,917 $212,917 Maximum Aggregate Claims Liability3 $1,439,019 $1,267,123 Total Program Cost8 $6,189,415 $5,358,645 Potential Overlap in Broker Fee 2/1/14-7/14/14 $125,521 Reduce or Avoid Audit Premium on Current OCIP ($229,235) by Starting CSAC-EIA OCIP 2/1/149 Overall Total Cost for CSAC-EIA OCIP Incl. $5,254,931 Broker Fee Overlap & Avoid Audit Premium Estimated Savings Comparing CSAC-EIA n/a ($934,484) OCIP to Port’s Current OCIP

2 The Port’s current OCIP was structured and priced for 4 years. For comparison purposes, the fees have been pro-rated to represent a 3 year term and the same construction and contractor payroll activity. 3 Although the CSAC-EIA OCIP deductible is higher than the current OCIP, this is offset by having a lower Maximum Aggregate Claims Liability rate which results in a lower Maximum Aggregate Claims Liability to the Port. Each claim presented under the deductible accrues to the maximum. Once the maximum is reached, subsequent claims are subject to $0 deductible (see footnote 3). 4 The Maximum Aggregate Claims Liability under the current OCIP is calculated at a rate of $5.55 per $100 payroll and a contractor payroll forecast of $25,928,275. The Maximum Aggregate Claim for the CSAC-EIA OCIP is calculated at an average rate of $4.91778 per $100 and a contractor payroll forecast of $25,928,275. The CSAC-EIA OCIP Maximum Aggregate Claim rate ranges from 4.69% to 8.96% depending on enrolled payroll classification. The Maximum Aggregate Claims Liability will be adjusted based on actual contractor payroll and enrolled payroll classification. The expected loss based on underwriter projections is $380,137. 5 Primary Program Cost is based on actual construction value and/or contractor payroll and is subject to audit adjustments. The Primary Program Cost for the current OCIP includes an anticipated audit premium of $229,236. 6 The Broker Administration Cost is 0.23% of construction value (estimated to be $259.3 million for 3 years) and is subject to adjustments based on actual construction values. In addition, the broker will earn 7.5% commission on the Excess/Umbrella premium. This commission is included in the Excess/Umbrella Cost. 7 Cost of Collateral is based on current letter of credit rates and subject to future rate adjustments. 8 Total CSAC-EIA OCIP cost ranges from $4,471,659 to $5,358,645. The low end is based on the expected loss estimate and the high end is based on the Maximum Aggregate Claims Liability forecast. 9 It is assumed that the anticipated audit premium on the Port’s current OCIP program can be greatly reduced or avoided by enrolling new contracts beginning in February 1, 2014, under the CSAC-EIA OCIP.

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BOARD MTG. DATE: December 12, 2013

Collateral Posting There is a $4,000,000 collateral requirement for the Port’s current OCIP with ACE. This collateral requirement will remain until ACE is satisfied that all known and incurred but not reported claims have been settled. The Port, however, may be able to reduce the collateral amount over time as reported claims have been settled and with the passage of time the likelihood of new claims diminishes. The $4,000,000 collateral is currently provided in the form of a letter of credit with Bank of Montreal. To the extent a letter of credit is not available to the Port in the future, the Port will be required to post cash to satisfy this requirement.

In addition, the Port will need to post collateral for potential claims under the new CSAC- EIA OCIP in an amount of approximately $1,000,000. It is anticipated that this collateral requirement can be funded quarterly over three years with an escrow agent. Given the relatively small amount and the difficulty of obtaining a letter of credit with a qualified insurance-required evergreen provision, Port staff recommends that this collateral posting be funded with cash. In addition, the collateral requirement may increase if the Port’s actual claims are higher than the insurance underwriter’s actuarial projections.

Audit Premiums As is standard in the OCIP market, the Port’s insurance premiums are based on actual construction values and/or contractor payroll values, and are subject to future audit adjustments. Premium amounts will increase if construction value and/or contractor payroll is higher than anticipated.

Effective Date Port staff recommends that the CSAC-EIA OCIP begin as soon as possible (approximately February 1, 2014), instead of at the expiration of the current OCIP on July 14, 2014. The CSAC-EIA OCIP program rates are expected to be about 13% lower than the current OCIP rates. Starting the CSAC-EIA OCIP ahead of the current OCIP expiration takes advantage of the lower rates as soon as possible for new projects (most notably the Oakland International Airport Terminal 1 M102 renovations that are about to begin) and minimizes the audit premium to be earned under the current OCIP. Contractors who are already enrolled in the current OCIP would continue in the current program until it expires on July 14, 2014. The projects not completed by July 14, 2014, would then transfer to the CSAC- EIA OCIP program.

On-Going Work to Finalize OCIP Renewal As is customary in the insurance market, terms, conditions and pricing are not locked-in until very close to the insurance policy effective date. As a result, it is important to note that through the insurance carriers’ on-going review or changes to the global insurance market, pricing and scope of coverage may become more or less favorable than summarized here.

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BOARD MTG. DATE: December 12, 2013

STRATEGIC PLAN

Strategic Priority Area Goal Objective How and When Sustainable Economic Goal A: Create 1. Maximize The Port’s insurance and Business sustainable the use of the policies protect the Port’s Development economic Port’s existing existing assets from growth for the assets various risks, preserving Port and the financial health of the beyond Port in the event of these risks. Goal D: 2. Minimize Improve the expenditures Port’s financial position.

BUDGET & FINANCIAL IMPACT

The costs associated with the CSAC-EIA OCIP as described in this Agenda Report are included in the FY 2013-14 Capital Budget and 5-year Capital Needs Assessment, as part of project-specific budgets.

As discussed under “Analysis”, premiums paid are subject to future audit adjustments based on actual construction value and/or contractor payroll. In addition, the Port’s collateral requirements may change based on actual claims history, and the Port’s letter of credit fees and access to a qualified letter of credit may change in the future.

STAFFING IMPACT

If the OCIP is extended, there will be no impact on current staff.

If the current OCIP expires July 14, 2014, and is not extended, the Port will be out of compliance with standard Port contract terms and will likely need additional staff to set up insurance requirements, monitor compliance, and oversee and resolve claims for the multiple Construction Contractors involved in Port public works projects.

SUSTAINABILITY

No sustainability opportunities are identified.

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BOARD MTG. DATE: December 12, 2013

ENVIRONMENTAL

The proposal to renew the Port’s OCIP 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 renewing an OCIP and taking related actions will result in a physical change in the environment, and therefore this action is not subject to CEQA and no further environmental review is required.

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 the provisions of the MAPLA do not apply.

OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

Not applicable.

GENERAL PLAN

Not applicable.

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

Option 1 (Recommended Option). Renew the Port’s OCIP through CSAC-EIA as described in this Agenda Report beginning as soon as possible (approximately February 1, 2014).

Option 2. Renew the Port’s OCIP through CSAC-EIA as described in this Agenda Report beginning July 14, 2014, and continue to enroll Construction Contractors in the current OCIP through July 14, 2014. This is not recommended because large Port projects beginning in 2014 would not have the benefit of the lower rates associated with the CSAC- EIA OCIP program.

Option 3. Do not place a new or renewal OCIP program, allow the current OCIP to expire effective July 14, 2014, and pay any applicable audit premium. This option is not

102 BUDGET & FINANCE Tab 4.1

BOARD MTG. DATE: December 12, 2013 recommended as the Port’s currently executed public works contracts require the Port to provide an OCIP. In addition, the Port would need to amend current and future public works bid documents and contracts to require contractors to carry separate insurance which would likely result in additional cost to the projects which would be passed on to the Port. If the Construction Contractors are required to carry the insurance, smaller businesses may not be able to carry limits high enough to adequately cover certain types of work. In addition, claims would be more complicated since multiple insurance carriers would be involved and Port staff would need to be supplemented in order to take over verification of insurance which is currently done by the OCIP administrator.

RECOMMENDATION

It is recommended that the Board authorize the Executive Director and other relevant staff, where appropriate, to:

ß Enter into a broker and administrative services agreement with the California State Association of Counties – Excess Insurance Authority (“CSAC-EIA”) for an amount not to exceed $5.5 million for a 3 year period, plus collateral posting in order to: - Renew the Port’s Owner Controlled Insurance Program (“OCIP”) for three years beginning as soon as possible (approximately February 1, 2014). - Provide related administrative services for the Port’s OCIP including but not limited to enrolling and orienting each Construction Contractor, attending pre- bid and pre-construction meetings, performing annual OCIP cost allocations, providing safety services, performing monthly payroll tracking and closing-out upon contract. This agreement will include broker fees to be paid by CSAC- EIA to the broker, Alliant Insurance Services (“Alliant”). - Provide administrative services for the Port’s related Professional Liability Insurance Policy (“PLIP”), Owners’ Protective Liability Insurance Policy (“OPPI”) and Contractor’s Pollution Liability Policy (“CPL”). ß Execute any incidental documents necessary to implement the CSAC-EIA OCIP and related insurance policies. This includes making any necessary Port payments to the applicable insurance carrier associated with audits associated with Port’s current OCIP and the proposed new CSAC-EIA OCIP. ß Provide collateral in the form of Port cash or letter of credit. The collateral requirement is anticipated to be approximately $1 million, but is subject to change based on the Port’s actual claims history. This includes authorizing the Executive Director to execute documents in connection with the letter of credit (such as a reimbursement agreement), subject to approval of the Port Attorney, as to form and legality. ß Pay the required audit premiums associated with the expiration of the current OCIP in July 2014, estimated to be $0-$250,000.

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December 12, 2012 4,1MH/kk j/M» rt& BOARD OF PORT COMMISSIONERS CITY OF OAKLAND

RESOLUTION APPROVING AND AUTHORIZING THE RENEWAL OF THE OWNER CONTROLLED INSURANCE PROGRAM AND RELATED ACTIONS.

WHEREAS, the Board of Port Commissioners ("Boar^") has reviewed and evaluated the Agenda Report No. V-y dated Dei^amber 12, 2013 (herein "Agenda Report") and related /agenda materiars, \has received the expert testimony of Port of Oalcland C>^prt") suarf, and has provided opportunities for and takenNp^lic/cpmment; now, therefore, be it

RESOLVED, that in acting \upoh\the matters contained herein, the Board has exercised its independent "^judgmenl^X based on substantial evidence in the record and adoptsi and reives pon the facts, data, analysis, and findings ^set-^orthXik ythe^Agen Report and in related agenda materials and In testimony received; and M T FURTHER RESOLVED^ that/based upOn\the\ information contained in the Agenda Report, the Board Jaereby approves and authorizes the Executive Director and other reJeVantf Port^s^ff to enter into a broker and administrative^ servaTces agreement with the California State Association of Counti xcesX^uranbe Authority ("CSAC-EIA") for an amount not to exceed million, for a \ year period, plus collateral posting in order to renew the Port's Owner Controlled Insurance Program POCIP") forN ree years beginning as soon as possible (approximately February 1, 2014K( (2)provide related administrative services for the Port's OCIP incrudina/byt not limited to enrolling and orienting each contractor and sub^-contractor involved in Port public works projects ("Construction Contractor"), attending pre-bid and pre-construction meetings, performing annual OCIP cost allocations, providing safety services, performing monthly payroll tracking and closing-out upon contract. This agreement will include broker fees to be paid by CSAC- EIA to the broker, Alliant Insurance Services; and (3) provide administrative services for the Port's related Professional Liability Insurance Policy and Contractor's Pollution Liability Policy; and be it

FURTHER RESOLVED, that the Executive Director or his designee is hereby authorized to execute any incidental documents necessary to implement the CSAC-EIA OCIP and related insurance policies. This includes making any necessary Port payments to the applicable insurance

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carrier associated with audits associated with the Port's current OCIP and the proposed new CSAC-EIA OCIP; and be it

FURTHER RESOLVED, that the Executive Director or his designee is authorized to provide collateral in the form of Port cash or letter of credit. The collateral requirement is anticipated to be approximately $1 million, but is subject to change based on the Port's actual claims history. This includes authorizing the Executive Director to execute documents in connection with the letter of credit, (such as a reimbursement agreement), subject to approval of the Port Attorney, as to form and legality; and be it FURTHER RESOLVED, that the Executive Director ^or his designee is authorized to pay the required audit premium^ /associate with the expiration of the current OCIP in July 20)Ar^ estimated to be $0- $250,000; and be it

FURTHER RESOLVED, that the Board hereby authori>zesx the Executive Director to make such additions, modifications, or\corrections as necessary to implement the CSAC-EIA QCIp'or to^correct erxryrs, subject to the limitations set forth herein ana\pYovided/that any such addition, modification or correction does not materiarly/aiffer from the terms and conditions set forth herein and^fh-^he Agenda^Report; and be it

FURTHER RESOLVED, that the\BbaM^hereby xirids and determines that the proposal to renew the Port's\ OCIP^a^re^ibwed in accordance with the requirements of the^CaHfornik \E^yj4onmenXal Quality Act ("CEQA") and the Port CEQA Guid^^hesxahd that ±t can be seen with certainty that there is no possibi^ity^that Vehewing the Port's OCIP and taking related actions will resulx \n a physical Ghange in the environmental, and, therefore, this aetxlo^i ^ts, not^^subject to CEQA and no further environmental review isxrequired;~ andJ?e it

FURT t\this resolution is not evidence of and does not irute> (a) a contract, or the grant of any right, ent operxy interest, or (b) any obligation or liability Jf jthe Board or any officer or employee of the Board, on/ approves and authorizes the execution of agreement e with the terms of this resolution. Unless and until a separate ^written agreement is duly executed on behalf of the Board as authorized by this resolution, is signed and approved as to form and legality by the Port Attorney, and is delivered to other contracting party, there shall be no valid or effective agreement; and be it

FURTHER RESOLVED, that this resolution shall be effective immediately upon adoption by the Board.

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BudgetComprehensive # detAnnualAIL Financial Report

Operating Budget Fiscal Year ending June 30, 2014

Five-Year Capital Needs Assessment Fiscal Years ending June 30, 2014 through 2018

Oakland, California (A Component Unit of the City of Oakland)

For the Years Ended June 30, 2013 and 2012

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Port of Oakland Oakland, California (A Component Unit of the City of Oakland)

Comprehensive Annual Financial Report For the Years Ended June 30, 2013 and 2012

Prepared by the Financial Services Division

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PORT OF OAKLAND (A Component Unit of the City of Oakland)

COMPREHENSIVE ANNUAL FINANCIAL REPORT

Fiscal Years Ended June 30, 2013 and 2012

Table of Contents

Pages INTRODUCTORY SECTION

Letter of Transmittal ...... i GFOA Certificate of Achievement for Excellence in Financial Reporting ...... vii Budget Organization Chart ...... viii Appointed Officials, Senior and Contributing Staff ...... ix

FINANCIAL SECTION

Independent Auditors’ Report ...... 1-2

Management’s Discussion and Analysis (Unaudited) ...... 3-14

Financial Statements: Statements of Net Position ...... 16-17 Statements of Revenues, Expenses and Changes in Net Position ...... 18-19 Statements of Cash Flows ...... 20-21 Notes to Financial Statements ...... 22-57

Required Supplementary Information (Unaudited): Schedule of Funding Progress - Other Postemployment Benefits ...... 59

STATISTICAL SECTION (Unaudited)

Index to Statistical Section ...... 61 Net Position by Components ...... 62 Statements of Revenues, Expenses and Changes in Net Position ...... 63 Principal Revenue Sources and Airline Revenue per Enplaned Passenger ...... 64 Aviation Statistics – South Airport ...... 65 Top Ten Individual Sources of Aviation Revenue ...... 66 Schedule of Airline Rates and Changes ...... 67 Principal Revenue Sources and Maritime Revenue per TEU ...... 68 Maritime Division – Container Trends ...... 69 Top Ten Individual Sources of Maritime Revenue by Alphabetical Order ...... 70 Net Revenue Calculation For Debt Service Coverage ...... 71 Debt Service Coverage ...... 72 Ratios of Debt Service ...... 73 Outstanding Debt by Debt Type ...... 74 Demographic and Economic Statistics for the City of Oakland ...... 75 Principal Employers – FY 2012 vs. FY 2006 ...... 76 Actual Employee Count by Division ...... 77 Capital Assets Information ...... 78

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INTRODUCTORY SECTION

. Letter of Transmittal

. GFOA Certificate of Achievement for Excellence in Financial Reporting

. Budget Organization Chart

. Appointed Officials, Senior Staff and Contributing Staff

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viii viii BUDGET &FINANCETab4.2

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PORT OF OAKLAND

APPOINTED OFFICIALS, SENIOR AND CONTRIBUTING STAFF For the Year Ended June 30, 2013

Board of Port Commissioners of the City of Oakland Gilda Gonzales, President James W. Head, First Vice- President Alan S. Yee, Second Vice-President Cestra Butner, Commissioner Earl S. Hamlin, Commissioner Bryan R. Parker, Commissioner Victor Uno, Commissioner

Senior Staff Deborah Ale Flint, Acting Executive Director Arnel Atienza, Chief Audit Officer Jean Banker, Deputy Executive Director John T. Betterton, Secretary of the Board Chris Chan, Director of Engineering Denyce Holsey, Director of Administration Pamela Kershaw, Director of Commercial Real Estate Isaac Kos-Read, Director of External Affairs Sara Lee, Chief Financial Officer Kristi McKenney, Acting Director of Aviation Marsha Carpenter Peterson, Port Labor Advisor Ron Puccinelli, Chief Technology Officer Richard Sinkoff, Director of Environmental Programs and Planning Amy Tharpe, Director of Social Responsibility Danny Wan, Port Attorney

Contributing Staff Julie Lam, Controller Angelica Avalos Leandro Denoga Alice Fan Katri Jones

Saw May Khoo Betsy Kwok 530 Water Street Cecilia Ravare Oakland, California 94607 Stanley Tanaka Sandra Yee Phone: 510-627-1100 David Zolezzi Website: portofoakland.com

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FINANCIAL SECTION

. Independent Auditors’ Report

. Management’s Discussion and Analysis (unaudited)

. Basic Financial Statements

. Required Supplementary Information (unaudited)

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Independent Auditors’ Report

Board of Port Commissioners of the City of Oakland, San Francisco, California

Report on the Financial Statements We have audited the accompanying financial statements of the Port of Oakland (Port), a component unit of the City of Oakland, California as of and for the years ended June 30, 2013 and 2012, and the related notes to the financial statements, as listed in the table of contents.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Port as of June 30, 2013 and 2012, and the changes in its financial position and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

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Emphasis of Matter As discussed in Note 1, the financial statements present only the Port enterprise fund and do not purport to, and do not, present fairly the financial position of the City as of June 30, 2013 and 2012, the changes in its financial position, or, where applicable, its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Also as described in Note 2 to the financial statements, effective July 1, 2011, the Port adopted the provisions of Governmental Accounting Standards Board (GASB) Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements; GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. GASB Statement No. 65 recognizes certain amounts that were previously reported as assets and liabilities as deferred outflows of resources or deferred inflow of resources on the statement of net position. The Port’s net position as of July 1, 2011 was restated by $20,025,000 as described in Note 2. Our opinion is not modified with respect to these matters.

Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis identified in the accompanying table of contents be presented to supplement the financial statements. Such information, although not a part of the financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the financial statements, and other knowledge we obtained during our audits of the financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information Our audits were conducted for the purpose of forming opinions on the financial statements that collectively comprise the Port’s financial statements. The introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the financial statements. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 31, 2013, on our consideration of the Port’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Port’s internal control over financial reporting and compliance.

Walnut Creek, California November 7, 2013

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Port of Oakland (A Component Unit of the City of Oakland) Management’s Discussion and Analysis (unaudited) June 30, 2013 and 2012

Management’s Discussion and Analysis

The Management’s Discussion and Analysis (MD&A) is intended to provide information concerning known facts and conditions affecting the Port of Oakland’s (Port) operations. The following discussion and analysis of the financial performance and activities of the Port provides an introduction and understanding of the financial statements of the Port for the fiscal years ended June 30, 2013 and 2012, with comparative information for June 30, 2011. This MD&A has been prepared by management and should be read in conjunction with the financial statements and the accompanying notes, which follow this section.

Financial Statement Overview

The Port’s financial report includes the MD&A, basic financial statements, notes to the basic financial statements, and required supplementary information. The basic financial statements include the Statements of Net Position; Statements of Revenues, Expenses and Changes in Net Position; and Statements of Cash Flows. In addition, the report includes a statistical section, which presents various financial and operating data.

The Port prepares the basic financial statements on the accrual basis in accordance with accounting principles generally accepted in the United States of America promulgated by the Governmental Accounting Standards Board (GASB). Revenues are recognized when earned, not when received, and expenses are recognized when incurred, not when paid. Capital assets are capitalized and, with the exception of land, air rights and noise easements, depreciated over their useful lives.

Summary of Net Position

The Statements of Net Position present the financial position for the Port at the end of the fiscal year. The statements include all assets, deferred outflows of resources, liabilities, and deferred inflows of resources of the Port. Net Position, the difference between assets, deferred outflows/inflows of resources, and liabilities, are an indicator of the current fiscal health of the Port and can provide an indication of improvement of its financial position over time. A summarized comparison of the Port’s assets, deferred outflows of resources, liabilities, and net position at June 30 follows (in thousands): 2012 2011 2013 % Change restated1 % Change restated1

Current and other assets$ 338,764 -3%$ 349,162 6%$ 330,078 Capital assets, net 2,199,085 1% 2,185,743 -1% 2,216,800 Total assets 2,537,849 0% 2,534,905 0% 2,546,878 Deferred outflow of resources 14,512 4% 14,017 7% 13,158 Debt outstanding 1,306,461 -5% 1,375,570 -3% 1,419,794 Other liabilities 217,481 -6% 231,018 -1% 234,267 Total liabilities 1,523,942 -5% 1,606,588 -3% 1,654,061 Net investment in capital assets 944,974 7% 882,351 2% 869,014 Restricted for construction 14,178 -31% 20,553 20% 17,187 Unrestricted 69,267 76% 39,430 99% 19,774 Total net position$ 1,028,419 9%$ 942,334 4%$ 905,975

1Net position for fiscal years 2012 and 2011 was restated to conform with GASB 65. Please see page 26 of the “Notes to Financial Statements” for further explanation.

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Port of Oakland (A Component Unit of the City of Oakland) Management’s Discussion and Analysis (unaudited) June 30, 2013 and 2012

Summary of Net Position (continued)

Total net position at June 30, 2013, increased approximately $86.1 million or 9.1% from $942.3 million on June 30, 2012 to $1,028.4 million on June 30, 2013. Net investment in capital assets, net of related debt, increased by approximately $63 million due to decrease in outstanding debt of $69 million and an increase in capital assets, net of depreciation of $13 million, offset by an increase in accounts payables on construction contracts of $4 million and decreases in bond reserves of $12.5 million and noise abatement reserves of $2.4 million. Restricted for construction decreased $6 million due to an increase in spending of passenger facility charges (PFC) proceeds on construction projects. Unrestricted net position increased approximately $29 million primarily as a result of an increase in other receivables of $17 million and a decrease in unearned revenue and environmental and other liabilities of $14 million. The increase in other receivables was primarily due to a $13.5 million promissory note from the combined sale and lease of the Oak-to-Ninth property. The decrease in environmental and other liabilities was primarily due to the completion and progress on environmental projects.

Total net position at June 30, 2012, increased approximately $36.4 million or 4.0% from $906.0 million on June 30, 2011 to $942.3 million on June 30, 2012. Net investment in capital assets, net of related debt increased by approximately $14.2 million due to net capital reductions of approximately $31 million, offset by a decrease in outstanding debt of $44 million. Restricted for construction increased $3.4 million as a result of PFC receipts received exceeding the reimbursement needed for construction projects. Unrestricted net position increased approximately $18.8 million primarily as a result of an increase in cash equivalents and other assets.

Deferred outflows of resources is the amount of the unamortized deferred loss on refunding that was formerly included in the long term debt total. This change was made because of the adoption of GASB 65 as discussed in Note 2 to the basic financial statements that classifies certain transactions in a new category called deferred outflows of resources.

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Port of Oakland (A Component Unit of the City of Oakland) Management’s Discussion and Analysis (unaudited) June 30, 2013 and 2012

Summary of Revenues, Expenses and Changes in Net Position

The Statements of Revenues, Expenses and Changes in Net Position reflect how the Port’s net position changed during the most recent fiscal year compared to the prior year. These changes are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. A summary of the Statements of Revenues, Expenses and Changes in Net Position as of June 30 follows (in thousands): Twelve Months Ended 2012 2011 2013 % Change restated1 % Change restated1 Operating revenues$ 315,518 3%$ 306,138 3%$ 297,983 Passenger facility charge revenue 19,924 1% 19,758 3% 19,106 Customer facility charge revenue 5,387 4% 5,184 9% 4,764 Interest income 1,095 -38% 1,755 -39% 2,876 Other income 19,074 100% - -100% 1,438 Total revenues 360,998 8% 332,835 2% 326,167 Operating expenses before depreciation 151,623 1% 150,778 2% 148,002 Depreciation 98,234 0% 98,032 -1% 98,816 Interest expense 59,598 -11% 66,798 -6% 70,714 Other expense 3,354 -18% 4,085 100% - Total expenses 312,809 -2% 319,693 1% 317,532 Change in net assets before capital contributions 48,189 267% 13,142 52% 8,635 Capital contributions - Grants from government agencies 37,896 63% 23,217 -15% 27,343 Increase in net position 86,085 137% 36,359 1% 35,978 Net position, beginning of the year as restated 942,334 4% 905,975 4% 869,997 Net position, end of the year $ 1,028,419 9%$ 942,334 4%$ 905,975

1Interest Expense for fiscal years 2012 and 2011 was restated to conform with GASB 65. Please see page 26 of the “Notes to Financial Statements” for further explanation.

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Port of Oakland (A Component Unit of the City of Oakland) Management’s Discussion and Analysis (unaudited) June 30, 2013 and 2012

Operating Revenues by Division

A condensed summary of operating revenues follows (in thousands):

Division 2013 2012 2011

Aviation $ 150,871 $ 140,309 $ 135,173 Maritime 151,869 152,988 151,854 Commercial Real Estate 12,778 12,841 10,956 Total $ 315,518 $ 306,138 $ 297,983

2013

The Port’s operating revenues increased approximately $9.4 million or 3.1% from $306.1 million in fiscal year 2012 to $315.5 million in fiscal year 2013.

The Aviation Division generated $150.9 million or 47.8% of the Port’s total operating revenues in fiscal year 2013. Aviation’s operating revenues increased approximately $10.6 million or 7.5% from $140.3 million in fiscal year 2012 to $150.9 million in fiscal year 2013. The increase in Aviation revenue was due to increases in: terminal rental revenue of $4.0 million; cargo building rental revenue of $2.3 million; parking revenue of $1.2 million; utility revenue of $1.5 million; and concession revenue of $0.7 million. The primary reasons for these increases were an increase in the terminal rental rate from $145.88 per square foot to $179.44 per square foot and an overall increase in demand at the airport. Passenger traffic increased 3.2% in fiscal year 2013, from 9,643,555 in fiscal year 2012 to 9,950,856 in fiscal year 2013.

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Port of Oakland (A Component Unit of the City of Oakland) Management’s Discussion and Analysis (unaudited) June 30, 2013 and 2012

Operating Revenues by Division (continued)

The Maritime Division generated $151.9 million or 48.1% of the Port’s total operating revenues in fiscal year 2013. Maritime’s operating revenues decreased approximately $1.1 million or 0.7% from $153.0 million in fiscal year 2012 to $151.9 million in fiscal year 2013. The decrease in Maritime revenue is primarily due to a shift in cargo activity among the terminals. Loaded Twenty Equivalent Units (TEUs) decreased 0.1% from 1,796,671 in fiscal year 2012 to 1,794,187 in fiscal year 2013.

The Commercial Real Estate Division generated $12.8 million or 4.1% of the Port’s total operating revenues in fiscal year 2013. Commercial Real Estate’s operating revenues in fiscal year 2013 were essentially unchanged from fiscal year 2012.

2012

The Port’s operating revenues increased approximately $8.1 million or 2.7% from $298.0 million in fiscal year 2011 to $306.1 million in fiscal year 2012.

The Aviation Division generated $140.3 million or 45.8% of the Port’s total operating revenues in fiscal year 2012. Aviation’s operating revenues increased approximately $5.1 million or 3.8% from $135.2 million in fiscal year 2011 to $140.3 million in fiscal year 2012. The increase is primarily attributable to a scheduled lease payment increase of $2.1 million; rent from the addition of a new tenant at the Airport of $0.7 million; an increase in terminal rental revenues of $0.2 million; and due to increased passenger traffic an increase in parking revenues of $40.4 million and concession revenues of $0.2 million. Traffic, as measured by passenger enplanements, increased 2.9% in fiscal year 2012.

The Maritime Division generated $153.0 million or 50.0% of the Port’s total operating revenues in fiscal year 2012. Maritime’s operating revenues increased approximately $1.1 million or 0.7% from $151.9 million in fiscal year 2011 to $153.0 million in fiscal year 2012. The increase is primarily attributable to a $2.7 million scheduled lease payment increase, offset by lower activity at other marine terminals, resulting in lower revenues of $1.6 million. Cargo activity, as measured by loaded TEUs, declined 0.1% in fiscal year 2012.

The Commercial Real Estate Division generated $12.8 million or 4.2% of the Port’s total operating revenues in fiscal year 2012. Commercial Real Estate’s operating revenues increased $1.8 million or 17.2% from $11.0 million in fiscal year 2011 to $12.8 million in fiscal year 2012. The increase is due to a one-time fee related to waiver of the Port’s repurchase option agreement on certain undeveloped properties at Jack London Square, and higher than expected percentage rents.

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Port of Oakland (A Component Unit of the City of Oakland) Management’s Discussion and Analysis (unaudited) June 30, 2013 and 2012

Operating Expenses by Division

A condensed summary of operating expenses (excluding depreciation) follows (in thousands):

Division 2013 2012 2011

Aviation $ 106,002 $ 106,657 $ 103,887 Maritime 37,059 35,708 36,034 Commercial Real Estate 8,562 8,413 8,081 Total $ 151,623 $ 150,778 $ 148,002

2013

The Port’s operating expenses, excluding depreciation, increased approximately $0.8 million or 0.6% from $150.8 million in fiscal year 2012 to $151.6 million in fiscal year 2013.

The Aviation Division represented 69.9% of the Port’s total operating expenses in fiscal year 2013. Aviation’s operating expenses decreased approximately $0.7 million in fiscal year 2013. The decrease was primarily due to lower Aircraft Rescue and Fire Fighting (ARFF) expenses resulting from a fiscal year 2012 and fiscal year 2013 true-up with the City of Oakland.

The Maritime Division represented 24.4% of the Port’s total operating expenses in fiscal year 2013. Maritime’s operating expenses increased approximately $1.4 million or 3.8% in fiscal year 2013 from $35.7 million in fiscal year 2012 to $37.1 million in fiscal year 2013. The increase was due to higher personnel related expenses, security projects and supplies for a variety of maintenance and repair projects.

The Commercial Real Estate Division represented 5.7% of the Port’s total operating expenses in fiscal year 2013. Commercial Real Estate’s operating expenses in fiscal year 2013 were essentially unchanged from fiscal year 2012.

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Port of Oakland (A Component Unit of the City of Oakland) Management’s Discussion and Analysis (unaudited) June 30, 2013 and 2012

Operating Expenses by Division (continued)

2012

The Port’s operating expenses, excluding depreciation, increased approximately $2.8 million or 1.9% from $148.0 million in fiscal year 2011 to $150.8 million in fiscal year 2012.

The Aviation Division represented 70.7% of the Port’s total operating expenses in fiscal year 2012. Aviation’s operating expenses increased approximately $2.8 million in fiscal year 2012 from $103.9 million in fiscal year 2011 to $106.7 million in fiscal year 2012. The increase was primarily attributed to personnel related expenses, airport security and maintenance expense.

The Maritime Division represented 23.7% of the Port’s total operating expenses in fiscal year 2012. Maritime’s operating expenses in fiscal year 2012 were essentially unchanged from fiscal year 2011.

The Commercial Real Estate Division represented 5.6% of the Port’s total operating expenses in fiscal year 2012. Commercial Real Estate’s operating expenses in fiscal year 2012 were essentially unchanged from fiscal year 2011.

Depreciation Expense by Division

A summary of depreciation expense follows (in thousands):

Division 2013 2012 2011

Aviation $ 44,459 $ 45,407 $ 48,199 Maritime 50,624 49,448 47,349 Commercial Real Estate 3,151 3,177 3,268 Total $ 98,234 $ 98,032 $ 98,816

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Port of Oakland (A Component Unit of the City of Oakland) Management’s Discussion and Analysis (unaudited) June 30, 2013 and 2012

Depreciation Expense by Division (continued)

2013

In fiscal year 2013, depreciation expense increased less than 1% or $0.2 million. Depreciation expense on Maritime related assets increased $1.2 million due to assests placed into service near the end of fiscal year 2012. Depreciation expense on Aviation related assets decreased $0.9 million due to several assets that fully depreciated in fiscal year 2012 and in early 2013.

The Port completed projects worth approximately $87.9 million during fiscal year 2013, of which approximately $61.3 million are for the Aviation Division, $26.5 million are for the Maritime Division and $40 thousand are for the Commercial Real Estate Division.

2012

In fiscal year 2012, depreciation expense decreased approximately 1% or $0.8 million. Depreciation expense on Maritime related assets increased $2.1 million due to assets placed into service near the end of fiscal year 2011. Depreciation expense on Aviation related assets decreased $2.8 million due to several assets that were fully depreciated in fiscal year 2011.

The Port completed projects worth approximately $13.9 million during fiscal year 2012, of which approximately $12.4 million are for the Aviation Division, $1.4 million are for Maritime Division and $51 thousand are for the Commercial Real Estate Division.

Grants are primarily restricted for the acquisition and construction of capital assets. The depreciation expense attributable to grant funded assets and to assets funded from other sources follows (in thousands):

2013 2012 2011

Non-grant funded assets$ 68,512 $ 70,951 $ 71,476 Grant funded assets (including those funded by PFCs) 29,722 27,081 27,340

Total depreciation expense $ 98,234 $ 98,032 $ 98,816

Interest Expense

Interest expense decreased $7.2 million in fiscal year 2013 from $66.8 million in fiscal year 2012 to $59.6 million in fiscal year 2013. The decrease in interest expense is the result of the Port’s refunding of outstanding debt and scheduled principal payments. For further explanation refer to Debt Administration section.

Interest expense decreased $3.9 million in fiscal year 2012 in comparison to fiscal year 2011. The decrease in interest expense is the result of the Port’s refunding of outstanding debt and scheduled principal payments. For further explanation refer to Debt Administration section. Please note that interest expense for fiscal year 2012 and 2011 has been restated to conform with GASB65. Further explanation of this pronouncement may be found on page 26 of the “Notes to Financial Statements”.

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Port of Oakland (A Component Unit of the City of Oakland) Management’s Discussion and Analysis (unaudited) June 30, 2013 and 2012

Other Income

In fiscal year 2013, the Port recognized approximately $19 million of other income. Other income consisted primarily of a $13 million gain from the sale of Commercial Real Estate assets known as Oak- to-Ninth and the affect of changes in estimate of previously expensed legal and environmental matters of $5.8 million.

Additional information on the gain from the sale of assets can be found in Note 4 Changes in Capital Assets in the accompanying notes to the financial statements.

Capital Contributions

Grants are, for the most part, restricted for the acquisition or construction of capital assets.

In fiscal year 2013, grants from government agencies increased approximately $14.7 million or 63.2% from $23.2 million in fiscal year 2012 to $37.9 million in fiscal year 2013. The increase was due to additional grant funding for capital projects in the Aviation Division, primarily funded with the Airport Improvement Program grants for the Runway Safety Area project.

In fiscal year 2012, grants from government agencies decreased approximately $4 million or 15% from $27.3 million in fiscal year 2011 to $23.2 million in fiscal year 2012. This was due to a decrease in grant funding for capital projects in the Aviation Division, primary the completion of the East Apron, Phase 3 project, which was funded with American Recovery and Reinvestment Act of 2009 grants.

Capital Assets (net of depreciation) and Capital Needs Assessment

A summary of Capital Assets, net of depreciation and amortization as of June 30 follows (in thousands):

2013 % Change 2012 % Change 2011 Capital assets: Land and land improvements $ 523,235 0% $ 520,805 0% $ 520,130 Noise easements and air rights 23,493 0% 23,493 86% 12,642 Construction in progress 197,125 13% 175,086 43% 122,528 Buildings and improvements 351,854 -7% 379,059 -8% 409,994 Container cranes 64,704 -8% 69,958 -7% 75,380 Infrastructure 1,001,867 2% 981,923 -5% 1,036,244 Software 10,628 13% 9,394 -11% 10,516 Other equipment 26,179 1% 26,025 -11% 29,366 Total $ 2,199,085 1% $ 2,185,743 -1% $ 2,216,800

Net capital assets increased by approximately $13.3 million or 0.6% in fiscal year 2013, due to an increase in capital assets of $103 million offset by an increase in accumulated depreciation of $89 million. Major additions to capital assets in fiscal year 2013 included electrical infrastructure for the Shore Power Program; BART – Oakland Airport Connector; Airport Terminal 1 renovation; Airport Runway Safety Area project; and overlay of various taxiways.

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Port of Oakland (A Component Unit of the City of Oakland) Management’s Discussion and Analysis (unaudited) June 30, 2013 and 2012

Capital Assets (net of depreciation) and Capital Needs Assessment (continued)

Net capital assets decreased by approximately $31.1 million or 1.4% in fiscal year 2012, due to an increase in capital assets of $65 million offset by an increase in accumulated depreciation of $96 million. Major additions to capital assets in fiscal year 2012 included acquired airport related noise easements; electrical infrastructure for the Shore Power Program; BART – Oakland Airport Connector; Airport Terminal 1 renovation; replacement of pump house 4 and 6; and overlay of various taxiways.

Additional information on the Port’s capital assets can be found in Note 4 Changes in Capital Assets in the accompanying notes to the financial statements.

On June 27, 2013, a Five-Year (fiscal year 2014-2018) Capital Needs Assessment (CNA) in the amount of $658.6 million was presented to the Board of Port Commissioners (Board) for informational purposes. For fiscal year 2014, the Board adopted a capital budget of $105.5 million. The most significant projects in the CNA are:

Aviation: Terminal 1 renovation and retrofit; BART – Oakland Airport Connector; perimeter dike improvements; and the runway safety area.

Maritime: Shore Power Program and Phase 1 redevelopment at the former Oakland Army Base.

Debt Administration

The total debt of the Port decreased approximately $69 million or 5% from $1,376 million in fiscal year 2012 to $1,306 million in fiscal year 2013. The decrease resulted from the refunding of outstanding debt, which was financed through a combination of new refunding bonds and internally generated funds. Specifically, the Port refunded a total of $464 million of outstanding senior lien debt and issued $384 million in refunding bonds. In addition, the Port made principal payments of $31 million on outstanding bonds, commercial paper, and a loan with the Department of Boating and Waterways. These decreases were partially offset by net increase to unamortized bond premium totaling $42 million.

The total debt of the Port decreased $44 million or 3% from $1,420 million in fiscal year 2011 to $1,376 million in fiscal year 2012. The decrease resulted from revenue bond debt payments of $49 million and the refunding of $348 million of 2000 Series K with $346 million of 2011 Series O that was offset by a net increase in bond premium of $7 million.

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Port of Oakland (A Component Unit of the City of Oakland) Management’s Discussion and Analysis (unaudited) June 30, 2013 and 2012

Debt Administration (continued)

The following table summarizes the Port’s outstanding debt as of June 30 (in thousands):

2013 2012 1 2011 1

Bond Indebtedness$ 1,222,706 $ 1,282,738 $ 1,326,764 DBW Loan 5,357 5,564 5,762 Commercial Paper 78,398 87,268 87,268 Total debt $ 1,306,461 $ 1,375,570 $ 1,419,794

1Bond Indebtedness for fiscal years 2012 and 2011 has been restated to conform with GASB 65. Please see page 26 in the “Notes to Financial Statements” for further explanation.

The debt coverage ratios for the fiscal years ending June 30 were as follows:

2013 2012 2011 Senior Lien (Minimum 1.25) 2.49 2.33 2.33 Intermediate Lien (Minimum 1.10) 1.59 1.50 1.47 Combined 1.58 1.50 1.47

The calculation to determine Combined Debt Coverage Ratio includes Senior Lien debt service, California Department of Boating and Waterways debt service, Intermediate Lien debt service and Commercial Paper interest. There is no amortization of principal associated with Commercial Paper. This calculation is not defined and is not a requirement in any Indenture.

Additional information on the Port’s debt activity can be found in Note 5 Debt in the accompanying notes to the financial statements.

Credit Ratings

The Port’s credit ratings as of June 30, 2013 are as follows:

 Standard & Poor’s Rating Services (S&P) underlying rating on the Port’s Senior Lien Bonds is “A+” and the Intermediate Lien Bonds is “A”. The Commercial Paper Notes for Series A, Series B and Series C is “A-1+”, and the Commercial Paper Notes for Series D, Series E and Series F is “A-1”.  Moody’s Investors Service, Inc. (Moody’s) underlying rating on the Port’s Senior Lien Bonds is “A2” and the Intermediate Lien Bonds is “A3”. The Commercial Paper Notes for all series is “P1”.  Fitch Ratings (Fitch) on the Port’s Senior Lien Bonds is “A+” and the Port’s Intermediate Lien Bonds is “A-“. The Commercial Paper Notes for Series A, Series B, and Series C is “F1+” and the Commercial Paper Notes for Series D, Series E, and Series F is “F1”.

On September 14, 2012, S&P raised its rating on the Port’s senior lien revenue bonds to “A+” from “A” and it’s intermediate lien revenue bonds to “A” from “A-”. The outlook is stable. On May 31, 2013 and September 13, 2012, Fitch and Moody’s, respectively, reaffirmed the Port’s rating on its Senior and Intermediate Lien Bonds.

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Port of Oakland (A Component Unit of the City of Oakland) Management’s Discussion and Analysis (unaudited) June 30, 2013 and 2012

Credit Ratings (continued)

On November 7, 2012, Fitch reaffirmed the Port’s ratings on the Commercial Paper Notes for Series A, Series B, and Series C. On May 17, 2013, Fitch reaffirmed the Port’s rating on the Commercial Paper Notes for Series D, Series E, and Series F.

On June 5, 2013, S&P corrected its rating on the Commercial Paper Notes for Series D, Series E and Series F to “A-1” from “A-1+”

Notes to the Basic Financial Statements

The notes to the Port’s basic financial statements can be found on pages 20-58 of this report. These notes provide additional information that is essential to a full understanding of the basic financial statements.

Facts and Conditions Affecting the Port’s Operation

On July 18, 2013 the Oakland Board of Port Commissioners approved a litigation settlement agreement with one of the Port’s major long-term seaport tenants, SSA Terminals, LLC and SSA Terminals (Oakland), LLC (collectively, SSAT). The settlement involved four of the Port’s then seven marine terminals, and allows SSAT to create a 350-acre mega-terminal at the Port’s middle harbor. Under the settlement, SSAT leases two terminals through 2022 at substantially similar rates and conditions, and SSAT assumes the lease on a third terminal through 2016, with one option to extend to 2022. Additionally, the Port agreed to terminate SSAT’s current lease at a fourth terminal effective September 30, 2013.

The settlement involves short-term revenue loss in exchange for longer term revenue growth and stability. Prior to this agreement, the Port was facing the expiration of all four terminal leases in fiscal years ending June 30, 2016 through June 30, 2017.

Contacting the Port’s Financial Management

Requests for additional information about this report, should be addressed to the Financial Services Division, Port of Oakland, 530 Water Street, Oakland, California 94607 or visit the website at www.portofoakland.com.

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Port of Oakland (A Component Unit of the City of Oakland) Statements of Net Position June 30, 2013 and 2012 (dollar amounts in thousands)

2012 2013 restated Assets Current assets: Unrestricted: Cash equivalents $ 179,440 $ 189,064 Accounts receivable (less allowance for doubtful accounts of $1,955 in 2013 and $2,392 in 2012) 34,052 26,693 Prepaid expenses and other assets 4,098 4,167 Total unrestricted current assets 217,590 219,924 Restricted: Cash equivalents 11,702 20,789 Investments 57,896 60,412 Deposits in escrow 2,269 1,446 Receivables - passenger facility charges and customer facility charges 2,596 2,678 Accrued interest receivable 25 222 Total restricted current assets 74,488 85,547 Total current assets 292,078 305,471 Non-current assets: Capital assets: Land and land improvements 523,235 520,805 Noise easements and air rights 23,493 23,493 Construction in progress 197,125 175,086 Buildings and improvements 848,432 851,721 Container cranes 153,775 153,775 Infrastructure 1,650,965 1,574,781 Software 13,391 11,052 Other equipment 78,829 75,973 Total capital assets, at cost 3,489,245 3,386,686 Less accumulated depreciation (1,290,160) (1,200,943) Capital assets, net 2,199,085 2,185,743 Other receivables 43,538 26,805 Other assets 3,148 7,392 Restricted investments - 9,494 Total non-current assets 2,245,771 2,229,434 Total assets 2,537,849 2,534,905

Deferred Outflows of Resources Loss on refunding $ 14,512 $ 14,017 (Continued)

The accompanying notes are an integral part of these financial statements.

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Port of Oakland (A Component Unit of the City of Oakland) Statements of Net Position (continued) June 30, 2013 and 2012 (dollar amounts in thousands)

2012 2013 restated Liabilities Current liabilities: Accounts payable and accrued liabilities $ 35,660 $ 30,926 Retentions on construction contracts 6,085 4,341 Environmental and other 10,832 10,161 Accrued interest 9,732 10,755 Long-term debt, net 48,464 50,100 Liability to City of Oakland 6,044 7,875 Unearned revenue 12,491 15,731 Total current liabilities 129,308 129,889

Non-current liabilities: Retentions on construction contracts 1,705 1,705 Environmental and other 26,170 32,937 Long-term debt, net 1,257,997 1,325,470 Deposits 5,546 6,383 Other post employment benefits 10,453 10,510 Unearned revenue 92,763 99,694 Total non-current liabilities 1,394,634 1,476,699 Total liabilities 1,523,942 1,606,588

Net Position Net investment in capital assets 944,974 882,351 Restricted for construction 14,178 20,553 Unrestricted 69,267 39,430 Total net position $ 1,028,419 $ 942,334

(Concluded)

The accompanying notes are an integral part of these financial statements.

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Port of Oakland (A Component Unit of the City of Oakland) Statements of Revenues, Expenses and Changes in Net Position For the years ended June 30, 2013 and 2012 (dollar amounts in thousands)

2012 2013 restated Operating revenues: Aviation: Terminal rentals and concessions $ 53,234 $ 48,458 Parking fees and ground access 30,548 29,252 Lease rentals 26,779 24,272 Landing fees 28,762 28,340 Utility sales 5,324 3,846 Fueling 3,918 3,985 Other 2,306 2,156 Total aviation operating revenues 150,871 140,309

Maritime: Marine terminal rentals 139,415 140,777 Space assignments and rentals 6,518 5,726 Utility sales 4,015 4,282 Other 1,921 2,203 Total maritime operating revenues 151,869 152,988

Commercial real estate: Lease rentals 9,396 8,786 Parking fees 2,133 2,086 Other 1,249 1,969 Total commercial real estate operating revenues 12,778 12,841 Total operating revenues 315,518 306,138 Operating expenses: Aviation: Materials, supplies, contract services and other 56,644 57,853 Security 13,766 13,468 Maintenance 21,487 22,067 Advertising and promotion 3,243 2,807 Administration 9,229 9,018 Cost of utility sales 1,633 1,444 Depreciation 44,459 45,407 Total aviation operating expenses 150,461 152,064 Maritime: Materials, supplies, contract services and other 13,140 12,918 Maintenance 10,876 10,340 Advertising and promotion 1,474 1,473 Administration 9,523 8,847 Cost of utility sales 2,046 2,130 Depreciation 50,624 49,448 Total maritime operating expenses $ 87,683 $ 85,156

(Continued)

The accompanying notes are an integral part of these financial statements.

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Port of Oakland (A Component Unit of the City of Oakland) Statements of Revenues, Expenses and Changes in Net Position (continued) For the years ended June 30, 2013 and 2012 (dollar amounts in thousands)

2012 2013 restated Operating expenses, continued

Commercial real estate: Materials, supplies, contract services and other $ 6,138 $ 6,325 Maintenance 786 487 Advertising and promotion 156 154 Administration 1,380 1,345 Cost of utility sales 102 102 Depreciation 3,151 3,177 Total commercial real estate operating expenses 11,713 11,590 Total operating expenses 249,857 248,810 Operating income 65,661 57,328

Non-operating revenues (expenses): Interest income 1,095 1,755 Interest expense (59,598) (66,798) Customer facility charges 5,387 5,184 Passenger facility charges 19,924 19,758 Other income (expense) 3,668 (1,752) Gain (loss) on sale (disposal) of capital assets 12,052 (2,333) Total net non-operating expenses (17,472) (44,186)

Increase in net position before capital contributions 48,189 13,142

Capital contributions - Grants from government agencies 37,896 23,217 Increase in net position 86,085 36,359

Net position, beginning of the year 926,000 Adjustment for adoption of GASB 65 (20,025) Net position, beginning of the year, as restated 942,334 905,975 Net position, end of the year $ 1,028,419 $ 942,334

(Concluded)

The accompanying notes are an integral part of these financial statements.

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Port of Oakland (A Component Unit of the City of Oakland) Statements of Cash Flows For the years ended June 30, 2013 and 2012 (dollar amounts in thousands)

2013 2012 Cash flows from operating activities: Receipts from customers and users $ 306,209 $ 307,801 Payments to suppliers (79,199) (80,293) Payments to employees (74,492) (71,543) Other operating cash receipts 2,119 2,465 Net cash provided by operating activities 154,637 158,430

Cash flows from capital and related financing activities: Proceeds from new borrowings 430,213 345,730 Repayments/refunding of debt (495,317) (397,043) Grants from government agencies 29,849 20,107 Interest paid on debt (65,121) (63,256) Purchase of capital assets (110,498) (68,852) Proceeds from sale of capital assets 4,801 - Customer facility charge and passenger facility charge receipts 20,305 20,457 Net cash used in capital and related financing activities (185,768) (142,857)

Cash flows from investing activities: Interest received on investments 1,233 1,465 Purchase of restricted investments (20,010) (16,585) Proceeds from maturity of restricted investments 31,197 9,413 Net cash provided (used) by investing activities 12,420 (5,707)

Net increase (decrease) in cash equivalents (18,711) 9,866

Cash equivalents, beginning of year 209,853 199,987 Cash equivalents, end of year $ 191,142 $ 209,853

(Continued)

The accompanying notes are an integral part of these financial statements.

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Port of Oakland (A Component Unit of the City of Oakland) Statements of Cash Flows (continued) For the years ended June 30, 2013 and 2012 (dollar amounts in thousands)

2013 2012 Reconciliation of operating income to net cash provided by operating activities: Operating income $ 65,661 $ 57,328 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 98,234 98,032 Other 2,119 2,465 Net effects of changes in: Accounts receivable, net of capital grants 688 2,725 Prepaid expenses and other current assets 69 (1,051) Other receivables and assets 1,011 1,740 Accounts payable and accrued liabilities 276 4,346 Liability to City of Oakland (1,831) (9,218) Unearned revenue (10,171) (862) Deposits (837) (200) Environmental and other liabilities (582) 3,125 Net cash provided by operating activities $ 154,637 $ 158,430

Non-cash capital and related financing activities: Acquisition of capital assets in accounts payable and accrued liabilities $ 14,682 $ 10,281 Loss on disposal of capital assets 1,182 2,276 Gain on sale of assets 13,234 - Reclassification of capital assets - 370 Non-cash performance deposits received 582 2,224 Grants - capital contributions 8,047 3,110

(Concluded)

The accompanying notes are an integral part of these financial statements.

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

1. Organization

The Port of Oakland, California (Port) was established in 1927 by the City of Oakland (City) and is included as a component unit in the City’s basic financial statements. The accompanying financial statements include the operations of the Oakland International Airport (Airport or OAK), the maritime facilities, and commercial real estate holdings.

The Port is governed by a seven-member Board of Port Commissioners (Board) whose members are appointed by the City Council, upon nomination by the Mayor. The Board appoints an Executive Director to administer operations. The Port prepares and controls its own budget, administers and controls its fiscal activities, and is responsible for all Port construction and operations. The Port is required by the City Charter to deposit its revenues in the City Treasury. The City Treasurer is responsible for investing and managing such funds.

2. Significant Accounting Policies

Basis of Accounting

The Port’s financial statements are presented on the accrual basis of accounting. Revenues are recognized when they are earned, and expenses are recognized when they are incurred.

Grants from Government Agencies Grants are, for the most part, restricted for the acquisition or construction of capital assets. Such grants are recorded as revenue when all eligibility requirements imposed by the provider have been met.

Passenger Facility Charges

The Port, as authorized by the Federal Aviation Administration (FAA) pursuant to the Aviation Safety and Capacity Expansion Act of 1990 (the Act), as amended, currently imposes a Passenger Facility Charge (PFC) of $4.50 for each enplaning passenger at the Airport. Under the Act, air carriers are responsible for the collection of PFC charges and are required to remit PFC revenues to the Port in the following month after they are recorded by the air carrier. The Port’s most recent application was approved by the FAA on January 11, 2012. The current authority to impose PFCs is estimated to end May 1, 2023.

PFC revenues, including any interest earned thereon, are restricted solely to finance allowable costs of new airport planning and development projects as defined and authorized by the FAA. PFC revenues may be used to pay debt service and related expenditures associated with FAA approved projects and the Port has received FAA approval to pay certain debt service if debt proceeds are used for qualifying projects. PFC revenues are recorded as non-operating revenue and any unspent PFC revenues are recorded as restricted cash.

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147 BUDGET & FINANCE Tab 4.2

Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Customer Facility Charges

Under Section 1936 of the California Civil Code, and pursuant to a Port ordinance effective January 2009, the rental car companies operating at the Airport are required to collect from the rental customers and remit to the Port a $10-per-transaction Customer Facility Charge (CFC). The revenues from CFCs collected by the Port are funding the shuttle bus operations between the terminal and rental car facility. CFC revenues are recorded as non-operating revenue and any unspent CFC revenues are recorded as restricted cash.

Net Position

Net position represents the residual interest in the Port's assets and deferred outflows of resources after liabilities and deferred inflows of resources are deducted. Net position consists of three sections: net investment in capital assets, restricted for construction, and unrestricted. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balance of debt that is attributable to the acquisition, construction, or improvement of those assets. Deferred outflows of resources or deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt are included in this component of net position. The restricted component of net position consists of restricted assets reduced by liabilities related to those assets. As of June 30, 2013 and 2012, the statement of net position reported $14,178,000 and $20,553,000, respectively, as restricted for construction.

Cash Equivalents

The Port considers highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Port's cash and investments in the City Treasury are, in substance, demand deposits and are considered cash equivalents.

Investments

The Port reports its investments at fair market value in the accompanying financial statements and the corresponding change in fair market value of investments is reported in the year in which the change occurs. Fair market value is based upon quoted market prices.

Restricted Assets

Assets whose use is restricted to specific purposes by bond indenture or otherwise are segregated on the statements of net position.

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148 BUDGET & FINANCE Tab 4.2

Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Capital Assets Capital assets are stated at cost and it is the policy of the Port to capitalize all expenses related to capital assets greater than $5,000. Interest costs applicable to qualifying assets are capitalized as part of the cost of the assets. Interest earned on temporary investment of the proceeds from qualifying tax-exempt debt is offset against interest costs capitalized. Depreciation expense is calculated using the straight-line method over the following estimated useful lives of the assets:

Buildings and improvements 5 to 50 years Container cranes 25 years Infrastructure 10 to 50 years Other equipment 5 to 10 years Intangible assets 20 years

Tenant improvements paid for by the tenants and owned by the Port are recorded as capital assets with an offsetting credit to unearned revenue. The asset is amortized over the shorter of the life of the lease or the life of the asset and the unearned revenue is amortized over the same terms.

Intangible assets which are identifiable are recorded as capital assets. The Port has identified noise easements, air rights and computer software development costs as intangible assets. Intangible assets not having indefinite useful lives are amortized over the estimated useful life of the asset.

Other Receivables

Other receivable includes future lease receipts from a fifty-year finance lease agreement and a note receivable associated with the sale and lease of the Oak-to-Ninth property as discussed in Note 4.

Loss on Refunding

The loss on refunding at the time of a refunding is reported as deferred outflow of resources and is amortized as interest expense over the shorter of the remaining life of the refunded bonds or life of the new bonds.

Unearned Revenue

Unearned interest revenue and prepaid rent related to tenant leases are deferred and amortized principally on the straight-line method over the life of the remaining lease term.

Compensated Absences

The Port accrues employee benefits, including accumulated vacation and sick leave, as liabilities in the period the benefits are earned.

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149 BUDGET & FINANCE Tab 4.2

Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Operating Revenues and Expenses

Operating revenues and expenses consist of those revenues and expenses that result from the ongoing principal operations of the Port. Operating revenues consist primarily of charges for services. Non-operating revenues and expenses consist of those revenues and expenses that are related to financing and investing activities. When an expense is incurred for purposes for which there are both restricted and unrestricted assets available, it is the Port’s policy to first utilize available restricted assets and then to utilize unrestricted assets.

Allocation of Expenses to the Port Businesses

The Port records to each of its revenue divisions (Aviation, Maritime, and Commercial Real Estate) expenses directly related to those operations. In addition, the Port annually allocates indirect expenses to these divisions based on an expense allocation methodology. Allocated expenses include general operating expenses, maintenance, advertising and promotion, and administrative expenses.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflow/inflow of resources, and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

New Accounting Pronouncements Adopted

Governmental Accounting Standards Board (GASB) Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, incorporates into the GASB’s authoritative literature certain accounting and financial reporting guidance that is included in Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board Opinions, and Accounting Research Bulletins of the AICPA Committee on Accounting Procedures which does not conflict with or contradict other GASB pronouncements. The provisions of this statement are effective for financial statements for periods beginning after December 15, 2011.

GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources and renames the resulting measure as net position rather than net assets. The provisions of this statement are effective for financial statements for periods beginning after December 15, 2011. As of July 1, 2011, the Port adopted the above GASB standards, which did not have a significant impact on its financial statements.

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150 BUDGET & FINANCE Tab 4.2

Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

New Accounting Pronouncements Adopted (continued)

GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, clarifies the appropriate reporting of deferred outflows of resources and deferred inflows of resources to ensure consistency in financial reporting. The statement also recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. During fiscal year 2013, the Port adopted the provisions of GASB Statement No. 65 and restated net position as of July 1, 2011 in the amount of $20,025,000 to write off $16,245,000 of unamortized bond issuance costs previously reported as an asset and $3,780,000 of bond issuance costs included in the unamortized loss on refunding previously reported as a contra liability. The remaining unamortized loss on refunding of $14,017,000 was reclassified from a contra liability to deferred outflows of resources. During fiscal year 2012, interest expense was increased by $1,088,000.

New Accounting Pronouncements Not Yet Adopted

In June 2012, GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions. The significant changes in this statement address (1) the measurement of pension obligations that derive liabilities (or assets); and (2) the calculations behind pension expense. GASB 68 also covers:

 Deferred outflows and deferred inflows of resources;  Methods and assumptions of pension calculations, including how to calculate the discount rate to be used and how to attribute the pension liability to various periods;  Note disclosure and required supplementary information; and  Defined contribution pension plan reporting.

Application of this statement is effective for the Port’s fiscal year ending June 30, 2015.

Reclassification

Certain 2012 amounts have been reclassified to conform to the 2013 presentation.

3. Cash, Cash Equivalents, Investments, and Deposits

The Port's cash, cash equivalents, investments and deposits in escrow consisted of the following at June 30 (in thousands): 2013 2012

U.S. Treasury Notes $ 57,896 $ 69,906 Government Securities Money Market Mutual Funds 120 2,914 City Investment Pool 190,396 206,313 Deposits in Escrow 2,269 1,446 Bank Deposits and Cash on Hand 626 626 $ 251,307 $ 281,205

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151 BUDGET & FINANCE Tab 4.2

Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Deposits in Escrow

Deposits in escrow consist of amounts received from construction contractors that are deposited into an escrow account in-lieu of retention withheld from construction progress billings. Interest on these deposits accrues to the contractor.

Investments

Under the City Charter, all cash receipts from the operations of the Port are deposited in the City Investment Pool. These funds are invested by the City, pursuant to an Investment Policy which it administers and reviews annually. For this reason, the Port does not maintain a policy of its own, and relies on the City Investment Policy to mitigate the risks described below.

Senior Lien Bonds reserves are on deposit with the Senior Lien Bonds trustee. The investment of funds held by the Senior Lien Bonds trustee is governed by the Senior Trust Indenture and is currently invested in either 1) U.S. Treasury Notes or 2) Government Securities Money Market Mutual Funds. There were no investments pertaining to the Intermediate Lien Debt.

At June 30, 2013, the Port had the following investments (in thousands):

Maturity

Credit Rating per Less than Fair Value Moody's 1 Year 1-5 Years U.S. Treasury Notes $ 57,896 Aaa $ - $ 57,896 Government Securities Money Market Mutual Funds 120 Aaa 120 - City Investment Pool 190,396 Not rated 190,396 - Total Investments $ 248,412 $ 190,516 $ 57,896

At June 30, 2012, the Port had the following investments (in thousands):

Maturity

Credit Rating per Less than Fair Value Moody's 1 Year 1-5 Years U.S. Treasury Notes $ 69,906 Aaa $ 60,412 $ 9,494 Government Securities Money Market Mutual Funds 2,914 Aaa 2,914 - City Investment Pool 206,313 Not rated 206,313 - Total Investments $ 279,133 $ 269,639 $ 9,494

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152 BUDGET & FINANCE Tab 4.2

Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Investments Authorized by Debt Agreements

The following are the types of investments generally allowed under the Senior Trust Indenture and the Intermediate Trust Indenture dated as of October 1, 2007 (Intermediate Trust Indenture, together with the Senior Trust Indenture, the Trust Indentures): U.S. Government Securities, U.S. Agency Obligations, obligations of any State in the U.S., prime commercial paper, FDIC insured deposits, certificates of deposit/banker’s acceptances, money market mutual funds, long or medium-term corporate debt, repurchase agreements, state-sponsored investment pools, investment contracts, and forward delivery agreements.

Interest Rate Risk

This risk represents the possibility that an interest rate change could adversely affect an investment’s fair market value.

In order to manage interest rate risk:

 Proceeds from bonds are invested in permitted investments, as stated in the Trust Indentures, with short term maturities.  The deposits with the City Treasury pursuant to the City’s Investment Policy and Section 53601 of the State of California Government Code, limits certain investments to short- term maturities of 360 days and 270 days, respectively. Also, Section 53601 limits the maximum maturity of any investment to be no longer than 5 years unless authority for such investment is expressly granted in advance by the City Council or authorized by bond covenants.

Credit Risk

This risk represents the possibility that the issuer/counterparty to an investment will be unable to fulfill its obligation.

In order to manage credit risk:

 Provisions of the Trust Indentures prescribe restrictions on the types of permitted investments of the monies held by the trustee in the funds and accounts created under the Trust Indentures, including agreements or financial institutions that must meet certain ratings, such as certain investments that must be rated in either of the two highest ratings by S&P and Moody’s.  The deposits with the City Treasury are invested in short-term debt that is rated at least A-1 by S&P, P-1 by Moody’s or F-1 by Fitch Ratings. Long-term debt shall be rated at least A- by S&P, A3 by Moody’s, and A- by Fitch Ratings.

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153 BUDGET & FINANCE Tab 4.2

Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Concentration of Credit Risk

The Trust Indentures place no limit on the amount the Port may invest in any one issuer.

Port revenues are deposited in the City Treasury. These and all City funds are pooled and invested in the City Investment Pool. The City has adopted an investment policy that provides for the following:

 The maximum maturity for any one investment may not exceed 5 years.  No more than 5 percent of the total assets of the investments held by the City may be invested in the securities of any one issuer except the obligations of the United States government or government-sponsored enterprises.  Permitted investments include U.S. treasury securities, federal agency and instrumentalities, banker’s acceptances, commercial paper, asset-backed commercial paper, local government investment pools, medium-term notes, negotiable certificates of deposit, repurchase agreements, reverse repurchase agreements, secured obligations and agreements, certificates of deposit, money market mutual funds, state investment pool (Local Agency Investment Fund), local City/agency bonds and State of California obligations, and other local agency bonds.  All investments are to be secured through third party custody and safekeeping procedures. All securities purchased from dealers and brokers are held in safekeeping by the City’s custodial bank, which establishes ownership by the City.  Additional information regarding deposit custodial credit, interest and credit risks, and securities lending transactions of the City Investment Pool is presented in the notes of the City’s basic financial statements. Requests for financial information should be addressed to the Finance and Management Agency, Accounting Division, City of Oakland, 150 Frank H. Ogawa Plaza, Suite 6353, Oakland, California 94612-2093.

Custodial Credit Risk

Custodial credit risks is the risk that, in the event of the failure of a depository financial institution or counterparty to a transaction, the Port will not be able to recover the value of its investment or collateral securities that are in possession of another party.

To protect against custodial credit risk:

 All securities owned by the Port under the terms of the Trust Indentures are held in the name of the Port for safekeeping by a third party bank trust department, acting as an agent for the Port. The Port had investments held by a third party bank trust department in the amount of $58,016,000 and $72,820,000 at June 30, 2013 and 2012, respectively.  All securities owned by the Port and invested by the City are held in the name of the City for safekeeping by a third party bank trust department, acting as an agent for the City under the terms of the Custody Agreements. The Port had $190,396,000 and $206,313,000 invested in the City Investment Pool at June 30, 2013 and 2012, respectively.

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154 BUDGET & FINANCE Tab 4.2

Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Custodial Credit Risk (continued)

The carrying amount of the Port’s deposits in escrow was $2,269,000 at June 30, 2013 and $1,446,000 at June 30, 2012. Of this amount, bank balances and escrow deposits of $250,000 on June 30, 2013 and on June 30, 2012, are insured or collateralized with securities held by the pledging financial institution’s trust department in the Port’s name and the remaining balance of $1,839,000 as of June 30, 2013 and $1,196,000 as of June 30, 2012, was exposed to custodial credit risk by not being insured or collateralized.

4. Changes in Capital Assets

A summary of changes in capital assets for the year ended June 30, 2013, is as follows (in thousands):

Beginning Transfer of Ending Balance Completed Balance July 1, 2012 Additions Retirements Construction June 30, 2013 Capital assets not being depreciated Land and land improvements $ 520,805 $ - $ (762) $ 3,192 $ 523,235 Noise easements and air rights 23,493 - - - 23,493 Construction in progress 175,086 116,424 (3,331) (91,054) 197,125

Total capital assets not being depreciated 719,384 116,424 (4,093) (87,862) 743,853

Capital assets being depreciated Buildings and improvements 851,721 56 (7,008) 3,663 848,432 Container cranes 153,775 - - - 153,775 Infrastructure 1,574,781 - (1,130) 77,314 1,650,965 Software 11,052 - - 2,339 13,391 Other equipment 75,973 163 (1,853) 4,546 78,829

Total capital assets being depreciated 2,667,302 219 (9,991) 87,862 2,745,392

Less accumulated depreciation for Buildings and improvements (472,661) (30,088) 6,171 - (496,578) Container cranes (83,817) (5,254) - - (89,071) Infrastructure (592,858) (57,298) 1,058 - (649,098) Software (1,658) (1,105) - - (2,763) Other equipment (49,949) (4,489) 1,788 - (52,650)

Total accumulated depreciation (1,200,943) (98,234) 9,017 - (1,290,160)

Total being depreciated, net 1,466,359 (98,015) (974) 87,862 1,455,232

Total capital assets, net $ 2,185,743 $ 18,409 $ (5,067) $ - $ 2,199,085

On June 10, 2013, the Port completed the combined sale and lease of approximately 64-acres of land known as Oak-to-Ninth. Buildings, improvements, infrastructure and certain land was transferred to a developer in exchange for approximately $18,000,000, of which $4,500,000 was paid in cash and $13,500,000 financed with a promissory note payable in full to the Port on or before October 1, 2015. The net book value of the assets transferred was approximately $4,977,000.

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155 BUDGET & FINANCE Tab 4.2

Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Changes in Capital Assets (continued)

A summary of changes in capital assets for the year ended June 30, 2012, is as follows (in thousands):

Beginning Transfer of Ending Balance Completed Balance July 1, 2011 Additions Retirements Construction June 30, 2012 Capital assets not being depreciated Land and land improvements $ 520,130 $ 512 $ 163 $ - $ 520,805 Noise easements and air rights 12,642 - - 10,851 23,493 Construction in progress 122,528 68,688 (2,292) (13,838) 175,086

Total capital assets not being depreciated 655,300 69,200 (2,129) (2,987) 719,384

Capital assets being depreciated Buildings and improvements 851,384 - 65 272 851,721 Container cranes 153,775 - - - 153,775 Infrastructure 1,574,958 - (1,401) 1,224 1,574,781 Software 11,069 - (17) - 11,052 Other equipment 74,742 51 (311) 1,491 75,973

Total capital assets being depreciated 2,665,928 51 (1,664) 2,987 2,667,302

Less accumulated depreciation for Buildings and improvements (441,390) (32,431) 1,160 - (472,661) Container cranes (78,395) (5,422) - - (83,817) Infrastructure (538,714) (54,144) - - (592,858) Softeware (553) (1,105) - - (1,658) Other equipment (45,376) (4,930) 357 - (49,949)

Total accumulated depreciation (1,104,428) (98,032) 1,517 - (1,200,943)

Total being depreciated, net 1,561,500 (97,981) (147) 2,987 1,466,359

Total capital assets, net $ 2,216,800 $ (28,781) $ (2,276) $ - $ 2,185,743

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156 Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

5. Debt Long-term debt consists of the following at June 30, 2013 and 2012 (in thousands): Fiscal Beginning Ending Principal Interest Maturity Original Balance Balance Due Within Rate Year Amount July 1, 2012 Additions Reductions June 30, 2013 One Year Senior Lien Bonds 2002 Revenue Bonds Series L 5.00-5.50 2033 401,530 $ 357,025 $ - $ 357,025 $ - $ - 2002 Revenue Bonds Series M 4.00-5.00 2021 218,470 27,660 - 27,660 - - 2002 Revenue Bonds Series N 3.25-5.00 2023 121,150 79,135 - 79,135 - - 2011 Revenue Bonds Series O 2.00-5.125 2031 345,730 334,550 - 6,390 328,160 6,635 2012 Revenue Bonds Series P 2.00-5.00 2033 380,315 - 380,315 - 380,315 2,985 2012 Revenue Bonds Series Q 2.00 2014 3,575 - 3,575 - 3,575 3,575 Total Senior Lien Bonds 1,470,770 798,370 383,890 470,210 712,050 13,195 Dept. of Boating and Waterway (DBW) Loan Small Craft Harbor Revenue Bonds, Series 1993 4.50 2030 7,176 5,564 - 207 5,357 217 32 Intermediate Lien Bonds 2007 Revenue Bonds Series A 4.00-5.00 2030 242,075 205,500 - 15,420 190,080 16,210 2007 Revenue Bonds Series B 4.00-5.00 2030 182,450 180,530 - 610 179,920 12,040 2007 Revenue Bonds Series C 5.00 2020 78,565 78,565 - - 78,565 - Total Intermediate Lien Bonds 503,090 464,595 - 16,030 448,565 28,250 Commercial Paper1

2010 Series A, B, C Notes 0.13-0.20 2016 N/A 63,398 - - 63,398 - BUDGET &FINANCETab4.2 2010 Series D, E, F Notes 0.19-0.23 2016 N/A 23,870 - 8,870 15,000 2 Total Commercial Paper 87,268 - 8,870 78,398 2 Sub-Total 1,355,797 383,890 495,317 1,244,370 41,664 Unamortized bond premium 19,773 46,323 4,005 62,091 6,800 Total Debt 1,375,570 430,213 499,322 1,306,461 $ 48,464 Current maturities of long-term debt (50,100) (57,334) (58,970) (48,464) Total Debt - long-term portion $ 1,325,470 $ 372,879 $ 440,352 $ 1,257,997

1As of June 30, 2013, the Port has authorization to issue an aggregate principal amount of commerical paper notes up to $300 million.

157 Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Debt (continued) Long-term debt consists of the following at June 30, 2012 and 2011 (in thousands): Beginning Ending Fiscal Balance Balance Principal Interest Maturity Original July 1, 2011 June 30, 2012 Due Within Rate Year Amount restated Additions Reductions restated One Year Senior Lien Bonds 2000 Revenue Bonds Series K 5.10-5.875 % 2031$ 400,000 $ 348,280 $ - $ 348,280 $ - $ - 2002 Revenue Bonds Series L 5.00-5.50 2033 401,530 357,025 - - 357,025 - 2002 Revenue Bonds Series M 4.00-5.00 2021 218,470 42,220 - 14,560 27,660 15,245 2002 Revenue Bonds Series N 3.25-5.00 2023 121,150 86,705 - 7,570 79,135 7,940 2011 Revenue Bonds Series O 1.50-5.125 2031 345,730 - 345,730 11,180 334,550 6,390 Total Senior Lien Bonds 1,486,880 834,230 345,730 381,590 798,370 29,575 Dept. of Boating and Waterway (DBW) Loan Small Craft Harbor Revenue Bonds, Series 1993 4.50 2030 7,176 5,762 - 198 5,564 207

33 Intermediate Lien Bonds 2007 Revenue Bonds Series A 4.00-5.00 2030 242,075 220,170 - 14,670 205,500 15,420 2007 Revenue Bonds Series B 4.00-5.00 2030 182,450 181,115 - 585 180,530 610 2007 Revenue Bonds Series C 5.00 2020 78,565 78,565 - - 78,565 - Total Intermediate Lien Bonds 503,090 479,850 - 15,255 464,595 16,030 Commercial Paper1 2010 Series A, B, C Notes 0.10-0.21 2014 N/A 63,398 - - 63,398 -

2010 Series D, E, F Notes 0.16-0.20 2013 N/A 23,870 - - 23,870 8 BUDGET &FINANCETab4.2 Total Commercial Paper 87,268 - - 87,268 8 Sub-Total 1,407,110 345,730 397,043 1,355,797 45,820

Unamortized bond premium 12,684 10,906 3,817 19,773 4,280 Total Debt 1,419,794 356,636 400,860 1,375,570 $ 50,100 Current maturities of long-term debt (49,843) (257) - (50,100) Total Debt - long-term portion $ 1,369,951 $ 356,379 $ 400,860 $ 1,325,470

1As of June 30, 2012, the Port has authorization to issue an aggregate principal amount of commerical paper notes up to $300 million.

158 BUDGET & FINANCE Tab 4.2

Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Debt Service

The Port’s long-term debt consists primarily of tax-exempt bonds. The majority of the Port’s outstanding bonds are revenue bonds which are secured by Pledged Revenues of the Port. Pledged Revenues are substantially all revenues and other cash receipts of the Port, including, without limitation, amounts held in the Port Revenue Fund with the City, but excluding amounts received from certain taxes, certain insurance proceeds, special facilities revenues, and certain other gifts, fees, and grants that are restricted by their terms to purposes inconsistent with the payment of debt service.

Pledged Revenues do not include cash received from PFCs or CFCs unless projects included in a financing are determined to be PFC or CFC eligible and bond proceeds are expended on such eligible projects and the Port elects to pledge PFCs or CFCs as supplemental security to such applicable bonds. Currently, the Port has no bonds for which PFCs or CFCs are pledged.

The Port did not capitalize any interest cost in fiscal year 2013 nor in 2012.

On October 10, 2012, the Port issued $380,315,000 of 2012 Series P (AMT) together with certain additional funds provided by the Port to refund and retire $357,025,000 of 2002 Series L and $79,135,000 of 2002 Series N. In addition, the Port issued $3,575,000 of 2012 Series Q (non- AMT) together with certain additional funds provided by the Port to refund and retire $27,660,000 of 2002 Series M. The final maturity date for the 2012 Series P is May 1, 2033 and for 2012 Series Q is May 1, 2014. The gross debt service savings through fiscal year 2033 is $63,573,000 with a present value savings of $60,113,000. In addition, the Port recorded a deferred loss on refunding of $1,809,000.

On August 16, 2011, the Port issued $345,730,000 of 2011 Series O to refund and retire 2000 Series K. The gross debt service savings through fiscal year 2033 is $28,026,000 with a present value savings of $29,206,000. In addition, the Port recorded a deferred loss on refunding of $2,492,000.

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159 BUDGET & FINANCE Tab 4.2

Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Debt Service (continued)

The Port’s required debt service payments on its Senior Lien Bonds and Intermediate Lien Bonds are due each May 1 and November 1 through May 1, 2033. The California Department of Boating and Waterways loan is due each August 1 through August 1, 2029. Commercial Paper has been classified as long-term debt because the Port has the intent and ability to continue to refinance this debt. The Port’s required debt service payment for the outstanding long-term debt for years ending June 30 are as follows (in thousands):

Year Ending Principal Interest Total 2014 $ 61,797 $ 61,953 $ 123,750 2015 68,890 58,892 127,782 2016 71,654 54,469 126,123 2017 56,658 50,344 107,002 2018 53,208 47,798 101,006 2019 - 2023 290,971 199,574 490,545 2024 - 2028 357,690 120,463 478,153 2029 - 2033 283,502 34,815 318,317

Total $ 1,244,370 $ 628,308 $ 1,872,678

Although the Port intends to refinance the Commercial Paper debt in the future, for purposes of this schedule, Commercial Paper debt is amortized over the fiscal years 2014-2017 pursuant to the “Term Loan” provisions of the Commercial Paper Reimbursement Agreements.

Types of Debt and Priority of Payment

Senior Lien Bonds

On October 10, 2012, the 2002 Series L, 2002 Series M, and 2002 Series N were refunded with 2012 Series P and 2012 Series Q. 2011 Series O, 2012 Series P, and 2012 Series Q (collectively, the Senior Lien Bonds) are issued under the Senior Trust Indenture and are paid from Pledged Revenues first.

As long as any Senior Lien Bonds remain outstanding, the Port has covenanted to collect rates, tolls, fees, rentals and charges so that Pledged Revenues in each fiscal year will be sufficient to pay all of the following amounts: (i) the sum of principal and interest on the outstanding Senior Lien Bonds; (ii) all other payments required for compliance with terms of the Senior Trust Indenture including, but not limited to, required deposits to any Reserve Fund; (iii) all other payments necessary to meet ongoing legal obligations to be paid from Pledged Revenues; and (iv) operation and maintenance expenses of the Port. In addition, payment of principal and interest on the Senior Lien Bonds when due is secured by a reserve fund held by the trustee and invested in U.S. Treasury Notes.

The Port has also covenanted in the Senior Trust Indenture that Net Pledged Revenue (Revenues less the Operation and Maintenance Expenses) will be equal to at least 125% of actual debt service for the Senior Lien Bonds (Senior Lien Debt Coverage Ratio).

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160 BUDGET & FINANCE Tab 4.2

Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

California Department of Boating and Waterways (DBW) Loan

The DBW Loan is subordinate to the Senior Lien Bonds but superior to the Intermediate Lien Bonds and the Port’s Commercial Paper Notes with respect to the Pledged Revenues. The Port turned over the operation of its marina, financed, in part, with DBW Loans, to a private company through a fifty-year capital lease in May 2004. The only DBW Loan outstanding as of June 30, 2013, was Series 1993 with a balance of $5,357,000.

Intermediate Lien Bonds

The 2007 Series A, Series B and Series C Bonds (collectively, the Intermediate Lien Bonds) issued under the Intermediate Trust Indenture are next in payment priority. The Intermediate Lien Bonds are paid from the Intermediate Lien Pledged Revenues. The Intermediate Lien Pledged Revenues are the Pledged Revenues after payment first, of all amounts payable for any Senior Lien Bonds and second, any debt service requirements payable on the DBW Loan. Payment of principal and interest on the Intermediate Lien Bonds when due is secured by a debt service reserve surety policy, as well as being insured by municipal bond insurance policies.

The Port covenanted in the Intermediate Trust Indenture that Net Pledged Revenues will be equal to at least 110% of the actual debt service becoming due and payable on the combined Intermediate Lien Bonds, Senior Lien Bonds, and DBW Loan (Intermediate Lien Debt Coverage Ratio).

Commercial Paper Notes

Commercial Paper Notes (CP Notes) have the lowest payment priority. The Board authorized a $150,000,000 Commercial Paper program in 1998 and a further $150,000,000 was authorized in 1999. The maximum maturity of the CP Notes is 270 days and the maximum interest rate is 12%. The Port has classified the CP Notes as long term debt as the Port intends and has the ability to reissue CP Notes until the expiration of the two irrevocable Letters of Credit (LOC), discussed below. Interest income paid to the holders of the CP Notes may fall under one of three tax treatments: tax-exempt Alternative Minimum Tax (AMT), tax-exempt non-AMT and taxable.

As of June 30, 2013, the CP Notes, backed by one of two separate irrevocable LOC which were originally issued on August 2, 2010, are as follows:

 Wells Fargo Bank, National Association (Wells) with a maximum stated amount of $163,315,000 (principal of $150,000,000 and interest of $13,315,000) and a termination date of August 2, 2013. The outstanding balance on the CP Notes issued under this LOC is $63,398,000 on June 30, 2013 and on June 30, 2012.

 JPMorgan Chase Bank, National Association (JPMorgan) with a maximum stated amount of $54,438,000 (principal of $50,000,000 and interest of $4,438,000) and an original termination date of August 2, 2012, that was extended to August 1, 2014. The outstanding balance on the CP Notes issued under this LOC is $15,000,000 and $23,870,000 on June 30, 2013 and 2012, respectively.

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Commercial Paper Notes (continued)

On July 1, 2013, both Wells and JPMorgan will each have a LOC with a maximum stated amount of $108,876,713 (principal of $100,000,000 and interest of $8,876,713) and a termination date of June 30, 2016.

The Port covenants in the Letter of Credit and Reimbursement Agreements with Wells and JPMorgan that the Intermediate Lien Debt Coverage Ratio will equal to at least 110%.

Priority of Payment

The following are the priority of payment tables (in thousands):

FY 2013 FY 2013 Total Debt Debt Net Maturity Service to Principal Pledged Date Maturity and Interest Revenues*

Total Net Pledged Revenues $ 170,128

Senior Lien Bonds: 2002 Revenue Bonds Series L 11/1/2032 $ - $ 9,150 2002 Revenue Bonds Series M 11/1/2020 - 15,848 2002 Revenue Bonds Series N 11/1/2022 - 9,890 2011 Revenue Bonds Series O 5/1/2031 511,908 23,081 2012 Revenue Bonds Series P 5/1/2033 643,117 10,254 2012 Revenue Bonds Series Q 5/1/2014 3,646 40 Subtotal Senior Lien Bonds 1,158,671 68,263 (68,263) Net Pledged Revenues Remaining after Sr. Lien 101,865 Dept. of Boating and Waterways Loan 8/1/2029 7,779 457 (457) Net Pledged Revenues Remaining after DBW 101,408 Intermediate Lien Bonds: 2007 Series A 11/1/2029 282,856 25,300 2007 Series B 11/1/2029 236,974 9,320 2007 Series C 11/1/2019 96,587 3,928 Subtotal Intermediate Lien Bonds 616,417 38,548 (38,548)

Net Pledged Revenues Remaining after Int. Lien 62,860 Commercial Paper Notes 89,811 156 (156) Net Pledged Revenues Remaining after CP Notes $ 62,704 Total $ 1,872,678 $ 107,424

* Net Pledged Revenues is Revenues less Operation and Maintenance Expenses (not including operating expenses paid with CFC funds, $5,147,000) plus Interest Earned (not including interest earned on PFC and CFC funds, $51,000 and $8,000 respectively).

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Priority of Payment (continued)

FY 2012 Total Debt Debt FY 2012 Maturity Service to Principal Net Pledged Date Maturity and Interest Revenues**

Total Net Pledged Revenues $ 161,254

Senior Lien Bonds: 2002 Revenue Bonds Series L 11/1/2032 $ 638,542 $ 18,300 2002 Revenue Bonds Series M 11/1/2020 29,512 16,105 2002 Revenue Bonds Series N 11/1/2022 100,112 11,647 2011 Revenue Bonds Series O 5/1/2031 534,989 23,121 Subtotal Senior Lien Bonds 1,303,155 69,173 (69,173)

Net Pledged Revenues Remaining after Sr. Lien 92,081

Dept. of Boating and Waterways Loan 8/1/2029 8,236 457 (457)

Net Pledged Revenues Remaining after DBW 91,624

Intermediate Lien Bonds: 2007 Series A 11/1/2029 308,155 25,298 2007 Series B 11/1/2029 246,294 9,319 2007 Series C 11/1/2019 100,515 3,928 Subtotal Intermediate Lien Bonds 654,964 38,545 (38,545)

Net Pledged Revenues Remaining after Int. Lien 53,079

Commercial Paper Notes* 94,942 159 (159)

Net Pledged Revenues Remaining after CP Notes $ 52,920

Total $ 2,061,297 $ 108,334

* The Total Debt Service to Maturity for Commercial Paper has been restated to incorporate the payment of both principal and interest on outstanding Commercial Paper debt pursuant to the “Term Loan” provision of the Commercial Paper Reimbursement Agreements. ** Net Pledged Revenues is Revenues less Operation and Maintenance Expenses (not including operating expenses paid with CFC funds, $4,217,000) plus Interest Earned (not including interest earned on PFC and CFC funds, $66,000 and $12,000 respectively).

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Bond Premium (Discount)

The Port amortizes the original issue discount or premium over the life of each bond issue. The unamortized amount for each Port issue is as follows (in thousands): 2013 2012 (Discount) (Discount) Bond Issue Premium Premium Senior Lien Bonds: 2002 Series L $ - $ (5,097) 2002 Series M - 92 2002 Series N - 1,545 2011 Series O 7,172 8,852 2012 Series P 42,754 - 2012 Series Q 49 - Subtotal Senior Lien Bonds 49,975 5,392 Intermediate Lien Bonds: 2007 Series A 3,866 4,500 2007 Series B 5,290 6,286 2007 Series C 2,960 3,596 Subtotal Intermediate Lien Bonds 12,116 14,382 Commercial Paper - (1) Total $ 62,091 $ 19,773

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

6. Environmental and Other Liabilities

Changes in environmental and other liabilities for the years ended June 30, 2013 and 2012 are as follows (in thousands):

Beginning Ending Amounts Balance Balance Due Within July 1, 2012 Additions Reductions June 30, 2013 One Year General liability $ 5,663 $ - (5,373) $ 290 $ 290 Accrued vacation, sick leave and compensatory time 6,023 2,799 (1,341) 7,481 5,024 Pollution liability 21,227 4,432 (7,985) 17,674 4,018 Workers' compensation 8,190 2,632 (1,192) 9,630 1,500 Other long-term liabilities 1,995 472 (540) 1,927 -

Total $ 43,098 $ 10,335 $ (16,431) $ 37,002 $ 10,832

Beginning Ending Amounts Balance Balance Due Within July 1, 2011 Additions Reductions June 30, 2012 One Year General liability $ 3,918 $ 4,685 $ (2,940) $ 5,663 $ - Accrued vacation, sick leave and compensatory time 6,595 1,653 (2,225) 6,023 4,370 Pollution liability 20,710 5,715 (5,198) 21,227 4,291 Workers' compensation 6,900 2,593 (1,303) 8,190 1,500 Other long-term liabilities 1,850 254 (109) 1,995 - Total $ 39,973 $ 14,900 $ (11,775) $ 43,098 $ 10,161

7. Leases

A major portion of the Port’s capital assets are leased to others. Leased assets include maritime facilities, aviation facilities, office and commercial space, and land. The majority of the Port’s leases are classified as operating leases.

Certain maritime facilities are leased under agreements that provide the tenants with preferential, but nonexclusive, use of the facilities. These leases provide for rentals based on gross revenues of the leased premises, or in the case of marine terminal facilities, on annual usage of the facilities. The leases generally provide for minimum rentals, and certain preferential assignments provide for both minimum and maximum rentals.

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Leases (continued)

A summary of revenues from long-term leases for years ended June 30 is as follows (in thousands):

2013 2012

Minimum non-cancelable rentals, including preferential assignments $ 178,085 $ 170,943 Contingent rentals in excess of minimums 16,272 18,695 Secondary use of facilities leased under preferential assignments - 216 $ 194,357 $ 189,854

The Port and Ports America Outer Harbor Terminal, LLC, a private company, entered into a long- term concession and lease agreement on January 1, 2010, for the operation of Berths 20-24 for 50 years. A $60 million upfront fee was paid to the Port in fiscal year 2010. At June 30, 2013 and 2012, the unamortized net upfront fee was approximately $50 million and $51 million, respectively. At June 30, 2013, the amounts classified as short-term and long-term unearned revenue were $1,074,000 and $48,856,000, respectively. At June 30, 2012, the amounts classified as short-term and long-term unearned revenue were $1,074,000 and $49,930,000, respectively.

Minimum future rental revenues for years ending June 30 under non-cancelable operating leases having an initial term in excess of one year are as follows (in thousands):

2014 $ 166,746 2015 164,079 2016 162,643 2017 142,566 2018 178,585 2019-2023 488,001 2024-2028 262,325 2029-2033 215,992 2034-2038 236,753 2039-2043 254,948 2044-2048 278,455 Thereafter 764,601 $ 3,315,694

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Leases (continued)

The Port turned over the operation of its marina to a private company through a long-term financing lease and operating agreement on May 1, 2004. Minimum future lease payments to be received, which is a component of unearned revenue, for years ending June 30 are as follows (in thousands):

2014 $ 390 2015 401 2016 413 2017 426 2018 438 2019-2023 2,398 2024-2028 2,780 2029-2033 3,222 2034-2038 3,736 2039-2043 4,331 2044-2048 5,020 Thereafter 6,874 $ 30,429

The capital assets leased to others at June 30 consist of the following (in thousands):

2013 2012

Land $ 447,870 $ 389,387 Container cranes 153,775 153,775 Buildings and improvements 215,556 219,324 Infrastructure 1,045,178 922,645 1,862,379 1,685,131 Less accumulated depreciation (631,192) (520,756) Net capital assets, on lease $ 1,231,187 $ 1,164,375

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

8. Unearned Revenue

Unearned revenue consists primarily of an upfront fee from a terminal operating; a long term financing lease for the marina operations; early redemption of special facilities bonds; prepayment of bond debt service for airline fuel facility and prepaid tenant rent.

Changes in unearned revenue for the years ended June 30, 2013 and 2012 are as follows (in thousands): Beginning Ending Amounts Balance Balance Due Within July 1, 2012 Additions Reductions June 30, 2013 One Year Ports America Outer Harbor upfront fee $ 51,003 $ - $ (1,073) $ 49,930 $ 1,073 Marina capital lease unearned interest revenue 21,055 - (503) 20,552 503 92A Special Facility bond redemptions 16,392 - (2,522) 13,870 2,522 Oakland Fuel Facilities Corporation 9,696 150 (580) 9,266 580 Unearned tenant rent 13,427 7,438 (10,733) 10,132 7,654 Other unearned revenue 3,852 - (2,348) 1,504 159

Total $ 115,425 $ 7,588 $ (17,759) $ 105,254 $ 12,491

Beginning Ending Amounts Balance Balance Due Within July 1, 2011 Additions Reductions June 30, 2012 One Year Ports America Outer Harbor upfront fee $ 52,077 $ - $ (1,074) $ 51,003 $ 1,074 Marina capital lease unearned interest revenue 21,558 - (503) 21,055 503 92A Special Facility bond redemptions 18,914 - (2,522) 16,392 2,522 Oakland Fuel Facilities Corporation 10,126 150 (580) 9,696 580 Unearned tenant rent 9,424 10,517 (6,514) 13,427 10,733 Other unearned revenue 4,188 - (336) 3,852 319 Total $ 116,287 $ 10,667 $ (11,529) $ 115,425 $ 15,731

9. Retirement Plan

Public Employees’ Retirement System Plan Description

All full-time and certain other qualifying employees of the Port are eligible to participate in the Public Employees’ Retirement Fund (Fund) of the State of California’s Public Employees’ Retirement System (CalPERS). Port employees are included on a cost-sharing basis with City employees in the City of Oakland miscellaneous unit of CalPERS. The Fund provides retirement, disability, and death benefits based on the employee’s years of service, age and final compensation.

Employees hired before January 2013 vest after five years of service and may receive retirement benefits at age 50. Starting in January 2013, CalPERS members who fall under the definition of a “new member” as defined by the Public Employees’ Pension Reform Act (PEPRA) will vest after five years of service and may receive retirement benefits at age 52.

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Public Employees’ Retirement System Plan Description (continued)

These benefit provisions and all other requirements are established by State statute and City ordinance. CalPERS issues a separate comprehensive annual financial report. Copies of the annual financial report may be obtained from the CalPERS Executive Office, 400 Q Street, Sacramento, California 95811 or at www.CalPERS.ca.gov. A separate report for the City’s plan within CalPERS is not available.

CalPERS does not calculate a separate pension obligation for the Port; therefore, no separate Port obligation can be presented herein. CalPERS most recent actuarial valuation for the Miscellaneous Plan of the City of Oakland as of June 30, 2011 valued the combined Port and City actuarial accrued liability at $2,025,140,791 and the combined Port and City unfunded actuarial accrued liability was $409,201,026. Under the requirements of GASB 68, the Port will have to recognize a liability for its proportionate share of the net pension liability and GASB 68 has recommended the use of the Port’s projected long-term contribution effort as compared to the total projected long-term contribution effort of the combined Port and City as a basis for determining the Port’s share. The Port is evaluating the effects of this methodology in anticipation of implementing GASB 68 for the fiscal year ending June 30, 2015.

The Port is required to contribute the remaining amounts necessary to fund retirement benefits for its employees using the actuarial basis determined by CalPERS. The Port’s employer contribution to the Fund was 25.115% (July 2012 to Feb 2013), 24.248% (March 2013 to June 2013), 23.604% (fiscal year 2012) and 19.885% (fiscal year 2011) of covered payroll in fiscal years 2013, 2012 and 2011 respectively. For the fiscal years ended June 30, 2013, 2012, and 2011, the Port’s annual pension costs for the employer contribution to CalPERS was $11,490,000, $11,039,000, and $8,964,000 respectively. The Port contributed 100% of the actuarial required contribution for each of the three years. The employer contribution rate for the year ended June 30, 2013 was based upon an actuarial valuation study performed by CalPERS Actuarial & Employer Services Division as of June 30, 2010.

The Port’s payroll reported to CalPERS for employees participating in the Fund was $45,796,000, $46,768,000, and $45,079,000 for the years ended June 30, 2013, 2012 and 2011, respectively. The Port’s payroll for all employees was $44,721,000, $43,214,000, and $41,685,000 in fiscal years 2013, 2012 and 2011 respectively.

PERS Employee Member Contributions

For fiscal years 2013, 2012, and 2011, the Port elected to pay the 8% Employer Paid Member Contributions (EPMC) to CalPERS on behalf of most of its employees and has exercised its options to include the 8% EPMC as compensation for the purpose of calculating the CalPERS contribution.

The Port has contributed $3,122,000, $3,552,000, and $3,510,000 for the fiscal years ended June 30, 2013, 2012, and 2011 respectively.

Effective the first pay period of January 2013, members of the International Brotherhood of Electrical Workers contributed 3% of the EPMC, and in exchange for the represented Employees’ contribution, the Port increased base salary of the International Brotherhood of Electrical Workers by 3%.

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

PERS Employee Member Contributions (continued)

Effective the first day of the pay period containing July 1, 2013, Port employees who are members of CalPERS including unrepresented employees are required to contribute 8% of their base salary as employee paid member contributions to CalPERS. The Port increased the base salary of employees by 8%.

Public Employees’ Pension Reform Act of 2013

Starting in January 2013, CalPERS members who fall under the definition of a “new member” as defined by PEPRA are subject to the provisions of PEPRA.

Highlights of PEPRA (for more information contact CalPERs (888) 225-7377).

 Benefit formula for new Miscellaneous members is 2% at age 62  Caps annual salary that can be used to calculate final pension benefit  Imposes member contribution requirements

Change in CalPERS Discount Rate Assumption

On March 14, 2012, the CalPERS Board of Administration approved a recommendation to lower the CalPERS discount rate assumption, or the rate of investment return the Fund assumes, from 7.75 to 7.50 percent. Keeping all other assumptions constant, the change in the CalPERS discount rate assumption will have the effect of increasing Public Agency Employer rates for fiscal year 2014 and subsequent fiscal years.

CalPERS states in Circular Letter 200-014-12 that in spite of the changes in the assumed discount rate assumption that it is possible that the funding contribution determined in the annual valuation may be less than the annual required contribution under the current GASB rules.

Agreement Between the City and the Port Regarding CalPERS Payments

During the period from July 1, 1976, through January 17, 1998, the Port appointed certain employees to positions in the classifications of Airport Servicemen and Airport Operations Supervisors. The Port was and has always been the employer that directly appointed, retained, employed and compensated the personnel in these positions.

As result of a decision by CalPERS’ Board of Administration on April 15, 1998, employees appointed to positions in the classifications of Airport Servicemen and Airport Operations Supervisors were reclassified from miscellaneous member status in CalPERS to safety member status, effective retroactively to the later of either the date of their respective employment in such classifications or July 1, 1976.

The decision to reclassify employees to safety member status resulted in an additional net cost to provide retirement benefits. CalPERS’ actuary estimated that the present value of this net cost (including subsequent actual experience through June 30, 2000, and projected experience through June 30, 2002) was $5,915,000.

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Agreement Between the City and the Port Regarding CalPERS Payments (continued)

The Port entered into an agreement with the City for the payment of this net cost by the Port directly to CalPERS. The agreement provides for the Port to make payments over 20 years in annual installments, adjusted for cost of living at a rate of 3.75%, until fully paid. No pre- payment penalty applies. The Port has made the scheduled payments of $672,000 and $648,000 for the fiscal years ended June 30, 2013 and 2012, respectively. The remaining unfunded liability at June 30, 2013 and 2012 was $4,922,000 and $5,168,000 respectively.

10. Other Postemployment Benefits

Plan Description

The Port contributes to the California Employer’s Retiree Benefit Trust (CERBT), an agent multiple-employer defined benefit postemployment healthcare plan administered by CalPERS. The CERBT is an Internal Revenue Code Section 115 trust and an investment vehicle that can be used by all California public employers to prefund future retiree health and Other Postemployment Benefits (OPEB) costs.

The Port’s Retiree Health Plan allows eligible retirees and their dependents to receive employer paid medical insurance benefits through CalPERS, subject to certain limitations described below. The Port adopted resolutions which established a Health Benefit Vesting Requirement for employees hired on or after September 1, 2011 (on or after April 1, 2013 for members of SEIU and IBEW).

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Plan Description (continued)

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), the Port will pay a percentage of employer contributions for the Retiree based upon the following:

Years of Credited Service % (at least 5 of which are with the City/Port) of Employer Contributions 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 22893 plus administrative fees and contingency reserve fund assessments.

Employees hired before October 1, 2009 [before January 1, 2013 for members of the Services Employees International Union (SEIU) and International Brotherhood of Electrical Workers (IBEW)] are eligible to receive dental and vision coverage through the Port’s Retiree Health Plan.

Funding Policy

Benefit provisions are established and are amended through negotiations between the Port and the various bargaining units during each bargaining period. The Port pays a portion of retiree benefit expenses on a pay-as–you-go basis to third parties, outside of the CERBT fund, and funds the remaining annual required contribution (ARC) to the CERBT fund.

As of June 30, 2013, there were approximately 526 employees who had retired from the Port and were participating in the Port’s Retiree Health Plan. During fiscal year ended June 30, 2013, the Port contributed $4,200,000 to the CERBT and made payments of $6,840,944 on behalf of eligible retirees to third parties outside of the CERBT fund.

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Funding Policy (continued)

As of June 30, 2012, there were approximately 564 employees who had retired from the Port and were participating in the Port’s Retiree Health Plan. During fiscal year ended June 30, 2012, the Port contributed $4,500,000 to the CERBT and made payments of $6,434,000 on behalf of eligible retirees to third parties outside of the CERBT fund.

Annual OPEB Cost and Net OPEB Obligation

The Port’s annual OPEB cost is equal to (a) ARC, an amount actuarially determined in accordance with the parameters of GASB Statement 45, plus (b) one year’s interest on the beginning balance of the net OPEB obligation, and minus (c) an adjustment to the ARC. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost of each year and any unfunded actuarial liabilities (or funding excess) amortized over an open period of thirty years.

The following table shows the components of the Port’s annual OPEB cost for the year, the amount contributed to the CERBT and changes in the Port’s net OPEB obligation as of June 30 (in thousands):

2013 2012 Annual required contribution $ 10,783 $ 10,783 Interest on prior year net OPEB obligation 800 796 Adjustment to annual required contribution (599) (596) Annual OPEB Cost 10,984 10,983 Contribution made (11,041) (10,934) Increase (decrease) in net OPEB obligation (57) 49 Net OPEB obligation - beginning of year 10,510 10,461 Net OPEB obligation - end of year $ 10,453 $ 10,510

The Port’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the current and prior two years are as follows (in thousands):

Annual Percentage of Fiscal OPEB OPEB Cost Net OPEB Year End Cost Contributed Obligation 6/30/2011 $ 11,193 99.36% $ 10,461 6/30/2012 $ 10,983 99.55% $ 10,510 6/30/2013 $ 10,984 100.51% $ 10,453

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Funding Status and Funding Progress

The table below indicates the funded status of the Port’s OPEB plan as of June 30, 2013, the most recent actuarial valuation date (in thousands).

Actuarial Accrued Liability (AAL) $ 136,616 Actuarial Value of Plan Assets 30,715 Unfunded Actuarial Accrued Liability (UAAL) $ 105,901

Funded Ratio (actuarial value of plan assets/AAL) 22.5% Annual Covered Payroll (active plan members) $ 47,823 UAAL as a Percentage of Annual Covered Payroll 221%

Actuarial Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive plan in effect and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short- term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Actuarially determined amounts are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future.

The actuarial cost method used for determining the benefit obligations of the Port is the Projected Unit Credit Cost Method. Under the principles of this method, the actuarial present value of the projected benefits is the value of benefits expected to be paid for active and retired employees. The AAL is the present value of benefits attributed to employee service rendered prior to the valuation date. The AAL equals the present value of benefits multiplied by a fraction equal to service date over service at expected retirement. The ARC for fiscal years 2011 and 2012 was based on an actuarial valuation of the Port’s plan as of June 30, 2011, which amortized the UAAL as a level dollar amount over an “open” period of 30 years. In the most recent valuation of the Port’s plan, as of June 30, 2013, the Port’s UAAL was amortized over a “closed” period of 30 years.

Actuarial assumptions used for the valuation of the Port’s plan include a discount rate, which is based on the CERBT expected rate of return for the plan assets, and annual healtch care cost trends, which is based on the “Getzen” model published by the Society of Actuaries. The demographic assumptions regarding turnover and retirement are based on statistics from reports for CalPERS under a “2.7% @ 55” benefits schedule. The June 30, 2011 valuation used a discount rate of 7.61% and annual healthcare costs were assumed to increase at rates ranging from 4.00% to 8.75%. The June 30, 2013 valuation used a discount rate of 7.00% and annual healthcare costs were assumed to increase at rates ranging from 2.75% to 7.25%.

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Actuarial Methods and Assumptions (continued)

The schedules presented as required supplementary information following the notes to the financial statements, present multiyear trend information. The Schedule of Funding Progress - Other Postemployment Benefits presents information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

11. Agreements with City of Oakland

The Port has entered into agreements with the City for provisions of various services such as aircraft rescue and firefighting (ARFF), Special Services, General Services, and Lake Merritt Trust Services. The City provides these services to the Port.

Special Services include designated police services, personnel, city clerk, and treasury services. General Services includes fire, rescue, police, street maintenance, and similar services. Lake Merritt Trust Services includes items such as recreation services, grounds maintenance, security, and lighting.

Port payments to the City for these services are made upon execution of appropriate agreements and/or periodic findings and authorizations from the Board.

Special Services and ARFF

Payments for Special Services and ARFF are treated as a cost of Port operations pursuant to City Charter Section 717(3) Clause Third and have priority over certain other expenditures of Port revenues. Special Services and ARFF from the City totaled $3,916,000 and $6,704,000 in fiscal years 2013 and 2012, respectively, and are included in Operating Expenses. At June 30, 2013 and 2012, $3,899,000 and $5,719,000, respectively, were accrued as current liabilities for these payments.

General Services and Lake Merritt Trust Services

Payments for General Services provided by the City are payable only to the extent the Port determines annually that surplus monies are available under the Charter for such purposes. As of June 30, 2013 and 2012, the Port accrued approximately $1,012,000 and $1,196,000, respectively, of payments for General Services. Additionally, the Port accrued approximately $1,133,000 and $961,000 to reimburse the City for Lake Merritt Trust Services in fiscal years 2013 and 2012, respectively. Subject to availability of surplus monies, the Port expects that it will continue to reimburse the City annually for General Services and Lake Merritt Trust Services.

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Golf Course Lease

The Port has leased property to the City under a 66-year lease, which is expressed in terms of the Amended and Restated Lease between the Port and the City for the development and operation of a public golf course by the City. The lease commenced in 2003 when the Port delivered a completed 164.9 acre golf course to the City to replace the City’s golf course that was destroyed when the Port used the site as a dredge disposal site. The golf course is leased to a third party and the minimum annual rental is $270,000 payable in twelve installments of $22,500 per month, which is then split 50/50 between the Port and the City.

Unearned Rent

In November 1994, the City entered into an agreement with the Port to partially fund the development of a project related to a lease at the Port. The lease required $5,145,000 in tenant improvements partially financed by $2,000,000 in deferred rent from the City’s former Redevelopment Agency. The unearned rent is classified as unearned revenue. At June 30, 2013 and 2012, unearned rent was approximately $872,000 and $942,000, respectively. The amount classified as short term unearned revenue at June 30, 2013 and 2012 was $70,000.

12. Commitments

Capital Program

As of June 30, 2013, the Port had construction commitments for the acquisition and construction of assets as follows (in thousands):

Aviation $ 64,657 Maritime 66,080 CRE & Support Division 1,418 Total $ 132,155

The most significant projects for which the Port has contractual commitments for construction are: Runway Safety Area of $36,545,000, Airport Terminal Renovation projects of $13,406,000, Phase 1 of the new rail terminal project on Port-owned OAB property of $48,464,000 and Shore Power of $12,115,000.

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Power Purchases

The Port purchases electrical power for resale and self-consumption and currently has three power purchase agreements with the East Bay Municipal Utility District (EBMUD), the Western Area Power Administration (WAPA) and SunEdison, LLC (SunEdison) with expiration dates greater than four years.

Counterparty Contract Contract Structure Estimated Estimated Annual Ending Year Output Cost EBMUD 2017 Take and Pay – (Pay 8,000 MWH Approximately contract price only if $584,000 with no energy is received) Annual Escalator

WAPA 2024 Take or Pay – (Pay 17,000 MWH Approx. $800,000 contract price without (Changes annually regard to energy depending on received) revenue requirement for power generation projects) SunEdison 2027 Take and Pay – (Pay 1,200 MWH Approx. $200,000 contract price only if with Annual energy is received) Escalator

In addition to the aforementioned power purchase agreements, the Port had outstanding, as of June 30, 2013, approximately $2.5 million of power purchases contracts with Powerex Corporation and Shell Energy North America with expiration dates of 18 months or less.

13. Contingencies

Environmental

The entitlements for the Airport Development Program (ADP) subject the Port to obligations arising from the adopted ADP Mitigation Monitoring and Reporting Program required under: the California Environmental Quality Act; permits issued by numerous regulatory agencies including the Regional Water Quality Control Board and the Bay Conservation and Development Commission; and settlement agreements. The majority of these obligations have been met, and monitoring and reporting are ongoing.

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Environmental (continued)

A summary of the Port’s environmental liability accounts, net of the estimated recoveries, included as Environmental and other liability on the statements of net position at June 30, 2013 and 2012, is as follows (in thousands):

June 30, 2013 Estimated Obligating Event Liability, net Recovery Pollution poses an imminent danger to the public or environment $ 392 $ - Violated a pollution prevention-related permit or license - - Identified as responsible to clean-up pollution 13,508 857 Named in a lawsuit to compel to cleanup 31 - Begins or legally obligates to cleanup or post-cleanup activities 3,743 60 Total by Obligating Event $ 17,674 $ 917

June 30, 2012 Estimated Obligating Event Liability, net Recovery Pollution poses an imminent danger to the public or environment $ 763 $ - Violated a pollution prevention-related permit or license - - Identified as responsible to clean-up pollution 17,092 619 Named in a lawsuit to compel to cleanup 31 - Begins or legally obligates to cleanup or post-cleanup activities 3,341 60 Total by Obligating Event $ 21,227 $ 679

The environmental liability accounts in the summary tables are listed by the initial obligating event. Due to new information, the obligating event may change from the initial obligating event. Examples of obligating events include: 1) the Port is named, or evidence indicates that it will be named, by a regulator such as the Department of Toxic Substances Control or the Regional Water Quality Control Board, as a responsible party or potentially responsible party for remediation; or 2) the Port has commenced, or legally obligates itself to commence, clean-up activities, monitoring or operation and maintenance of the remediation effort (e.g., by undertaking a soil and groundwater pre-development investigation).

Methods and Assumptions

The Port measured the environmental liabilities for pollution remediation sites on Port-owned property using the Expected Cash Flow technique. The measurements are based on the current value of the outlays expected to be incurred. The cash flow scenarios include each component which can be reasonably estimated for outlays such as testing, monitoring, legal services and indirect outlays for Port labor instead of ranges of all components. Reasonable estimates of ranges of possible cash flows are limited from a single scenario to a few scenarios. Data used to develop the cash flow scenarios is obtained from outside consultants, Port staff, and the Port’s outside legal counsel.

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Methods and Assumptions (continued)

Changes to estimates will be made when new information becomes available. Estimates for the pollution remediation sites will be developed when the following benchmarks or changes in estimated outlays occur:

 Receipt of an administrative order.  Participation, as a responsible party or a potentially responsible party, in the site assessment or investigation.  Completion of a corrective measures feasibility study.  Issuance of an authorization to proceed.  Remediation design and implementation, through and including operation and maintenance and postremediation monitoring.  Change in the remediation plan or operating conditions, including but not limited to type of equipment, facilities and services that will be used and price increases.  Changes in technology.  Changes in legal or regulatory requirements.

Recoveries

Estimated future recoveries that are listed on the prior page have been netted against the environmental and other liability accounts. In calculating the estimated future recoveries, Port staff and outside legal counsel reviewed and applied the requirements of GASB 49 for accounting for recoveries. For example, if a Port tenant has a contract obligation to reimburse the Port for certain pollution remediation costs, or if an insurance carrier has paid money on a certain claim and the Port is pursuing additional costs from the insurance carrier associated with the claim, then a recovery was estimated. If an insurance carrier has not yet acknowledged coverage, then a recovery was not estimated.

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Litigation

As of June 30, 2013, the Port was a defendant in various lawsuits arising in the normal course of business, including constructing public improvements or construction related claims for unspecified amounts. The ultimate disposition of these suits and claims is not known and the Port’s insurance may cover a portion of any losses. Port management may make provision for probable losses if deemed appropriate on the advice of legal counsel. To the extent that such provision for damages is considered necessary, appropriate amounts are reflected in the accompanying financial statements. A summary of the reported liability included within the Environmental and other liability on the statements of net position is as follows (in thousands):

General liability at June 30, 2010 $ 3,079 Current year claims and changes in estimates 4,983 Vendor payments (4,144)

General liability at June 30, 2011 3,918 Current year claims and changes in estimates 4,685 Vendor payments (2,940)

General liability at June 30, 2012 5,663 Current year claims and changes in estimates (926) Vendor payments (4,447)

General liability at June 30, 2013 $ 290

The Port was in litigation with one of its maritime tenants in connection with such tenant’s complaint before the Federal Maritime Commission alleging the Port has violated the Federal Shipping Act of 1984 by entering into a long term concession and lease agreement with another maritime tenant. As discussed in Note 16, the Port has settled the matter on July 18, 2013.

Landscaping and Lighting Assessment District (LLAD)

The Port and the City concluded that the LLAD previously imposed on Airport property for the years ended June 30, 1997 through 2012 were not permissible under the Federal Aviation Administration’s Policy and Procedures Concerning the Use of Airport Revenue. No amounts were accrued on the Port’s financial statements.

14. Insurance

The Port purchases insurance on certain risk exposures including but not limited to property, crane, rail, automobiles liability, airport liability, umbrella liability, environmental liability, fidelity, fiduciary liability, and public officials liability. Port deductibles for the various insured programs range from $10,000 to $1,000,000 each claim. The Port is, however, self-insured for other general liability and liability/litigation-type claims, workers’ compensation of the Port’s employees and most first party earthquake exposures. However, during fiscal years 2013 and 2012, the Port carried excess insurance over $1,000,000 for the self insured general liability and workers compensation exposures. There have been no claim payments related to these programs that exceeded insurance limits in the last three years.

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

Workers' Compensation

Changes in the reported liability, which is included as part of environmental and other, follows (in thousands):

Workers' compensation liability at June 30, 2010 $ 6,900 Current year claims and changes in estimates 863 Claim payments (863)

Workers' compensation liability at June 30, 2011 6,900 Current year claims and changes in estimates 2,593 Claim payments (1,303)

Workers' compensation liability at June 30, 2012 8,190 Current year claims and changes in estimates 2,632 Claim payments (1,192)

Workers' compensation liability at June 30, 2013 $ 9,630

The workers’ compensation liability of $9,630,000 at June 30, 2013 is based upon an actuarial study performed as of June 30, 2013 that assumed a probability level of 70% and a discount rate of 1.15%. The workers’ compensation liability balance of $8,190,000 at June 30, 2012 is based upon an actuarial study performed as of June 30, 2012 that assumed a probability level of 70% and a discount rate of 0.57%.

Capital Improvement Projects

The Port maintains an Owner Controlled Insurance Program (OCIP) and Professional Liability Insurance Program (PLIP) for contractors and consultants working on Port Capital Improvement Projects (CIP).

OCIP provides general liability insurance and workers’ compensation insurance for contractors working on CIP projects. The Port is responsible for payment of the deductible/self-insured retention, which is currently $100,000 for each general liability and workers’ compensation claim. The Port’s OCIP insurance broker provided an actuarial forecast for this program that projects losses within the deductible/self-insured retention, which have not yet been accrued, of approximately $507,000 through program expiration in July 2014.

The PLIP provides professional liability insurance for consultants working on Port CIP projects. Subject to this program, the consultants separately are responsible for paying the deductible/self- insured retentions, which are $50,000 for consultants with annual revenues under $20,000,000 and $1,000,000 for consultants with annual revenues over $20,000,000. The Port’s deductible/self-insured retention is $1,000,000. There is no actuarial forecast for this coverage.

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Port of Oakland (A Component Unit of the City of Oakland) Notes to Financial Statements For the years ended June 30, 2013 and 2012

15. Public Transportation Modernization, Improvement, and Service Enhancement

On May 20, 2008, the California Emergency Management Agency (Cal EMA) awarded $2,900,000 to the Port under the California Port and Maritime Security Grant Program (CPMSGP) to fund the Wireless Truck Tracking and Reporting System Phase 1 and Perimeter Intrusion Detection and Reporting Projects. The Port has established a drayage truck registry and implemented the Truck Management System. The Port also completed installation of a terminal perimeter, intrusion detection system utilizing CCTV cameras and video analytics.

On April 15, 2009, the Cal EMA awarded the Port an additional $3,331,000 under the CPMSGP to fund 3 projects: 1) Comprehensive Geospatial Security Mapping, 2) Fiber Optic Telecommunications Linkage, and 3) Wireless Truck Tracking and Reporting System Phase 2 Projects. Projects 1 and 2 are complete and Project 3’s implementation continues.

On September 29, 2009, the Federal Emergency Management Agency’s awarded the Port $7,620,950 under the 2009 American Recovery and Reinvestment Act to fund two Port Security projects: 1) Joint City/Port Domain Awareness Center, and 2) Transportation Worker Identification Credential (TWIC) Infrastructure at Marine Terminals.

The Port has recorded a receivable for the Public Transportation Modernization, Improvement, and Service Enhancement Projects of $2,607,000 and $506,000 as of June 30, 2013 and 2012, respectively.

16. Subsequent Event

On July 18, 2013 the Oakland Board of Port Commissioners approved a litigation settlement agreement with one of the Port’s major long-term seaport tenants, SSA Terminals, LLC and SSA Terminals (Oakland), LLC (collectively, SSAT). The settlement involved four of the Port’s then seven marine terminals, and allows SSAT to create a 350-acre mega-terminal at the Port’s middle harbor. Under the settlement, SSAT leases two terminals through 2022 at substantially similar rates and conditions, and assumes the lease on a third terminal through 2016, with one option to extend to 2022. Additionally, the Port agreed to terminate SSAT’s current lease at a fourth terminal effective September 30, 2013.

The settlement involves short-term revenue loss in exchange for longer term revenue growth and stability. Prior to this agreement, the Port was facing the expiration of all four terminal leases in fiscal years ending June 30, 2016 through June 30, 2017.

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REQUIRED SUPPLEMENTARY INFORMATION

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Port of Oakland (A Component Unit of the City of Oakland) Required Supplementary Information (Unaudited) For the years ended June 30, 2013 and 2012

1. Schedule of Funding Progress – Other Postemployment Benefits

The schedule of funding progress presented below provides a consolidated snapshot of the Port’s ability to meet current and future liabilities with plan assets. The funded ratio conveys a plan’s level of assets to liabilities, an important indicator to determine the financial health of the OPEB plan. The closer the plan is to a 100% funded status, the better position it will be in to meet all of its future liabilities.

An actuarial valuation study performed as of June 30, 2013 valued the Actuarial Accrued Liability at $136,616,000, an increase of $7,710,000 from the previous study performed as of June 30, 2011.

Actuarial Acturial Unfunded UAAL as a % Acturial Value of Accrued AAL Funded Covered of Covered Valuation Assets Liability (UAAL) Ratio Payroll Payroll Date (a) (AAL) (b) (b-a) (a/b) (c) ((b-a)/c) 1/1/2011 13,373 131,327 117,954 10.2% 45,248 261% 6/30/2011 19,145 128,906 109,760 14.9% 44,627 246% 6/30/2013 30,715 136,616 105,901 22.5% 47,823 221%

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Statistical Section (Unaudited)

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PORT OF OAKLAND (A Component Unit of the City of Oakland)

Statistical Selection

This part of the comprehensive annual financial report for the Port of Oakland presents detailed information as a context for understanding the financial statements, note disclosures, and required supplementary information.

Contents Schedule

Financial Trends Net Position by Components ...... 1 Statements of Revenues, Expenses and Changes in Net Position ...... 2

Revenue Capacity Aviation Division: Principal Revenue Sources and Airline Revenue per Enplaned Passenger ...... 3 Aviation Statistics – South Airport ...... 4 Top Ten Individual Sources of Aviation Revenue ...... 5 Schedule of Airline Rates and Charges ...... 6

Maritime Division: Principal Revenue Sources and Maritime Revenue per TEU ...... 7 Maritime Division - Container Trends ...... 8 Top Ten Individual Sources of Maritime Revenue by Alphabetical Order ...... 9

Debt Capacity Net Revenue Calculation for Debt Service Coverage ...... 10 Debt Service Coverage ...... 11 Ratios of Debt Service ...... 12 Outstanding Debt by Debt Type ...... 13

Demographic and Economic Information Demographic and Economic Statistics for the City of Oakland ...... 14 Principal Employers – FY 2012 vs. FY 2006 ...... 15

Operating Information Actual Employee Count by Division ...... 16 Capital Assets Information ...... 17

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190 Port of Oakland Schedule 1 (A Component Unit of the City of Oakland) Schedule of Net Position by Components Last Ten Fiscal Years (dollar amounts in thousands)

2004 2005 2006 2007 2008 (1) 2009 (2) 2010 2011 (3) 2012 2013 Net position: Net investment in capital assets $ 483,659 $ 592,698 $ 663,939 $ 875,547 $ 862,165 $ 853,011 $ 881,567 $ 869,014 $ 882,351 $ 944,974 Restricted 175,229 136,004 114,377 9,806 12,692 21,357 11,677 17,187 20,553 14,178 Unrestricted 49,925 34,414 49,266 11,896 39,729 14,838 (2,258) 19,774 39,430 69,267

Total net position $ 708,813 $ 763,116 $ 827,582 $ 897,249 $ 914,586 $ 889,206 $ 890,986 $ 905,975 $ 942,334 $ 1,028,419

Note: (1) The 2008 unrestricted net assets amount was reduced by $9,212 in 2009 for a prior period adjustment. (2) The beginning balance decreased by $6,680 due to the adoption of GASB 49. (3) The beginning balance decreased $20,025 due to the adoption of GASB 65. 62 BUDGET &FINANCETab4.2 191 Port of Oakland Schedule 2 (A Component Unit of the City of Oakland) Statements of Revenues, Expenses and Changes in Net Position Last Ten Fiscal Years (dollar amounts in thousands)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Operating revenues: Aviation $ 121,183 $ 126,988 $ 133,869 $ 139,491 $ 159,086 $ 130,443 $ 130,284 $ 135,173 $ 140,309 $ 150,871 Maritime 99,605 112,859 122,819 127,141 128,351 140,739 143,344 151,854 152,988 151,869 Commercial real estate 11,747 11,163 10,773 10,742 12,446 12,108 11,597 10,956 12,841 12,778 Total operating revenues 232,535 251,010 267,461 277,374 299,883 283,290 285,225 297,983 306,138 315,518

Operating expenses: Aviation 116,385 123,295 134,104 144,169 162,299 161,542 152,099 152,086 152,064 150,461 Maritime 64,271 67,609 72,451 75,570 82,264 90,029 84,004 83,383 85,156 87,683 Commercial real estate 17,333 15,154 13,553 14,140 13,711 12,674 12,606 11,349 11,590 11,713 Total operating expenses (1) 197,989 206,058 220,108 233,879 258,274 264,245 248,709 246,818 248,810 249,857

Operating income 34,546 44,952 47,353 43,495 41,609 19,045 36,516 51,165 57,328 65,661

Non-operating revenues (expenses): Interest income 3,653 8,935 11,146 10,457 13,145 9,655 4,741 2,876 1,755 1,095 Interest expense (54,410) (59,488) (61,405) (65,261) (76,796) (78,415) (74,624) (70,714) (6) (66,798) (6) (59,598) Loss on debt defeasance ------(4,158) - - - Customer facility charges (2) 5,936 5,375 7,742 7,430 6,999 5,235 4,530 4,764 5,184 5,387 Passenger facility charges (2) - - 29,671 30,221 27,033 19,391 19,702 19,106 19,758 19,924 Other income (expenses) 12,874 3,678 2,136 10,419 2,452 (5,072) 292 1,438 (1,809) 3,668 63 Gain (loss) on disposal of capital assets (57,631) (514) (1,835) (2,761) (14,985) (435) (6,562) - (2,276) 12,052 Total net non-operating expenses (89,578) (42,014) (12,545) (9,495) (42,152) (49,641) (56,079) (42,530) (44,186) (17,472)

Change in net assets before capital contributions (55,032) 2,938 34,808 34,000 (543) (30,596) (19,563) 8,635 13,142 48,189

Capital contributions: Grants from government agencies 10,339 19,180 29,658 14,094 27,092 11,896 21,343 27,343 23,217 37,896 Land conveyed to Port 3,173 ------Land conveyed from U.S. Army - - - 21,573 ------

Passenger facility charges (PFC) (2) 29,130 29,031 ------BUDGET &FINANCETab4.2 Customer facility charges (CFC) (2) 1,118 2,043 ------Interest income from PFC and CFC 1,035 1,111 ------Total capital contributions 44,795 51,365 29,658 35,667 27,092 11,896 21,343 27,343 23,217 37,896

Change in net position (10,237) 54,303 64,466 69,667 26,549 (18,700) 1,780 35,978 36,359 86,085 Net position, beginning of the year, as restated 719,050 708,813 763,116 827,582 888,037 (3) 907,906 (4) 889,206 869,997 (5) 905,975 942,334 Net position, end of the year $ 708,813 $ 763,116 $ 827,582 $ 897,249 $ 914,586 $ 889,206 $ 890,986 $ 905,975 $ 942,334 $ 1,028,419

Note: (1) Total operating expenses include depreciation and amortization. (2) CFC and PFC were presented in various formats and in separate line items. Commencing in FY 2006, all CFC and PFC were categorized as "Non-operating revenues & expenses" in the Port's audited financial statements. (3) The 2008 unrestricted net assets amount was reduced by $9,212 in 2009 for a prior period adjustment. (4) The beginning balance decreased by $6,680 due to the adoption of GASB 49. (5) The beginning balance decreased $20,989 due to the adoption of GASB 65. (6) Interest expense was increased by $964 in FY 2011 and decreased by $1,088 in FY 2012 due to the adoption of GASB 65. 192 Port of Oakland Schedule 3 (A Component Unit of the City of Oakland) Principal Revenue Sources and Airline Revenue per Enplaned Passenger Last Ten Fiscal Years

Airline Revenue Per Enplaned Passenger 2009 (2)

12.00 10.00 8.00 6.00 4.00 Revenue in in $ Revenue 2.00 0.00 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Fiscal Years

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Aviation revenues:

64 Terminal rental (1) $ 20,215,042 $ 23,115,191 $ 26,496,828 $ 29,086,828 $ 32,153,229 $ 26,263,040 (3) $ 25,497,463 $ 27,364,000 $ 26,501,221 $ 31,231,563 Landing fees (Excludes Cargo Airlines) 10,604,702 11,296,427 12,587,169 14,442,874 16,838,252 17,213,846 19,206,913 19,626,426 19,699,801 19,902,017 Total airline revenues 30,819,744 34,411,618 39,083,997 43,529,702 48,991,481 43,476,886 44,704,376 46,990,426 46,201,022 51,133,580

Concession 15,250,009 15,892,401 17,323,078 18,773,156 21,861,577 17,948,928 (3) 18,797,132 19,127,821 19,372,472 20,103,716 Parking & ground access 45,140,417 42,425,750 42,381,447 41,567,417 39,221,863 29,505,355 (3) 28,001,940 28,812,537 29,252,483 30,547,660 Lease rentals 15,149,828 16,522,758 16,173,463 18,054,979 20,551,862 21,004,740 19,776,344 20,707,048 24,271,955 26,778,749 Landing fees--Cargo Airlines 3,998,258 4,350,225 4,911,713 5,677,359 6,603,275 7,926,263 7,646,361 8,673,223 8,640,337 8,860,083

Aviation fueling 3,111,504 6,833,030 5,879,259 3,993,271 13,411,817 3,564,246 3,589,896 3,560,980 3,984,459 3,918,318 BUDGET &FINANCETab4.2 Utility sales 4,088,391 4,585,644 3,941,092 3,803,021 4,000,763 4,192,036 3,690,206 4,427,134 3,846,405 5,324,150 Other (2) 3,625,020 1,967,402 6,174,920 4,092,139 4,443,581 2,824,306 4,077,976 2,873,178 4,740,148 4,204,678 Total revenues $ 121,183,171 $ 126,988,828 $ 135,868,969 $ 139,491,044 $ 159,086,219 $ 130,442,760 $ 130,284,231 $ 135,172,347 $ 140,309,281 $ 150,870,934

Enplaned passengers 6,957,782 7,171,141 7,187,587 7,267,170 6,802,486 4,955,743 (3) 4,777,514 (3) 4,687,878 4,825,802 4,973,107 Airline revenue per enplaned passenger $ 4.43 $ 4.80 $ 5.44 $ 5.99 $ 7.20 $ 8.77 $ 9.36 $ 10.02 $ 9.57 $ 10.28

Note: (1) Terminal rentals are for airlines only. Non-airline terminal rental revenues are classified under "Other". (2) Includes non-airline terminal revenues, miscellaneous revenues and other field revenue. (3) The drop in commercial activities was due to loss of 7 airlines, namely American Airlines, Aloha Airlines, Continental Airlines, Express Jet, Skybus, ATA Airlines and TACA International Airlines. 193 Port of Oakland Schedule 4 (A Component Unit of the City of Oakland) Aviation Statistics - South Airport Last Ten Fiscal Years

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 PASSENGERS Enplaned 6,957,782 7,171,141 7,187,587 7,267,170 6,802,486 4,955,743 4,777,514 4,687,878 4,825,802 4,973,107 Deplaned 6,939,143 7,135,168 7,180,976 7,266,655 6,824,544 4,968,042 4,780,661 4,679,699 4,817,753 4,977,749 Total 13,896,925 14,306,309 14,368,563 14,533,825 13,627,030 9,923,785 (2) 9,558,175 (2) 9,367,577 9,643,555 9,950,856

FREIGHT ( in 000 lb) Inbound 674,783 713,544 703,118 693,291 694,513 568,696 516,536 536,601 532,724 529,605 Outbound 723,190 767,210 771,810 768,048 741,453 626,474 541,473 568,082 552,475 543,928 Total 1,397,973 1,480,754 1,474,928 1,461,339 1,435,966 1,195,170 (3) 1,058,009 (3) 1,104,683 1,085,199 1,073,533

TOTAL AIR CARGO (in 000 lb) 1,408,452 1,493,531 1,485,973 1,471,796 1,452,437 1,212,414 (3) 1,079,243 (3) 1,124,605 1,104,388 1,087,140 (Freight & Mail)

LANDED WEIGHT (in 000 lb) (4) Passenger Carriers 8,862,439 (5) 9,185,531 (5) 9,154,681 (5) 9,385,633 9,095,540 6,873,516 (2) 6,328,081 (2,5) 5,957,187 6,076,945 6,090,830 Cargo Carriers 3,336,954 (5) 3,525,403 (5) 3,570,049 (5) 3,678,155 3,560,162 3,158,521 (3) 2,494,619 (3,5) 2,624,269 2,634,870 2,691,589 65 Total 12,199,393 12,710,934 12,724,730 13,063,788 12,655,702 10,032,037 8,822,700 8,581,456 8,711,815 8,782,419

AIRCRAFT MOVEMENTS 182,079 187,858 186,321 189,712 181,690 122,028 (2) 114,327 (2) 106,260 107,652 102,470

PARKING

Number of stalls 8,596 8,431 7,298 6,864 7,868 6,103 (6) 6,315 (6) 6,950 (6) 6,516 (6,8) 6,516 (6,8) Average revenue per stall $4,648 $4,391 $4,991 $5,112 $4,151 $3,991 (2) $3,605 (2) $3,391 (7) $3,688 $3,900 BUDGET &FINANCETab4.2

Note: Oakland Airport is comprised of the North and South Field. North Field handles general aviation and South Field handles commercial passengers and freight airlines.

(1) Not used. (2) The drop in commercial activities was due to loss of 7 airlines, namely American Airlines, Aloha Airlines, Continental Airlines, Express Jet, Skybus, ATA Airlines and TACA International Airlines. (3) Federal Express reduced the number of flights by 13% during FY 2008-09. (4) Excludes non-revenue flights. (5) Previously reported amounts have been corrected due to a classification error. (6) 1,186 stalls in Daily Parking Lot were blocked due to the drop of volume. (7) Parking revenue was revised due to the completion of a parking contractor audit. (8) 434 stalls in Daily Parking Lot were blocked due to construction of the BART - Oakland Airport Connector. 194 BUDGET & FINANCE Tab 4.2

Port of Oakland Schedule 5 (A Component unit of the City of Oakland) Top Ten Individual Sources of Aviation Revenue Fiscal Year 2013 and Fiscal Year 2004

Percentage of Percentage of Fiscal Year 2013 Revenue Revenue Fiscal Year 2004 Revenue Revenue Southwest Airlines $ 35,648,751 32.7% On-Airport Public Parking (2) $ 39,957,907 47.5% On-Airport Public Parking (1) 25,241,050 23.2% Southwest Airlines 15,228,788 18.1% Federal Express Corp. 18,226,357 16.7% Federal Express Corp. 7,214,356 8.6% Avis Budget Group, Inc. 5,940,641 5.5% Air Terminal SVC (CA1) 4,325,796 5.1% HMS Host Corporation 5,430,305 5.0% Alaska Airlines 3,568,990 4.2% Hertz Corporation 4,810,293 4.4% Hertz Corporation 3,396,146 4.0% United Parcel Service 4,174,115 3.8% United Airlines 3,049,196 3.6% DTG Operations, Inc. 3,549,485 3.3% jetBlue Airways 2,632,562 3.1% Alaska Airlines 3,045,631 2.8% United Parcel Service 2,434,641 2.9% jetBlue Airways 2,790,586 2.6% Avis Budget Group, Inc. 2,289,926 2.7%

Note: (1) Operated by Ampco Parking Oakland Airport Management, LLC until December 1, 2012 and LAZ Parking California, LLC after December 1, 2012. (2) Operated by Five Star Parking.

66 195 Port of Oakland Schedule 6 (A Component Unit of the City of Oakland) Schedule of Airline Rates and Charges Last Ten Fiscal Years

Actual Actual Actual Budget Budget Budget Budget Budget Budget Budget Costs from period: FY02-03 FY03-04 FY04-05 FY06-07 FY07-08 FY08-09 FY09-10 FY10-11 FY11-12 FY12-13

Rates & Charges for period: CY2004 CY2005 CY2006 CY2007 (2) FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

Landing Fees (per 1,000 lbs. MGLW) (1)

Basic Landing Rate $ 1.21 $ 1.29 $ 1.46 $ 1.62 $ 1.85 $ 2.50 $ 3.06 $ 3.30 $ 3.27 $ 3.29

Terminal Space Rental (per square foot per year)

Type1 - Ticket Counter $ 155.89 $ 165.67 $ 190.22 $ 181.34 $ 188.13 $ 164.81 $ 164.81 $ 176.81 $ 176.26 $ 211.56 Type2 - Office Space 140.30 149.10 171.20 163.21 169.32 148.33 148.33 159.13 158.63 190.40 67 Type3 - Baggage Space (3) 124.71 132.54 152.18 145.07 150.50 131.85 131.86 141.45 141.00 169.24 Type4 - Baggage Make-Up 109.12 115.97 133.16 126.94 131.69 115.37 115.37 123.77 123.39 148.10 Type5 - Ticket Counter (Others) 77.95 82.84 95.12 90.67 94.07 82.41 82.42 88.41 88.13 105.78 Type6 - Office Space (Others) 70.15 74.55 85.60 81.61 84.66 74.16 74.16 79.56 79.32 95.21 Type7 - Baggage Make-Up (Others) 54.56 57.98 66.57 63.47 65.85 57.68 57.68 61.88 61.69 74.05

Primary Holdroom, Loading Bridge Rental (per Holdroom per month) BUDGET &FINANCETab4.2

Holdroom, Loading Bridge $ 28,649 $ 29,595 $ 34,250 $ 31,678 $ 34,576 $ 31,269 $ 32,801 $ 36,006 $ 36,080 $ 41,907

Note: (1) MGLW - Maximum Gross Landing Weight (2) In FY2007, the Port converted from using actual previous year's expenses to budgeted expenses for the forthcoming fiscal year as the basis for calculating Rates & Charges. (3) The baggage claim requirement is calculated by multiplying the Type 3 rate by the square footage of the baggage claim areas. Until FY2008, the requirement is calculated among the airlines using an 80/20 formula. 20% of the revenue requirement is divided equally among all airlines. The remaining 80% is distributed among all airlines based on the number of enplaned passengers. Beginning FY2009, the requirement is distributed among all airlines based on the number of enplaned passengers. 196 Port of Oakland Schedule 7 (A Component Unit of the City of Oakland) Principal Revenue Sources and Maritime Revenue per TEU Last Ten Fiscal Years

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Maritime revenues:

Marine terminal rentals $ 89,178,000 $ 101,198,000 $ 109,001,000 $ 115,305,000 $ 117,795,000 $ 126,068,000 $ 130,254,000 $ 138,964,000 $ 140,777,000 $ 139,415,000 Space assignments and rentals 4,042,000 3,361,000 3,809,000 3,306,000 3,731,000 8,553,000 6,961,000 5,771,000 5,726,000 6,518,000 Other revenues 6,381,000 3,534,000 4,230,000 3,177,000 2,248,000 1,966,000 1,813,000 2,881,000 2,203,000 1,921,000 Crane rentals 4,000 (1) ------Maritime revenue, excluding utility sales 99,605,000 108,093,000 117,040,000 121,788,000 123,774,000 136,587,000 139,028,000 147,616,000 148,706,000 147,854,000

Utility sales - 4,766,000 5,779,000 5,353,000 4,577,000 4,152,000 4,316,000 4,238,000 4,282,000 4,015,000 $ 99,605,000 $ 112,859,000 $ 122,819,000 $ 127,141,000 $ 128,351,000 $ 140,739,000 $ 143,344,000 $ 151,854,000 $ 152,988,000 $ 151,869,000

TEUs (Full only) 1,406,250 1,628,369 1,723,181 1,722,522 1,802,004 1,605,613 1,729,122 1,799,050 1,796,671 (2) 1,794,187 (3) Maritime revenue per TEU, excluding utility sales $ 70.83 $ 66.38 $ 67.92 $ 70.70 $ 68.69 $ 85.07 $ 80.40 $ 82.05 $ 82.77 $ 82.41

Note: (1) Contracts with terminals operators were changed to new all-inclusive agreements in fiscal year 2004. Hence, crane rentals were not individually billed. (2) Fiscal year 2012 TEU's were revised after internal audit was finalized. (3) Subject to change pending completion of internal audit. 68 BUDGET &FINANCETab4.2 197 BUDGET & FINANCE Tab 4.2

Port of Oakland Schedule 8 (A Component Unit of the City of Oakland) Maritime Division - Container Trends Last Ten Fiscal Years (TEUs)

Full Containers Fiscal Year Import % Export % Grand Total 2004 606,202 43% 800,048 57% 1,406,250 2005 784,312 48% 844,057 52% 1,628,369 2006 876,462 51% 846,719 49% 1,723,181 2007 863,393 50% 859,129 50% 1,722,522 2008 848,383 47% 953,621 53% 1,802,004 2009 723,504 45% 882,109 55% 1,605,613 2010 754,257 44% 974,865 56% 1,729,122 2011 811,082 45% 987,968 55% 1,799,050 2012(1) 802,831 45% 993,840 55% 1,796,671 2013(2) 794,615 44% 999,572 56% 1,794,187

Container Trends 1,200,000

1,000,000

800,000

600,000 Import Export 400,000

Full Containers Full Containers in TEUs 200,000

-

Fiscal Years

Note: (1) Fiscal year 2012 TEUs were revised after internal audit was finalized. (2) Subject to change pending completion of internal audit.

69 198 BUDGET & FINANCE Tab 4.2

Port of Oakland Schedule 9 (A Component unit of the City of Oakland) Top Ten Individual Sources of Maritime Revenue by Alphabetical Order Fiscal Year 2013 and Fiscal Year 2004

Fiscal Year 2013 Fiscal Year 2004 BNSF Railway Company American President Lines Eagle Marine Services, Ltd Burlington Northern/Santa Fe Evergreen Marine Corp. (Taiwan) Ltd Evergreen Marine Corp. (Taiwan) Ltd GSC Logistics, Inc. International Transportation Service Ports America Outer Harbor Terminal, LLC Maersk-Sealand/CSX Shippers Transport Express, Inc. Shippers Transport Express, Inc. SSA Terminals, LLC and SSA Terminals (Oakland), LLC (combined) SSA Terminals, LLC Total Terminals International, LLC Total Terminals International, LLC TraPac, Inc. Trans Pacific Container Service Corp. Truck Parking (1) Yusen Terminal, Inc.

Note:

The Port of Oakland terminal tenants compete against each other for business. The Port feels disclosure of revenue by tenant would give advantages or disadvantages to certain tenants. (1) Operated by Ampco System Parking, Inc.

70 199 Port of Oakland Schedule 10 (A Component Unit of the City of Oakland) Net Revenue Calculation For Debt Service Coverage Last Ten Fiscal Years (dollar amounts in thousands)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Operating Revenues (Excluding OPA) $ 224,372 $ 251,010 $ 267,461 $ 277,374 $ 299,883 $ 283,290 $ 285,225 $ 297,983 $ 306,138 $ 315,518 Operating Expenses before Depreciation (1) (125,977) (131,791) (139,837) (147,754) (164,047) (162,499) (145,931) (144,278) (146,561) (146,426) Operating Income before Depreciation 98,395 119,219 127,624 129,620 135,836 120,791 139,294 153,705 159,577 169,092

Gross Interest Earned (2) 8,183 7,417 8,942 8,838 9,095 9,382 8,566 1,797 1,677 1,036 Pledged OPA Revenue (3) 4,219 ------

Net Revenue Available for Debt Service $ 110,797 $ 126,636 $ 136,566 $ 138,458 $ 144,931 $ 130,173 $ 147,860 $ 155,502 $ 161,254 $ 170,128

Note: (1) Operating Expenses before Depreciation does not include operating expenses reimbursed by customer facility charges (CFC). (2) Starting in fiscal year 2011, the amortization of bond premium has been accounted for as a component of interest expense. Also excludes interest earned on passenger facility charges (PFC) and CFC funds 71 (3) OPA - Oakland Portside Associates, a blended component unit in the Port's fiscal financial statements, was dissolved effective June 30, 2004 and its assets transferred to the Port. BUDGET &FINANCETab4.2 200 Port of Oakland Schedule 11 (A Component Unit of the City of Oakland) Debt Service Coverage Last Ten Fiscal Years (dollar amounts in thousands)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Net Pledged Revenues Available for Debt Service $ 110,797 $ 126,636 $136,566 $138,458 $144,931 $130,173 $147,860 $155,502 $161,254 $ 170,128

Debt Service Senior Debt Service (1) $ 59,365 $ 61,788 $ 71,774 $ 82,649 $ 71,230 $ 64,465 $ 84,218 $ 66,641 $ 69,173 $ 68,263 Intermediate Debt Service (2) N/A N/A N/A N/A 84,458 94,045 113,303 105,645 108,175 107,268 Combined Debt Service (3) N/A N/A N/A N/A 90,274 95,301 113,611 105,878 108,334 107,424

Debt Service Coverage Ratio (4) Senior Lien (minimum 1.25) 1.87 2.05 1.90 1.68 2.03 2.02 1.76 2.33 2.33 2.49

Intermediate Lien (minimum 1.10) (5) N/A N/A N/A N/A 1.72 1.38 1.42 1.47 1.50 1.59

Combined Aggregate (5) N/A N/A N/A N/A 1.61 1.37 1.42 1.47 1.50 1.58

72 Net Pledged Revenues to Debt Service

180,000 160,000 140,000 Net Pledged Revenues 120,000 Senior Debt Service 100,000 Intermediate Debt Service 80,000 Combined Debt Service 60,000 in $000s

40,000 BUDGET &FINANCETab4.2 20,000 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Fiscal Years

Note: (1) Senior debt service is less capitalized interest. (2) Intermediate debt service consists of Senior Lien, Department of Boating and Waterways Loans and Intermediate Lien debt. (3) Combined debt service is all debt service including interest on Commercial Paper. (4) Debt Service Ratio is calculated by dividing the Net Pledged Revenues Available for Debt Service by the corresponding Debt Service. (5) Intermediate Lien and Combined Aggregate Debt Service Coverage ratios includes the following: - In fiscal year 2010, a reduction in debt service of $95 million due to the release of funds from Series F, Series K, Series L and Series N bond reserve funds. - In fiscal year 2012, $0.6 million of Series M unspent bond proceeds were applied to the debt service payment. 201 Port of Oakland Schedule 12 (A Component Unit of the City of Oakland) Ratios of Debt Service Last Ten Fiscal Years (dollar amounts in thousands)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Debt Service

Senior Revenue Bonds (1) Aviation $ 7,320 $ 7,818 $ 8,254 $ 9,845 $ 5,997 $ 5,437 $ 14,887 $ 12,551 $ 13,206 $ 13,014 Maritime 47,779 48,745 58,269 67,515 61,159 59,021 67,682 54,085 55,960 55,242 Commercial Real Estate 4,266 5,225 5,251 5,289 4,074 7 1,649 5 7 7 Total Senior Revenue Bonds Debt Service $ 59,365 $ 61,788 $ 71,774 $ 82,649 $ 71,230 $ 64,465 $ 84,218 $ 66,641 $ 69,173 $ 68,263

Department of Boating & Waterways Commercial Real Estate $ - $ - $ - $ - $ 457 $ 457 $ 457 $ 457 $ 457 $ 457

Intermediate Revenue Bonds Aviation $ - $ - $ - $ - $ 3,618 $ 7,610 $ 7,617 $ 8,867 $ 12,033 $ 12,018 Maritime - - - - 8,886 20,985 20,486 29,128 25,271 25,289 Commercial Real Estate - - - - 267 527 525 552 1,241 1,241 73 Total Intermediate Revenue Bonds Debt Service $ - $ - $ - $ - $ 12,771 $ 29,122 $ 28,628 $ 38,547 $ 38,545 $ 38,548

Commercial Paper (2) Aviation $ - $ - $ - $ - $ 1,793 $ 361 $ 90 $ 68 $ 40 $ 41 Maritime - - - - 4,023 896 218 165 116 115 Commercial Real Estate ------3 0 BUDGET &FINANCETab4.2 Total Commercial Paper Debt Service $ - $ - $ - $ - $ 5,816 $ 1,257 $ 308 $ 233 $ 159 $ 156

Debt Service by Division Aviation $ 7,320 $ 7,818 $ 8,254 $ 9,845 $ 11,408 $ 13,408 $ 22,594 $ 21,486 $ 25,279 $ 25,073 Maritime 47,779 48,745 58,269 67,515 74,068 80,902 88,386 83,378 81,347 80,646 Commercial Real Estate 4,266 5,225 5,251 5,289 4,798 991 2,631 1,014 1,708 1,705 Total Debt Service $ 59,365 $ 61,788 $ 71,774 $ 82,649 $ 90,274 $ 95,301 $ 113,611 $ 105,878 $ 108,334 $ 107,424

Aviation Debt Service per Enplaned Passenger Enplaned passengers (in 000's) 6,958 7,171 7,188 7,267 6,802 4,956 4,778 4,688 4,826 4,973 Aviation Debt Service per Enplaned Passenger (not in 000's) $ 1.05 $ 1.09 $ 1.15 $ 1.35 $ 1.68 $ 2.71 $ 4.73 $ 4.58 $ 5.24 $ 5.04

Note: (1) Senior Revenue Bond debt service is less capitalized interest. (2) Interest only. 202 BUDGET & FINANCE Tab 4.2

Port of Oakland Schedule 13 (A Component Unit of the City of Oakland) Outstanding Debt by Debt Type Last Ten Fiscal Years (dollar amounts in thousands)

Department of Intermediate Boating & Special Capital Tax Commercial Fiscal Year Senior Bonds (1) Bonds Waterways Facilities Bonds Exempt Loan Paper Total

2004 $ 1,418,586 $ - $ 9,739 $ 34,090 $ 1,154 $ 150,000 $ 1,613,569 2005 1,410,431 - 6,787 - 348 150,000 1,567,566 2006 1,395,464 - 6,632 - - 150,000 1,552,096 2007 1,370,072 - 6,473 - - 191,893 1,568,438 2008 962,822 503,090 6,307 - - 78,540 1,550,759 2009 935,672 498,585 6,133 - - 81,440 1,521,830 2010 856,000 494,390 5,952 - - 89,440 1,445,782 2011 834,230 479,850 5,762 - - 87,268 1,407,110 2012 (2) 803,761 478,977 5,564 - - 87,268 1,375,570 2013 762,025 460,681 5,357 - - 78,398 1,306,461

Note: (1) Senior Debt was called Parity Bonds Debt through Fiscal Year 2007. (2) Starting in 2012, amounts include bond discount/premium.

74 203 BUDGET & FINANCE Tab 4.2

Port of Oakland Schedule 14 (A Component Unit of the City of Oakland) Demographic And Economic Statistics for the City of Oakland Last Ten Calendar Years

Personal Per Capita Calendar Income Personal Median School Unemployment Year Population ($000s) Income Age Enrollment Rate (%) 2004 411,600 $ 18,163,496 44,129$ 33.3 49,334 6.1 2005 412,300 $ 9,044,213 21,936$ 33.3 49,334 5.3 2006 411,755 $ 11,697,548 28,409$ 33.3 41,467 7.1 2007 415,492 $ 9,114,233 21,936$ 33.3 39,802 7.4 2008 420,183 $ 10,554,157 25,118$ 36.1 39,705 9.6 2009 425,068 $ 11,182,689 26,308$ 36.7 38,826 17.1 2010 390,757 $ 10,607,099 27,145$ 37.1 38,450 17.2 2011 392,333 (1) $ 11,107,340 (1) 28,311$ 36.3 38,540 16.3 2012 394,832 (1) $ 11,281,140 (1) 28,572$ 36.2 37,742 14.3 2013 399,326 $ 12,391,086 31,030$ 36.6 36,180 11.3

Note: In FY 2003 - 2004 median family income was used as per capital personal income

Source: Population - State of California Department of Finance, Per Capita Income and Median Age - DemographicsNow.com, School Enrollment - Oakland Unified School District, Unemployment Rate - State of California Employment Development Department

(1) 2011 and 2012 were updated with newly available data from the California Department of Finance and DemograhicsNow.com.

75 204 BUDGET & FINANCE Tab 4.2

Port of Oakland Schedule 15 (A Component Unit of the City of Oakland) Principal Employers in the City of Oakland - FY 2012 vs FY 2006

FY 2012 (2) FY 2006 (1) Number of Percentage of Number of Percentage of Employer Employees Rank Total Employment Employees Rank Total Employment

County of Alameda 8,843 1 5.11% 9,740 1 5.63% Oakland Unified School District 4,496 2 2.60% 8,000 2 4.63% Kaiser Permanente Medical Group 4,418 3 2.56% 5,450 3 3.15% Dreyer's Grand Ice Cream Inc. 4,191 4 2.42% N/A Cost Plus Inc. 4,113 5 2.38% N/A City of Oakland 4,073 6 2.36% 4,290 5 2.48% Alta-Bates Summit Medical Center 3,623 7 2.10% N/A 1.48% Children's Hospital & Research 2,600 8 1.50% N/A Bay Area Rapid Transit 1,499 9 0.87% 2,800 6 1.62% Peralta Community College District 1,400 10 0.81% N/A Kaiser Foundation Hospitals N/A 4,340 4 2.51% Federal Express N/A 2,790 7 1.61% Alta-Bates Medical Center N/A 2,620 8 1.52% Kaiser Foundation Health Plan N/A 2,590 9 1.50% Summit Medical Center N/A 2,230 10 1.29%

Total 39,256 44,850

Note: (1) Data pertaining to principal employers for past 10 years is not readily available. As such, we used 2006 data as our base year which is the earliest information available. (2) Data pertaining to principal employers for 2013 is not readily available. As such, we used 2012 data as our latest information available.

Source: Fiscal Year 2006 - Economic Development Alliance for Business, Alameda County Largest Employers. Fiscal Year 2012 - Various sources Total employment of 172,896 (2011 estimate) from DemographicsNow.com is used to calculate the percentage of employment.

76 205 Port of Oakland Schedule 16 (A Component Unit of the City of Oakland) Actual Employee Count by Division Last Ten Fiscal Years

Revenue Divisions 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Aviation 316 290 310 289 315 307 238 228 242 233 Maritime 26 21 18 65 (1) 77 78 63 61 63 69 Commercial Real Estate 12997878877

Subtotal 354 320 337 361 400 392 309 297 312 309

Support Divisions Corporate Administrative Services 32 31 26 29 26 35 17 17 14 14 Engineering 204 170 167 108 (1) 91 49 37 37 39 38 Financial Services 42 39 39 42 40 33 27 27 28 30 Others 91 81 82 89 92 64 58 59 58 65 Subtotal 369 321 314 268 249 181 139 140 139 147

Total 723 641 651 629 649 573 448 437 451 456 77

Employee Count

900

600 BUDGET &FINANCETab4.2

300 Employees

0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Fiscal Years

Note: (1) Harbor Facilities was moved from Engineering Division to Maritime Division in FY 2007.

Source: Port of Oakland Human Resources Database 206 Port of Oakland Schedule 17 (A Component Unit of the City of Oakland) Capital Assets Information Last Ten Fiscal Years

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Aviation facilities Paved airport runways 4 4 4 4 4 4 4 4 4 4 Total length of runways (in feet) 25,038 25,038 25,038 25,038 25,038 25,038 25,038 25,038 25,038 25,038 Area of airport (in acres) 2,600 2,600 2,600 2,600 2,600 2,600 2,600 2,600 2,600 2,600 Parking stalls 8,596 8,431 7,298 6,864 7,868 6,103 (1) 6,315 (1) 6,950 (1) 6,516 (1,2) 6,516 (1,2)

Harbor facilities Miles of waterfront 19 19 19 19 19 19 19 19 19 19 Berthing length at wharves (in feet) 23,031 23,031 23,063 23,063 23,063 23,233 23,233 23,233 23,233 23,233 Harbor area (in acres) 770 770 786 786 786 786 786 779 779 779

Commercial Real Estate

78 Owned acreage 914 877 876 876 874 874 874 874 865 834 Parking stalls 2,114 2,114 2,114 2,004 1,479 1,429 1,429 1,429 1,429 1,429

Note: (1) 1,186 stalls in Daily Parking Lot were blocked due to the drop of passenger volume.

(2) 434 stalls in Daily Parking Lot were blocked due to construction of the BART - Oakland Airport Connector. BUDGET &FINANCETab4.2

Source: Port of Oakland Records 207 BUDGET & FINANCE Tab 4.3

PORT OF OAKLAND

Report to Board of Port Commissioners Year Ended June 30, 2013

208 BUDGET & FINANCE Tab 4.3

PORT OF OAKLAND Report to Board of Port Commissioners Year Ended June 30, 2013

Table of Contents

Page

Transmittal Letter ...... 1

Required Communications ...... 2

Current Year Comments and Responses ...... 5

Status of Prior Year Comments ...... 5

Schedule of Uncorrected Misstatements ...... 8

209 BUDGET & FINANCE Tab 4.3

Board of Port Commissioners of the City of Oakland, California

In planning and performing our audit of the financial statements of the Port of Oakland (Port) as of and for the year ended June 30, 2013, in accordance with auditing standards generally accepted in the United States of America, we considered the Port’s internal control over financial reporting (internal control) as a basis for designing our audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Port’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Port’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency or combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis.

Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses. Given these limitations during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

We have also provided a status of our prior year comments beginning on page 5 of this document.

This communication is intended solely for the information and use of the Board of Port Commissioners, management and others within the Port, and is not intended to be and should not be used by anyone other than these specified parties.

Walnut Creek, California November 7, 2013

1

210 BUDGET & FINANCE Tab 4.3

PORT OF OAKLAND Report to Board of Port Commissioners Year Ended June 30, 2013

REQUIRED COMMUNICATIONS

We have audited the financial statements of the Port of Oakland (Port), as of and for the year ended June 30, 2013. Professional auditing standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards and U.S. Office of Management and Budget (OMB) Circular A-133, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our engagement letter dated April 23, 2013. Professional standards also require that we communicate to you the following information related to our audit.

Qualitative Aspects of Accounting Practices

Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Port are described in Note 2 to the Port’s financial statements. As described in Note 2 to the financial statements, the Port changed its accounting policies related to deferred inflows and deferred outflows of resources by adopting Statement of Governmental Accounting Standards No. 65, Items Previously Reported as Assets and Liabilities.

We noted no transactions entered into by the Port during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.

Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were:

. Claims liabilities; . Pollution remediation costs; . Allowance for losses on customer accounts receivable; . Workers’ compensation liability; . Pension contributions and Postemployment benefits other than pensions (OPEB) liability; . Depreciation for capital assets; . Allocation of costs to construction projects;

Management’s estimates were based on the following:

. Estimated claims liabilities and pollution remediation costs are based on independent consultant valuations as well as internal valuations; . Allowance for losses on customer accounts receivable is based on historical collection activity; . Workers’ compensation liability is based on an actuarial valuation; . Estimated Pension contributions and OPEB liability are based on actuarial valuations; . Depreciation estimates for capital assets are based on estimated useful lives of assets; and . Allocation of costs to construction projects is based on a methodology in accordance with OMB Circular A-87 cost principles.

2

211 BUDGET & FINANCE Tab 4.3

PORT OF OAKLAND Report to Board of Port Commissioners Year Ended June 30, 2013

REQUIRED COMMUNICATIONS (Continued)

Qualitative Aspects of Accounting Practices (Continued)

We evaluated the key factors and assumptions used to develop these accounting estimates in determining that they are reasonable in relation to the Port’s financial statements.

Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements have been noted above.

The financial statement disclosures are neutral, consistent and clear.

Difficulties Encountered in Performing the Audit

We encountered no significant difficulties in dealing with management in performing and completing our audit.

Corrected and Uncorrected Misstatements

Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. The attached schedule summarizes uncorrected misstatements of the financial statements. Management has determined that their effects are immaterial, both individually and in the aggregate, to the financial statements taken as a whole.

Disagreements with Management

For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors’ report. We are pleased to report that no such disagreements arose during the course of our audit.

Management Representations

We have requested certain representations from management that are included in the management representation letter dated November 7, 2013.

Management Consultations with Other Independent Accountants

In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the Port’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those financial statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all relevant facts. To our knowledge, there were no such consultations with other accountants.

3

212 BUDGET & FINANCE Tab 4.3

PORT OF OAKLAND Report to Board of Port Commissioners Year Ended June 30, 2013

REQUIRED COMMUNICATIONS (Continued)

Other Audit Findings or Issues

We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Port’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

Other Information in Documents Containing Audited Financial Statements

Our responsibility for other information in documents containing the financial statements and our report does not extend beyond the financial information identified in our audit report. We do not have an obligation to perform any procedures to corroborate other information contained in these documents. The Port includes its financial statements and our report in its Comprehensive Annual Financial Report (CAFR). However, we have read the other information in the Port’s CAFR and considered whether such information, or its manner of presentation, were consistent with information appearing in the financial statements. Nothing came to our attention that caused us to believe that such information, or manner of its presentation, is materially inconsistent with the information, or manner of its presentation, appearing in the financial statements.

4

213 BUDGET & FINANCE Tab 4.3

PORT OF OAKLAND Report to Board of Port Commissioners Year Ended June 30, 2013

CURRENT YEAR COMMENTS AND RESPONSES

None reported.

STATUS OF PRIOR YEAR COMMENTS

2012-#1. Oracle Enterprise Resource Planning System Conversion (Material Weakness) - Addressed

The Port should complete implementation of the following recommendations:

 Prepare a user training plan, conduct thorough user training, follow up with the users to assure the training was adequate, conduct ongoing user training as necessary, and prepare a user handbook as a reference document.  Update all the Port’s procedures to incorporate the new and revised Oracle procedures (billing/collections, procurement/disbursements, payroll/human resources, property management, capital projects and general ledger).  Prepare the Port-wide risk assessment of internal controls in response to the functionality of the Oracle system.  Complete a staffing needs assessment in conjunction with the Port-wide risk assessment of internal controls.

Status per Port Management During the course of the fiscal year, Port management and staff continued efforts to improve the Oracle ERP system with respect to: conducting a Port-wide risk assessment, performing a staffing needs assessment, updating and documenting procedures, and developing a thorough training plan.

In late March, the Internal Audit division completed a Port-wide risk assessment of internal controls. The risk assessment found no significant weaknesses, but identified opportunities to improve efficiency and strengthen internal controls. The Information Technology and Finance divisions are working together to prioritize and resolve all the findings. While performing the risk assessment, the Internal Audit division also performed a staffing needs assessment, which identified the need to update procedure documentation and cross train key personnel with singular knowledge of procedures. Efforts to update documentation and cross train personnel will be completed in conjunction with similar efforts to update financial policies and related procedures as described in the update to finding 2012-#4 Financial Policies.

At this point in time, all significant training on Oracle has been identified and completed. The Finance and Information Technology divisions independently evaluated the need for more comprehensive Oracle training. Both divisions concluded that users were confident with knowing how to use Oracle to accomplish tasks, but questioned the overall efficiency of the processes being performed in Oracle. The divisions agreed that each key business process should be systematically reviewed for efficiency and effectiveness, with the resulting processes documented, and additional training provided as needed. Many of these efforts will be completed in conjunction with similar efforts to update financial policies and procedures as described in the update to finding 2012-#4 Financial Policies. Staff will be involved through-out this process to ensure their understanding and acceptance of the procedures.

5

214 BUDGET & FINANCE Tab 4.3

PORT OF OAKLAND Report to Board of Port Commissioners Year Ended June 30, 2013

2012-#2. Retirement and Health Care Costs (General Comment) - Addressed

The Port should proactively communicate the costs and benefits of its retirement and health care programs to employees, management, commissioners, and other stakeholders. The objective of this communication should be to build consensus about the value and sustainability of the current programs.

Status per Port Management Rising retirement and health care costs remain a concern for the Port. The Port has and will continue to proactively communicate with its employees the value of benefits received. For example, at the beginning of the calendar year, the Port’s Corporate Administrative Services division issued compensation statements to all of the Port’s employees. The compensation statements summarized for the employee their total compensation earned at the Port, including the Port’s cost to provide health care and other benefits to the employee and their eligible dependents.

In addition, two significant actions occurred during the course of the year to reduce pension and health care costs at the Port. The passage of California’s pension reform act reduces the pension benefit for new CalPERS participants, including Port employees, effective January 1, 2013. For new CalPERS participants, this law among other things, increases the retirement age, caps the annual payout and requires workers to pay for at least half the cost. Also, effective July 2013, and consistent with terms agreed upon with various bargaining units of the Port, all Port employees began contributing to the CalPERS pension fund. Furthermore, during the course the year, SEIU and IBEW accepted changes to the Port’s Retiree Health Plan for new hires, which were previously adopted by the Port and previously accepted by the Port’s other unions. The changes include the adoption of a longer vesting schedule and the elimination of retiree vision and dental coverage for employee’s hired after certain cut off dates. While the cost savings from the reduced pension and health care retirement plan will not be realized for many years, it is a significant step in reducing future retirement costs.

2012-#3. Popular Financial Report (General Comment) – Considered but not implemented

The Port should design an easily understood and highly visual popular financial report intended to communicate the Port’s financial results and condition to a broad non-technical audience. The report should be based on information in the Port’s CAFR and be issued within six months of the Port’s fiscal year end. Distribution of the report could be via the Port’s existing Currents newsletter and posted on the Port’s website.

Status per Port Management Port management understands the value a popular financial report could provide to non-technical users of the financial statements, but does not feel the cost involved to produce a popular financial report is worth the benefit received at this time. Currently, Port management does not have plans to produce a popular financial report, but will evaluate the cost and benefit of such a report in the future.

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215 BUDGET & FINANCE Tab 4.3

PORT OF OAKLAND Report to Board of Port Commissioners Year Ended June 30, 2013

2012-#4. Financial Policies (General Comment) – In progress

The Port should review the listing of GFOA best practice policies against an inventory of its current policies to determine if there are additional policies that should be put in place or updated.

Status per Port Management During the fiscal year, Port management conducted a review of current financial policies to determine if and where updates were needed, and to identify if new policies were necessary to fill in gaps. It was determined that several of the policies required only minor updating, while certain policies required more significant rewrites, and one new policy, focused on Accounts Payable, was needed. In conjunction with that review, Port management developed a work plan which identified and prioritized policies and procedures and established completion dates. In the last 15 months, the Port has updated 11 financial policies and related procedures and is on track with its work plan.

2012-#5. Grants Management (General Comment) – In progress

1. The Finance Division should prepare a grants summary report at least quarterly. Finance management should use this report to assure that all grants are being administered properly, including expenses agree with amounts recorded in the general ledger, amounts expended are claimed for reimbursement in a timely manner, billed amounts are collected in a timely manner, expenditures are on track for being spent within the grant period, and receivables recorded in the general ledger agree with grant administrator records.

2. The Finance Department should develop a written policy for managing grants that describes the major steps from grant application to close out. The Port should update its grant procedures to contemplate the new grants policy as well as changes resulting from implementation of Oracle.

Status per Port Management As part of the larger effort to update existing policies and procedures (see update to finding 2012-#4 Financial Policies), Port staff has begun their efforts to document and update grant management procedures and policies. Port staff will continue to focus on improving grant related reporting and process controls.

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216 BUDGET & FINANCE Tab 4.3

PORT OF OAKLAND Report to Board of Port Commissioners Year Ended June 30, 2013

Schedule of Uncorrected Misstatements

# DESCRIPTION DEBIT CREDIT

1 Unrestricted cash equivalents $ 476,875

Interest income $ 476,875

To record unrealized gain on investments held in the City of Oakland’s treasury pool.

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217 STRATEGY & POLICY Tab 5

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

218 STRATEGY & POLICY Tab 5.1

Port of Oakland Renewable Energy Procurement Update December 12, 2013

219 STRATEGY & POLICY Tab 5.1

Electric Utility Operation Background

 Operate as a publicly owned utility (POU)  Services OAK, Former FISCO and OAB  Purchase electricity from wholesale market and resale to Port tenants and for Port’s own use  Subject to rules governing POUs (Frank Dodd, Assembly Bill 32, Renewable Portfolio Standards, etc.)

 Port resells to approximately 130 customers

 Total Quantity of Electricity Sold:  2011 – 43,327 MWH  2012 – 45,136 MWH  2013 – 46,000 MWH (Estimated)

220 STRATEGY & POLICY Tab 5.1

Electric EServicelectric TerritoryService

Legend Port service PG&E service

2/23/07

221 STRATEGY & POLICY Tab 5.1

Electricity Retail Sales

Former Oakland Army Base Former Navy Property # of Customers: 21 # of Customers: 15 Annual MWH Sales: 1,458 Annual MWH Sales: 26,319

Notes: 1. Customer Count varies from month to month 2. Annual sales if for CY Oakland Airport 2012 # of Customers: 94 Annual MWH Sales: 17,359

222 STRATEGY & POLICY Tab 5.1

Renewable Portfolio Standards

 In April, 2011, Governor Brown signed Senate Bill 2 of the first extraordinary session (SBX1-2).  Requires Investor Owned Utilities (IOUs) and POUs to develop a Renewable Energy Resources Procurement Plan and Enforcement Program  In December 2011, Port adopted a Procurement plan and enforcement program based on the language of SBX1-2. They included the following elements:  Eligible renewable products  Compliance periods  Procurement targets  Portfolio balance requirements  Acceptable delays in compliance  Reporting requirements  Measures the Board will take if the Port is out of compliance  In October, 2013, California Energy Commission (CEC) adopted new regulations clarifying SBX1-2  Today, Port staff proposes to adopt revised procurement plan based on new clarifying regulations.

223 STRATEGY & POLICY Tab 5.1

Compliance Periods & Procurement Targets  3 compliance periods & annual compliance period thereafter  Compliance Period 1 – CY 2011 – 2013  20% of retail sales during compliance period  Compliance Period 2 – CY 2014 – 2016  20% of retail sales during 2014 and 2015  25% of retail sales during 2016  Compliance Period 3 – CY 2017 – 2019  27% of retail sales during 2017  29% of retail sales during 2018  31% of retail sales during 2019  Annual Compliance Period – CY 2020 & Beyond  33% of retail sales during 2020

224 STRATEGY & POLICY Tab 5.1

Renewable Energy Procurement Status

Compliance Year % of Retail Sales Renewables Renewables Period from Renewable Required Procured Resources (* Estimated) (* Estimated) 2011 20% 11,600 1 2012 20% 26,200 3,600 2013 20% *18,600 2014 20% *10,600 2 2015 20% *31,200 *10,600 2016 25% *10,600 2017 27% *9,100 3 2018 29% *44,120 *1,600 2019 31% *1,600 2020 & 33% *17,160 *1,600 4 Beyond

225 STRATEGY & POLICY Tab 5.1

Optional Compliance Measures Adopted

 Implemented optional compliance measures in the Port’s Procurement Plan.  Excess procurement – Allows carryover of certain eligible renewable energy certificates from one compliance period to a future compliance period

 Waiver of timely compliance – Waives compliance for reasons beyond the Port’s control

 Cost limitations constraints – Waives compliance due to disproportionate rate impact from compliance

226 STRATEGY & POLICY Tab 5.1

Reporting

 By July 1 of each year, the Port will submit a report to the CEC that demonstrates the Port’s compliance with its procurement plan. Report includes:  Contract information  Actual or forecasted sales  Actual or forecasted retirement of RECs for RPS Compliance  Discussion of progress on compliance

 Staff expects to meet the requirements of the Compliance Period 1 without any exceptions.  Enough excess procurement to cover unexpected events.

227 STRATEGY & POLICY Tab 5.1

Port Portfolio of Renewable Resources

Counterparty Type of Term Annual Renewable Generation (MWH) Western Area Power Small 2005-2024 500 Administration (WAPA) Hydropower SunEdison Solar 2007-2026 1,100 Powerex Corp. Wind 2011 10,000 East Bay Municipal Utility Biogas 2012-2017 9,000 District (EBMUD) Silicon Valley Power Varies 2013 8,000 (Municipal Utility)

228 STRATEGY & POLICY Tab 5.1

Other Projects Considered

Counterparty Project Term Renewable Size (Years) Fuel (MW) Ameresco Manteca, LLC 2-4 20 Biogas (Landfill) Western GeoPower, LLC 1-2 20 Geothermal Monterey County Water Resources 2 N/A Small Agency Hydropower Monterey Regional Waste 2 10 Biogas Management District (Landfill)

229 STRATEGY & POLICY Tab 5.1

Next Steps

 2 Action Items Needed:  Adopt the First Amended and Restated Renewable Energy Resources Procurement Plan  Modifications to be consistent with newly adopted CEC Regulations  Approve the Renewable Energy Certificate Transfer Agreement with NCPA  Allows Port to receive Renewable Energy Certificates from WAPA power to satisfy the Port’s procurement plan requirements  Continue to look for other renewable energy opportunities for future compliance  Port’s Energy Innovation Initiative  Partnerships with other utilities  Onsite generation possibilities

230 STRATEGY & POLICY Tab 5.2

BOARD MTG. DATE: 12/12/13

AGENDA REPORT

TITLE: Adoption of First Amended and Restated Renewable Energy Resource Procurement Plan

AMOUNT: No Budget Impact

PARTIES INVOLVED:

Corporate Name/Principal Location Port Electric Customers at the Oakland Oakland, CA International Airport, Former Fleet Industrial Supply Center Oakland, and Former Oakland Army Base

TYPE OF ACTION: Resolution

SUBMITTED BY: Chris Chan, Director of Engineering

APPROVED BY: J. Christopher Lytle, Executive Director

SUMMARY

On October 1, 2013, the California Energy Commission (CEC), the agency charged with enforcing the provisions of SBX1-2, adopted regulations which provided clarity on the requirements set forth by SBX1-2. This agenda report requests the adoption of revisions to the Port’s existing Procurement Plan to be consistent with the CEC’s newly adopted regulations.

FACTUAL BACKGROUND

On April 12, 2011, Governor Jerry Brown signed SBX1-2 into law. Under SBX1-2, publicly owned utilities (POUs), such as the Port were required to develop a procurement plan for the purchase of 20% of its electricity from eligible renewable resources by calendar year 2013, 25% by calendar year 2016 and 33% by calendar year 2020. The Board adopted its Procurement Plan on December 1, 2011. In addition, the Board also adopted an RPS Enforcement Program to ensure the Port would be in compliance with its adopted procurement plan and to ensure that the Port was making reasonable progress towards achieving the 20%, 25%, and 33% by 2013, 2016, and 2020, respectively.

As a POU, the Port of Oakland (Port) purchases electricity from the wholesale electricity market to supply its own operational needs and for resale to the Port’s tenants at the Oakland International Airport (OAK), the former Naval Fleet Industrial Supply Center-Oakland (FISCO), and the former Oakland Army Base (OAB). As a POU, the Port must meet the requirements of the RPS Program. The RPS Program is a set of regulations that requires a utility to increase

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BOARD MTG. DATE: 12/12/13 its procurement of electricity from an eligible renewable energy source such as wind, solar, biomass and geothermal.

On October 1, 2013, the California Energy Commission (CEC) adopted a set of Regulations1 which clarifies how publicly owned utilities will meet the RPS. Although the Port adopted its Procurement Plan in 2011, the plan was developed to be consistent with SBX1-2 which does not include some of the clarifications contained in the new regulations.

In consideration of the above, staff recommends the Board adopts the First Amended and Restated Renewable Energy Resource Procurement Plan, which incorporates the CEC’s clarifying rules as described below.

ANALYSIS

Port staff developed a Renewable Energy Resources Procurement Plan that is consistent with the laws established by SBX1-2. The existing Renewable Energy Resources Procurement Plan includes the following elements: • Defines the compliance periods and procurement targets for each compliance period. • Requires annual review of reasonable progress made towards the procurement targets for each compliance period. • Defines the type of electricity contracts and limits of each type. • Defines the process for carrying over excess renewable energy procurement from one compliance period to the next • Defines the terms of timely compliance • Identifies the conditions under which the Port may be waived from meeting its procurement targets and the procedure for such waivers. • Defines the cost limitations for expenditures. • Reporting requirements including posting requirements on the Port's progress towards meeting its RPS.

Staff proposes the following amendments to the Port’s existing Procurement Plan to be consistent with the Regulations: • Add formulas for calculating procurement targets for each compliance period. • Add formulas for calculating excess procurement from one compliance period to the next. • Add clarification on considerations for establishing cost limitation • Add details as to the timeline for filing reports to the CEC and the type of information that is reported to the CEC.

1 California Code of Regulations, Title 20, Division 2, Chapter 2, Article 4, Section 1240 and California Code of Regulations Title 20, Division 2, Chapter 13, Sections 3200-3208

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BOARD MTG. DATE: 12/12/13

STRATEGIC PLAN

The Strategic Plan was adopted by the Board on October 5, 2010. The Strategic Plan is a cornerstone of the overall alignment of the Port. It provides the framework for focusing the work of staff and the Board of Port Commissioners, and serves to guide an organization-wide redesign to better match the skills and talents of Port employees with the overall strategic goals of the organization in the key areas of Sustainable Business and Economic Development, Stewardship and Accountability, Port Workforce and Operations, and Communication and Information.

This project would help the Port achieve the following goal and objective:

STRATEGIC HOW THIS PROJECT PRIORITY GOAL OBJECTIVE IMPLEMENTS + WHEN AREAS Stewardship Goal G: Sustain Healthy 1. Partner to share risk, The State of California and Communities Through accountability, benefits Renewable Portfolio Standards Accountability Leading Edge Environmental and improve set some of the highest goals in Stewardship environmental and safety the nation. The proposed compliance. amendments to the Procurement Plan will align the Port of Oakland with the State of California’s high standards. The Procurement Plan outlines our targets and serves as a strategic plan for meeting the targets. The Port is committed to achieving at least 33% renewable by calendar year 2020. The Board as a partner of the state has the role of enforcing the Port’s compliance with the procurement plan. This role begins immediately.

BUDGET & FINANCIAL IMPACT

There are no immediate budget impacts as a result of adopting the First Amended and Restated Renewable Energy Resources Procurement Plan. However, based on current cost differential between renewable and non-renewable energy, the Port’s current electricity costs may increase by as much as 50% by 2020 in order to be in compliance with the plan (including these amendments). The additional cost increases for renewable electricity will be recovered through the Port’s electric rate tariff. Staff will continue to evaluate renewable energy purchasing opportunities for cost effectiveness and budget the cost appropriately. Staff will make recommendations to the Board on future renewable electricity purchases to comply with the procurement plan.

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233 STRATEGY & POLICY Tab 5.2

BOARD MTG. DATE: 12/12/13

STAFFING IMPACT

The matters contained in this Agenda Report will not impact current or future staffing.

SUSTAINABILITY

Adopting the Renewable Energy Resources Procurement Plan will demonstrate the Port’s continued commitment towards the use of renewable energy. The Port is also increasing the amount of renewable energy used by 2017 from 20% to 25%. By 2020, the Port expects to procure 33% of its electricity from a renewable resource.

ENVIRONMENTAL

The proposal to adopt the Amended and Restated Renewable Energy Resources Procurement Plan 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 adopting the Amended and Restated Renewable Energy Resources Procurement Plan will result in a physical change in the environment, and therefore that action is not subject to CEQA. The procurement plan will increase the Port's use of renewable energy, which will have a beneficial effect on the environment.

MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)

The matters addressed under this action are not within the scope of the Port of Oakland Maritime and Aviation Project Labor Agreement (MAPLA) and the provisions of the MAPLA do not apply to this action.

OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

The Port's Owner Controlled Insurance Program (OCIP) does not apply to this action.

GENERAL PLAN

This action does not change the use of any existing facility or create new facilities, and therefore does not require a General Plan conformity determination pursuant to Section 727 of the City of Oakland Charter.

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.

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BOARD MTG. DATE: 12/12/13

OPTIONS

1. Adopt the First Amended and Restated Renewable Energy Resources Procurement Plan which will provide a clear roadmap on how the Port intends to meet its RPS targets. This is the recommended option.

2. Take No Action: The Port will continue to operate based on the existing Procurement Plan. This option has some potential for misinterpretation on how the Port is meeting its RPS requirements.

RECOMMENDATION

It is recommended that the Board adopt the First Amended and Restated Renewable Energy Resources Procurement Plan.

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235 STRATEGY & POLICY Tab 5.2

12/12/13 Item No.: 5.2 DC/kk

A# BOARD OF PORT COMMISSIONERS CITY OF OAKLAND

RESOLUTION APPROVING AND ADOPTING THE FIRST AMENDED AND RESTATED RENEWABLE ENERGY RESOURCE PROCUREMENT PLAN.

WHEREAS, the Board of Port Commissib'hers ("Board") has reviewed and evaluated Board Agenda Report Item No. 5.2, dated December 12, 2013 (the "Agenda Report") and related agenda materials,, has received the expert testimony of Port of Oakland ("Port") sta£f, and has provided opportunities for and taken public comment; and \yz WHEREAS, that in acting upon this matter, the Board has exercised its independent judgment based on substant:i>al\evidence in the record and adopts and relies upon the facts, data, analysis, and findings set forth in the Agenda Report and\ in related agenda materials and in testimony received; now,/thereforeV \b,e i/ / RESOLVED, that the Board\A hereby \finds and determines that it can be seen with certainty that/there is, ho possibility that the adoption of the First Amended and Restarted Renewable Energy Resource Procurement Plan (the "Procurement Plan") as described in the Agenda Report will .resuit\in\a\physical change in the environment, and therefore, / sttch adoptipnX is not subject to the California Environmental Quality Act\ pCEQA") . 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; and be/it

FURTHER RESOLVED, that based upon the information contained in the Agenda Report, the Board hereby approves and adopts the First Amended and Restated Renewable Energy Resource Procurement Plan as more fully described in the Agenda Report; and be it

FURTHER RESOLVED, that this resolution shall be effective immediately upon adoption by the Board.

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BOARD MTG. DATE: 12/12/13

AGENDA REPORT

TITLE: Authorization to Execute Renewable Energy Certificate Transfer Agreement with Northern California Power Agency

AMOUNT: $5 (one time) / $2.50 Annually on-going

PARTIES INVOLVED:

Corporate Name/Principal Location Northern California Power Agency Roseville, CA Jim Pope, General Manager

TYPE OF ACTION: Resolution

SUBMITTED BY: Chris Chan, Director of Engineering

APPROVED BY: J. Christopher Lytle, Executive Director

EXECUTIVE SUMMARY

This agenda report requests authorization to execute the Renewable Energy Certificate (REC) Transfer Agreement Between the Northern California Power Agency (NCPA)1 and Port of Oakland (Port) in order to transfer RECs from NCPA’s Western Renewable Energy Generation Information System (WREGIS) to the Port’s WREGIS account.

FACTUAL BACKGROUND

The Port, as a publicly owned utility (POU), must comply with certain State Renewable Portfolio Standards (RPS) regulations as well as the Port’s own adopted Renewable Energy Resources Procurement Plan (Procurement Plan). The mechanism by which the Port demonstrates compliance with the regulations is through the retirement of RECs in the Port’s WREGIS2 account.

The Port receives a share of Western Area Power Administration (WAPA) power from a portfolio of federally owned large and small hydropower projects in California, of which small hydropower projects are eligible to be counted as renewable resources. WAPA has agreed to transfer the RECs generated by the small hydropower projects to the power purchasers, which includes the Port. Since, the Port delegated the management of the Port’s share of WAPA power to NCPA, WAPA transferred the Port’s RECs to NCPA instead of directly to the Port. In

1 Northern California Power Agency (NCPA) is a joint powers authority consisting of 12 municipal utilities and a transportation agency including the Port of Oakland. 2 WREGIS is a California Energy Commission (CEC) approved tracking system for RECs.

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BOARD MTG. DATE: 12/12/13 order for the Port to receive the RECs, the Port will have to instruct NCPA to initiate another REC transfer from NCPA to the Port.

NCPA, in order to protect its own interest and its membership, developed the Renewable Energy Certificate Agreement (Agreement) that outlines the terms and conditions under which the RECs are transferred to the owner, in this case, the Port. The Port must execute the agreement, which is requested by this agenda report, prior to the transfer of RECs from NCPA to the Port.

ANALYSIS

Each REC generally represents proof that 1 Megawatt-hour (MWh) of electricity was generated by a renewable resource. In April, 2011, the California Legislature enacted Senate Bill 2 of the First Extraordinary Session (SBX1-2), which (among other things) further defines the eligibility of renewable resources. The additional rules and regulations resulting from SBX1-2 put the liability for qualification of RECs on the generation owners and the utility company that retires the RECs for its own compliance.

WAPA transferred approximately 541 and 499 RECs for calendar years 2011 and 2012, respectively to NCPA for the Port’s share of WAPA power. WAPA will transfer RECs for calendar year 2013 sometime during the first half of 2014. The Port paid $334 and $288 for calendar years 2011 and 2012 respectively for the cost of transferring the RECs from WAPA to NCPA. This cost was included as part of the Port’s budgeted WAPA costs. However, the cost of transferring the RECs from NCPA to Port was not included. The cost of transferring the RECs from NCPA to WAPA is approximately $5 (~$2.50 per year depending on the actual number of RECs transferred). While, the cost of transferring RECs is minimal and the process of transferring RECs from NCPA to the Port is simple, there are, however, implications as to what the RECs represent. The Agreement holds NCPA harmless from any liability associated with the use of the RECs. Port staff believes this arrangement is fair because NCPA is acting as a conduit in the transfer process and is not the originator of the REC. Therefore, NCPA should not have to bear the responsibility of ensuring the eligibility of the RECs for the Port’s use. Moreover, the Port is one of the member entities of NCPA.

The RECs generated by WAPA small hydropower projects are eligible to be counted as renewable resources for the Port’s RPS procurement target. The RECs generated by the WAPA project each year will meet 1% of the Port’s RPS procurement target. The Port will continue taking power from WAPA through the year 2024. The cost per REC from WAPA is about $0.60/REC. The cost for replacing RECs from the wholesale market is approximately $30/REC. Therefore, staff recommends that the Board approve the execution of the Renewable Energy Certificates Transfer Agreement Between Northern California Power Agency and Port of Oakland so the Port may realize the full benefit of federal hydropower and meet the Port’s RPS procurement target.

STRATEGIC PLAN

The Board adopted the Strategic Plan on October 5, 2010. The Strategic Plan is a cornerstone of the overall alignment of the Port. It provides the framework for focusing the

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238 STRATEGY & POLICY Tab 5.3

BOARD MTG. DATE: 12/12/13 work of staff and the Board of Port Commissioners, and serves to guide an organization-wide redesign to better match the skills and talents of Port employees with the overall strategic goals of the organization in the key areas of Sustainable Business and Economic Development, Stewardship and Accountability, Port Workforce and Operations, and Communication and Information.

This project would help the Port achieve the following goal and objective:

STRATEGIC HOW THIS PROJECT PRIORITY GOAL OBJECTIVE IMPLEMENTS + WHEN AREAS Sustainable Goal A: Create Sustainable 1. Maximize the use Once the Port executes the NCPA Economic and Economic Growth For the of existing assets. REC transfer Agreement, the Port Business Port and Beyond will receive the credit generated by Development the federally owned hydropower projects, the same projects that the Port purchases power from. If the Port chooses not to execute the agreement, the Port would have to purchase replacement RECs at a higher price.

BUDGET & FINANCIAL IMPACT

The cost of transferring the WAPA generated RECs from NCPA to the Port for calendar years 2011 and 2012 will be approximately $5. The ongoing annual cost of REC transfers through year 2024 is estimated at approximately $2.50 per year and will depend on the actual number of RECs transferred.

STAFFING IMPACT

The matters contained in this Agenda Report will not impact current or future staffing.

SUSTAINABILITY

WAPA’s power projects provide the Port with low cost renewable energy which promotes the Port’s environmental and financial sustainability.

ENVIRONMENTAL

The proposals to approve the execution of the Renewable Energy Certificates Transfer Agreement Between Northern California Power Agency and Port of Oakland 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 the transfer of renewable energy certificates will result in a physical change in the environment, and therefore that action is not subject to CEQA.

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239 STRATEGY & POLICY Tab 5.3

BOARD MTG. DATE: 12/12/13

MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)

The matters addressed under this action are not within the scope of the Port of Oakland Maritime and Aviation Project Labor Agreement (MAPLA) and the provisions of the MAPLA do not apply to this action.

OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

The Port's Owner Controlled Insurance Program (OCIP) does not apply to this action.

GENERAL PLAN

This action does not change the use of any existing facility or create new facilities, and therefore does not require a General Plan conformity determination pursuant to Section 727 of the City of Oakland Charter.

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 to this agreement because NCPA is a governmental agency.

OPTIONS

1. Approve the execution of the Renewable Energy Certificates Transfer Agreement Between Northern California Power Agency and Port of Oakland. This is the recommended action.

2. Take No Action: The Port will be required to procure replacement RECs in order to remain in compliance with the Port’s RPS procurement target. The wholesale market cost of the replacement RECs is currently $30/REC, resulting in a significant cost increase for the Port.

RECOMMENDATION

It is recommended that the Board approve the execution of the Renewable Energy Certificates Transfer Agreement Between Northern California Power Agency and Port of Oakland.

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12/12/13 Item 5.3 DC/kk £wz—--

BOARD OF PORT COMMISSIONERS CITY OF OAKLAND

RESOLUTION APPROVING AND AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE THE RENEWABLE ENERGY CERTIFICATES TRANSFER AGREEMENT WITH NORTHERN CALIFORNIA POWER AGENCY.

WHEREAS, the Board of Port Commissioners^"Board"j \jrcas reviewed and evaluated Board Agenda Report Item No. 5.3, dated December 12, 2013 (the "Agenda Report") and related agenda materials, has received the expert testimony of Port of Oakland ("Port") staff, and has provided opportunities for and taken public comment; and

WHEREAS, that in acting upon this matter, the Board has exercised its independent judgment based on substantial^ evidence in the record and adopts and relies,.upon the facts,, data, analysis, and findings set forth in the Agenda, Report and related agenda materials and in testimony received;xnow, therefore, be it

RESOLVED, that thev6oard hereby finds and determines that it can be seen with-''certainty that there is no possibility that the approval and authorization of execution of the Renewable Energy Certificates Transfer

FURTHER RESOLVED, that the Board hereby approves and authorizes the Executive Director to execute the Agreement with the NCPA in order to transfer renewable energy certificates from NCPA's Western Renewable Energy Generation Information System ("WREGIS") account to the Port's WREGIS account; and be it

FURTHER RESOLVED, that this resolution is not evidence of and does not create or constitute (a) a contract, or the grant of any right, entitlement or property interest, or (b) any obligation or

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241 STRATEGY & POLICY Tab 5.3

liability on the part of the Board or any officer or employee of the Board. This resolution approves and authorizes the execution of an agreement in accordance with the terms of this resolution. Unless and until a separate written agreement is duly executed on behalf of the Board as authorized by this resolution, is signed and approved as to form and legality by the Port Attorney, and is delivered to other contracting party, there shall be no valid or effective agreement; and be it

FURTHER RESOLVED, that this resolution shall be effective immediately upon adoption by the Board.

298968

242 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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12/12/13 Tab No. 6.1 yfl4 JS/lhr *a

BOARD OF PORT COMMISSIONERS CITY OF OAKLAND

RESOLUTION AUTHORIZING AN UPGRADE TO THE AUDIO SYSTEM FOR THE BOARD ROOM LOCATED AT 530 WATER STREET, OAKLAND, CALIFORNIA.

WHEREAS, the Board of Port siortersx ("Board") has reviewed and evaluated the Agenda Repor tern 6.1 da^ed-^December 12, 2013 ("Agenda Report") and related age, ials, hks received the expert testimony of Port of Oakland aff, and has provided opportunities for and taken public commen pw, therefore be it

RESOLVED, that in ac upon thisS ^natter, the Board has exercised its independent judging on ^substantial evidence in the record and adopts and relies cts, data, analysis, and findings set forth in the Age t and in related agenda materials and in testimo. and be it

FURTHER e Board hereby authorizes an upgrade to the audio Board Room located at 530 Water Street, Oakland, jGaiifor increases the FY 13-14 capital budget by up to $50,0CKC^ro-^und s provements; and be it

Df that the Board hereby authorizes the Executive Dir designee to negotiate, approve and execute such agreements h other documents as may be necessary and appropriate to pe the services contemplated in the Agenda Report, in accordance with 1 applicable Port purchasing rules and policies, subject to the Por attorney's approval as to form and legality; and be it

FURTHER RESOLVED, that the Board determines and finds that this Resolution is categorically exempt from requirements of the California Environmental Quality Act ("CEQA") Guidelines, and the Port CEQA Guidelines pursuant to Section 15301(a), which addresses interior or exterior alterations of existing structures, facilities, mechanical equipment, or topographical features with negligible or no expansion of use beyond that previously existing; and be it

298997

250 REMAINING ACTION ITEMS Tab 6.1

FURTHER RESOLVED, that this Resolution is not evidence of and does not create or constitute (a) a contract (s), or the grant of any right, entitlement or property interest, or (b) any obligation or liability on the part of the Board or any officer or employee of the Board. Unless and until a separate written contract is duly executed on behalf of the Board as authorized by this resolution, is signed as approved as to form and legality by the Port Attorney, and is delivered to other contracting party, there shall be no valid or effective change order.

298997

251 REMAINING ACTION ITEMS Tab 6.2

BOARD MTG. DATE: 12/12/13

AGENDA REPORT

TITLE: Authorization to Extend Lease with Ports America Outer Harbor Terminal, LLC for the Berths 25/26 Marine Terminal for Six Months, through June 30, 2014

AMOUNT: Approximately $8.4 million annually ($4.2 million for 6-month extension)

PARTIES INVOLVED:

Corporate Name/Principal Location Ports America Outer Harbor Terminal, LLC Oakland, CA

TYPE OF ACTION: Ordinance

SUBMITTED BY: Jean Banker, Maritime Director (Acting)

APPROVED BY: J. Christopher Lytle, Executive Director

SUMMARY

Ports America Outer Harbor Terminal, LLC (PAOH) currently leases the Berths 25/26 marine terminal (see Exhibit A) pursuant to a Non-Exclusive Preferential Assignment Agreement (Lease) with the Port, which PAOH assumed in 2010. The lease initially was set to expire on June 30, 2013, but was extended to December 31, 2013. Staff is requesting an additional 6- month extension to the lease term for the purpose of continuing negotiations with PAOH for a multi-year extension to the lease.

FACTUAL BACKGROUND

On August 2, 2010, the Port entered into the Second Supplemental Agreement to a Non-Exclusive Preferential Assignment Agreement (‘Lease”) with PAOH for the Berths 25/26 marine terminal. The Lease initially was set to expire on June 30, 2013. Under the Lease, PAOH has two options to extend the Lease for an additional five years each upon mutual agreement between PAOH and the Port on compensation terms. Accordingly, PAOH exercised its first option by giving notice to the Port in writing on June 25, 2012 of its intent to exercise the first 5-year option, contingent upon agreement with the Port on the terms and conditions of lease extension. Port staff met with PAOH on several occasions to discuss the compensation terms of the Lease extension; however, no agreement was reached by June 2013. Therefore, staff requested and the Board approved an extension through December 31, 2013 to continue negotiations on the terms and condition of such an extension.

Following a brief hiatus in Summer 2013, staff and PAOH resumed negotiations and have met on several occasions since then. At this time, staff and PAOH are still negotiating terms for a multi-year Lease extension for the Berths 25/26 marine terminal. Staff currently believes that agreement can be reached if more time is allotted for negotiations.

252 REMAINING ACTION ITEMS Tab 6.2

BOARD MTG. DATE: 12/12/13

ANALYSIS

Port staff believes that an additional 6-month extension to the Lease term will provide adequate time to complete discussions with PAOH regarding the compensation terms for the Berths 25/26 marine terminal Lease. Staff’s goal is to complete negotiations as soon as possible, but believes a 6-month extension is prudent. PAOH management concurs with a 6-month Lease extension as described herein, subject to the approval of their board of directors.

More specifically, Port staff proposes that if agreement cannot be reached by December 31, 2013 (current expiration date), the Lease term will automatically terminate on the earlier to occur of (i) the date that the Port and PAOH reach agreement on the compensation terms of the lease extension or (ii) June 30, 2014. If agreement is not reached by June 30, 2014, staff will then be free to market the Berth 25/26 terminal to other interested terminal operators.

STRATEGIC PLAN

The action described herein would help the Port achieve the following goal and objective of the Port’s Strategic Plan:

STRATEGIC HOW THIS PROJECT PRIORITY GOAL OBJECTIVE IMPLEMENTS + WHEN AREAS Sustainable Goal A: Create Maximize the use of The proposed lease extension Economic and sustainable economic existing assets will secure revenue for the Port Business growth for the Port and and maintain business operations Development beyond Retain existing customers at Berths 25/26 while discussions and tenants over the terms and conditions for Goal B: Maintain and a longer lease continue. Aggressively Grow Core Businesses

BUDGET & FINANCIAL IMPACT

Extension of the Lease for the Berths 25/26 marine terminal by six months secures revenue of approximately $4.2 million, excluding any tariff increases that may take affect in Fiscal Year 2013-14 and may apply to the Lease.

STAFFING IMPACT

The action described herein is not anticipated to impact staffing levels.

SUSTAINABILITY

The action described herein does not directly provide opportunities for sustainability as described in the Port’s Sustainability Policy.

253 REMAINING ACTION ITEMS Tab 6.2

BOARD MTG. DATE: 12/12/13

ENVIRONMENTAL

The proposed six-month extension to the term of the Lease between the Port and PAOH is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to the Port CEQA Guidelines, Section 15301(p), which exempts renewals, extensions or amendments to leases or license and concession agreements where the premises or licensed activity was previously leased or licensed to the same or another person, and involving negligible or no expansion of use beyond that previously existing. Extending the Lease with the existing tenant, PAOH, to continue its current business operations meets the criteria for this exemption.

The Lease premises includes 6.5 acres that are under the oversight of the State of California’s Department of Toxic Substances Control (DTSC, site 01280092) due to volatile organic compounds in shallow groundwater, remaining from a former use as a marine chemical terminal and hazardous materials bulk storage and processing facility. A deed restriction1 on that portion of the site prohibits certain land uses and activities, such as groundwater extraction and excavation or soil disturbance without DTSC review and approval of a soil management plan. Continued use of the deed-restricted portion of the site for marine terminal purposes is not subject to CEQA under Section 15061(b)(3) of the CEQA Guidelines, which 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 extending the existing Lease for the same uses on that portion of the site will result in a physical change in the environment, and therefore this action is not subject to CEQA.

MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)

The matters addressed under this action are not within the scope of the Port of Oakland Maritime and Aviation Project Labor Agreement (MAPLA) and the provisions of the MAPLA do not apply to this action.

OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

This action is not subject to the Port's Owner Controlled Insurance Program (OCIP).

GENERAL PLAN

This action does not change the use of any existing facilities or create new facilities; therefore a General Plan conformity determination pursuant to Section 727 of the City of Oakland Charter is not 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”), 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.

1 http://www.envirostor.dtsc.ca.gov/regulators/deliverable_documents/4540135025/LUC.Port.Final.Execu.recorded.pdf

254 REMAINING ACTION ITEMS Tab 6.2

BOARD MTG. DATE: 12/12/13

OPTIONS

Staff has identified the following options for the Board’s consideration:

1. Authorize the Executive Director to execute a 6-month extension to the Berths 25/26 Lease, through June 30, 2014, and determine that if an agreement cannot be reached between the Port and PAOH by such date, the Lease will automatically expire on June 30, 2014. 2. Do not authorize the Executive Director to execute a 6-month extension to the Berths 25/26 Lease, determine that the lease expires on December 31, 2013, and direct staff to market the Berths 25/26 marine terminal to other interested parties. There will be no Lease revenues collected while the terminal is marketed.

RECOMMENDATION

Staff recommends that the Board:

1. Make the CEQA findings outlined herein; 2. Authorize the Executive Director to execute a 6-month extension to the Berths 25/26 Non- Exclusive Preferential Assignment Agreement, through June 30, 2014; and 3. Determine that if agreement cannot be reached between the Port and PAOH by such date, the Non-Exclusive Preferential Assignment Agreement will automatically expire on June 30, 2014, and direct staff to market the Berths 25/26 marine terminal.

255 REMAINING ACTION ITEMS Tab 6.2

BOARD MTG. DATE: 12/12/13

Exhibit A

Berths 25/26 Marine Terminal

256 REMAINING ACTION ITEMS Tab 6.2

BOARD OF PORT COMMISSIONERS CITY OF OAKLAND

ORDINANCE APPROVING AND AUTHORIZING THE EXECUTIVE DIRECTOR TO ENTER INTO AN AMENDMENT TO THE NON-EXCLUSIVE PREFERENTIAL ASSIGNMENT AGREEMENT ("LEASE") WITH PORTS AMERICA OUTER HARBOR TERMINAL LLC FOR THE BERTHS, 25/26 MARINE TERMINAL FOR SIX MONTHS, THROUGH JUNE 30, 2014.

WHEREAS the Board of Port Commissioners% y> of the City of Oakland ("Board") has reviewed and evaluated the proposed extension of the Non- Exclusive Preferential Assignment Agreement\ ("Lease") with Ports America Outer Harbor Terminal LLC ("Ports\America") for\Berths 25/26 as set forth in the Agenda Report for Agenda Item x6/2, dated December 12, 2013 (the "Agenda Report") and related agenda materials,, has, received .the expert testimony of Port of Oakland ("Port") staff, and has provided opportunities for and taken public comment; now, therefore \ / y "\ \\ < BE IT ORDAINED by the; Board of Port Commissioners of the City of Oakland as follows: \\ / /\\ \\ / \) Section 1. In acting upon this matter, the Board has exercised its independent judgment based on substantial evidence in the record and adopts and relies upon the facts, data, analysis, and findings set forth in the Agenda Report and in related agenda materials and in testimony received. \ \ \ Section 2. The Board hereby finds and determines as follows: \ \ A. Goiitinueci use of the leasehold premises for marine terminal purposes is not subject/to California Environmental Quality Act ("CEQA") under Section 15061 (b) (-3) of the CEQA Guidelines, which 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 extending the existing Lease for the same uses on the premises, including the prohibitions on soil disturbances, will result in a physical change in the environment, and therefore this action is not subject to CEQA.

B. In addition, the proposed six-month addition to the term of the Lease between the Port and Ports America is categorically exempt from the CEQA pursuant to the Port CEQA Guidelines, Section 15301(p), which exempts renewals, extensions or amendments to leases or license and concession agreements where the premises or licensed activity was previously leased or licensed to the same or another person, and involving negligible or no

Page 1 of 2 298947

257 REMAINING ACTION ITEMS Tab 6.2

expansion or use beyond that previously existing. Extending the Lease with the existing tenant, Ports America, to continue its current business operations meets the criteria of this exemption.

Section 3. The Board approves and authorizes the Executive Director to enter into an amendment to the Lease to extend the Lease with Ports America for Berths 25/26 Marine Terminal for six months, through June 30, 2014, under the same terms and conditions of the existing Lease. The existing Lease currently generates approximately $8.4 million annually ($4.2 million for 6-month extension) in Port revenue, as further detailed and explained in the Agenda Report.

Section 4. This ordinance is not evidence of and does not create or constitute (a) a contract, or the grant of any/rrght, entitlement or property interest, or (b) any obligation or liability/ on the part of the Board or any officer or employee of the Board. This

Section 5, This ordinance effective immediately upon adoption by the Board,

President

Attest: Secretary.

Approved as to form and legality:

Port Attorney

Page 2 of 2 298947

258 REMAINING ACTION ITEMS Tab 6.3

BOARD MTG. DATE: 12/12/13

AGENDA REPORT

TITLE: Five-Year Extension of License and Concession Agreement with Piedmont Hawthorne Aviation, LLC d/b/a Landmark Aviation (Aviation)

AMOUNT: $9,159.88 Per Month

PARTIES INVOLVED:

Corporate Name/Principal Location Piedmont Hawthorne Aviation, LLC, a Limited Liability Delaware organized; Company; d/b/a Landmark Aviation Houston, Texas based Dan Bucaro, President and CEO Houston, TX Houston, TX Allen Ashcraft, Executive Vice President and General Counsel TYPE OF ACTION: Ordinance

SUBMITTED BY: Deborah Ale Flint, Director of Aviation

APPROVED BY: Chris Lytle, Executive Director

This action would give first reading to an ordinance approving, by Letter Amendment (Amendment), a five-plus (5) year extension to the term of an existing License and Concession Agreement (License) with Piedmont Hawthorne Aviation, LLC, d/b/a Landmark Aviation (Landmark) for occupancy of 17,940sf of hangar and office space within Port Building L-210 (the “Premises”) at a monthly rental of $9,159.88. This action would also authorize the Director of Aviation to execute the Amendment.

FACTUAL BACKGROUND

Landmark, a tenant at Oakland International Airport (OAK) since November, 2011, has 52 fixed base operations across the United States, Canada and Europe, including 10 at airports comparable in size and scope to OAK. Fixed base operators (FBOs) conduct a wide range of aeronautical support activities including, but not limited to fueling, maintenance and charter flights.

In addition to the License, Landmark – as a significant North Field tenant – has the following agreements with the Port, which generate $332,101.80 of fixed, monthly revenue:

Agreement Approximate Type Date Square Feet Facilities Lease 06/14/2013* 677,780 Offices/Hangars/Shops/Aprons/Parking (12 locations) Lease 11/01/2011 704,307 Offices/Hangars/Shops/Parking (2 locations) License 06/06/2013 15,398 Office/Hangar/Shop/Apron/Parking License 09/01/2010 51,390 Office/Hangar/Apron

* Date of assignment from Business Jet Center Oakland, LP to Landmark Aviation

Piedmont/Landmark (License Amend) (12-12-13)

259 REMAINING ACTION ITEMS Tab 6.3

BOARD MTG. DATE: 12/12/13

On June 13, 2013, pursuant to Resolution No. 13-96, the Board of Port Commissioners approved the License for a term not to exceed six (6) months (i.e. from June 14, 2013 through December 13, 2013). At that time, staff requested Board approval of a short-term agreement so as not to have a chilling effect on the marketing of L210 along with two, vacant adjacent properties (i.e. L230 C&D). Port staff have exposed the properties to a wide range of potential lessees and/or remodelers including the following North Airport tenants: Landmark Aviation and KaiserAir, Fixed Base Operators; Oakland Flyers, a North Airport flying club; the Aviation Institute of Maintenance, an aircraft mechanic vocational training institute and prospective new tenants: an air ambulance company and a pilot training school. Until one or more of these initiatives materialize, the Port continues to earn money from use of the properties’ ramp/apron areas for itinerant aircraft parking.

Port Building L210, 9171 Earhart Road, North Airport:

ANALYSIS

The proposed Amendment would extend the term for five-plus (5) years commencing on December 14, 2013 and ending on December 31, 2018. To reduce the need for the Board to approve an extension every year, staff is requesting this five-plus (5) year term, subject to the 30-day termination described below.

Piedmont/Landmark (License Amend) (12-12-13) 2

260 REMAINING ACTION ITEMS Tab 6.3

BOARD MTG. DATE: 12/12/13

The current monthly rent of $9,159.88 and three (3) times monthly rent-based performance deposit would be subject to annual increases via the Consumer Price Index (Urban Wage Earners and Clerical Workers–San Francisco-Oakland-San Jose, CA).

Landmark would continue to have all maintenance responsibilities for this 86-year-old, steel/corrugated, metal building. In addition, all taxes and utilities would be paid by Landmark. The Port would have neither maintenance or repair responsibilities, nor any capital improvement obligations.

So as not to adversely impact the Port’s marketing of vacant, adjacent hangar spaces (Building L-230C and L-230D) the Port, with Landmark’s consent, has retained a bilateral right to terminate the License, as extended by the Amendment, on 30 days’ notice. Landmark may also terminate the License on 30 days’ notice if it no longer needs the Premises.

STRATEGIC PLAN

Approval of the Amendment complements the following goals of the Port’s FY2011-2015 Strategic Plan:

STRATEGIC PRIORITY GOAL OBJECTIVE IMPLEMENTATION AREAS 1. Maximize the use of Goal A: existing assets. This will maintain OAK’s Create 3. Increase revenue and job employment base and Sustainable creation. the associated Economic 4. Pursue strategic disposable income will Growth For The partnerships at all help grow the area Sustainable Port And levels: local, regional, economy. Economic and Beyond national and international.

Business This extension of term Development helps retain Landmark Goal B: revenue for this building Maintain and 1. Retain existing customers and saves the Port Aggressively and tenants. expense funds since Grow Core Landmark is responsible Businesses for maintenance of this 86 year old structure.

Approval will retain a Goal D: $9,159.88 monthly Improve The revenue stream and 3. Maximize return on Port’s Financial result in $71,425 of Investment (ROI). Position revenue in excess of that budgeted for FY13-14.

Piedmont/Landmark (License Amend) (12-12-13) 3

261 REMAINING ACTION ITEMS Tab 6.3

BOARD MTG. DATE: 12/12/13

BUDGET & FINANCIAL IMPACT:

The North Airport FY13-14 revenue budget assumed revenue for the L210 premises to be $38,494 based on previous tenant occupying only a fraction of the Premises at a lower monthly rent. However, since Landmark is leasing more space than the prior tenant, approval of the Amendment will result in additional FY13-14 revenue of approximately $71,425.

STAFFING IMPACT

There will be no change in Port staffing as a result of approving the Amendment.

SUSTAINABILITY

There are no obvious environmental opportunities involved in approving the Amendment.

ENVIRONMENTAL

CEQA Determination The Amendment is categorically exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Port CEQA Guidelines, Section 15301(p), which exempts renewals, extensions or amendments to leases or license and concession agreements where the premises or licensed activity was previously leased or licensed to the same or another person, and involving negligible or no expansion of that previously existing.

Mitigation No construction activities will occur. This project will not have any significant impacts to the environment; therefore, no mitigation measures are required.

Related Plans and Policies This project does not require mitigation measures; therefore, there are no related or adopted plans for this project.

Environmental Compliance This action will not disturb soil, groundwater, or hazardous materials.

Piedmont/Landmark (License Amend) (12-12-13) 4

262 REMAINING ACTION ITEMS Tab 6.3

BOARD MTG. DATE: 12/12/13

MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)

The action to approve this Amendment does 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 to this action. However, if future tenant construction work under this Amendment exceeds the thresholds required for coverage under the MAPLA, the provisions of MAPLA will apply when the Port Permits are requested for said future construction work.

OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

Owner Controlled Insurance Program (OCIP) coverage does not apply to this Amendment as it is not a capital improvement construction project.

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 tenant employs 21 or more employees working on Port-related work and the tenancy agreement is greater than $50,000. In addition, construction prevailing wage requirements will apply if tenant construction work commences under this License in the future.

OPTIONS

1. Adopt an ordinance approving an Amendment to the existing License for a five-plus (5) year extension of the License as outlined above, and authorizing the Director of Aviation’s execution of the Amendment allowing Piedmont Hawthorne Aviation, LLC d/b/a Landmark Aviation to retain and expand its clientele at OAK thereby ensuring the Port’s retention of $9,159.88 in monthly revenue.

2. Do not adopt an ordinance approving an Amendment for a five–plus (5) year extension of the License as outlined above, which would result in termination of the License as of December 13, 2013 and loss to the Port of $9,159.88 of monthly revenue.

3. Reject the proposed Amendment but recommend different terms and conditions. Piedmont/Landmark (License Amend) (12-12-13) 5

263 REMAINING ACTION ITEMS Tab 6.3

BOARD MTG. DATE: 12/12/13

RECOMMENDATION

It is recommended that the Board approve the terms and conditions set forth in this Agenda Report for an amendment extending the term of the above-described License for five years with Piedmont Hawthorne Aviation, LLC d/b/a Landmark Aviation for a monthly rent of $9,159.88 adjustable on June 1, 2014 and annually thereafter no less than the annual increase in the Consumer Price Index (Urban Wage Earners and Clerical Workers-San Francisco-Oakland-San Jose, CA) and authorizing the Director of Aviation to approve and execute the amendment to the License subject to the Port Attorney's review and approval as to form and legality.

Piedmont/Landmark (License Amend) (12-12-13) 6

264 REMAINING ACTION ITEMS Tab 6.3

BOARD MTG. DATE: 12/12/13

Piedmont/Landmark (License Amend) (12-12-13) 7

265 REMAINING ACTION ITEMS Tab 6.3

\X |A la ufr \Wb",

ORDINANCE APPROVING TERMS AND CONDITIONS OF AND AUTHORIZING APPROVAL AND EXECUTION OF A FIVE-YEAR EXTENSION OF LICENSE AND CONCESSION AGREEMENT WITH PIEDMONT HAWTHORNE AVIATION, LLC, D/B/A LANDMARK AVIATION,^FOR A MONTHLY RENT OF $9,159.88 ADJUSTABLE ON JUNE 1, 2014 AND ANNUALLY THEREAFTER^ NO LESS THAN THE ANNUAL INCREASE IN\ THE CONSUMER PRICE INDEX.

WHEREAS the Board of Por ners of the City of Oakland 'Board") has reviewed VaTtcl e Agenda Report for Agenda Item 6.3, dated December\^Zt 'Agenda Report") and related agenda materials, has reced\vecp>the ""expert testimony of Port of Oakland ("Port") staff, and has prW^Lded ^opportunities fo]r and taken public comment; now, ther-efoxe

BE IT ORDAINED bjy/ the Bok

Section 2,/The Board hereby approves the terms and conditions proposeor in the Agenda Report for and hereby authorizes the Port's Director of Aviation to approve and execute an extension of a License and Concession Agreement with Piedmont Hawthorne Aviation, LLC, dba Landmark Aviation, for a five (5) year term at a monthly rental rate of $9,159.88 per month adjustable on June 1, 2014 and annually thereafter no less than the annual increase in the Consumer Price Index, subject to approval by the Port Attorney as to form and legality.

Section 3. The Board hereby finds and determines that this transaction is categorically exempt from the requirements of the California Environmental Quality Act ("CEQA") pursuant to Port CEQA Guidelines Section 15301(p), which exempts renewals, extensions or

Page 1 of 2 299000

266 REMAINING ACTION ITEMS Tab 6.3

amendments to leases or license and concession agreements where the premises or licensed activity was previously leased or licensed to the same or another person, and involving negligible or no expansion of that previously existing.

Section 5. This ordinance is not evidence of and does not create or constitute (a) a contract (s), or the grant of any right, entitlement or property interest, or (b) any obligation or liability on the part of the Board or any officer or employee of the Board. Unless and until a separate written contract is duly executed on behalf of the Board as authorized by this resolution, is signed as approved as to form and legality by the Port Attorney, and is delivered to other contracting party, there shall be no valid or effective change order.

Section 6. This ordinance shall effective immediately upon adoption by the Board.

President.

Attest: Secretary.

Approved as to form and legality:

Port Attorney

Page 2 of 2 299000

267 REMAINING ACTION ITEMS Tab 6.4

BOARD MTG. DATE: 12/12/13

AGENDA REPORT

TITLE: Approval of a Second Amendment to Lease of the Lease Between Port of Oakland and Southwest Airlines Co. Dated February 1, 2004 (501 Alan Shepard Way) (Aviation)

AMOUNT: $303,672 Annual Revenue. Incremental revenue of approximately $31,836 above the FY2013-14 budget.

PARTIES INVOLVED:

Corporate Name/Principal Location Southwest Airlines Co./ Dallas, TX Gary C. Kelly, Chairman and CEO Dallas, TX Greg Gillis, Regional Property Manager Dallas, TX Steve Bernhart, Station Manager Oakland, CA

TYPE OF ACTION: Ordinance

SUBMITTED BY: Deborah Ale Flint, Director of Aviation

APPROVED BY: J. Christopher Lytle, Executive Director

With this action, staff seeks Board adoption of an Ordinance approving the terms and conditions, and authorizing the Executive Director to execute, the Second Amendment to Lease with Southwest Airlines Co. (“Southwest”).

This action will provide for (i) incorporating 10,287 square feet of existing building improvements into the Assigned Space, (ii) adjusting the Annual Rate to $303,672.24, (iii) adjusting the Performance Deposit to $76,000, (iv) extending the Term to December 31, 2018, and (v) adjusting the Insurance Requirements.

FACTUAL BACKGROUND

On February 1, 2004 the Port of Oakland (the “Port”) executed a 119 month lease with Southwest (the “Lease”) permitting Southwest to construct, maintain and operate a proprietary airline provisioning center (the “Provisioning Center”) on Port property at 501 Alan Shepard Way. The Assigned Space is 52,280 of land and had an initial rent of $8,739 per month. Within the Assigned Space, Southwest constructed, at its cost, a building of approximately 10,287 square feet as well as a loading ramp, truck staging area and employee/guest parking. The Port provided all necessary infrastructure to the periphery of the Assigned Space. The initial rent adjusts upward annually based on the Consumer Price Index and, additionally, to fair market value at the end of year five. The current monthly rent is $11,644 (FY13-14 revenue of $137,268). The Lease expires on December 31, 2013 and contains no option to extend its term.

SWA Provisioning Center-Second Amendment_FINAL to JBanker.doc

268 REMAINING ACTION ITEMS Tab 6.4

BOARD MTG. DATE: 12/12/13

Reversion of Southwest-constructed improvement to Port’s ownership: Attachment A, Paragraph N of the Lease ("End of Term") states, "…All alterations, additions and improvements made pursuant to Paragraph A of this Attachment A shall immediately become Port's property and, at the expiration or earlier termination of this Lease, shall remain in the Assigned Space without compensation to Lessee." In anticipation of this event, staff recently had an MAI appraisal of the Provisioning Center land and improvements prepared.

ANALYSIS

The existing Lease which covers land only, and under which Southwest constructed, occupies and maintains a proprietary airline Provisioning Center expires on December 31, 2013. This Lease does not provide for an extension of its ten-year term and upon its expiration all permanent improvements become the property of the Port. Any extension of the term of the Lease will therefore also require an upward rental adjustment in recognition of the value of the improvements located on the land which will revert to Port ownership. In anticipation of this reversion in ownership of the improvements, staff recently had prepared an MAI appraisal of the Provisioning Center land and improvements. This appraisal determined a fair market rental rate for the provisioning center land and improvements to be $2.46 per square foot per month of building area∗. Therefore, upon expiration of the Lease and reversion of ownership to the Port of all permanent improvements, the fair market rent for this leasehold is $25,306 per month, or, $303,672 per year.

In order to provide for Southwest’s continued occupancy of the Provisioning Center, the Lease is proposed to be amended as follows:

1. Incorporate the Southwest-constructed 10,287 square foot provisioning building and associated permanent improvements (which revert to Port ownership as of the end of December) into the definition of "Assigned Space".

2. Adjust the "Monthly Payment" to $25,306.02 per month, or, $303,672.24 per year.

3. Adjust the "Performance Deposit" to $76,000; approximately two-times monthly billings (rent plus any other charges associated with the leasehold). Southwest has earned a good credit history with the Port, so it is recommended that the Board approve an exception to Port Policy No. AP 509 to reduce the total security deposits due for this Lease from three to approximately (but not less than) two times the average billings due under the Lease.

4. Extend the "Term" by five years to December 31, 2018.

∗ Rental under the current Lease is based on gross land area of 56,280 square feet at a FMRV of $0.21 per square foot per month ($11,644 per month). All improvements were constructed by Southwest with the Port receiving no “value” for these improvements until they revert to the Port as of December 31, 2013. The proposed rental is based building size of 10,287 square feet at $2.46 per square foot = $25,306.02 per month.

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5. Modify the "Insurance Requirements" as determined by the Port Risk Manager.

Aerial view of the Southwest Provisioning Center

STRATEGIC PLAN

Entering into the Second Amendment to Lease supports the goals of the Port’s 2011-2015 Strategic Plan:

Strategic Priority Goal Objective Result Areas Sustainable Goal A: Create Maximize the use Incorporating the Economic and sustainable of existing assets. Southwest Provisioning Business economic growth for Center permanent Development the Port and improvements into the beyond. leased premises generates additional revenue to the Port and maximizes the use of Port land. Sustainable Goal B: Maintain Retain existing Extending the Term of the Economic and and aggressively customers and Lease provides for the Business grow core tenants. continuing use and Development businesses. occupancy of the Southwest Provisioning Center.

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BUDGET & FINANCIAL IMPACT

For FY2013-14, the revenue budget for the Southwest Provisioning Center is $189,865. This represents six months (July-December) of revenue at $11,644 per month as provided for in the Lease plus six months (January-June) of projected revenue at $20,000 per month, in anticipation of a Second Amendment to Lease which staff assumed would be entered into between Southwest and the Port. The Second Amendment to Lease will actually provide for revenue of $25,306 per month and incremental revenues of approximately $31,836 above the FY2013-14 budget.

STAFFING IMPACT

There will be no Port staffing impact as the result of this action.

SUSTAINABILITY

There are no obvious environmental opportunities involved with the Second Amendment to Lease.

ENVIRONMENTAL

The action proposed in this agenda report involves executing the Second Amendment to Lease with Southwest for its continued operation of a proprietary airline provisioning center. Executing the Second Amendment to Lease has been determined to be categorically exempt from 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.

MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)

The action to approve the Second Amendment to Lease does 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. However, if future tenant construction work under this tenancy agreement exceeds the thresholds required for coverage under the MAPLA, the provisions of MAPLA will apply when Port Permits are requested for such future construction work.

OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

The action to approve the Second Amendment to Lease is not within the scope of the Port of Oakland’s Owner Controlled Insurance Program as it is not a capital improvement construction project. The tenant will be required to comply with the insurance clause contained in the Lease.

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GENERAL PLAN

Pursuant to Section 727 of the City of Oakland Charter, the Second Amendment to Lease has been determined to conform to the policies for the transportation designation of the Oakland General Plan.

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 Lease agreement because the service provider is subject to a valid collective bargaining agreement. However, future tenant construction work under this Lease agreement, construction prevailing wage requirements will apply.

OPTIONS

1. Approve the terms and conditions as described above, and authorize the Executive Director to execute, a Second Amendment to Lease with Southwest Airlines, Co. (“Southwest”) at Oakland International Airport (“OAK”).

2. Do not approve the terms and conditions of the Second Amendment to Lease, as described above, but recommend different terms and conditions; or,

3. Reject the Second Amendment to Lease, as described above, which will result in the inability of Southwest to operate a proprietary provisioning center at OAK.

RECOMMENDATION

It is recommended that the Board give first reading to an ordinance approving the Second Amendment to Lease with Southwest that is consistent with the terms and conditions described above, including extending the term by five (5) years and increasing rent to $25,306 per month effective January 1, 2014, and authorize the Executive Director to execute such Second Amendment to Lease subject to the Port Attorney’s review and approval as to form and legality.

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* ;- BOARD OF PORT COMMISSIONERS CITY OF OAKLAND

ORDINANCE APPROVING AND AUTHORIZIN; EXECUTION OF A SECOND AMENDMENT TO LEASE WITH SOUTHWEST AIRLINES CO.

WHEREAS, the Board of Port Commissi ne: of the City df Oakland ("Board") has reviewed and evaluated th Report for Agenda Item 6.4, dated December 12, 2013 (the "Ag and related agenda materials, has received the expert >f Port of Oakland ("Port") staff, and has provided opp lor and taken public comment; and

WHEREAS, that in acting upon ^thi Board has exercised its independent judgment based\ on^s.\ib "idence in the record and adopts and relies upon the facts, is, and findings set forth in the Agenda Report, an ated, agenda materials and in testimony received; now-"t herefore

BE IT ORDAINED by the', Bpard o'f 'Port Commissioners of the City of Oakland as follow^:/ // Section 1. The N^pard"""h~e""reby_ approves the terms and conditions proposed in__the Agenda Report for a Second Amendment to Lease with Southwest/Airline^ Co. (the "Second Amendment"), located at 501 Alan Shepard WaryT "da-kland International Airport, including the following termar /Ml) incorporating >10,287 square feet of existing building improvements, (2) adjusting the annual lease rate to $303,672.24 and (3) extending the te]rmi five years to December 31, 2018.

Section\2. The /Board approves and authorizes the Executive Director, orxhi-s/ae-signee, to:

A. execute for and on behalf of the Board the Second Amendment and such other documents as may be necessary to consummate this transaction, as approved by the Port Attorney as to form and legality; and

B. make such additions, modifications, or corrections as necessary to implement the Second Amendment or to correct errors, subject to the limitations set forth herein and provided that any such addition, modification or correction does not materially differ from the terms and conditions set forth herein and in the Agenda Report.

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Section 3. The Board hereby finds and determines that this transaction is exempt from the requirements of the California Environmental Quality Act ("CEQA") pursuant to CEQA Guidelines, Section 15301, 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.

Section 4. This ordinance is not evidence of and/does not create or constitute (a) a contract, or the grant of any raght, entitlement or property interest, or (b) any obligation oryliability on the part of the Board or any officer or employee of the^Board\ xhis ordinance approves and authorizes the execution of a cohtract in Accordance with the terms of this ordinance. Unless and' lintil a separate written contract is duly executed on behalf of th'e JSoard as authorized^by this ordinance, is signed as approved as to form andALegality by^he Port Attorney, and is delivered to other cpntfr^actir^g party, there shall be no valid or effective contract.

Section 5. This ordinance-^ shall be ctive immediately upon adoption by the Board.

President.

Attest: Secretary.

Approved as to form and legality:

Port Attorney

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AGENDA REPORT

TITLE: Authorization to Amend Port Ordinance 3634 to Adjust Certain North Field Rates and to Adopt an Ordinance to Authorize a Five-Year Extension of Multiple Agreements with General Aviation Tenants (Aviation)

AMOUNT: $474,312 FY2013-14 Budgeted Revenue (No FY2013-14 Change or Additional Revenue By This Action)

PARTIES INVOLVED:

Corporate Name/Principal Location 162 General Aviation Tenants at Oakland International Airport Various as Listed on Exhibit A TYPE OF ACTION: Ordinance (2)

SUBMITTED BY: Deborah Ale Flint, Director of Aviation

APPROVED BY: J. Christopher Lytle, Executive Director

As recommended by the Port Attorney, to improve governance, this action would give first reading to (i) an ordinance that extends the term by five (5) years for 162 existing agreements with tenants utilizing general aviation facilities at the North Field of Oakland International Airport (OAK), and (ii) a second ordinance that amends Section 9 of Port Ordinance 3634 related to specific changes in North Field rates, and implements annual increases in the rates for existing general aviation facilities. For both ordinances, the Board would delegate authority to the Director of Aviation to execute the extension/rental revision amendments (the Amendments) to implement the proposed changes.

FACTUAL BACKGROUND

In accordance with the By-Laws and Administrative Rules (revision dated June 13, 2013), the Executive Director, or his designee has the authority to designate and assign space in the Airport Aviation or airport area for temporary occupancy for various general aviation (“GA”)1, or other aviation related facilities.

1 General aviation (“GA”) is defined as all civil aviation operations other than passenger and cargo air services operations for remuneration or hire. GA flights range from gliders and powered parachutes to corporate jet flights. The majority of the world's air traffic falls into this category, and most of the world's airports serve general aviation exclusively. GA covers a large range of activities, both commercial and non- commercial, including flying clubs, flight training, agricultural aviation, light aircraft manufacturing and maintenance.

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Pursuant to this delegation, over the past several years, the Port has entered into 162 agreements with tenants occupying space throughout the North Field of OAK. Exhibit A2 is a detailed listing of each tenant, the location of identified GA facility, current monthly rental rate, and the FY2013-14 estimated revenue. Specifically:

• All are month to month agreements with the right of either party to terminate upon thirty (30) days written notice;

• Total estimated revenue for FY2013-14 is $449,0023; and,

• All of these agreements lack a defined expiration date and restrict the Port’s ability to adjust existing rates reflective of fair market rental value (FMRV).

There are two agreement models used for the affected GA facilities: (1) Application and Agreement for Assigned Ramp or Tie-down Space and (2) Application and Agreement for Hangar Space. Both agreement forms have been previously reviewed and approved by the Port Attorney.

As noted above, the term of the agreements for the tenancies listed on Exhibit A is on a month-to-month basis.As recommended by the Port Attorney, the existing 162 agreements must be amended since they lack a defined expiration date. In addition, it is proposed that the agreements be further amended to include the ability to: (i) extend the month to month term for an additional five-plus year period, and (ii) adjust current rental rates on an annual basis. Upon Board approval, amending the existing agreements would be a straight- forward process; whereas, negotiating new agreements would be time-consuming and an inefficient use of Port staff time, and would not generate additional revenue.

ANALYSIS

The two existing forms of agreements cover the GA facilities in the North Field identified as (and illustrated on the aerial photograph):

1. Ramp/Apron Space (i.e., land) under privately owned Port-A-Ports: “portable” aircraft storage facilities that are privately owned. There are 58 such Port-A-Port ramp/apron spaces with 98% occupancy.

2. Port-Owned Port-A-Ports: “portable” aircraft storage facilities that are owned by the Port; also known as the “New T-Hangars”. “New” is a misnomer as these facilities were constructed by the Port in 1975. There are 41 such hangars: 37 are occupied; 2 are vacant and 2 require structural repair before being leasable.

2 Exhibit A is provided so the Board may collectively review and approve each tenancy. 3 FY2013-14 Revenue shown on Exhibit A is slightly less than Budgeted Revenue of $474,312 due to a small number of vacancy and short delay in implementing planned rental increases.

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3. Port-Owned T-Hangars: permanent aircraft storage facilities that are owned by the Port; also known as “Old T-Hangars”. There are 5 Port-owned buildings, constructed in 1957 and 1968 subdivided into 43 tenancies with 100% occupancy.

4. Tie-Down Areas: uncovered parking spaces for privately owned aircraft most with tie-down anchorages; 40- and 50-foot lengths. There are 87 40-foot Tie-Downs and 6 50-foot Tie-Downs; just 24 (26%) of these Tie-Downs are utilized.

Northwest Corner of the North Field – Oakland International Airport

Extension of Term

The proposed Amendments will extend for a period of five-plus additional years (through June 30, 2019) all tenancies listed on Exhibit A. Except for rental rates discussed below, no other terms and conditions of the existing agreements will be modified: premises, authorized use, and specifically, the right of either party to terminate the agreement with 30-day written notice shall remain in full force.

Corporate governance requires that these agreements, with each having a tenancy extending beyond one year, must be approved by Port ordinance. This proposed action will meet that requirement and will not (i) encumber additional Port property, (ii) affect FY13-14 budgeted revenue, (iii) waive the Port’s right to future rental increases, or (iv) in any way amend any other terms or conditions of the existing agreements.

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Annual Adjustment of Rental Rates:

The FAA requires that airports be financially self-sufficient and charge rents that will maximize revenue. Further, the FAA allows airports the flexibility to establish rental rates based on either (i) a cost-recovery basis for capital expenditure plus maintenance, or (ii) FMRV.

Cost Recovery: As noted in the descriptions of these GA facilities, based on their age, all capital costs have been fully depreciated and maintenance costs for the buildings and surrounding aprons are minimal. Therefore, basing rents on cost-recovery would not be applicable.

Fair Market Rental Value: Port staff recently had all four categories of North Field GA facilities professionally evaluated and appraised for their respective FMRV’s within the Bay Area GA marketplace. The findings of the professional appraisal effort determined that a majority of these GA facilities at OAK currently are being charged FMRV rates, with no further need of adjustment. Port staff notes that on account of the recent economic recession, rates have been held constant for five (5) years over which time the CPI increase has been 9.7%. However:

4 As indicated above, of the total 93 Tie-Down Spaces, 69 (74%) are vacant. Based on the appraiser’s analysis, the Port’s current rates are higher than what is charged for comparable Tie-Down spaces at other Bay Area GA airports. Specifically, the 40-foot Tie-Down spaces that are currently authorized to be charged at $77 per space per month, have been appraised at $65 per space per month, and the 50-foot Tie-Downs are authorized at $110 per space per month yet have been appraised at $80 per space per month.

Downward adjustment of these vacant Tie-Down spaces to the appraiser-suggested FMRV level of $65 per month for the 40-foot spaces and $80 per month for the 50- foot spaces, will enable the North Field to be competitive with neighboring GA airports, potentially attract more users, and tangibly increase sustainable revenues with a higher volume of paid tenancies.

4 Since 37 (95%) of the 39 leasable Port-owned New T-Hangars are occupied, Port staff is proposing no change in the rental rate for these hangar types.

4 Since 100% of the 43 Old T-Hangars are occupied, and there is a large number of interested parties on the waiting list for these very popular facilities, it is Port staff’s opinion that the appraiser-recommended increase of 2¢ per square foot per month (a 6.7% increase over current rates) will not impact occupancy rates.

4 Since 98% of the Ramp Spaces for Privately-owned hangars are occupied, it is Port staff’s opinion that the appraiser-recommended increase of 2¢ per square foot per month (a 5.9% increase over current rates) for the 780 square foot and the 1060 square foot space types will not impact occupancy rates.

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Staff’s request for amending Port Ordinance 3634 primarily focuses on:

1. Increasing the rates on Ramp/Apron space with tenant-owned Port-A-Port, on New T-Hangars and Old T-Hangars;

2. Decreasing the existing rate for the 40-foot and 50-foot Tie-Down spaces; and,

3. Authorizing annual CPI4 rental increases for all monthly North Field rates (hourly rates would not be impacted).

For CPI increases, such annual adjustments would increase each rate by first applying the CPI factor and then rounding up to the nearest whole dollar. The first adjustment for all rate changes would be made July 1, 2014. To summarize, if authorized by the Board, the North Field GA rates, which would impact the tenancies shown on Exhibit A, will be:

Current Proposed Rate3 Rate Space GA Facility 2 Rate (Eff.: July 1, 2014) Request 1.a. Ramp/Apron Space 780SF $129.00 $ 140.00 $11 Increase 1.b. Ramp/Apron Space 1060SF 182.00 191.00 $9 Increase 1.c. Ramp/Apron Space 1340SF 243.00 243.00 No Change 1.d. Ramp/Apron Space 2050SF 367.00 369.00 $2 Increase 2.a. Port Owned New T-Hangars; 760 SF 262.00 262.00 No Change 2.b. Port Owned New T-Hangars; 1,000SF 317.00 317.00 No Change 2.c. Port Owned New T-Hangar; 1,060SF 414.00 414.00 No Change 2.d. Port Owned New T-Hangar; 1,340SF 522.00 522.00 No Change 3.a. Port Owned Old T-Hangars; 840SF 253.00 269.00 $16 Increase 3.b. Port Owned Old T-Hangars; 960SF 287.00 307.00 $20 Increase 3.c. Port Owned Old T-Hangars; 1110SF 334.00 355.00 $21 Increase 3.d. Port Owned Old T-Hangars; 1152SF 351.00 369.00 $18 Increase 3.e. Port Owned Old T-Hangars; 1596SF 478.00 511.00 $33 Increase 4.a. Tie-Downs (40-Foot) 77.00 65.00 $12 Decrease 4.b. Tie-Downs (50-Foot) 110.00 80.00 $30 Decrease

2 The “Current Rate” reflects those adopted by Ordinance No. 4059 (June 17, 2008) which amended Ordinance No. 3634. 3 The “Proposed Rate” is determined by appraisal as of May 15, 2013 and would be further increased by CPI effective July 1, 2014.

Amending Port Ordinance 3634 to allow for annually adjusting rates is consistent with the structure of existing agreements and business practices as applied by Airport Properties to its portfolio of documented tenancies and relationships throughout OAK. No other terms and conditions will be modified: base rental rate, premises, authorized use, and specifically, the right of either party to terminate the agreement by 30-day written notice shall remain in full force.

4 Consumer Price Index for Urban Wage Earners and Clerical Workers (“CPI”) for the San Francisco – Oakland – San Jose Area, each July 1st throughout the additional five-year period. 5

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STRATEGIC PLAN ALIGNMENT

Adopting the ordinances to amend Port Ordinance 3634 and to extend for five years the agreements listed on Exhibit A will fulfill the following strategic plan objectives:

STRATEGIC PRIORITY GOAL OBJECTIVE IMPLEMENTATION AREAS

4Extending the existing agreements for five years (terminable by either party by 30-day written notice) 1. Retain existing customers and tenants. utilizing an extension agreement will be an Goal B: 2. Price Port services to provide a highly effective and efficient Maintain and competitive value. means of protecting the Aggressively Airport’s revenues without Grow Core 3. Promote effective strategic causing an undue Businesses. communication with Port customers. administrative burden.

4No additional Port Sustainable 4.Enhance Customer Service property will be Economic and encumbered and the Business Port’s rights under the Development existing agreements will not be limited in any way. 4Extending the existing agreements for five years by an extension agreement (rather than Goal D: entering into 162 new Improve the Minimize expenditures and focus on agreements) will minimize Port’s financial core services. staff time and allow Airport position. Properties staff to concentrate on new and enhanced revenue- generating opportunities.

BUDGET & FINANCIAL IMPACT

Adopting the proposed Port Ordinance to adjust North Field rental rates and the new ordinance to extend for five years the agreements listed on Exhibit A will have no impact on the adopted FY2013-14 Revenue Budget of $474,312. In FY2014-2015, when the above proposed rates take effect, the net difference of the proposed rate changes is an annual increase of $11,014 not including annual CPI adjustment proposed for July 1, 2014.

STAFFING IMPACT

There will be no change in Port staffing as a result of adopting the proposed ordinance amendment, or extending the existing tenancy agreements listed on Exhibit A.

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SUSTAINABILITY

There are no obvious environmental opportunities involved with adopting the proposed ordinance amendment, or extending the existing tenancy agreements listed on Exhibit A.

ENVIRONMENTAL

CEQA: This Agenda Report involves amending section 9 of Port Ordinance 3634, and extending the term for five years for the 162 existing tenancy agreements between the Port and the North Field general aviation tenants. These agreements are categorically exempt from 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.

MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)

The action to amend the 162 tenancy agreements referenced in Exhibit A is not within the scope of the Port of Oakland Maritime and Aviation Project Labor Agreement (MAPLA) and the provisions of MAPLA do not apply. However, if future tenant construction work under these tenancy agreements exceeds the thresholds required for coverage under the MAPLA, the provisions of MAPLA will apply when Port Permits are requested for said future construction work.

OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

The Port of Oakland’s Owner Controlled Insurance Program does not apply since none of the tenancy agreements referenced in Exhibit A include a Capital Improvement construction project.

GENERAL PLAN

This action does not change the use of any existing facility or create new facilities, and therefore does not require a General Plan conformity determination pursuant to Section 727 of the City of Oakland Charter.

LIVING WAGE

Living Wage Regulations do not apply to those agreements referenced on Exhibit A which do not employ 21 or more employees working on Port-related work; however, in those cases, the tenant will be required to certify that should living wage obligations become applicable, the tenant shall comply with the Port of Oakland Living Wage Regulations.

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OPTIONS

1. Adopt an ordinance covering the 162 agreements listed on Exhibit A between the Port and tenants by extending their term for an additional five-plus year period (through June 30, 2019), subject to right of either party to terminate the agreement on 30 days notice. In addition, adopt a second ordinance to amend Section 9 of Port Ordinance 3634 as shown in the table above to (i) increase the rate on Ramp/Apron spaces with tenant-owned Port-A-Ports and on Old T-Hangars (ii) reduce the monthly charge for 40-foot and for 50-foot Tie-Down spaces, and (iii) enable all rental rates for the 162 agreements and all future agreements covering general aviation facilities to be adjusted annually commencing July 1, 2014 in accordance with increases in the CPI (rounded up to the nearest dollar). For both ordinances, the Board would delegate authority to the Director of Aviation to execute an extension/rental revision amendment with each tenant.

2. Do not adopt either proposed ordinance suggested in Option 1 above. This option would constrain the Port staff’s ability to effectively market and lease a large number of vacant Tie-Down spaces, and would also require staff to re-negotiate each agreement individually, after gaining separate authority from the Board.

3. Reject staff’s proposal to amend Section 9 of Port Ordinance 3634, and to amend and extend the terms and conditions of the 162 existing agreements listed on Exhibit A, and recommend a different course of action.

RECOMMENDATION

It is recommended that the Board give first reading to an ordinance covering the 162 agreements listed on Exhibit A between the Port and tenants by extending their term for an additional five-plus year period (through June 30, 2019), subject to right of either party to terminate the agreement on 30 days notice. In addition, adopt a second ordinance to amend Section 9 of Port Ordinance 3634 as shown in the table above to (i) increase the rate on certain Ramp/Apron spaces with tenant-owned Port-A-Ports and on Old T-Hangars (ii) reduce the monthly charge for 40-foot and for 50-foot Tie-Down spaces, and (iii) enable all rental rates for the 162 agreements and all general aviation facilities to be adjusted annually commencing July 1, 2014 in accordance with increases in the CPI (rounded up to the nearest dollar). For both ordinances, the Board would delegate authority to the Director of Aviation to execute an extension/rental revision amendment with each tenant, subject to the Port Attorney’s review and approval as to form and legality.

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Exhibit A

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Exhibit A, Cont’d.

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Exhibit A, Cont’d.

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Exhibit A, Cont’d.

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Exhibit A, Cont’d.

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Exhibit A, Cont’d.

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A& BOARD OF PORT COMMISSIONERS CITY OF OAKLAND

ORDINANCE APPROVING AND AUTHORIZING FIVE-YEAR EXTENSIONS OF 162 EXISTING AGREEMENTS WITH GENERAL AVIATION TENANTS AT /OAKLAND INTERNATIONAL AIRPORT.

WHEREAS, the Board of Port Commissioners ("Board" )\ has reviewed and evaluated the Agenda Report Item A>. 5, s@hted December 12, 2013 ("Agenda Report") and related ageno^^majzre^aals, has received the expert testimony of Port of Oakland (ntorx/f staff, and has provided opportunities for and taken public.,^comment:

WHEREAS, that in acting uponYtM-s. m>tt^ery/the Board has exercised its independent judgment based on\substantial evidence in the record and adopts and relies upotT^the factsj/data, analysis, and findings set forth in the Agenda R^ntfftv \and \ri\ related agenda materials and in testimony received; now^ therefore \\

BE IT ORDAINED by xtJ*e 'BbaTrd-af Port Commissioners of the City of Oakland as follp-ws-:-^ Section 2^. The BoaNrd\ereby approves and authorizes the extensions of 162 existing agreements listed on Exhibit A to this ordinance for five years, through Jun^J30, 2019, at the rates set forth in Exhibit A to this ordinance^ and /the terms and conditions set forth in the Agenda Report, and upon "sucn/ standard terms and conditions as specified in such agreements, s-ub/ject to the Port Attorney's review and approval as to form and legality.

Section 2. The Board hereby authorizes the Director of Aviation to:

A. execute the extension/rental revision amendments under the terms and conditions contained in the Agenda Report, subject to the Port Attorney's review and approval as to form and legality; and

B. make such additions, modifications, or corrections as necessary to implement the amendments or to correct errors, subject to

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the limitations set forth herein and provided that any such addition, modification or correction does not materially differ from the terms and conditions set forth herein and in the Agenda Report.

Section 3. The Board hereby finds and determines that the amendments are categorically exempt from the California Environmental Quality Act ("CEQA") pursuant to CEQA Guidelines Sections 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.

Section 4. This ordinance is not evidenc and does not create or constitute (a) a contract, or the grant my right, entitlement or property interest, or (b) any obligati .ability on the part of the Board or any officer or employee the :d. This ordinance approves and authorizes the execution contracts^ rn accordance with the terms of this ordinance. Unle and until a\ separate written contract is duly executed on behalf Sard as authorized by this ordinance, is signed as approved as and legality by the Port Attorney, and is delivered to other d cting party, there shall be no valid or effective contract*

Section 5. This ordinani fective immediately upon adoption by the Board.

President.

Attest: Secretary.

Approved as to form and legality:

Port Attorney

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Exhibit A

North Field General Aviation Tenants

Ramp-Apron Space

TENANT Use Premises Monthly Rent FY 13/14 Revenues

Paul Traver Aircraft Storage L-611 (G-A-1) S 243,00 $ 2.816.00

Joseph Mudd Aircraft Storage L-611 (6-A-3) S 243.00 $ 2.016.00

Larry Ftstotera Aircraft Storage L-611 (6-A-5J s 243.00 $ 2.016.00

Rodney Pimentel AircraftStorage L-611 (6-A-7) $ 243.00 $ 2.016.00

James Gabbertfttext Century Aircraft Storage L-611 (6-A-9) $ 243.00 $ 2.016.00

Merrill Martin Aircraft Storage L-611 (6-A-11) $ 243.00 $ 2.016.00

William Montague Aircraft Storage L-611 (6-A-13) $ 243.00 $ 2.916.00

Bruce Lymburn Aircraft Storage L-611 (6-A-15) $ 243.00 $ 2.S16.00

Rodney Pimentel Aircraft Storage L-611 (6-A-17) s 120.00 $ 1.548.00

L-G11 (Row A) Subtotal $ 2,073.00 $ 24,876.00

Arlene & Bert Inch Aircraft Storage L-611 (6-B-1) $ 243.00 $ 2.016.00

ADan Edwards Aircraft Storage L-611 (6-B-2) $ 243.00 S 2.016.00

Simon Oe Giuli Botta Aircraft Storage L-611 (6-8-3) $ 243.00 $ 2.016.00

Donald Brody Aircraft Storage L-611 (6-8-6) $ 243.00 $ 2.016.00

Larry Ftstotera Aircraft Storage L-611 (6-8-7) $ 243.00 $ 2.916.00

Andre Cyr Aircraft Storage L-611 (6-B-8) s 243.00 $ 2.016.00

William Montague Aircraft Storage L-611 (6-8-9) $ 243.00 $ 2.016.00

Robert Coussens Aircraft Storage L-611 (6-B-10) s 243.00 $ 2.016.00

Marshall Cromer Aircraft Storage L-611 (6-B-11) s 182.00 $ 2.184.00

Matthew Tutino Aircraft Storage L-61K6-B-12) $ 243.00 s 2.916.00

Larry Fistolera Aircraft Storage L-611 (6-B-13) $ 182.00 3 2.184.00

Albert & Jean Ferrari Aircraft Storage L-611 (6-B-14) $ 243.00 $ 2.916.00

James Blanco Aircraft Storage L-611 (6-B-15) $ 182.00 $ 2.184.00

James and Kathleen Bauer AircraftStorage L-611 (6-B-16) $ 182.00 $ 2.184.00

Paul Holland Aircraft Storage L-611 (6-B-17) $ 182.00 $ 2.184.00

Peter Oessart Aircraft Storage L-611 (6-B-18) $ 182.00 $ 2.184.00

L-611 (Row B) Subtotal $ 3.522.00 $ 42.264.00

James Hager Aircraft Storage L-611 (6-C-1) s 182.00 $ 2.184.00

Oavid McCtoskey Aircraft Storage L-611 (6-C-2) s 182.00 $ 2.184.00

Gary Kelson Aircraft Storage L-611 (6-C-3) s 182.00 $ 2.184.00

James Hager Airaaft Storage L-611 (6-C-4) s 182.00 $ 2.184.00

Thierry Locard/Yakflight Aircraft Storage L-611 (6-C-5) $ 182.00 $ 2.184.00

William Montague (2 spaces @ $182) Aircraft Storage L-611 (6-C-6/6-C-16) 5 364.00 $ 4.368.00

Victoria Thys (Barnes) Aircraft Storage L-611 (6-C-7) s 182.00 S 2.184.00

Marc Paisin Aircraft Storage L-611 (6-C-8) s 182.00 $ 2.184.00

298949

291 REMAINING ACTION ITEMS Tab 6.5

Exhibit A, Cont'd.

Ramp-Apron Space cont'd.

TENANT Use Premises Monthly Rent FY 13/14 Revenues

James Hager Aircraft Storage L-611 (6-C-9) S 182.00 $ 2.184.00

James Breazeate Aircraft Storage L-611 (6-C-10) s 182.00 $ 2.184.00

William Montague Aircraft Storage L-611 (6-C-12) s 182.00 » 2.184.00

Scott Solmonson Aircraft Storage L-611 (6-C-13) $ 182.00 $ 2.184.00

Patrick Murray Aircraft Storage L-611 (6-C-14) s 182.00 $ 2.184.00

Steven Tappan Aircraft Storage L-611 (6-C-15) s 182.00 $ 2.184.00

Scott Solmonson Aircraft Storage L-611 (6-C-17) $ 182.00 $ 2.184.00

Athanassios Oiacakis Aircraft Storage L-611 (6-C-18) 5 182.00 $ 2.184.00

Amos Nathaniel Goldhaber Aircraft Storage L-611 (6-C-19) s 367.00 $ 4.404.00 L-611 (Row C) $ 3,461.00 $ 41,532.00

James Gabbert/Next Century Aircraft Storage L-611 (6-D-1) $ 182.00 $ 2.184.00

Kenneth Landau AircraftStorage L-611 (6-D-2) 3 367.00 $ 4.404.00

James GabbertfNext Century (2spaces) Aircraft Storage L-611 (6-0-3*6-0-5) $ 364.00 $ 4.368.00 Ffte Prop, LLC/Rodney Fete 2 spaces AircraftStorage L-611 (6-D-4/6-D-6) $ 364.00 $ 4.388.00 L-611 James Gabbert/Next Century (3 spaces) AircraftStorage (6D7/6D9/6011) $ 546.00 $ 6.552.00

James Hager Aircraft Storage L-611 (6-D-8) S 182.00 $ 2.184.00

Garrett Gruener AircraftStorage L-611 (6-D-10) s 182.00 $ 2.184.00

James Hager Aircraft Storage L-611 (6-0-12) s 182.00 $ 2.184.00

Sheldon Ramsay/SR Aviation Inc. AircraftStorage L-611 (6-D-13) s 182.00 $ 2.184.00

Oonald Brody Aircraft Storage L-611 (6-D-14) $ 182.00 $ 2.184.00

Donald Brody AircraftStorage L-611 (6-D-16) $ 182.00 $ 2.184.00

L-611 (Row D) $ 2.915.00 $ 34.980.00

"New T-Hangars" TENANT Use Premises Monthly Rent || FY 13/14 Revenues | Buildin0 L-878

Jerry Wagner Aircraft Storage L-878A $ 317.00 S 3.804.00 Anthony Huckaba/Aero Enterprises LLC Aircraft storage L-878B $ 317.00 $ 3.804.00 MarkBaird Aircraft storage L-878C $ 317.00 $ 3.804.00 Colin Cross Aircraft storage L-878D $ 317.00 $ 3,804.00 William Kimmerer Aircraft storage L-878E s 317.00 $ 3.804.00 Paul Bemowski Aircraft storage L-878F $ 317.00 $ 3.804.00 John Rabkin Aircraft storage L-878G $ 317.00 $ 3.804.00 Stephen Williams Aircraft Storage L-878H $ 317.00 $ 3.804.00 Jonathan Reining Aircraft storage L-878J $ 317.00 $ 3.804.00 Sam Stpkins/Ann Granberg Aircraft storage L-878K $ 262.00 $ 3.144.00 Steve Martin Aircraft storage L-878L $ 262.00 $ 3.144.00 Julius Timbol Aircraft Storage L-878N s 262.00 $ 3.144.00 Roland Feldmeier Aircraft storage L-878P * 262.00 $ 3.144.00 Maurice McEvoy Aircraft storage L-878R $ 262.00 $ 3.144.00 Stephen Blankenship Aircraft storage L-878S s 262.00 s 3.144.00 Aaron B. Dwyer Aircraft storage L-878T s 262.00 $ 3.144.00 Roger/Oiedre Meads Aircraft storage L-878U $ 262.00 $ 3.144.00 Bldg. L-878 Subtotal $ 4.949.00 $ 59.388.00

298949

292 REMAINING ACTION ITEMS Tab 6.5

Exhibit A, Cont'd.

"New T-Hangars", Cont'd. TENANT Use Premises Monthly Rent | FV 13/14 Revenues Building L-879

Christian Borth Aircraftstorage L-879A S 262.00 S 3.144.00

Brad Lewis Aircraft storage L-879B 3 262.00 $ 3.144.00 Steven Booska Aircraft storage L-879C $ 262.00 $ 3.144.00 Michael Wasteney Aircraft Storage L-879F S 262.00 $ 3.144.00

James Gay Aircraft storage L-879G S 262.00 $ 3.144.00 Peter KHIcommons Aircraft storage L-879H $ 262.00 S 3.144.00 Bruce Godfrey Aircraft storage L-879J $ 262.00 $ 3.144.00 Brian Cain Aircraft storage L-879K S 262.00 $ 3.144.00 Jerry Rowell Aircraft storage L-879L S 262.00 $ 3.144.00 Stefon Shelton Aircraft storage L-879M $ 262.00 $ 3.144.00 Noel Cragg Aircraft storage L-879P S 262.00 $ 3.144.00 Robin Beauchamp Aircraft storage L-879Q $ 262.00 $ 3.144.00 Bldg. L-879 Subtotal $ 3.144.00 $ 37.728.00

Building L-880 Henry Hallam Aircraft storage L-880A $ 262.00 $ 3.144.00 Conway B. Jones Aircraft storage L-880C S 262.00 $ 3.144.00 Fred & Charles Aden Aircraft storage L-8800 $ 262.00 $ 3.144.00 Inger Kareem Fahmi Aircraft storage L-880E s 262.00 $ 3.144.00 Gerard Cerchio Aircraft storage L-880F s 262.00 $ 3.144.00 Brent& Anne Smith Aircraft storage L-880G s 317.00 $ 3.804.00 Bldg. L-880 Subtotal $ 1,627.00 $ 19.524.00

Building L-611 W. Chandler Wonderry Aircraft Storage I L-611 (6-B-4) S 522.00 $ 6.264.00 Richard Green Aircraft Storage | L-611 (6-C-11) s 414.00 $ 4.068.00 Building L-611 Subtotal 93600 $ 11,232.00

298949

293 REMAINING ACTION ITEMS Tab 6.5

Exhibit A, Cont'd. "Old T-Hangars" TENANT Use Premises Monthly Rent FY 13/14 Revenues

Robert Weinstein Aircraft Swarie L-905A ; 4~s.dc S 5.736.0C Daniel Chadbcurne Ai-caft Storage L-905B 3 -7c. 3C S 5.738.00 R3lph Higgs Aircraft Storage L-905C S -7c.jC 5 5.736.DC

Alameda Aero Club Aircrafi Storace L-S05D S -7c. DC 3 5.736.00 Bldg. L-905 Subtotal S 1,912.00 $ 22.944.00

Eva Fields Aircraft Swace L-906A ; 324.30 •;-. 4,003.00 Stanmore Cooper Aircraft Storace L-906B c 252. DC 3 3.036.0C Paul Millner Aircraft Storage L-S06C 5 252.DC s 3.036,30

William Bartlett Aircrafi Storage L-90SD 1 252.DC 3 3.036.30 Stephen S. Ashley Aircraft Storage L-90SE 3 252.DC 3 3.336.00

Lionel Madore & Julia Irvine Aircraft Storage L-i'OGF c 252.DG I 3.036.00

David King Aircraft Storage L-906G s 253.00 3 3.036.00 Dennis Wassmann Aircaft Stcace L-90SH s 253.0C 5 3.336.00

Arthur DiGrazia Aircraft Storage L-906J s 253.00 S 3.336.00

Jordan Coonrad Aircraft Storage L-906K s 334.00 $ 4.302.00

Bldg. L-906 Subtotal s 2.692.00 S 32.304.00

John Rabkin Aircraft Storage L-907A S 253.00 S 2.036.00 Howard Clay II Aircraft Storage L-907B s 253.00 s 3.336.00

Mon K. Lee Aircaft Storage L-907C s 252.0C 5 34138.00

Peter Falk Aircraft Uto-aoe L-907D s 253.00 S 2.335.00

Michael Eggan Aircaft 3 to'ace L-907E s 334.00 I 4.309.0C

David Ruegg Aircraft Storage L-907F s 334.00 5 4.008.0C

Bruce Bolla Aircaft Storace L-907G s 253.00 S 3.326.00

L. Duane Roach Aircraft Storage L-907H s 253.00 S 3.03-6.00

Barry Surgess Aircraft Storace L-907J s 253.00 s 3.036.00

David Penney/Ronald Put Aircraft Storage L-S07K s 253.00 s 3.036.0C

Bldg. L-907 Subtotal s 2.692.00 s 32.304.00

William O'Keefe Jr. Aircraft Storage L-909A S 351.00 2 4.212.00 Wayne Marchant Aircaft Storage L-909B s 257.0C S 3.444.0C Robert Borromeo Aircaft Storage L-909C s 257.00 3 2.444.00 Arnold Lim Aircrafi Storage L-909D s 257.00 3 3.444.00 Joe Trujillo Aircaft Storage L-909E •: 2c7.DC 3 3444.3C

Iv3r Anderson Aircraft Storage L-909F 5 257.00 5 3444.30

Roy Tnllia Aircraft Stcace L-909G 5 2:7.DC 5 3.444.00

Bruce Bauer Aircraft Storage L-909H S 287.00 5 3.44-,DC Kelli Gant & Mike McHugh Aircrafi Storage L-909J s 257.00 3 3.444.00 Robert Linford Aircraft Storage L-909K s 351.00 3 4.212.00

Bldg. L-909 Subtotal s 2,998.00 .: 35.976.00

Sheldon Rams3y/SR Aviation Inc. Aircraft Storage L-910A S 237.00 S 3.444.30 Lelan Sparks Aircraft Storage L-910B c 257.00 S 3.444.00 ^ Roger Boyvey Aircraft Swage L-910C 257.00 3 3.444.30 C3rol Healy Aircraft Sto-age L-910D s 287.00 3 3.444.DC Randall Shaffer Aircrafi Swane L-910F 5 351.00 S 4.212.30 Leo O'Farrell Aircraft Sto-age L-910G S 257.3C S 3.444.3C Barbara Bolton Aircraft Storage L-910H -j 2i7.DC 5 3.444.30 Randal! Perkins Ai-cafi Storage L-910J s 287.0Q 3 3.444.3C Duane Sitter'Linda Norns Aircraft Sto-aqe L-910K c 257.00 3 3.444.30 Bldg L-910 Subtotal s 2,647.00 S 31.764.00

298949

294 REMAINING ACTION ITEMS Tab 6.5

Exhibit A, Cont'd.

Tiedowns

TENANT Use Premises Mo lthlv Rent FY 13(14 Revenues Wiiliair J ' hn toe-down T-1 s 77.30 3 924.3C Aerial Beacon.'Sam Gaadi t e-down T-2 s 77.DC i 924.DC Kenneth Levins He-down T-3 3 77. DC 3 524.DC Mike Karp tss-down T-4 c 77.DC 3 524.00 Stephen Ashley 'e-down T-S s 77.00 5 524.DC John Math:son tie-down T-7 c 77.30 5 524.00 Ronald Jones (2 spaces (a> S77) tee-down T9/T10 S 154.00 3 '.845.00 Serge Ruiz tie-down T-12 s 77.00 S 924,30 Alameda Aero Club tie-down T-14 s 77.30 3 924.DC Alameda Aero Club (2 spaces (d> $77) He-down T-18/T-19 c 154.00 3 1.846,00 Dan Malmgren tie-down 6-B-6 •: 77.00 3 624.30 Greg Keller tee-down 906-2 S 77.00 3 924.30 Charles Greer tee-down 906-4 5 77.0G 5 524.DC James E. Stevens tie-down 907-4 S 77.00 $ 924.30 William Drummond fee-down 907-7 •3 77.0C $ 924.30 Erick Davidson te-down 909-1 S 77.00 S 924.00 Weston lsberg fee-down 909-4 s 77.00 $ 524.30 FBN Holding Corporation tie-down 910-4 s 77.00 S 924,DC Jason Cabot tee-down A-3 s 77.30 3 524.DC David Newitt tee-down A-6 s 77.00 3 924.DC James Watkins t e-down B-2 ; 77.00 3 524.30 Michael Wasteney tie-down M-9 S 77.00 3 924.00 Tiedown Subtotal s 1.848.00 $ 22.176.00

298949

295 REMAINING ACTION ITEMS Tab 6.5

Exhibit A, Cont'd.

North Field General Aviation Tenants (Summary)

TENANT CATEGORY # of transactions Monthly Rents FY 13/14 Revenues

Ramp/Apron Space L-611 (Row A) 0 2.073.00 24.876.00 L-611 (Row B) 16 3.522.00 42.264.00 L-611 (RowC) 18 3.461.00 41.532.00 L-611 (Row D) 15 2.015.00 34.980.00 Ramp/Apron Space subtotal 58 11,871.00 143,652.00

New T-Hangars Bldg. L-878 17 4.949.00 S 59.388.00 Bicg. L-879 12 3.144.00 $ 37.738.00 Bldg. L-880 6 1.627.00 $ 19.524.00 Bldg. L-611 2 936.00 $ 11.232.00 T-Hangars subtotal 37 10,656.00 $ 127,882.00

Old T-Hangars Bldg. L-905 4 1.912.00 22.944.00 Bldg. L-906 10 2.692.00 32.304.00 Bldg. L-S07 10 2.692.00 32.304.00 Bldg. L-909 10 2.998.00 35,976.00 Bldg. L-910 0 2.647.00 31.764.00 Old T-Hangars Subtotal 43 12,941.00 155,292.00

Tie Downs 24 locations 24 1,848.00 $ 22,176.00

TOTALS 162 37,416.00 $ 449.002.00

298949

296 REMAINING ACTION ITEMS Tab 6.5

y BOARD OF PORT COMMISSIONERS CITY OF OAKLAND

\ ORDINANCE AMENDING SECTION 9 OF PORT ORDINANCE^NO. 3634 RELATING TO CHARGES FOR USE OF FACILITIES AT OAKLAND INTERNATIONAL AIRPORT, NORTH FIELD.

WHEREAS, the Board of Port Commissioners/("Board") has reviewed and evaluated Agenda Report Item 6.5 dated December 12, 2013, and> related agenda materials ("Agenda Report"), has received th^ expert testimony of Port of Oakland ("Port") staff, and ha^s provided/opportunities for and taken public comment; and \ \y /

WHEREAS, that in acting upor^ this matt-er,\the Board has exercised its independent judgment based \on^subs:t:antial evidence in the record and adopts and relies upon the facts,, \data, ~"ana.lysisY and findings set forth in the Agenda Report, and in re\La\ed agenda -materials and in testimony received; now, therefore \ , . \ BE IT ORDAINED tfy>the^Board W/Port Commissioners of the City of Oakland as follows: \

Section 1. Subsection A{-l-^of Section 9 of Port Ordinance No. 3634 is hereby amended toNreacr ip—f-ulJL as follows:

-"Toir-paved or improved aircraft parking spaces in the North Field, otfier-i^an t>hoses .despribed in subsection e(l), e(2), e(3), f(l) or f(2), de/s'ignatedN\tdv accommodate aircraft with wingspans or length, whichever is greater, \the rates shall be as follows (as further adjusted by the Consumer Price I\ndex as described below;

Each First 8 Additional Monthly Hours or 8 Hours or Maximum Total Tiedowns Rate Fraction Fraction Daily Rate Thereof Thereof 40 feet or less $ 65.00 $ 6.00 $ 3.00 $ 8.00 50 feet or less 80.00 7.00 4.00 12.00 75 feet or less 162.00 12.00 5.00 19.00 100 feet or less 182.00 18.00 6.00 29.00 125 feet or less 283.00 29.00 12.00 42.00 150 feet or less 413.00 40.00 18.00 57.00 175 feet or less 547.00 52.00 28.00 77.00 200 feet or less 675.00 64.00 33.00 95.00 Over 200 feet 816.00 77.00 39.00 116.00 Blimp 40 feet or less 1,258.00 84.00 40.00 125.00 Taxi-in/taxi out 110.00 7.0 4.00 12.00 298927

297 REMAINING ACTION ITEMS Tab 6.5

The monthly rates set forth above (but not the hourly or daily rates) will increase (but not decrease) each year for the next five years, beginning July 1, 2014, by the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the San Francisco/Oakland/San Jose Area, rounded up to the nearest whole dollar."

Section 2. Subsection g(2) of Section 9 of Port Ordinance No. 3634 is hereby amended to read in full as follows:

For storage of aircraft in T-hangars in the North Field, the monthly storage rates exclusive of office space in said T-hangars shall be as follows (as further adjusted by the Consumer Price I*idex as described below):

Hangar Area Monthly (Port owned Hangars)

Port-A-Port (single) $262.00 Port-A-Port (light twin) 317.00 T-Hangar (840 sq. feet) 269.00 T-Hangar (960 sq. feet) 307.00 T-Hangar (1,110 sq. feet) 355.00 T-Hangar (1,152 sq. feet) 369.00 T-Hangar (1,596 sq. feet) 511.00

Hangar Area Between—Hangar 6 and South of Building L\606 (Port owned H, Monthly Rates

T-Hangar 414.00 T-Hangar fe^U__^^7 522.00

hangar. Area x Monthly Rates (Privately, owned ^ortrA-Port)

q. feet*) $ 140.00 60\sq. feet) 191.00 0]sq. feet) 243.00 sq. feet) 369.00

ffice space in said T-hangars shall be $0.3026 per square rounded to the nearest dollar for the total office space occupied. Electricity shall be provided separately on a metered basis.

The monthly rates set forth above will increase (but not decrease) each year for the next five years, beginning July 1, 2014, by the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the San Francisco/Oakland/San Jose Area, rounded up to the nearest whole dollar."

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298 REMAINING ACTION ITEMS Tab 6.5

Section 3. The Board of Port Commissioners hereby finds and determines that the establishment and imposition of the above rates pursuant to Sections 1 and 2 of this ordinance is exempt from the requirements of the California Environmental Quality Act under California Public Resources Code Section 21080(b)(8) and Sections 15273 and 15061(b)(3) of Title 14 of the California Code of Regulations. The bases for the exemption are that the rates are established and imposed for the purpose of obtaining funds for capital projects necessary to maintain service within existing service areas and it can be seen with certainty that there is no possibility that imposition of the rXtes referenced herein will have a significant effect on the environment.

Section 4. This ordinance shall be effective July

President.

Attest Secretary. Approved as to form and legality:

Port Attorney

298927

299 REMAINING ACTION ITEMS Tab 6.6

BOARD MTG. DATE: 12/12/13

AGENDA REPORT

TITLE: First Reading of an Ordinance Approving a Space/Use Permit for Non- exclusive Retail and Duty Free Concession Privileges with World Duty Free Group North America and Adoption of a Resolution Approving an Amendment to the Space/Use Permit for Non-Exclusive Food, Beverage, Retail and Duty Free Concession Privileges with Host International Inc. (Aviation)

AMOUNT: $6,250,000 (Estimated Revenue over Remainder of Term). No FY2013- 14 Change or Additional Revenue By This Action

PARTIES INVOLVED:

Corporate Name/Principal Location World Duty Free Group North America Bethesda, MD Padraig Drennan, President Host International, Inc. Bethesda, MD Tom Fricke, CEO

TYPE OF ACTION: Ordinance/Resolution

SUBMITTED BY: Deborah Ale Flint

APPROVED BY: J. Christopher Lytle, Executive Director

This action recommends approval of a Space Use Permit for non-exclusive Retail and Duty Free Concession privileges at Oakland International Airport (OAK) to World Duty Free Group North America (WDFG) and an amendment of an existing Space Use Permit with Host International, Inc.

FACTUAL BACKGROUND

At its meeting of July 5, 2006, the Board adopted Ordinance 3922, which approved a Space Use Permit (SUP) with Host International, Inc. (Host) for non exclusive Food, Beverage, Retail and Duty Free concession privileges. Host was awarded the right to operate these concessions at OAK following a Request For Proposal process that occurred in 2006. Host scored the highest ranking of the five proposers. The SUP terminates on May 31, 2018 and provides for the operation of 19 food/beverage units and 15 retail units.

Effective September 6, 2013, Host exited the retail business and sold its interests to WDFG. Host requested permission to assign the SUP to WDFG, however this cannot be done as the SUP at OAK covers Host’s food/beverage locations as well as Host’s retail units.

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300 REMAINING ACTION ITEMS Tab 6.6

BOARD MTG. DATE: 12/12/13

Since OAK does not have two separate contracts, the Board is being asked to approve a “splitting” of the existing SUP by approving a parallel SUP with WDFG for the 15 retail units, (aka, a “transfer” between Host and WDFG) and amending the existing Host SUP to remove those 15 retail units. All other terms and conditions of the existing SUP remain in effect for both the Host SUP and the WDFG SUP.

Retail and Duty Free Concessions:

Between 2006 and 2010, Host constructed 15 retail units comprised of 6 newsstands, 8 specialty retail outlets and 1 duty free store. Three of the specialty retail units are operated by subtenants, as is the duty free store. Host was required to spend $3,774,264 on retail capital improvements and has submitted documentation (unaudited) that it spent $4,316,283, thus meeting this contractual requirement. In addition, Host is required to spend $805,603 on retail unit mid-term refurbishments. To date, Host has not spent any of the required mid-term refurbishment amount. It is recommended that should the transfer to WDFG take place, the mid-term refurbishments be a condition of approval, with WDFG specifically acknowledging the need to spend at least $805,603.

Along with the Host operated units, OAK has a direct lease with one specialty retail operator. In addition, the retail program is enhanced with automated specialty retail (non- food vending machines) and a seasonal, temporary ‘pop-up’ retail store.

The retail business at OAK generated $12,526,826 in gross receipts in CY2012, and generated $1,662,434 revenue for the Port. This is broken down as follows:

Retail Unit Type Gross Receipts Revenue to the Port Newsstands $8,016,761 $1,079,746 Specialty Retail $4,363,765 $ 551,377 Duty Free $ 146,300 $ 31,311 Total $12,526,826 $1,662,434

The newsstands generate almost twice as much revenue as specialty retail and the Port has no direct agreements with any newsstand provider other than Host. With the divesture of the retail business, Host no longer provides corporate support for the retail units at OAK. The stores are currently being managed and sourced with the cooperation of WDFG on an interim basis, pending Port approval of a transfer of this business. In the event a transfer is not approved, the stores will no longer receive the support of WDFG and it is believed by staff that the quality and range of the product offered will decline thus negatively impacting revenue.

Summary Information on World Duty Free Group North America

World Duty Free Group North America (the new Permittee under the proposed new SUP) is part of World Duty Free S.p.A, one of the world’s leading airport retailers. Autogrill SA is the parent company of both WDFG and HMS Host and has over 550 shops in 20 countries. Autogrill operates a retail management model that is innovative, flexible, dynamic and centered on the customer. It is the overall market leader in the European heartlands of

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301 REMAINING ACTION ITEMS Tab 6.6

BOARD MTG. DATE: 12/12/13

Spain and the UK, with substantial international presence in the Middle East, Latin America and the Caribbean. In the U.S., WDFG operates 240 locations in 32 airports. Autogrill recently completed a demerger to separate its travel retail and duty free business from its Food and Beverage business. World Duty Free S.p.A shares began trading on Mercato Telematico Azionario (electronic stock market) organized and operated by Borsa Italiana S.p.A. on October 1, 2013. Autogrill stated that the separation of the two businesses may make it easier for the financial markets to understand and assess their respective strategies separately, as well as facilitate any industrial alliances in the two markets.

Food and Beverage Concessions:

Between 2006 and 2011, Host constructed 11 individual food/beverage outlets, and two food courts containing an additional 8 food/beverage outlets. Of these, 7 are operated by subtenants. The transfer of the retail program to WDFG will have no impact on the operation of Host’s food and beverage concessions.

ANALYSIS

The proposed WDFG SUP is parallel to the existing contract with Host. All of the provisions, including the requirements adhering to Port Ordinances such as Living Wage and maintaining labor peace are the same as stated in the current Host SUP. The only changes from the existing contract are deletions relating to initial construction timelines (since all units have been constructed), and language specific to food and beverage operations, and modification of Exhibit 5 of the SUP. It should be noted that one of the retail subtenants was exempted from the Living Wage requirements by Port Resolution 06091 adopted April 18, 2006.

Exhibit 5 lists each ‘assigned space’ by a letter/number reference (R = retail and F = food/beverage) and sets out the rent, square footage and permitted use for each space. The Exhibit 5 attached to the WDFG SUP will show only those spaces designated with an “R” (except Unit R-11(e) discussed below).

The corresponding amendment to the Host SUP does nothing except revise Exhibit 5 to delete reference to the retail units. The Host SUP will retain all of the “F” spaces, as well as R-11(e) which is occupied by Auntie Anne’s Pretzels, a food unit included in the R-11 “Oakland Row” kiosks.

Creating two separate contracts will not increase or decrease any of the rights or obligations of Host except those related to the retail component of the contract. WDFG will assume all of the rights and obligations for the retail units; however, those rights and obligations will not change from those currently imposed on Host.

As an alternative to entering into a separate SUP with WDFG, the Board could approve a sublease of the retail units to WDFG. In this case, Host would continue to be responsible for the rent payments and operational quality of the retail units. This is not recommended as certain provisions of the contract do not apply to subtenants, and the Port would have

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302 REMAINING ACTION ITEMS Tab 6.6

BOARD MTG. DATE: 12/12/13 less control working through Host as an intermediary compared to having a direct relationship with WDFG.

STRATEGIC PLAN

Approving a new SUP with WDFG supports the goals of the Port’s 2011-2015 Strategic Plan:

Strategic Priority Goal Objective Result Areas

Sustainable Goal A: Create 1. Maximize use of ∑ Transferring the retail units to Economic and Sustainable Economic existing assets. WDFG will provide for a Business Growth for the Port and 2. Affirm Port identity stronger operation at the Development Beyond. as a public enterprise. Airport, increasing sales and 3. Increase revenues, revenue, which may increase job creation and small the need for additional business growth. employees (i.e., a net 4. Pursue strategic increase in retail jobs). partnerships at all levels: local, regional, national and international.

Goal B: Maintain and 1. Retain existing ∑ Transferring the retail units to Aggressively Grow Core customers and WDFG will provide the Port Businesses tenants. with an additional partner, 2. Promote effective who has a wide international strategic network of businesses and communication with an outstanding world Port customers. reputation. 3. Price Port services to provide a highly competitive value. 4. Enhance customer service.

1. Improve cash position and debt ∑ Approving the SUP will Goal D: Improve The service coverage ratio stimulate changes in the Port’s Financial Position (DSCR). retail units that may generate 2. Minimize additional revenue without expenditures. any associated costs to the Port.

BUDGET & FINANCIAL IMPACT

It is anticipated that splitting the Host SUP should not result in any significant change in revenue to the Port. The retail stores should generate the same revenue regardless of the owner.

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303 REMAINING ACTION ITEMS Tab 6.6

BOARD MTG. DATE: 12/12/13

STAFFING IMPACT

Current staff levels are sufficient to manage one additional contract, so there should be no impact on staffing.

SUSTAINABILITY

WDFG is expected to abide by all relevant Port policies regarding sustainability.

ENVIRONMENTAL

This project has been determined to be categorically exempt from requirements of the California Environmental Quality Act (CEQA) pursuant to Class 1 of Guidelines of Section 15301, Existing Facilities which exempts 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. In addition, this project is also exempt from the CEQA requirements pursuant to Class 1 of the Port CEQA Guidelines Section 15301 (p) which exempts the execution of leases or license and concession agreements where the premises or licensed activity was previously leased or licensed to the same or another person, and involving negligible or no expansion beyond that previously existing.

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 the provisions of the MAPLA do not apply. However, the capital investments provided in this action will include significant construction type work that will be performed by Host or its subtenants and this work will be subject to coverage under the terms of MAPLA as it applies to Port tenants when the Port Permits are requested for said construction work.

OWNER CONTROLLED INSURANCE PROGRAM (OCIP)

The Port's Owner Controlled Insurance Program does not apply to this item.

GENERAL PLAN

Pursuant to Section 727 of the City of Oakland Charter, this project has been determined to conform to the policies for the transportation designation of the Oakland General Plan.

LIVING WAGE

In accordance with Port Resolution No. 06091 adopted April 18, 2006, the living wage requirements set forth in Section 728 of the Charter of the City of Oakland apply to this contract. In addition, future construction work under the new Space Use Permit,

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304 REMAINING ACTION ITEMS Tab 6.6

BOARD MTG. DATE: 12/12/13 construction prevailing wage requirements will apply. As noted in the Analysis section, one of the retail subtenants was exempted from the Living Wage requirements by Port Resolution 06091 adopted April 18, 2006.

OPTIONS

The Board may take any of the following actions:

1. Adopt an ordinance approving a new Space Use Permit (parallel to the existing Host contract) with World Duty Free Group North America and pass a resolution amending the Space Use Permit with Host International, Inc. to delete the retail units, which is the staff recommendation;

2. Approve a sublease of the retail units to World Duty Free Group North America, continuing to keep Host liable for the stores; or,

3. Do not approve a transfer of the retail units and require Host and its subtenants to continue to operate the stores.

RECOMMENDATION

Staff recommends adoption of an ordinance approving terms and conditions for a new Space Use Permit with World Duty Free Group North America substantially similar to the SUP currently in effect with Host International Inc. and subject to the terms and conditions outlined above.

It also is recommended that the Board pass a Resolution approving terms and conditions for an amendment to the existing Space Use Permit with Host International Inc. to modify Exhibit 5 to delete the retail units numbered R-2 through R-11(d) and all obligations associated with them.

For both actions, the Board would delegate authority to the Executive Director to approve and execute each agreement, subject to the Port Attorney’s review and approval as to form and legality.

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305 REMAINING ACTION ITEMS Tab 6.6

12/12/13 Tab No. 6.6 JS/lhr ^L p BOARD OF PORT COMMISSIONERS CITY OF OAKLAND

RESOLUTION ADOPTING AND APPROVING AN AMENDMENT TO THE SPACE/USE PERMIT FOR FOOD, BEVERAGE, RETAIL AND DUTY FREE CONCESSION WITH HOST INTERNATIONAL, INC.

WHEREAS, the Board of Port ssiomarsv ("Board") has reviewed and evaluated the Agenda Reporl tern 6.6 datebV^December 12, 2013 ("Agenda Report") and related age^ ma als, h^s received the expert testimony of Port of Oakland aff, and has provided opportunities for and taken public commeni bw, therefore be it

RESOLVED, that the herebyxaibgfroves the terms and conditions set forth in the A^ teport^/for amendment to the Space/Use Permit for Food, Beve ^ail/^and Duty Free Concession with Host International, Inc. by m< 'ying^/Exhibit 5 thereto to delete the retail units number^oT^R-2 thj jugh R-ll(d) and all obligations associated with such yCjtiTtsx if, am ily if, World Duty Free Group North America, or a^^apprp]^riate "filiate, has fully assumed all outstanding responsibi itions, and liabilities associated with such retail juaits; a^ndXbe it tVED^/xhat the Board hereby authorizes the Executive signee to negotiate, approve and execute for and on bel Board an amendment to such Space/Use Permit and such other\ aocumc s as may be necessary and appropriate to consummate this tra} ion, subject to the Port Attorney's approval as to form and legality; and, be it

FURTHER RESOLVED, that in acting upon this matter, the Board has exercised its independent judgment based on substantial evidence in the record and adopts and relies upon the facts, data, analysis, and findings set forth in the Agenda Report, and in related agenda materials and in testimony received; and, be it

FURTHER RESOLVED, that the Board expressly and exclusively acts upon this matter without creating, conceding, accepting, or suggesting any limitation, waiver, estoppel or invalidation of any position of the Port with respect to any issue, claim or defense concerning any matter. This action of the Board is made without any admission of the existence of any liability or responsibility of the Port, or for the purpose of creating, providing, modifying or

299004

306 REMAINING ACTION ITEMS Tab 6.6

interpreting obligations of any party under, or terms and conditions of, any existing contract or agreement; and be it

FURTHER RESOLVED, that the Board determines and finds that adoption of this resolution is categorically exempt from requirements of the California Environmental Quality Act ("CEQA") pursuant to Class 1 of Guidelines of Section 15301, Existing Facilities which exempts operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features with negligible or no expansion of use beyond that existing at the time of lead agency's determination. In addition, this action is also exempt from the CEQA requirements pursuant to Class 1 of Port CEQA Guidelines Section 15301 (p) which exempts the execution of leases or liceus^ and licensed to the same or another person, and involving negl^Lble or no expansion beyond that previously existing; and be it

FURTHER RESOLVED, that this re lot evidence of and does not create or constitute (a) a fract (s) ,\oV-^the grant of any right, entitlement or property interest, (b) anU/obligation or liability on the part of the Board o :er or employee of the Board. Unless and until a separate writ "contract is duly executed on behalf of the Board as authorized by tft resolution, is signed as approved as to form and lega^i by the^ :t Attorney, and is delivered to other contracting ty>. there; 'shall be no valid or effective change order; and be it

FURTHER RESOL: resolution shall be effective immediately upon adopt

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307 REMAINING ACTION ITEMS Tab 6.6 fp

BOARD OF PORT COMMISSIONERS r- CITY OF OAKLAND

ORDINANCE APPROVING TERMS AND CONDITIONS FOR AND AUTHORIZING APPROVAL AND EXECUTION OF SPACE/USE PERMIT WITH WORLD DUTY FREE GROUP NORTH AMERICA.

WHEREAS the Board of Port Commissioners Xof^the City of Oakland ("Board") has reviewed and ey-aiuate^ the Agenda Report for Agenda Item 6.6, dated December 12,/2oi"3s ,{l-h\ "Agenda Report") and related agenda materials, has received the expert testimony of Port of Oakland ("Port") staff, and has provided Opportunities for and taken public comment; now, therefore

BE IT ORDAINED by the or—Pbrt Commissioners of the City of Oakland as follows:

Section 1. IfK acting upbra_o this matter, the Board has exercised its independent judgment kmsed on substantial evidence in the record and adopts aiiX/£-eJj2j~~apon the facts, data, analysis, and findings set for-th-in\ trie Agenda Report and in related agenda materials and iri-^es^imony received.

Section 2. rf^e1! Bo

Section 3. That rents for applicable retail units shall be as set forth below, as such rents may be adjusted from time to time consistent with the existing Space/Use Permit with Host International, Inc. :

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308 REMAINING ACTION ITEMS Tab 6.6

Minimum Annual Guarantees Monthly Effective Portion 7/1/13 2013 Retail Unit

R-2 Oakland Tribune News 103,125.00 World Passage Duty R-3 Free 30,225.00

R-4 Oakland Tribune News 268,107.54

R-4a See's 39,076.04 Lake Merritt R-5 News 32,880 Sports R-6 Scene* 26,7;

R-7 Oakland Tribune News

R-8 Oakland News Tech R-9 Showcase Bayfront R-10 News Bayfront R-lla Books Silver Moon/Bii4ux R-llb Terner // \ Sunglass <^"X \. / R-llc Icon \^\/^

R-lld Oakl andC-Ma-rJceupl ace

R-lle Seed's \ \ <

Total Retail Rent 1,348,673.46 112,389.46

Section ^. That the Board determines and finds that adoption of this ordinance is categorically exempt from requirements of the California Environmental Quality Act ("CEQA") pursuant to Class 1 of Guidelines of Section 15301, Existing Facilities which exempts operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features with negligible or no expansion of use beyond that existing at the time of lead agency's determination. In addition, this action is also exempt from the CEQA requirements pursuant to Class 1 of Port CEQA Guidelines Section 15301 (p) which exempts the execution of leases or license and licensed to the same or another person, and involving negligible or no expansion beyond that previously existing.

Page 2 of 3 299003

309 REMAINING ACTION ITEMS Tab 6.6

Section 5. This ordinance is not evidence of and does not create or constitute (a) a contract (s), or the grant of any right, entitlement or property interest, or (b) any obligation or liability on the part of the Board or any officer or employee of the Board. Unless and until a separate written contract is duly executed on behalf of the Board as authorized by this resolution, is signed as approved as to form and legality by the Port Attorney, and is delivered to other contracting party, there shall be no valid or effective change order.

Section 6. This ordinance shall be effective immediately upon adoption by the Board.

President.

Attest: Secretary.

Approved as to form and legality:

Port Attorney

Page 3 of 3 299003

310 UPDATES & ANNOUNCEMENTS Tab 7

UPDATES & ANNOUNCEMENTS The President, Members of the Board and the Executive Director will report on noteworthy events occurring since the last Board Meeting.

311 SCHEDULING Tab 8

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

312 SCHEDULING Tab 8.1

Regular Board Meeting Schedule for 2014

Thursday, January 23, 2014 1:00PM Thursday, February 13, 2014 1:00 PM Thursday, February 27, 2014 1:00 PM Thursday, March 13, 2014 1:00 PM Thursday, March 27, 2014 1:00 PM Thursday, April 10, 2014 1:00 PM Thursday, April 24, 2014 1:00 PM Thursday, May 8, 2014 1:00 PM Thursday, May 22, 2014 1:00 PM Thursday, June 12, 2014 1:00 PM Thursday, June 26, 2014 1:00 PM Thursday, July 10, 2014 1:00 PM Thursday, July 24, 2014 1:00 PM

August Recess

Thursday, September 11, 2014 1:00 PM Thursday, September 25, 2014 1:00 PM Thursday, October 9, 2014 1:00 PM Thursday, October 23, 2014 1:00 PM Thursday, November 13, 2014 1:00 PM Thursday, November 27, 2014 HOLIDAY Thursday, December 11, 2014 1:00 PM Thursday, December 25, 2014 HOLIDAY

313 SCHEDULING Tab 8.1

December 12, 2013 Item No.: 8.1 JS/lhr « qr_ /*fr BOARD OF PORT COMMISSIONERS CITY OF OAKLAND

RESOLUTION ADOPTING A NEW BOARD MEETINGS SCHEDULE FOR THE BOARD OF PORT COMMISSIONERS FOR .CALENDAR YEAR 2014.

WHEREAS, Article II of the By-Laws/^and Administrative Rules for the Board of Port Commissioners (^By-LavsV) a&i Rule VyZ) of the Rules for Public Participation at Meetings OT^e\Boar& of Port Commissioners and Standing Committees ("Rules") specify \that the Board of Port Commissioners ("Board") shall establish a rXquiar^ meeting schedule for Board meetings; and

WHEREAS, the Ralph M. Browii Aeft\ (California Government Code Section 54950 et seq.) permits theV^poard Ito determine and adjust the dates and times of theB^roXs regular meetings, from time to time, by way of resolution or m^rcion;\npw, therefore be it

RESOLVED, that th( .meetings for calendar year 2014 shall be held in the p&srdyRodi the Port of Oakland Building, 530 Water Street, in they^eity^Qf\)ak^ ind-^on the following days at the following times:

Thursday," mary y.f, 2014 1 00 PM Thursday, ^^ary/13, 2014 1 00 PM Thursday, February 27, 2014 1 00 PM Thursday, Mar<^/l3, 2014 1 00 PM Thursday, March 27, 2014 1 00 PM Thursday, April 10, 2014 1 00 PM Thursday, April 24, 2014 1 00 PM Thursday, May 8, 2014 1 00 PM Thursday, May 22, 2014 1 00 PM Thursday, June 12, 2014 1 00 PM Thursday, June 26, 2014 1 00 PM Thursday, July 10, 2014 1 00 PM Thursday, July 24, 2014 1 00 PM

August Recess

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314 SCHEDULING Tab 8.1

Thursday, September 11, 2014 1::00 PM Thursday, September 25, 2014 1::00 PM Thursday, October 9, 2014 1::00 PM Thursday, October 23, 2014 1::00 PM Thursday, November 13, 2014 1::00 PM Thursday/ November 27, 2014 HOLIDAY Thursday, December 11, 2014 1::00 PM Thuroday/ DocombGr 25, 2014 HOLIDAY; and be it

FURTHER RESOLVED, that the Board shall modify this meeting schedule, as appropriate from time to time, by action of the Board.

298794

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